What Mushrooms and Fish Poop Taught Us About Launching a New Line of Breakfast Cereals

Lean Startup 201

Jonathan Bertfield & Adam Berk

November 16 th, 2015

2015 Lean Startup Conference

Sponsored by:

Jonathan Bertfield

• 20 Years in Product Management

• Consulting clients: Pearson Inc., Disney, Associated Press, News Corp. Sesame Workshop, Business Insider, American Press Institute

• Coach at General Assembly Enterprise, NYU Stern

Adam Berk

• What problem are you solving? I help teams pick their riskiest assumptions and run experiments.

• Currently at Pearson with >>• Founded a sharing economy site

with the opposite result of AirBnb

201 agenda

1. Who’s here? Why?

2. What will I learn?

3. What is the Lean Startup & where did it

come from?

4. How and why does it work?

5. What should I do next? (go to Aubrey’s

WS!)

what will I learn?

Deep dive into riskiest assumptions, hypotheses Discussion of Topics:• What is an MVP (what are some great examples?)• What do I measure?• What do I do with my learnings?

Exercise: list your assumptions and rank themGet INTO and THROUGH BML once!

Common Purpose

We share a vision for the kind of company we want to create:

A company that continuously createsnew sources of growth.

A company that actually creates value for customers.

recap from 101

1. Quickly build products that matter

2. Recognize your assumptions (what you know vs. what you don’t)

3. Test assumptions early and often 4. Don’t spend time and money building

the wrong things

teaser for 301

1. Get out your bunsen burners because you are going

to run a REAL experiment

2. Aubrey Smith worked directly with Eric Ries

integrating Lean Startup at GE, you don’t want to miss her workshop!

3. Advanced topics like innovation accounting,

governance, regulated markets

we believe that you…

1. have read the book 2. believe that LS is “at least worth

considering” 3. have run an experiment or thought about

it in your lifetime4. want to run more experiments with your

team

we believe you will leave here with...

• An “intermediate level understanding” of the current state of Lean Startup thinking

• An understanding of what to test• An introduction to how to run experiments

THE CONFIDENCE TO GET IN (AND THROUGH) THE LOOP

we promise...

● practical● no jargon ● honesty

If you promise● to trust us the first time, test us the second

time● respect your peers● participate fully in the exercises without fear

of...

what is a startup?

“A human institution designed to create a new product or service under conditions of extreme uncertainty. “

- Eric Riesauthor, The Lean Startup

A method to systematically address uncertainty through rapid iteration and market learning.

what is the Lean Startup?

what is the Lean Startup?

History

Terminology / Definitions

Application / Applicability

simple history of Lean Startup

• Edwards Deming• Lean Manufacturing - Toyota Production System

• Agile Software Development• Customer Development - Steve Blank

• Lean Startup - Eric Ries• Business Model Canvas - Osterwalder

• Lean Startup Community

ENTERPRISE

STARTUPS

Three Key Areas to Discuss

History

Terminology / Definitions

Application / Applicability

what is the Lean Startup?

Terminology / Definitions• Entrepreneurs• Startups• Uncertainty (Product / Market / Model)• Minimum Viable Product / Pre MVP• Experiments

○ Assumptions○ Hypotheses○ metrics, vanity metrics, customer development

• Validated Learning (how to do test and measure the right things)

• Pivots

what is the Lean Startup?

scientific methodRoger Bacon (1214 - 1284) is credited as the first scholar to promote inductive reasoning as part of the scientific method.

1. Identify problems to generate ideas2. Identify and prioritize the underlying

assumptions behind those ideas3. Generate hypotheses and predictions 4. Define and deliver tests that expose

opportunities for learning5. Use resulting data to inform activity

Attribution: CC George Thomas

Attribution: CC bixentro

what kinds of uncertainty?

Technical / product Can we build this?

Customer / market If we build this, will people use/buy it?

Business modelOnce we build this, can we find a way to make money from it?

● Technical / product ○ TESLA BATTERY, SOLAR, SOME STUFF THAT

AUBREY WILL TALK ABOUT IN 301

● Customer / market ○ YOUR IDEA (99% of the time)

● Business model○ GROUPON, HOMEJOY

what kinds of uncertainty?

@FAKEGRIMLOCK - follow HIM, HER, IT? -- it’s BRILLIANT

Minimum Viable Product

Translate your critical assumptions into an experiment:1. Isolate critical assumptions for testing2. Prioritize assumptions for testing3. Draft your hypothesis to be tested4. Build an experiment5. Measure the results6. Collect the data and learning in a systematic

Validated Learning using scientific principles

High Risk

Low Risk

UnknownKnown

Assumptions: prioritization

Why?● Focuses you, your employees● Draw line in the sand ● Introduces accountability● Saves time● Introduces “learning” cultureHow ● most unknown thing that will kill the idea,

democratic, random?

Assumptions: @ AirBnb

Assumptions: Expert Tip1. Do this as a team

Spend 1-3 days listing, prioritizing your critical assumptions as a team

2. Get on the same pageAgree on what is most critical to test, how to test it

and when you will meet next to discuss the results (2, 4, 6 weeks)

3. Track everythingAssign one person in charge of collating & tracking learning in an excel spreadsheet

scientific method

1. Identify problems to generate ideas2. Identify and prioritize the underlying

assumptions behind those ideas3. Generate hypotheses and predictions 4. Define and deliver tests that expose

opportunities for learning5. Use resulting data to inform activity

components of an example hypothesis

I believe [target market/customer type]

will [do this action / use this solution]

[at this level/frequency]

for [this reason]. (by this date)

how does it work?

Three Key Areas to Discuss

History

Terminology / Definitions

Application / Applicability

scientific method

1. Identify problems to generate ideas2. Identify and prioritize the underlying

assumptions behind those ideas3. Generate hypotheses and predictions 4. Define and deliver tests that expose

opportunities for learning (&PROOF)5. Use resulting data to inform activity

Minimum Viable Product (MVP)

Experiment that helps you validate (or invalidate) hypotheses about the value or growth potential for a new product

An MVP helps you answer a specific question about one of your assumptions (as fast as possible and helps you understand the WHY)

MVP Pearson case study

Learn Build

Measure

Learn Build

Measure

MVP Pearson case study

scientific method

1. Identify problems to generate ideas2. Identify and prioritize the underlying

assumptions behind those ideas3. Generate hypotheses and predictions 4. Define and deliver tests that expose

opportunities for learning5. Use resulting data to inform activity

measure results

What knowledge are you looking to gain?LEARN or PROVE

What you are going to do with the knowledge when you get it?START THE LOOP AGAIN BASED ON NEW EVIDENCE, NEW LEARNINGS, NEW PROOF!!!

why does it work?

why does it work? (less luck more skill)

Path to Success

The ability to LEARN faster than your competition may be

the only sustainable competitive advantage.

Arie de Geus

Questions?

Phil DillardLean Startup Trainer

415-894-5297Phil@LeanStartup.co

Heather McGoughCo-Founder, Lean Startup Company(415) 830-2479Heather@LeanStartup.co