Successfully Apply Successfully Apply “Lean” Start-Up Principles “Lean” Start-Up Principles

to to University SpinoutsUniversity Spinouts

Live Webinar - 10 April 2012

www.technologytransfertactics.com – Phone: 877-729-0959

David J. MillerAdjunct Professor - The School of Management

George Mason University

Mr. Miller is an entrepreneur and has spent the last 10 years working with and managing a various new ventures. In December 2007 he founded FamilyFantasySports.com, the first fantasy sports site dedicated to family play. Mr. Miller holds an MBA from the University of Chicago (Entrepreneurship, Finance, & Strategic Management), an MSc in the International Politics of Asia from the University of London’s School of Oriental and African Studies (dissertation: Changing Definitions of Security in the Information Age: The People’s Republic of China and the Internet), and a BA in international relations from the University of Michigan.

dmillerq@gmu.edu http://CampusEntrepreneurship - http://twitter.com/campus_entre

Gerard Eldering Founder and President InnovateTech Ventures

Mr. Eldering specializes in venture creation based on inventions

licensed from universities and research institutions. He has been working in the technology transfer community for more than a decade and is passionate about the creation of professionally managed and funded start-up companies. Prior to launching InnovateTech, he founded and served as Director of the Technology Transfer Office at The MITRE Corporation.

gerard@innovatetech.comwww.innovatetech.com

Overview

• Introduction• Ries, Blank on Entrepreneurship; Start-Ups• The Lean Basics, Business Models• Hypotheses• Customer Development• The Movement, Lean Myths & Other Issues• Questions

Path to Lean

• Internet Bubble experience from B School (99-01)

• Startups Since• Research high impact

firms created by students at US universities

Path to Lean• Stanford, Harvard using lean– Engineering, business schools

• Lean Startup (Eric Ries)• Four Steps to the Epiphany (Steven G

Blank)• Created out of their experiences• Builds on other management

methods/tools (lean manufacturing, boot strapping, software development)

• Customer focused

7

Eric Ries | IMVU

• Experienced team, strong market = failure

• Hypotheses about customers, markets, partners

• Build, measure, learn – feedback loop

• Experiment, multiple attempts, fast iterations

8

Customer Development

• Steve Blank• Four Steps to the

Epiphany• Stanford/Berkeley• Startup Handbook now

out (apparently easier to read)

Ries & Blank Rethink the Startup?

Human institution designed to deliver a new product or service under conditions of extreme uncertainty. (Ries)

Nothing to do with size of company, sector of the economy, or industry

The product and customer are unknown.

If truly innovative, even more uncertainty

STARTUP =

EXPERIMENT

Blank & Ries: Some Thoughts

Businesses fail because THEY DO NOT HAVE ENOUGH CUSTOMERS

A startup is an organization formed to search for a repeatable and scalable BUSINESS MODEL (ITERATIONS)

Startups that don’t iterate (PIVOT) fast enough fail

There are NO facts inside your building, so get outside and find them

Create & TEST the business MODEL first, business plan & business will follow

Experimenting to reduce the time between iterations (pivots)

Will increase odds of successbefore funding runs out

Lean Theory in Brief:

Which activities are value-creating and which are waste?

Value is created by delivering products or services to customers

Innovators use business models to sketch out quick and dirty conceptual prototypes of a business around the product (not just the product itself) in a format that is generally understandable and generates dialogue with others.

“Business models...are themanagerial equivalent of thescientific method. You start with a hypothesis, which you then test in action and revise when necessary”.

Magretta, Why Business Models Matter.Harvard Business Review, May 2002.

Hypothesis For Everything

• Value Proposition (Product or Service)• Customers• Channels• Revenues• Costs• Key Partners, Activities, Resources

Customer Hypotheses

• What types of customers• Customer Problems• A day in their life• Organizational map and customer influence

map• ROI justification (or emotional if consumer)• Minimum feature set

Customer Development Model

Focuses on understanding customer problems and needs, developing a sales model that can be replicated, creating and driving end use demand, and transition from learning and discovering to execution (Steven G Blank)

Customer Discovery

• Discovering who the customers for your product are and whether the problem you believe you are solving is important to them

• Are there customers and a market for your vision?• Not just any customers, those with a problem they

need solved (the more effort/money they have put into this the better)

Customer Validation

• Proves you have found a set of customers with a proven and repeatable sales process that has been tested – early customers are a key

• If you complete discovery & validation: you have verified market, located customers, tested value of product, identified buyer, established pricing/channels; you have found a business model

Customer Creation (Marketing)

• Create end user demand and drive customers to your channels

• The type of market you are entering will determine how you create customers (Blank)

Minimize TOTAL time through the loop

Ries

Some of the Methods for Lean (Ries)

Learn Faster

Split Tests

Customer Development

Five Whys

Customer Advisory Board

Falsifiable Hypotheses

Product Owner

Accountability

Customer Archetypes

Cross-functional Teams

Semi-autonomous Teams

Smoke Tests

Build Faster

Unit Tests

Usability Tests

Continuous Integration

Incremental Deployment

Free & Open-Source

Cloud Computing

Cluster Immune System

Just-in-time Scalability

Refactoring

Developer Sandbox

Minimum Viable Product

Measure Faster

Funnel Analysis

Cohort Analysis

Net Promoter Score

Search Engine Marketing

Predictive Monitoring

Measure Faster

Split TestsContinuous Deployment

Usability Tests

Real-time Monitoring & Alerting

Customer Liaison

Experimenting to reduce the time between iterations (pivots)

Will increase odds of successbefore funding runs out

Lean Theory in Brief:

Lean Startup Movement (JOIN!)

• Ries, Blank books, classes (Stanford, Harvard)• Software• Social Media (blogs, videos, slideshare, etc)• Online Courses• Related Books (Business Model Generation,

Nail it then Scale It, Blue Ocean Strategy)• Meetup/Other Groups/Skillshare• NSF – Innovation Corps (led by Steve Blank)

Lean Startup Myths

• Lean means no money• Lean only works with bootstrapped firms• Lean is only for tech companies• Lean is only for startups• Lean is only for profit firms

Final Thoughts on Lean

• Customer, not product focus initial• Test hypotheses quickly, learn, pivot?• No facts inside the building • Searching for business model• Just a part of the new venture creation

process• Needs more testing, experimentation,

evolution

University Spinouts as Lean Startups

• In many cases the lean startup approach is ideal for university spinouts– Well suited for faculty and student lead startups– Academics should be comfortable with key concepts –

validated learning, build – measure – learn– Can work well for low resourced startups

• But can it work for life science startups, energy, electronics?– What elements of the lean startup approach work for

these types of startups?

The Entrepreneurial Tech Transfer Officer

• Most tech transfer offices operate more like a on campus startup than a typical university office“The concept of entrepreneurship includes anyone who

works within my definition of a startup: a human institution designed to create new products and services

under conditions of extreme uncertainty” Eric Ries, The Lean Startup

• So doesn’t each tech transfer officer need to act like an entrepreneur?

Using the Lean Startup Approach for TTO Innovation

• Thinking like an entrepreneur – how to I take this unique disclosure and get it to market?

• Build – Measure – Learn – Can we apply this concept to marketing inventions?

• MVP – In house product launch as market experimentation?– Leveraging the university community

• Applying the concierge MVP concept to tech transfer marketing

Questions, Comments, Thoughts?Questions, Comments, Thoughts?

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