October Lean Startup 101 presentation to Lean Startup Circle Boston

1. Lean Startup Circle Boston
October 2011
Wireless Access: Connect to CAMBRIDGE. Access Code is sc1027
November Event with Brett Durrett,VP Engineering at IMVU
Space is limited. Register Now at: http:/bit.ly/LscNov

2. Lean Startups
The Manufacturing of Innovation

4. Who am I?
john@blueleaf.com - @johnprendergast - About.Me/JohnPrendergast

5. Founder of Blueleaf.com
Who am I?
john@blueleaf.com - @johnprendergast - About.Me/JohnPrendergast

6. Founder of Blueleaf.com
Board Member oneforty
Who am I?
john@blueleaf.com - @johnprendergast - About.Me/JohnPrendergast

7. Founder of Blueleaf.com
Mentor at Techstars
Board Member oneforty
Who am I?
john@blueleaf.com - @johnprendergast - About.Me/JohnPrendergast

8. Founder of Blueleaf.com
Mentor at Techstars
Board Member oneforty
Who am I?
One of the first Boston Chicken Franchisees
john@blueleaf.com - @johnprendergast - About.Me/JohnPrendergast

9. Founder of Blueleaf.com
Mentor at Techstars
Board Member oneforty
Who am I?
One of the first Boston Chicken Franchisees
Product Management at a series of startups
john@blueleaf.com - @johnprendergast - About.Me/JohnPrendergast

10. Founder of Blueleaf.com
Mentor at Techstars
Board Member oneforty
Who am I?
One of the first Boston Chicken Franchisees
Product Management at a series of startups
Investment Banker for Tech Cos
john@blueleaf.com - @johnprendergast - About.Me/JohnPrendergast

11. Lean Startups

12. Name has caused confusion

13. Toyota Production System
Lean Manufacturing

14. Minimize waste ...
http-//www.flickr.com/photos/editor/172690560/sizes/l/in/photostream/.jpg

15. Not cheap or bootstrapped

16. Startups?

17. It’s where innovation happens

18. What is a startup?

19. What is a startup?
• A startup is a human institution designed to deliver a new product or
service under conditions of extreme uncertainty
• Nothing to do with size of the company, sector of the economy or
industry

20. Said Differently ...

21. Innovation

22. Innovation Manufacturing

23. Innovation Manufacturing
Repeatable process for creating market accepted innovation

24. Innovation Manufacturing
Apply lean manufacturing principles and the scientific method to
the process of innovation

25. Lean Startups
Apply lean manufacturing principles and the scientific method to
the process of innovation

26. CAUTION_http-//www.flickr.com/photos/32315759@N00/452776240/sizes/z/in/photostream/

27. Methodology Can’t
Replace Judgement

28. Or Replace Vision

29. Why bother with this?

30. Source: Eric Ries

31. Most Innovations Fail
Source: Eric Ries

32. It doesn’t need to be that way . . .

33. Why Do Startups Fail?

34. Lack of Customers

35. Question?

36. Does it make sense that we have
product development process ...
Source: Steve Blank

37. ... but a not a Customer
Development Process?

38. Entrepreneurial
Superpowers

39. Vision / Delusional
Capacity
Entrepreneurial
Superpowers

40. Vision / Delusional
Capacity
Bias for Action
Entrepreneurial
Superpowers

41. Steve Blank Hypotheses
• Entrepreneurs and Investors are generally executing on guesses
• Startups aren’t small versions of large organizations
• They are about learning/discovery, not execution
• Need to surface hypotheses/assumptions and test against facts
• However, the Facts Live Outside of the Building

42. Led to Customer
Development Model
Source: Steve Blank

43. Customer Development is at the
Heart of Lean Startups

44. Surface Hypotheses & Test

45. Facts Live Outside of the Building

46. Separate Vision from Delusion

47. Customer Development

48. Eric Ries Extended Model
• Steve realized the Problem was unknown,
• Eric’s Insights
• Given that the Solution is also unknown
• Agile development needed to match Customer development speed

49. Built To Learn
IDEAS
LEARN BUILD
DATA
CODE
MEASURE

50. John Boyd’s Insight
IDEAS
LEARN BUILD
DATA
CODE
MEASURE

51. John Boyd’s Insight
OODA Loop IDEAS
LEARN BUILD
DATA
CODE
MEASURE

52. John Boyd’s Insight
OODA Loop IDEAS
• Observe, Orient, Decide, Act LEARN BUILD
DATA
CODE
MEASURE

53. John Boyd’s Insight
OODA Loop IDEAS
• Observe, Orient, Decide, Act LEARN BUILD
• Depends on accurate external data DATA
CODE
MEASURE

54. John Boyd’s Insight
OODA Loop IDEAS
• Observe, Orient, Decide, Act LEARN BUILD
• Depends on accurate external data DATA
CODE
MEASURE
• Speed through the loop beats
quality of iteration

55. Changes Context of Progress

56. Not About Working Big Plan

57. Progress
=
Validated Learning About Customers

58. Or we can accelerate into a brick wall

59. Changes scope of
development efforts

60. Changes scope of
development efforts
• Huge feature lists don’t make sense

61. Changes scope of
development efforts
• Huge feature lists don’t make sense

62. Changes scope of
development efforts
• Huge feature lists don’t make sense
• Actual working product may not make sense

63. Changes scope of
development efforts
• Huge feature lists don’t make sense
• Actual working product may not make sense

64. Changes scope of
development efforts
• Huge feature lists don’t make sense
• Actual working product may not make sense
• Create the smallest amount of “product” necessary to learn

65. Minimum Viable Product

66. Product / Market Fit
“Do whatever is required to get to product/market fit. Including:
changing out people,
rewriting your product,
moving into a different market,
telling customers no when you don’t want to,
telling customers yes when you don’t want to,
raising that fourth round of highly dilutive venture capital
—whatever is required.”
— Marc Andreessen
http://blog.pmarca.com/2007/06/the-pmarca-gu-2.html

67. Great Startups Adjust To Facts

68. The Pivot
http://startuplessonslearned.blogspot.com/2009/06/pivot-dont-jump-to-new-vision.html

69. The Pivot
• What do successful startups have in common?
• They started out as digital cash for PDAs, but evolved into online
payments for eBay.
• They started building BASIC interpreters, but evolved into the world's
largest operating systems monopoly.
• They were shocked to discover their online games company was actually
a photo-sharing site.
http://startuplessonslearned.blogspot.com/2009/06/pivot-dont-jump-to-new-vision.html

70. The Pivot
• What do successful startups have in common?
• They started out as digital cash for PDAs, but evolved into online
payments for eBay.
• They started building BASIC interpreters, but evolved into the world's
largest operating systems monopoly.
• They were shocked to discover their online games company was actually
a photo-sharing site.
http://startuplessonslearned.blogspot.com/2009/06/pivot-dont-jump-to-new-vision.html

71. The Pivot
• What do successful startups have in common?
• They started out as digital cash for PDAs, but evolved into online
payments for eBay.
• They started building BASIC interpreters, but evolved into the world's
largest operating systems monopoly.
• They were shocked to discover their online games company was actually
a photo-sharing site.
• Pivot: change directions but stay grounded in what we’ve learned.
http://startuplessonslearned.blogspot.com/2009/06/pivot-dont-jump-to-new-vision.html

72. The Pivot
PIVOTCARTOON_http-//www.newyorker.com/humor/issuecartoons/2010/04/26/cartoons_20100419#slide=2

73. On Pivots
@dbinetti

74. On Pivots
@dbinetti

75. On Pivots
• Pivots are restatements of your business model; not synonymous with
product change
@dbinetti

76. On Pivots
• Pivots are restatements of your business model; not synonymous with
product change
@dbinetti

77. On Pivots
• Pivots are restatements of your business model; not synonymous with
product change
• Pivots are a consequence of learning about your business, not just your
product
@dbinetti

78. On Pivots
• Pivots are restatements of your business model; not synonymous with
product change
• Pivots are a consequence of learning about your business, not just your
product
@dbinetti

79. On Pivots
• Pivots are restatements of your business model; not synonymous with
product change
• Pivots are a consequence of learning about your business, not just your
product
• Pivots are vision-driven, not testing driven
@dbinetti

80. Speed Wins ...

81. What about management process?

82. Leading & Managing Lean

83. Leading & Managing Lean
• People don’t rally around experiments - “It’s the vision stupid”

84. Leading & Managing Lean
• People don’t rally around experiments - “It’s the vision stupid”

85. Leading & Managing Lean
• People don’t rally around experiments - “It’s the vision stupid”
• Everything starts with vision then rigorously test against actual results

86. Leading & Managing Lean
• People don’t rally around experiments - “It’s the vision stupid”
• Everything starts with vision then rigorously test against actual results

87. Leading & Managing Lean
• People don’t rally around experiments - “It’s the vision stupid”
• Everything starts with vision then rigorously test against actual results
• Optimize Total Time through the loop

88. Leading & Managing Lean
• People don’t rally around experiments - “It’s the vision stupid”
• Everything starts with vision then rigorously test against actual results
• Optimize Total Time through the loop

89. Leading & Managing Lean
• People don’t rally around experiments - “It’s the vision stupid”
• Everything starts with vision then rigorously test against actual results
• Optimize Total Time through the loop
• Traditional management tools are not built for extreme uncertainty

90. Leading & Managing Lean
• People don’t rally around experiments - “It’s the vision stupid”
• Everything starts with vision then rigorously test against actual results
• Optimize Total Time through the loop
• Traditional management tools are not built for extreme uncertainty

91. Leading & Managing Lean
• People don’t rally around experiments - “It’s the vision stupid”
• Everything starts with vision then rigorously test against actual results
• Optimize Total Time through the loop
• Traditional management tools are not built for extreme uncertainty
• Iteration speed is governed by speed of learning not “building”

92. Start with Vision and adjust

93. Unit Economics & Biz model
NOT projections

94. Openness NOT command and
control

95. Learning Can Be Scary

96. Innovation accounting

97. Innovation accounting
• Establish the Baseline
• Build the minimum viable product
• Measure how customers behave right now

98. Innovation accounting
• Establish the Baseline
• Build the minimum viable product
• Measure how customers behave right now

99. Innovation accounting
• Establish the Baseline
• Build the minimum viable product
• Measure how customers behave right now
• Tune the Engine
• Experiment to move metrics from baseline to ideal

100. Innovation accounting
• Establish the Baseline
• Build the minimum viable product
• Measure how customers behave right now
• Tune the Engine
• Experiment to move metrics from baseline to ideal

101. Innovation accounting
• Establish the Baseline
• Build the minimum viable product
• Measure how customers behave right now
• Tune the Engine
• Experiment to move metrics from baseline to ideal
• Pivot or persevere
• When experiments reach diminishing returns some distance from goal

103. In Action - Stanford Lean Launchpad

110. Tactical fun with MVPs

111. Minimum Viable Product
• Minimum set of features needed to learn from earlyvangelists - visionary
early customers
• Avoid building products that nobody wants
• Max learning per $
• Probably much more minimum than you think

112. Minimum Viable Product
• Visionary customers can “fill in the gaps” on missing features, if the
product solves a real problem
• Allows us to achieve a big vision in small increments without going in
circles
• Requires a commitment to iteration
• MVP is only for BIG VISION products; unnecessary for minimal products

113. Minimum Viable Product

114. Minimum Viable Product
• Smoke testing with landing pages, adwords

115. Minimum Viable Product
• Smoke testing with landing pages, adwords
• SEM on $5 per day

116. Minimum Viable Product
• Smoke testing with landing pages, adwords
• SEM on $5 per day
• In-product split testing

117. Minimum Viable Product
• Smoke testing with landing pages, adwords
• SEM on $5 per day
• In-product split testing
• Paper prototypes

118. Minimum Viable Product
• Smoke testing with landing pages, adwords
• SEM on $5 per day
• In-product split testing
• Paper prototypes
• Keynote products

119. Minimum Viable Product
• Smoke testing with landing pages, adwords
• SEM on $5 per day
• In-product split testing
• Paper prototypes
• Keynote products
• Concierge tests

120. Minimum Viable Product
• Smoke testing with landing pages, adwords
• SEM on $5 per day
• In-product split testing
• Paper prototypes
• Keynote products
• Concierge tests
• Cohort and Engagement

121. MVP Fears

122. MVP Fears
• False negative: “customers would have liked the full product but the MVP
sucks, so we abandoned the vision

123. MVP Fears
• False negative: “customers would have liked the full product but the MVP
sucks, so we abandoned the vision

124. MVP Fears
• False negative: “customers would have liked the full product but the MVP
sucks, so we abandoned the vision
• Visionary complex “Customers don’t know what they want”

125. MVP Fears
• False negative: “customers would have liked the full product but the MVP
sucks, so we abandoned the vision
• Visionary complex “Customers don’t know what they want”

126. MVP Fears
• False negative: “customers would have liked the full product but the MVP
sucks, so we abandoned the vision
• Visionary complex “Customers don’t know what they want”
• Too busy to learn: “it would be faster to just built it right, all this measuring
distracts from delighting customers”

127. Lean Startup Principles

128. Lean Startup Principles
• Innovation & Entrepreneurship is management

129. Lean Startup Principles
• Innovation & Entrepreneurship is management

130. Lean Startup Principles
• Innovation & Entrepreneurship is management
• Validated Learning

131. Lean Startup Principles
• Innovation & Entrepreneurship is management
• Validated Learning

132. Lean Startup Principles
• Innovation & Entrepreneurship is management
• Validated Learning
• Build - Measure - Learn

133. Lean Startup Principles
• Innovation & Entrepreneurship is management
• Validated Learning
• Build - Measure - Learn

134. Lean Startup Principles
• Innovation & Entrepreneurship is management
• Validated Learning
• Build - Measure - Learn
• Speed through the loop beat quality

135. Lean Startup Principles
• Innovation & Entrepreneurship is management
• Validated Learning
• Build - Measure - Learn
• Speed through the loop beat quality

136. Lean Startup Principles
• Innovation & Entrepreneurship is management
• Validated Learning
• Build - Measure - Learn
• Speed through the loop beat quality
• Innovation Accounting

137. People and Resources
Text
john@blueleaf.com - @johnprendergast - About.Me/JohnPrendergast

138. People and Resources
• Steve Blank - www.steveblank.com, includes the Standford Lean Launchpad
Text
john@blueleaf.com - @johnprendergast - About.Me/JohnPrendergast

139. People and Resources
• Steve Blank - www.steveblank.com, includes the Standford Lean Launchpad
- Book: 4 Steps to the Epiphany
Text
john@blueleaf.com - @johnprendergast - About.Me/JohnPrendergast

140. People and Resources
• Steve Blank - www.steveblank.com, includes the Standford Lean Launchpad
- Book: 4 Steps to the Epiphany
• Eric Ries - www.startuplessonslearned.com
Text
john@blueleaf.com - @johnprendergast - About.Me/JohnPrendergast

141. People and Resources
• Steve Blank - www.steveblank.com, includes the Standford Lean Launchpad
- Book: 4 Steps to the Epiphany
• Eric Ries - www.startuplessonslearned.com
- Book: The Lean Startup Text
john@blueleaf.com - @johnprendergast - About.Me/JohnPrendergast

142. People and Resources
• Steve Blank - www.steveblank.com, includes the Standford Lean Launchpad
- Book: 4 Steps to the Epiphany
• Eric Ries - www.startuplessonslearned.com
- Book: The Lean Startup Text
• Patrick Vlaskovits & Brant Cooper - Vlaskovits.com, market-by-numbers.com
john@blueleaf.com - @johnprendergast - About.Me/JohnPrendergast

143. People and Resources
• Steve Blank - www.steveblank.com, includes the Standford Lean Launchpad
- Book: 4 Steps to the Epiphany
• Eric Ries - www.startuplessonslearned.com
- Book: The Lean Startup Text
• Patrick Vlaskovits & Brant Cooper - Vlaskovits.com, market-by-numbers.com
- The Entrepreneurs Guide to Customer Development
john@blueleaf.com - @johnprendergast - About.Me/JohnPrendergast

144. People and Resources
• Steve Blank - www.steveblank.com, includes the Standford Lean Launchpad
- Book: 4 Steps to the Epiphany
• Eric Ries - www.startuplessonslearned.com
- Book: The Lean Startup Text
• Patrick Vlaskovits & Brant Cooper - Vlaskovits.com, market-by-numbers.com
- The Entrepreneurs Guide to Customer Development
• Meetup.com, local Lean Startup Circle Meetups - ~20,000 members globally
john@blueleaf.com - @johnprendergast - About.Me/JohnPrendergast

145. People and Resources
• Steve Blank - www.steveblank.com, includes the Standford Lean Launchpad
- Book: 4 Steps to the Epiphany
• Eric Ries - www.startuplessonslearned.com
- Book: The Lean Startup Text
• Patrick Vlaskovits & Brant Cooper - Vlaskovits.com, market-by-numbers.com
- The Entrepreneurs Guide to Customer Development
• Meetup.com, local Lean Startup Circle Meetups - ~20,000 members globally
http://lean-startup.meetup.com/
john@blueleaf.com - @johnprendergast - About.Me/JohnPrendergast

146. People and Resources
• Steve Blank - www.steveblank.com, includes the Standford Lean Launchpad
- Book: 4 Steps to the Epiphany
• Eric Ries - www.startuplessonslearned.com
- Book: The Lean Startup Text
• Patrick Vlaskovits & Brant Cooper - Vlaskovits.com, market-by-numbers.com
- The Entrepreneurs Guide to Customer Development
• Meetup.com, local Lean Startup Circle Meetups - ~20,000 members globally
http://lean-startup.meetup.com/
• Lean Startup Circle online - ~4,000 members with active discussions
john@blueleaf.com - @johnprendergast - About.Me/JohnPrendergast

147. People and Resources
• Steve Blank - www.steveblank.com, includes the Standford Lean Launchpad
- Book: 4 Steps to the Epiphany
• Eric Ries - www.startuplessonslearned.com
- Book: The Lean Startup Text
• Patrick Vlaskovits & Brant Cooper - Vlaskovits.com, market-by-numbers.com
- The Entrepreneurs Guide to Customer Development
• Meetup.com, local Lean Startup Circle Meetups - ~20,000 members globally
http://lean-startup.meetup.com/
• Lean Startup Circle online - ~4,000 members with active discussions
https://groups.google.com/group/lean-startup-circle
john@blueleaf.com - @johnprendergast - About.Me/JohnPrendergast