Startup tools!Daniel Tenner(@swombat)

Overview

0. Starting thoughts

1. Business Model Canvas

2. Coming up with your idea

3. Lean Startup, or where to go from

here

4. Recap and closing thoughts

0. Starting thoughts

•Entrepreneurship is a career

•Entrepreneurship is a career

•Startups are (risky) experiments

•Entrepreneurship is a career

•Startups are (risky) experiments

•You don’t have to experiment full-time

•Entrepreneurship is a career

•Startups are (risky) experiments

•You don’t have to experiment full-time

•Ideas are only a small part of it

•Entrepreneurship is a career

•Startups are (risky) experiments

•You don’t have to experiment full-time

•Ideas are only a small part of it

•Running your own business is great

•Entrepreneurship is a career

•Startups are (risky) experiments

•You don’t have to experiment full-time

•Ideas are only a small part of it

•Running your own business is great

•Start today with what you have

Disclaimer

Disclaimer

•No silver bullets

•No substitute for experience

•Just one tool

•Not the whole tool

Disclaimer

•No silver bullets

•No substitute for experience

•Just one tool

•Not the whole tool

Disclaimer

•No silver bullets

•No substitute for experience

•Just a couple of tools

•Not the whole tool

Disclaimer

•No silver bullets

•No substitute for experience

•Just a couple of tools

•Not the whole tool

1. Business Model Canvas

“Send me your business plan”

Problems with B-plans

•Hard to see if complete

•Discourages collaboration

•Not for visual people

• Lengthy and tedious to prepare

• Lengthy to absorb

• Can hide issues under mountains of words

•Most people won’t read any of it!

Problems with B-plans•Hard to see if complete

•Discourages collaboration or change, static

•Not for visual people

• Lengthy and tedious to prepare

• Lengthy to absorb

• Can hide issues under mountains of words

•Most people won’t read any of it!

Problems with B-plans•Hard to see if complete

•Discourages collaboration or change, static

•Not for visual people

• Lengthy and tedious to prepare

• Lengthy to absorb

• Can hide issues under mountains of words

•Most people won’t read any of it!

Problems with B-plans•Hard to see if complete

•Discourages collaboration or change, static

•Not for visual people

• Lengthy and tedious to prepare or absorb

• Lengthy to absorb

• Can hide issues under mountains of words

•Most people won’t read any of it!

Problems with B-plans•Hard to see if complete

•Discourages collaboration or change, static

•Not for visual people

• Lengthy and tedious to prepare or absorb

• Can hide issues under mountains of words

• on’t read any of it!

Problems with B-plans•Hard to see if complete

•Discourages collaboration or change, static

•Not for visual people

• Lengthy and tedious to prepare or absorb

• Can hide issues under mountains of words

•Most people won’t read any of it!

• on’t read any of it!

Problems with B-plans•Hard to see if complete

•Discourages collaboration or change, static

•Not for visual people

• Lengthy and tedious to prepare or absorb

• Can hide issues under mountains of words

•Most people won’t read any of it!

•Present just one vision

But business plans serve a purpose...

“Plans are worthless, but

planning is everything.”

- A great many people(incl. Dwight D. Eisenhower)

Business planning has evolved

Better business planning:

• Easy to see what’s missing

•Dynamic, open to suggestions and changes

• Visual

•Quick to prepare, change and grasp

• Issues come up to the surface

• People actually want to read it!

•Present multiple possibilities

Is that possible?

Hero Rats...

Hero Rats...

•Genetically modified super-rats with brain chips.

•At the press of a button, the Hero Rat will seek out nearby explosives (e.g. in a land mine). Press another button and the Hero Rat returns (if still alive...).

Hero Rats...

•Due to a revolutionary process called “Rat Magic”, the rats are inexpensive to breed and fit out with brain chips.

Hero Rat Exercise 1

•Come up with as many different possible customer types as possible.

•Time: 4 minutes.

Hero Rat Exercise 2

•What makes Hero Rats valuable?

•Time: 4 minutes.

Hero Rat Exercise 3

•How can you sell Hero Rats?

•Time: 3 minutes.

Hero Rat Exercise 4

•You get the idea...

•Time: 3 minutes.

Hero Rat Exercise 5

•Sell the Hero Rats!(so you can go to lunch!)

•Time: 3 minutes.

Let’s have some fun

with the rats...

There are many ways to run Hero

Rat Inc...

Free rats for all?

Hero Rat Exercise 6

•How can you give away the Hero Rats for free?

•Time: 5 minutes.

Hero Rats for the mass market

Hero Rat Exercise 7

•Can you sell Hero Rats as a consumer product?

•Time: 5 minutes.

HRaaS?

Hero Rat Exercise 8 (last!)

•Can you make Hero Rats a subscription service?

•Time: 5 minutes.

Recap

Business Plans in 2012• Easy to see what’s missing

•Dynamic, open to suggestions and changes

• Visual

•Quick to prepare, change and grasp

• Issues come up to the surface

• People actually want to read it

•Present multiple possibilities!

Bon Appétit!

2. Coming up with your idea

2. Coming up with your ideas

Idea Reach

Constraints

1. Start with you...

effectuation.org

Expert entrepreneurs start with what they have and who they are. 

Who do you care about helping?

Exercise 1

•Using yellow post-its, pin down things you really want to have on your business model.

•Time: 3 minutes.

•Note: don’t put things you don’t care about!

2. Then, the not-you

What do you hate doing?

What is ridiculously hard

for you?

Exercise 2

•Using red post-its, pin down things you don’t want on your business model.

•Time: 3 minutes.

•Note: don’t put things you don’t care about!

3. Your assets

What communities/mark

ets do you have access to?

What resources do you have access to

which others don’t?

Exercise 3

•Using green post-its, pin down assets and resources.

•Time: 3 minutes.

•Note: put anything that could help.

Groups of 3-5!

Exercise 4

•Help each other: come up each with a customer, resource and activity.

•Time: 6 minutes.

•Note: more options is better!

4. Get some help!

Who else cares about your customers?

Exercise 5

•Add other potential players around your canvas (partners or customers).

•Time: 3 minutes.

•Note: more options is better!

Remember: your first idea is always

dumb.

Exercise 6

•Sketch out 3 alternative business models that fit your constraints.

•Time: 3 minutes.

•Note: more options is better!

...but what next?

3. Lean Startup, or where to go from

here

“Lean Startup”

What is a startup?

What is a startup?

•“The act or fact of starting something; a setting in motion.”

•-Dictionary (useless)

What is a startup?

•“Startups are fresh, new companies trying to do cool stuff.”

•-Instinctive (still mostly useless)

What is a startup?

•“A startup is an organization formed to search for a repeatable and scalable business model.”

•-Steve Blank

What is a startup?

•“A startup is a human institution designed to deliver a new product or service under conditions of extreme uncertainty.”

•-Eric Ries

What is a startup?

•“...essentially a startup is a new business designed for scale.”“A startup is a small company that takes on a hard technical problem.”

•-Paul Graham

What is a startup?

•“A startup is a business which has ambitions and plans to grow by a large factor over the next few years.”

•-Me!

Key points

•Uncertainty, search, difficulty

•Ambition, growth

•Methods, plans

•Business, money

How should I build a startup?

Some typical approaches that

don’t work

1. First, write a business plan...

2. Raise lots of money and then

figure it out

3. Plan it, build it and they will come

4. Get lots of users and figure the rest

out later

5. Don’t spend anything at all.

A better method... “Lean”

Lean is not...

•Cheap

•Rigid

•Limited to simple ideas

•The magic key to success

Lean is...

•A method to organise the chaos

•Less waste

•Less risk

•More learning

•A common language

The fundamental principle of “Lean”

•People don’t care about things they don’t need/want

•Building things people don’t need is waste

•Building large things that people don’t need is large waste

•You have no idea what you’re doing

•You have no idea what to build

•People don’t care about things they don’t need/want

•Building things people don’t need is waste

•Building large things that people don’t need is large waste

•You have no idea what you’re doing

•You have no idea what to build

•People don’t care about things they don’t need/want

•Building things people don’t need is waste

•Building large things that people don’t need is large waste

•You have no idea what you’re doing

•You have no idea what to build

•People don’t care about things they don’t need/want

•Building things people don’t need is waste

•Building large things that people don’t need is large waste

•You have no idea what you’re doing

•You have no idea what to build

•People don’t care about things they don’t need/want

•Building things people don’t need is waste

•Building large things that people don’t need is large waste

•You have no idea what you’re doing

•You have no idea what to build

Sounds hard!

➡Building things is probably a waste of your time right now.

➡Building things is probably a waste of your time right now.

The “Lean” approach:

•Build the smallest, easiest, smartest thing that teaches you what you need to learn

➡Building this thing is probably a waste of your time right now.

➡Building this thing is maybe a waste of your time right now.

➡Building this thing is maybe not a waste of your time right now.

➡Building this thing is probably not a waste of your time right now.

The “Lean” approach:

•Build the smallest, easiest, smartest thing that teaches you what you need to learn

What do you need to learn?

Do people want it?

Can I sell it?

Can I build it?

A startup plan

1.Do people want it?

2.Can I sell it?

3.Can I build it?

The “Lean” approach:

•Build the smallest, easiest, smartest thing that teaches you what you need to learn

Minimum Viable Product

Minimum Viable Product

•Landing page

•Paper prototype

•Presentation/pitch

•Anything that enables you to learn!

Minimum Viable Product

•Landing page

•Paper prototype

•Presentation/pitch

•Anything that enables you to learn!

Minimum Viable Product

•Landing page

•Paper prototype

•Presentation/pitch

•Anything that enables you to learn!

Minimum Viable Product

•Landing page

•Paper prototype

•Presentation/pitch

•(Fake) demo video

•“Concierge MVP”

•Anything that enables you to learn!

Minimum Viable Product

•Landing page

•Paper prototype

•Presentation/pitch

•(Fake) demo video

•“Concierge MVP”

•Anything that enables you to learn!

Minimum Viable Product

•Landing page

•Paper prototype

•Presentation/pitch

•(Fake) demo video

•“Concierge MVP”

•Anything that enables you to learn!

MVP

•MVP is not a shitty version of the product.

•MVP is driven by the questions you need answered.

The Lean Cycle

Lean Toolkit

Metrics

Up and to the right...

Vanity metrics

•User signups

•Traffic

•Retention rate

•Any metric in a vacuum

Good metrics

•Mostly: A/B test results

•Cohort breakdowns

•Retention rates over time

•Activity stream

•Any metric that’s actionable

Actionable?

•Must be related to the key engines of your business...

Engines:value and growth

Engine of value

•How much value is your startup delivering?

•Is it enough to be worth paying for?

•Do people perceive that and agree?

Engine of growth

•How does your startup acquire new customers?

•Paid

•Viral

•Sticky

Engine of growth

•How does your startup acquire new customers?

•Paid (CAC & LTV)

•Viral (Viral Coefficient)

•Sticky (Retention rate)

Actionable Metrics

•Actionable metrics are the ones which can lead to a change which you know will impact your key drivers.

“If you simply plan on seeing what happens, you

always succeed... in seeing what happens!”

- Eric Ries

“If you can’t fail, then you can’t learn.”

- Eric Ries

“Innovation Accounting”

Lean reporting

•If you only report usage/revenue, that’s what you’ll be judged on

•Track validated learning instead

Pivots(hot buzzword alert)

Experiment failed... what now?•Why did it fail? Which assumption

was wrong?

•Can the assumption be tweaked, or does it need to be thrown out?

•How can we rework the business model now we know that we know this?

Experiments succeeded, but...

•If it’s not working well enough to build a sustainable business, it’s not working, period.

•(diminishing returns...)

How to know if it’s working well

enough?

Types of pivots

•Zoom-in pivot: single feature becomes the whole product

•Zoom-out pivot: the product becomes a feature of a larger product

•Customer segment pivot: some customers like us, but not the ones initially targeted

•Customer need pivot: the product doesn’t solve a big enough problem for our customers

•Business architecture pivot: low margin, high volume, vs. high margin, low volume

•Value capture pivot: change the way you monetise

•But... don’t abuse pivots.

4. Recap and closing thoughts

Let’s recap...

EVERYTHING!

Startups are experiments

Test critical things as quickly as

possible

Actionable metrics, not vanity metrics

Report on learning progress

Pivot when assumptions are

wrong

What to do from here

•Be Smart

•Get Advice

•DO THINGS!

Where to go from here...

• “The Lean Startup” - Eric Ries

• “Running Lean” - Ash Maurya

• “The entrepreneur’s guide to customer development” - Brant Cooper & Patrick Vlaskovits

• Numerous blogs online...

• Mentors...

• EXPERIENCE!

Big Recap!

Thank you!Daniel Tenner(@swombat)

http://swombat.com