2. Lean Startup Essentials
Agenda
Today’s focus: The early stage
• 10 - 20min blocks, quick Q&A after each
• 1: Why? & The Canvas
• 2: Customer Discovery
• 3: Case Study
4. Lean Startup Essentials
#1: Introduction
About Me
• 2nd time entrepreneur
• 2007-2010: Soup.io
• The Efficient Cloud
“Heroku for Europe” to
“PaaS technology for hosting providers”
(Seedcamp 2011 company)
• Collaborated with Ash Maurya
on the Lean Canvas
5. Lean Startup Essentials
#1: Introduction
Whats the Lean Startup?
• A methodology on how to create order in
the (unavoidable) chaos of a startup.
• Iterative approach to learning & building
(as in: agile vs. waterfall)
• Summarization of entrepreneurial
learnings.
6. Lean Startup Essentials
#1: Introduction
Where this all comes from
• Steve Blank - Customer Development
• Alex Osterwalder - Business Model Canvas
• Eric Ries - The Lean Startup
• Ash Maurya - Lean Canvas
9. Lean Startup Essentials
#1: Lean Startup
Startup:
Temporary organization used to
search for a repeatable and scalable
business model.
As defined by Steve Blank.
10. Lean Startup Essentials
#1: Lean Startup
Your initial goal:
Improve likely success rate of your venture,
and reduce risk of failure.
Enable yourself to actually
make the jump into a full-time entrepreneur.
11. Lean Startup Essentials
#1: Lean Startup
Your Process:
Likely entirely chaotic.
No one implements the lean startup
as a strict process.
Similar to agile adoption (e.g. Kan-ban)
you need to make a slow transition
into more structured thinking.
16. Lean Startup Essentials
#1: The BM Canvas
Day
Month
No.
Who are our Key Partners?
Who are our key suppliers?
Which Key Resources are we acquiring from partners?
Which Key Activities do partners perform?
What Key Activities do our Value Propositions require?
Our Distribution Channels?
Customer Relationships?
Revenue streams?
What Key Resources do our Value Propositions require?
Our Distribution Channels? Customer Relationships?
Revenue Streams?
What are the most important costs inherent in our business model?
Which Key Resources are most expensive?
Which Key Activities are most expensive?
What value do we deliver to the customer?
Which one of our customer’s problems are we helping to solve?
What bundles of products and services are we offering to each Customer Segment?
Which customer needs are we satisfying?
What type of relationship does each of our Customer
Segments expect us to establish and maintain with them?
Which ones have we established?
How are they integrated with the rest of our business model?
How costly are they?
For whom are we creating value?
Who are our most important customers?
Through which Channels do our Customer Segments
want to be reached?
How are we reaching them now?
How are our Channels integrated?
Which ones work best?
Which ones are most cost-efficient?
How are we integrating them with customer routines?
For what value are our customers really willing to pay?
For what do they currently pay?
How are they currently paying?
How would they prefer to pay?
How much does each Revenue Stream contribute to overall revenues?
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Year
18. Lean Startup Essentials
#1: The BM Canvas
Customer Segments
• Narrowly chosen group of
people that buy/use your
product
• Marketplace biz models =
2 cust segmens (or more)
• Matching Value Proposition,
Channels, Revenue Streams
and Customer Relationships
Key Partners
Key Activities
Key
Resources
Cost Structure
Value
Proposition
Customer
Relationships
Channels
Revenue Streams
Customer
Segments
19. Lean Startup Essentials
#1: The BM Canvas
Channels
• How does the customer learn
Key Partners
about your product?
• B2B and B2C vastly different!
• SEM, SEO, Friend Invites, Social
Media, Direct Sales, Tradeshows,
PR, Content Marketing, etc.
Key Activities
Key
Resources
Cost Structure
Value
Proposition
Customer
Relationships
Channels
Revenue Streams
Customer
Segments
20. Lean Startup Essentials
#1: The BM Canvas
Value Proposition
• What’s the problem you’re
Key Partners
solving for the customer?
• These might be things they’ve
already started building in
house, because there is an
active need
Key Activities
Key
Resources
Cost Structure
Value
Proposition
Customer
Relationships
Channels
Revenue Streams
Customer
Segments
21. Lean Startup Essentials
#1: The BM Canvas
Revenue Streams
• How much is the problem
Key Partners
worth to the customer?
• Not how much it costs you to
implement the value proposition
• Avoid Free and Freemium!
(marketing tactic, not rev model)
Key Activities
Key
Resources
Cost Structure
Value
Proposition
Customer
Relationships
Channels
Revenue Streams
Customer
Segments
22. Lean Startup Essentials
#1: The BM Canvas
Customer Relationships
• How do you want to interact
Key Partners
with your customers?
• Automated self-service vs.
many in-person meetings
• Determines the scalability
of your business model
Key Activities
Key
Resources
Cost Structure
Value
Proposition
Customer
Relationships
Channels
Revenue Streams
Customer
Segments
23. Lean Startup Essentials
#1: The BM Canvas
Key Activities
• What are the people in your
Key Partners
company doing day by day?
• Create the product: Software
Development, DevOps, etc.
• Market the product
• Integrate the product, run
webinars, create whitepapers, ...
Key Activities
Key
Resources
Cost Structure
Value
Proposition
Customer
Relationships
Channels
Revenue Streams
Customer
Segments
24. Lean Startup Essentials
#1: The BM Canvas
Key Resources
• Which physical assets do you
need for your company to work?
(set of test hardware, etc.)
• Which other assets?
(online platform, patents, etc.)
• Include/exclude HR, doesn’t
really matter (duplicate info)
Key Partners
Key Activities
Key
Resources
Cost Structure
Value
Proposition
Customer
Relationships
Channels
Revenue Streams
Customer
Segments
25. Lean Startup Essentials
#1: The BM Canvas
Cost Structure
• What are your HR costs?
Key Partners
(rough estimate)
• Marketing channel costs
• Infrastructure costs
• It’s about Unit Economics,
not your made-up 5 year plan
Key Activities
Key
Resources
Cost Structure
Value
Proposition
Customer
Relationships
Channels
Revenue Streams
Customer
Segments
26. Lean Startup Essentials
#1: The BM Canvas
Key Partners
• Channel Partners
• Strategic Partners/Alliances
• Suppliers
• Especially Important for
direct sales biz models
Key Partners
Key Activities
Key
Resources
Cost Structure
Value
Proposition
Customer
Relationships
Channels
Revenue Streams
Customer
Segments
27. Lean Startup Essentials
#1: The BM Canvas
Example: Tupalo
Key Partners
Herold /
European
Directories
Key Activities Value
Proposition
Software Dev
SEO
Key
Resources
Data about
businesses
Customer
Customer
Relationships Segments
#1 Finding
#1: Community
information,
quality & location #2: Clear B2B
of a business
Product
#1 9-to-5 folks
looking for lunch
options, etc.
#1 Long-tail
mainstream
Channels
#2 Promoting a
business,
providing correct #1 Long-tail SEO #2 Business
information to
owners
#2 Direct Sales
customers
(restaurants, etc.)
Cost Structure
Revenue Streams
HR (15 people)
Infrastructure (4 servers)
#1 Free
Business Data
#2 Hundreds/Thousands of EUR (recurring)
28. Lean Startup Essentials
#1: The BM Canvas
Example: Freckle
Key Partners
Key Activities Value
Proposition
Software Dev
Marketing/
Copywriting
Key
Resources
Existing
audience:
Mailinglists,
Twitter, etc.
Customer
Customer
Relationships Segments
Tracking time
Tribe-like
precisely without interaction
effort
Freelancers
Agencies
Easily invoice
clients with good Channels
report on
performed work - Word of mouth
- Cross-sales
- Freebies
- Existing
audience
Cost Structure
Revenue Streams
HR (2 people)
Hosting (1 server)
12-50 USD / month (dep. on company size)
29. Lean Startup Essentials
#1: The BM Canvas
Example: Garmz
Key Partners
Marketing
Partners!
Key Activities Value
Proposition
Marketing
Biz Dev
Fashion schools
Software Dev
Key
Resources
Production
Factory
#1 Massproducing a
fashion garment
Customer
Customer
Relationships Segments
#2 Buy trendy
clothes
#1 Fashion
designers
#2 Online Shop
#1 Build up your
fashion brand
#1 Structured
work together
#2 Trend-chasing
hipsters
Channels
Fashion blogs
Partnerships
#1 Fashion schools
#1 Fashion events
#2 Word of mouth /
strong brand
Cost Structure
Revenue Streams
Production! (super expensive)
Prototyping
Payout to designer
#2 100 EUR / piece
30. Lean Startup Essentials
Live Example
Someone from the audience:
Pitch us your business
4 other people:
What’s the customer segment?
What are the channels?
What’s the value proposition?
What’s the revenue model?
#1: The BM Canvas
39. Lean Startup Essentials
#2: Customer Discovery
Customer Interviews
30 min in-person with
your prototypical customer
People like talking about their field explore their worldview.
40. Lean Startup Essentials
#2: Customer Discovery
How to conduct an interview
1. Set context & tell your story
2. Tell your problem hypothesis
3. Listen to their worldview
4. Ask for follow up / references
41. Lean Startup Essentials
#2: Customer Discovery
Online Market Tests:
Google Adwords
Fake Landing Page with
“Signup to be notified when we launch”
“Can we call you to ask a couple of Qs?”
42. #2: Customer Discovery
Lean Startup Essentials
User Groups & Conferences:
Hand out cards with invite codes landing page with “join our soon-tolaunch beta programme”
SolidRails
European VPS cloud. Fully-integrated Rails hosting.
Your private beta access code: OEWO8C
43. #2: Customer Discovery
Lean Startup Essentials
Amy Hoy’s
Sales Safari:
Lurk in online forums of your
customer segment, learn how they
talk about products & benefits
46. Recap: What’s PaaS?
• The role model: Heroku
• Fully-integrated hosting for
Rails/Java/Django/etc.
• Many US clones popping up
• VMware’s Cloud Foundry - OSS PaaS
50. Market Testing
• Invite codes at conferences & user meetups
• Google Adwords testing, e.g. RailsHosting.in
• Interviews with hosting providers
• Open ears to what the end-users want, and
what the industry currently sells (“cloud
hosting”)
51. Pivot
• Marketing channels hard to build up
• Hosting is a local market
• Product & engineering-driven company
much easier with B2B model
