Introduction to Lean Startup from a lean startup coach and entrepreneur

1. Lean Startup
Kevin Shutta
Organizer at Lean Startup Machine
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2. Introductions
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3. What I will get from this workshop?
• What is Lean Startup compared to other approaches
• When to use it
• What I will get out of it
• How to do it
• Where to can learn more
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4. Workshop Schedule
• Presentation & questions (1 hour ish)
• Practice (coming up with experiment ideas)
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5. 98% of Startups FAIL
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Because they never get customers to pay for their offering and/or build something
nobody wants.

6. Case Study
(Not Lean)
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7. College Hobby
I created over 2,000 videos teaching myself how to speak in public.
Practice generally included 10-60 second videos on skills that someone
could practice on his/her own:
• Pronunciation
• Gestures
• Stance
• Confidence
• Etc.
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8. Startup Idea: Share this with the world
through online network for public speaking
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9. Startup Weekend Washington, D.C. 2013
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Top Competitor
Solution
Resolve fear through skill-building using low cost, low effort, high
feedback training online through a guided community and content.

10. Successes
• 1st Place at Startup Weekend
• Designed a few courses of content
• Team of 4-7 working on this for 5 months
• Investors LOVED the idea, they just wanted to see the PRODUCT
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11. It was NOT the product that was the problem.
After attending a Lean Startup Machine workshop…
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12. Customers (Sales Pitch)
50 people in the streets of Washington, D.C.
• 48 thought the idea would be good for other people, but not for
themselves
• “This would be good for introverts, but not me”
• “I take beta blockers before I speak, so I’m fine.”
• “I’m a teacher. I got used to the stress a long time ago, so I don’t look for
solutions anymore.”
• 1 Person liked it because he wanted to recruit me for network
marketing
• 1 Person ACTUALLY wanted to give it a try
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13. Customers (Product Demo)
Demo in Asperger’s group
• 100% (about 10 of 10) saw their speaking skills improve after their
combined content and video course
• 0% wanted continued lessons
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14. Online platform for Public Speaking
Customers
Money
Problem
Offering
Solves
Problem for
customer
Captures
Money
Scalable
Money to
Build
Technology
to Build
People to
Build
Willing to Use
$$$ to solve
Problem

15. Wall of Shame
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Lesson: you can’t forecast your user base if you don’t have any users. You can’t analyze your service
against what others value if you haven’t talked with them

16. Result
FAIL
4 months of time that did not result in a successful business
Hundreds of dollars (mainly on pizza and gas, luckily)
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17. Lesson Learned: forcing my idea on the world
doesn’t work
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18. What is Lean Startup?
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19. Startup
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A startup is a human institution designed to deliver a new
product or service under conditions of extreme uncertainty.
- Eric Ries

20. Lean Startup
Lean Startup is about finding the cheapest, fastest way to
Reduce the risk of your startup not succeeding,
And rapidly iterating until you find the business that succeeds
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21. Your Startup idea is a set of [untested] Hypotheses
“I believe [Customer] has a problem with [Problem]”
“I believe [Solution] will solve [Problem] for [Customer]”
“I believe [Customer] will pay for [Solution]”
“I believe [Customer] will repeat buy the [Solution] or recommend to a
friend”
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22. So… identify and reduce your risks of failing by
testing, validating, and getting to the right model
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23. Experiments Are your Answers
Hypothesis: “I believe [customer] has a problem with [problem]”
Experiment: Ask the customers. See if they exhibit the behavior of
someone with that problem (discussed later)
Success Criteria: If I can find X of Y customers in this setting who have
this problem, success and continue. If two or less, it’s not strong
enough.
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24. 24
Build
Experiment
MeasureLearn
Create new experiments
to validate / invalidate
business models until you
fine one that works

25. Some Types of Experiments
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26. Types of Experiments
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Experiment Possible Tools Question it Answers
(Validation/Invalidation)
Learning Available
Problem
Interview
Open-ended
questions
Does the customer have the problem I think they
have? What problems do they have?
• Customer pain points (if any)
• Alternative solutions
• Customer Segments
• Potential Use Cases (stories)
Solution
Interview
Prototype
Screenshots
Mock-ups
Could the solution work? • Identify early adopters
• Features required / not required in
minimum viable product
Pitch MVP Scripts
Sales materials (e.g.
screenshots)
Letter of Intent
Landing Page
Can we drive traffic? Can we get signups? Will
people sacrifice time / money / emails / other
currency to solve their pain (with our solution)?
• Sales & marketing tactics
• Customer objections
• Pricing information
Concierge
MVP
A person (you)
Simple technology
(sometimes)
Does the manual version of my product solve the
customer need? Do they return or refer others?
• Product optimization (features
needed and not needed)
• Sales funnel optimization
• Potential lifetime customer value
and sales model

27. Customer / Problem Interviews
Find your potential customers and talk with them about their
problems.
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28. Find your Customers
GET OUT OF THE BUILDING. Find customers who have the problem you
think they have.
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29. Seriously…
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30. Find customers that have the problem
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• Aware that they have the problem
• Previously searched for a solution
• Tried to solve it themselves
• Have money to pay for solution

31. Sample Problem Interview Script
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Intro
What are your top challenges with [area]?
Why are those problems?
What have you tried to do to solve this?
Hi, my name is Kevin. Have a minute? I’m doing a school
project on vacations. Could you tell me about your last
vacation?
Could you tell me about your planning process?
What was hard? Why?
What have you tried to do to solve this?
General General

32. Once you have customer and problem, SELL IT!
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33. Pitch MVP
Purpose: see if your customer with the problem will put something on
the line to solve that problem
Script:
• Intro and qualify them
• Do you have a problem with [Problem]?
• Present a solution (doesn’t have to work or exist!)
• Ask for the currency (attention, money, email address, etc.)
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34. 34

35. If people will not give up their email address for a
promise to solve their problem, they will not pay
money for a product that promises that it will.
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36. Landing Page
Purpose: See if your statement of value is enough for consumers to
proceed with your offering
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3% or more is great. You need to know if customers who do not
already know you will convert. DO NOT use your friends.

37. People are now signing up for my service.
However, it doesn’t exist yet. How can we
know if they will like it?
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38. Concierge
Purpose: see if the solution solves the pain
Experiment: manually do what your service is intended to do
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39. Concierge Sample
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Grace Ng
Lean Startup Machine
@uxceo
Question: Will connecting people with websites and UX Designers for $$$ create a
mutually beneficial experience?
1. Let customers fill out an online form that sends email to Grace
2. UX Designers fill out form that submits email to Grace
3. Grace manually introduces them in an email
Result: the experience was OK and Grace had more to improve
See the experiment at https://www.youtube.com/watch?v=-_MH8TENpwc

40. Concierge Sample
Created PDF coupons and emailed them to customers (they didn’t just
go build it)
Answered: Yes, there is demand for such a system
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41. What does Minimum and Viable mean?
The minimum feature set that solves the customer’s pain
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42. THIS Presentation: Minimum and Viable
Customer Pain points:
• Need to cover Lean Startup
• Needs to be 1-2 hours
Iteration #1 (February 2015): junky black and white presentation that covers all essential
topics. Takes ~ 1 hour
Iteration #2 (April 2015): junky black and white presentation, with a few improvements
(note these are still peripheral needs. Customer pain points still addressed in iteration #1):
• “Questions” slide is actually at the end, not randomly in the middle
• Overview of MVPs added
• Some useless slides eliminated
Things I didn’t care about. Why? Because they don’t address the core value proposition.
• Fonts
• Animations
• Spell check 42

43. Pivots
If you find that your proposed hypothesis failed in the market, the
market is telling you something. CHANGE YOUR MODEL (PIVOT) and
try the new one. Otherwise, you are beating a dead horse.
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44. Facebook
Started As…
Facemash, a site where you can
choose which person was
“hotter”
Now…
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45. Starbucks
Started as…
Selling expresso makers and
coffee beans
Ended as..
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46. Pivots – What’s the Point?
If you can care more about the value you are delivering (and capturing)
from customers, then chances are you will make more money than if
you care only about the vision you want to share (impose) on the
world.
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47. Case Study
[Lean]
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48. Vacation-Nation

49. Busy,
adventurou
s travelers
Vacation
planning
hard
Planning
is a
problem
Interview:
50%
Busy,
personal
travelers
Don’t use
travel
rewards
effectivel
y
People
feel not
using
points
effectively
Interview
:
10/20
Lived
abroad,
now live
U.S.
No access
to favorite
goods
abroad
People
attached
to
products
Interview
5/10
Lived 2+
Areas /
Regions
Less than
50%
Pivot!
Pains: travel
rewards,
money,
booking
Not pain:
destination,
people
Few had
problem;
no pain
Pivot!
Rewards not
a pain point
for general
market
8/8
Persevere
!
Some: no
search,
food only,
or don’t
know exact
item
11 of 18
Pivot
Miss
product.
Searched
but did
not find
Customer
s know
exact
product
Interview:
10/20
Don’t track
their
rewards
points
Notifies
users of
value trips
based on
prefs
People care
about value
points
provide
Pitch:
15/20
7 of 10
Persevere
Travel
Professiona
ls with
Many
Points
Most want
food,
not
pressing, or
found good
way to solve
Validated
service!

50. Note: you can use the previous slide (along
with the downloadable version as an aid) to
organize your experiments. The board is
created by Lean Startup Machine.
However Excel is just as good.

51. Customers
Money
Problem
Offering
Solves
Problem for
customer
Captures
Money
Scalable
Money to
Build
Technology
to Build
People to
Build
Willing to Use
$$$ to solve
Problem
Vacation-Nation
Take a fraction of points. Not risky. Take a fraction of points. Not risky.

52. See how there is less risks to the business failing?
I accomplished more in three days with Lean
Startup than I did in 4-5 months without.
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55. Bottom Line
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Customers
Money
Problem
Offering
Solves
Problem for
customer
Captures
Money
Scalable
Money to
Build
Technology
to Build
People to
Build
Willing to Use
$$$ to solve
Problem
Experiment. Fail. Pivot. Fail. Pivot.
Go as fast as you can until you are in the green

56. Lean Metrics
Measure things that matter:
• Make an impact to your business
• Measurable
• Actionable
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57. Lean Metrics
• Acquisition – visit, signup, etc.
• Activation – use of a core feature – create an account, play a game,
take an Uber ride, etc.
• Retention – come and use again
• Referral – invite others who are acquired
• Revenue
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Copyright: Dave McClure
(Acquisition-Activation-Retention-Referral-Revenue)

58. More Metrics
• Cohort metrics (for testing changes to your site)
• Viral coefficient – average number of customers each person refers
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59. Recap
• Startups are risky
• Paying customers or revenue-generating users are more important
than investors
• Many risks can be eliminated cheaply and efficiently using lean
startup validation / invalidation, learning, and pivoting
• An experiment is conducted to answer a question
• Do things that matter
• Actionable
• Eliminate risk and uncertainty
• Valuable to your business
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60. How you can do it
Find your customers
If you have an idea, try to sell it
If you have a product or prototype, test it with them
Find out as soon and as cheaply as possible if there is a problem with
your model. Fix the problem, find an alternative, or ditch the model.
Note: Don’t worry too much about people stealing your idea. How
many of you are going to build a vacation planning tool or rewards
points optimizer?
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61. Lean Startup Machine
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62. Lean Startup Machine Experiment Board
(next slide)
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http://www.javelin.com/
(Download for a tweet)
Experiment Board is available at…

65. Lean Startup Machine
The hands-on Lean Startup workshop
• Learn a repeatable process for finding products that succeed with
companies
• Hands-on guidance and practice from successful entrepreneurs and
leaders in Lean
• April 17th-19th in Silicon Valley (three days)
https://www.leanstartupmachine.com
https://www.leanstartupmachine.com/siliconvalley
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66. If you enjoy this session, please help us get the
word out…
Event Description
Lean Startup Machine is a 3-day discovery workshop where participants learn a repeatable
process for finding products that will succeed with customers. During the workshop,
participants identify customers, discover their needs, design an offering, and determine
whether a business can be created. Participants are guided by experienced mentors, serial
entrepreneurs, and thought leaders in the practice of Lean Startup. The Silicon Valley
event takes place April 17th-19th and you can find out more
at https://www.leanstartupmachine.com/cities/silicon-valley. Register today with 20%
discount code lsm20.
Twitter
Learn to create products customers love at @Lean #Startup Machine, coming to
#SiliconValley Apr 17-19! http://tiny.cc/bl4lvx @Lean_BayArea
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67. Other Ways to Learn More
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There are plenty of books out there these days.

68. Questions
Contact Information
Kevin Shutta
kshutta@gmail.com
Linkedin: www.linkedin.com/in/kevinshutta
@KevinShutta 68
Other Content
Lean Startup Machine
Grace Ng
(Last slide before practice)

69. Experiment Development
Some questions to ask:
• Who is your customer?
• Where can you find them?
• What is their biggest problem in your area? Do they agree with you?
• What do you need to know about your customers?
• What makes you nervous or stressed about whether your product will
sell and get customers?
• How can you find out if your product will work before creating it?
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