The slides from the introduction to Lean Business Methodology from the Victoria, BC Lean Startup Meetup. meetup.com/Lean-Startup-Victoria

1. E245 Value Proposition Ann Miura-Ko January 2011

3. Market Type

5. The Problem The “problem” justifies why the product is valuable to someone The Problem Statement: For whom? What issue do they face? Note: Doesn’t reference the product

6. Potency of the Problem

7. Technology and Market Insight Market Insight Value chain disruption Deregulation Changes in how people work, live and interact and what they expect Technology Insight Moore’s Law New scientific discoveries Typically applies to hardware, clean techand biotech

8. Examples of Market Insight People want to play more involved games than what is currently offered Facebook can be the distribution for such games Masses of people are more likely to micro-blog than blog The non-symmetric relationships will allow companies and individuals to self-promote European car sharing sensibilities could be adopted in North America People, particularly in urban environments, no longer wanted to own cars but wanted to have flexibility.

9. Insight Characteristics Right Wrong Biggest Potential Wins Non-Consensus Mindless Competition Consensus

10. Key Thought What insight do I have that is not yet conventional wisdom?

11. Market Type Market Type determines: Rate of customer adoption Sales and Marketing strategies Cash requirements

12. Existing Market Characteristics: Customers are always hungry for better performance Incumbents exist Usually technology driven Positioning driven by product and how much value customers place on its features Risks: Incumbents will defend their turf Network effects of incumbent Continuing innovation

13. Resegmented Market Low cost provider (Southwest) Unique niche via positioning (Whole Foods) What factors can you eliminate that your industry has long competed on? Which factors should be reduced well below the industr’s standard? Which factors should be raised well above the industry’s standard? Which factors should be created that the industry has never offered? (blue ocean)

14. New Market Customers don’t exist today How will they find out about you? How will they become aware of their need? How do you know the market size is compelling? Which factors should be created that the industry has never offered? (blue ocean)

15. Competition Are substitute products and services available? Are competitors threatening to offer better price or value? How saturated is our market? How likely are customers to defect?

19. Put it up on a high traffic webpage

20. If it gets clicks, collect the emails of interested customers

21. Build a ‘ghetto’ version of the product or feature

22. Test everything

23. Iterate constantlySource: http://grattisfaction.com/2010/01/how-zynga-does-customer-development-minimum-viable-product/

24. Goal of MVP Determine Product Market Fit Don’t scale before Product Market Fit Without it, attracting interest from partners and investors will be harder/lower value

25. The Ecosystem (“Customers”) Day to day users May actually have zero influence in buying process End User Influencer / Recommender Preferences and decisions influence or impact buying decisions Economic Buyer The person who controls the purse strings or is in charge of the budget Decision Maker The buck stops here

26. The Ecosystem (The Rest) Suppliers Entity that provides parts or services needed to manufacture your product Channels Group or organization that installs, distributes or sells the product in your place Government Organizations responsible for monitoring trading and safety standards related to your product Partners Other entities that provide products related to delivery of your final product

27. Testing the MVP (Non-Web) Can you get customers to pay for a product that doesn’t yet exist (or barely does)? Interview customers to make sure they have a matching core problem Set up web site landing page to test for conversion Set up a Lighthouse Customer Program where potential customers pay to get early access to product prototypes

28. Testing the MVP (Web Example) Can you get customers to pay for a product that doesn’t yet exist (or barely does)? Interview customers to make sure they have a matching core problem Set up web site landing page to test for conversion See what offers are required to get customers to use the product (e.g. prizes, payment) Use problem definition as described by customers to identify key word list – plug into Google search traffic estimator - high traffic means there is problem awareness Drive traffic to site using Google search and see how deep into a registration process customers are willing to go through

29. Testing the MVP Smoke testing with landing pages using AdWords In-product split-testing Prototypes (particularly for hardware) Removing features Continued customer discovery and validation Surveys Interviews

31. Market Type

33. Iteration without crisis

35. The Value Proposition Pivot UK-92480 Problem: Angina (chest pains) Selectively blocking an enzyme called PDE5 could expand blood vessels and treat angina. Nuf said

36. Test these hypotheses for next week: Problem Statement: What is the problem? For whom? Technology / Market Insight: Why is the problem so hard to solve? Competition: What do customers do today? Product: How do you do it? Is this valuable or unique? What is the MVP? TEST THE MVP!