Introduction to Lean Startup leading up to a 3-hour workshop. Presented by me at EFYI (European Forum for Young Innovators) 2016, conference organized by Poland Innovative (Polska Innowacyjna).

1. LEAN METHODOLOGY
FOR STARTUPS: INTRO
Lecture prepared by Dr Gregory Prokopski
(Montreal / Canada) for EFYI 2016, Lódź, Poland
Conference organized by Poland Innovative

2. About Dr Gregory Prokopski
• PhD from McGill University, Montreal
• MSc, Eng. Computer Sciene Wroclaw Univeristy of
Technology
• MSc, Eng. Marketing and Business Administration from
Wroclaw University of Technology
• Independent consultant since 1999
• Prof. at McGill University, Montreal
• Interested in Internet-based startups
• Practical, non-academic – real results orientation
• Currently on his 5th startup

3. Content of this Workshop
• Pareto efficiency
• 20% of knowledge that gives 80% of results
• What counts is application, not just knowledge
• Knowledge is just potential power, it must be
used to become actual power
• Core ideas and tools
• Practical examples of Lean methodology
application

4. WHAT DOES *NOT* LEAD
TO SUCCESS
In business and beyond – review of common, ineffective
ways of thinking that prevent success.

5. Overconfidence in intuition
• If success was a simple matter of
intuition we’re born with then
everyone would just achieve it
• We can train our intuition
• How to do it?
• What to do if you don’t have it yet?

6. Conceit and being full of yourself
• On some level,
internally most people
(you and I) think
they’re smarter than
everyone else
• This leads to failure

7. Secret projects
• Mindset of scarcity tells us to
keep our “best idea” secret
• Cuts us off from knowledge,
coaching and mentoring of
other people
• What counts is not the idea
but realization and iteration
• Only exception: if your
solution is patentable. But
you still need a team.

8. Myth of “Aviator” – lonely genius
• He had an idea for a novel movie and a plane
• He had no experience. He just was stubborn,
he put it all in, and… he won.
• This is romantically very alluring,
but IT IS A LIE
• We don’t know what people want
– which product or service
• As scientists we must first say
“We don’t know”

9. PRINCIPLES, METHODS OF
THINKING AND TOOLS OF
LEAN METHODOLOGY

10. Mastery is practicing fundamentals
“Get the fundamentals
down and the level of
everything you do will
rise”
-- Michael Jordan

11. Lean Startup*
• Is a set of such fundamentals
• Is a way of thinking and acting when
managing a startup (as opposed to chaos)
• It is an effective methodology tested by
hundreds of thousands of startups around
the world
• Created and documented in widely
publicized book “The Lean Startup” by Eric
Ries
• *) Lean Startup is a trademark registered by Eric Ries and is used
throughout this presentation for identification purposes only

12. The Lean Startup - System
• Systematic approach to managing startups
• Instead of chaos (usual in startups) – order
• You can learn this system – today!
• Next, we will take a closer look at the main components of
this system

13. Build, Measure, Learn loop
• Iterative innovation model
• Every iteration begins with an
idea
In our simulation, after this
lecture, we will perform two
iterations (turns) of that loop

14. Idea is a hypothesis
• Create a hypothesis, e.g.
“People need to communicate
and we can facilitate that”
• We need to test it
• We also need to know what we
will measure to find out if
hypothesis is true or not

15. Co zbudowac? MUP / MVP
• MVP – Minimum Viable
Product
• Minimal time, money, effort
spent to create it
• Only good enough to test the
hypothesis and measure
results

16. Our MVP

17. COMMON TYPES OF MVP
Real companies and products

18. Video explaining a product
• Dropbox used a video to
get VC funding to build a
product
• Even before alpha version
of Dropbox software was
built it already had 5000
registered users

19. Landing Pages, AdWords, A/B tests
• Timothy Ferriss had ~100
different ideas for the title
• His metric was AdWords
clicks statistics
• Owing it (mainly?) to the
title the book sold over 1
million copies worldwide
and made the author
famous

20. More about A/B split tests
• To product versions
• We measure how customers
react to each version (at the
same time)
• In this example conversion
rate is a metric

21. Wizard of Oz
• User thinks that everything
is automated
• In reality everything is
done “behind the curtain”
and “by hand”

22. Private Concierge
• We give users (the initial
adopters) VIP treatment
• Individual attention
• Few clients
• Service is cheap but clients
take time to provide feedback
• In such case feedback will be
our set of metrics

23. Many other types of MVP are possible
• Piecemeal MVP
• Collecting funds from future clients, e.g. Kickstarter or
IndieGoGo
• MVP with just one function – Google initially only was
good to find information related to Linux OS
• Blogs – measure post popularity and engagement
• Interviews with potential customers
• Make up your own!

24. Build, Measure, Learn loop
• Iterative innovation model
• Every iteration begins with an
idea
[ slide repeated ]

25. METRICS
What to measure and what not to

26. Vanity metrics vs. Actionable metrics
• Today we can measure just
about anything
• But not measurements obtained
are useful
• Some metrics are fantastic for a
press conference (vanity
metrics)
• Other metrics can indicate a
direction in which to take a
product (actionable metrics)

27. Vanity Metrics – Examples
1. Our page was visited 100000 times last
week alone!
2. Our product was downloaded 763
thousand times this year
3. We have 1 million registered users

28. Purpose of a metric
• You can’t select the correct
metric if you don’t know first
WHY you want to measure
something
• Closely related to the hypothesis
• We measure that, which will
allow us to prove that the
hypothesis was true or not

29. What to measure and why (1/2)
• If the hypothesis was that the new version of the product
will be used more often…
• Then we need to measure the engagement, e.g. how many times
per day users log into the site and perform actions, in comparison
with the existing version (simultaneous A/B test)
• If the hypothesis was that the new packaging of the
product will attract new customers…
• Then we need to measure how many new clients are coming in per
day (or week) compared to the previous version (cohorts)

30. What to measure and why (2/2)
• If the hypothesis was that the new pricing strategy will
increase lifetime customer value…
• Then we need to measure that value as A/B test
SECRET TO REMEMBER: pricing strategy is usually the
most important element you should be testing.
Most startups fail because they are not able to begin
generating profits in the short time before their funding
runs out.

31. LEARN
AND MAKE DECISIONS
Stay the course or change direction

32. Metrics results analysis (1/2)
• If we chose correct metrics then we will be able to take
action – make a decision
• E.g. in A/B test new internet site structure resulted in
lower user engagement
• In such case we’ll keep the existing solution

33. Metric results analysis (2/2)
• E.g. we increased the product price from 0 (free) to 10 Euro
and only 0.5% of our users bought the new product. Consider:
• Does the product provide a real value to the customer?
• Is the value communicated effectively?
• Do we need a different product?
• Do we need to find different customers with a different profile?
• Should we focus on customers with the existing profile and find many
more of them?
• Often, to answer that you will need a new thesis and new
iteration

34. Stay the course or change it?
• “Persevere” or “Pivot”?
• The reason why we did the
test and collected results
(metrics) was so that we
can make a decision about
future direction

35. About direction change
“Its ok to pivot and its
equally ok to persevere,
we just need to know our
reasons for doing so.”
– Dr Bridget

36. SUMMARY

37. Loop – small steps

39. Recommended book
• Discusses many topics we
haven’t addressed in this
talk
• In particular the concept of
Engine of Growth is worth
examining and applying

40. Other Lean Startup book
• Lean Analytics by Alistar Croll i Benjamin Yoskovitz
• Lean UX by Jeff Gothelf
• Running Lean by Ash Maurya
• UX for Lean Startups by Laura Klein
• Lean Enterprise by multiple authors
See http://theleanstartup.com/the-lean-series

42. THANK YOU
QUESTIONS PLEASE
After that – time for the workshop