1. Lean Startup
Ryan D. Hatch
February 2014
rdkhatch
#LeanStartup

2. About Ryan

Co-Founder, Dynamis

Lean & Agile Coach

Recovering Developer

Helping teams accelerate business growth

3. How Not to Waste Your Life
Provide Value to Others
Higher Rates of Startup Success.

4. Meet Jim
Story Time
Gold Ore Mining

5. Jim
Company B
Story Time
Company A

6. Gold is invisible.
63 tons of rock. Long, expensive process.
only
1 oz gold
Challenge: Must find rocks with highest value.

7. Jim Burnell
holding his X-ray gun
Fast Feedback. Before Investing.

8. Small teams can beat big teams
Use Fast-feedback Innovation – To play by a new set of rules.

9. My Startup - Dynamis

10. My Startup Experience

After several startup failures, 4 co-founders

Started in 2009 - Help Employers Optimize Health Insurance Benefits

Early Success & Struggles. Had 5 early adopter customers.

Funded by Golden Angels, Spring 2012. CEO, CTO duo.

Product Owner – v2 Replatform – MVP for new customers

Customer Problem & Solution Interviews. Lost Sales Interviews.

Small, High-Impact Team

Focused on Return on Investment


Cash Burn Rate & Sales Transparency
Customer Success kicking into gear
“This will double my business in 1 year.”
Customer success being featured at tradeshows

11. Customer Hack
Actual Application
Mockups
How well would this
solve your problem?

12. Customer Types in Product Lifecycle
Customer
Goal
Crossing the Chasm, Geoffrey Moore

13. Why Lean Startup?
Rockets, Risks, and Hockeysticks

14. 1.) Team builds an awesome product idea

15. 2.) Launch like Rockets & Hockeysticks

16. 3.) Dominate

17. Reality check.
90% of New Concepts Fail.

18. Don’t Make These
Same Mistakes
Startup Failures to Learn From

19. Myth: Build it. And they will come.
Truth
No business survives first contact with customers.
You build it, and no one cares.
Customers are often biggest risk. Not Technology.
Product development is a discovery process.
Sell before you Build.

20. No Proxies for Paying Customers

Successful people who believe in & mentor you

College Interns

Networking with other Entrepreneurs

Exceptional New Technology

Board of Director at National Realtor Association

Multiple Patent Applications

Board of Advisors at Wyndham Hotels

Business Plan

Partnering with 2x PhD’s

Multiple Pilot Programs

Building Talented Teams & Working Together

Busiest booth at trade shows

Creating New Products

Featured Articles in National magazines

Free Trials

Friends with top industry leaders

Beautiful marketing & UI

Awards in National publications

21. False Shadow Beliefs - Unspoken
Reality Distortion Field
 “We know what customers want”
 “We can accurately predict the future”
 “Executing the plan is progress”

22. Approaches to
New Product Development

23. Uncertainty grows into Future

24. Long-term planning is… let’s just call it Guessing

25. Traditional New Products - Waterfall
Business Model: Known
Business Plan
Raise Capital
Solution: Known
Requirements
Design
Development
Testing
Sales

26. Business Model: Unknown
Solution: Unknown
Agile Product Development
?

27. Business Model: Unknown
Customer Development
Solution: Unknown
Agile Product Development

28. Lean Startup

29. What is a Startup?

Temporary organization

Searching for a Repeatable, Scalable Business Model

Environment of uncertainty

Not a small version of a large company

No VP of xyz

No Sales Department

30. You’re not building a Product
You’re building a Business.

31. Key Benefits of Lean Startup

Process for startups to follow

Learn very fast what people will buy & use.

Start selling as soon as possible.

Eliminates Risk Early.

Uses data to seek truth & avoid opinions / politics

Get more Swings at bat.

Minimizes cash burn rate.

Scales at the right time.

Much higher rates of success.

32. Customer Development
Customer
Input
Customer Sales
& Usage
Get to Customer Sales as fast as possible

33. Living Document

34. No Facts are inside your building
The Answers are outside.

35. Run Science Experiments - To Learn as Fast as possible
ramlijohn.com

37. Don’t Delay Failure.
Test your Assumptions.
Get to Business Failure Fast.
And Learn what to Fix.

38. Ok, I get it. I want some.
Most people just want to sound cool.
Tired of Buzz words & Fluffy pictures?
Stop using the Buzz words.
Start applying Lean Startup.

39. Race to Learning

40. Breakeven Burndown
Running out of Cash & Time
$
Profit
Burn Rate
Death
Time (Runway)
* plus variable costs

41. Race to Scalable Business Model
$
Scalable Business Model
Burn Rate
Death
Time (Runway)

42. Multiple Funding Rounds
$
Scalable
Business
Model
Profit
Burn Rate
Death
Time (Runway)
* plus variable costs

43. Roadmap
High Value Problem
Solution Commitment
Scalable Solution
10 Customers
100 Customers
Scale
Have I found customers with a problem worth solving?
Are customers committed to my proposed solution?
Have I developed a Scalable Business Model?
Let’s throw money at this puppy
custdevframework.com

44. High Value Problem
Solution Commitment
High Value Problem
Have I found customers
with a problem worth solving?
Scalable Solution
10 Customers
100 Customers
Scale

45. This is not about You. Get to know your Customers.

46. Discover Problems: Voice of the Customer

What are your goals for the next year?

What could make the biggest impact on accomplishing those goals?

What are the barriers you are encountering?

How are you solving today?
Customer
Goals
Barriers /
Problems

47. Ecosystem of Target Customer
Understanding the customer
Allowed 3X the Price!

48. Problem Interviews

Everyone is Lying to you - including your Mom!

The Mom Test = Would your mom tell you the truth?

Never talk about your solution ideas.

Ask specifics about the past.

Prioritize: Rank this problem more important / less important

What would a solution allow you to achieve? What impact value to business?

Have you tried to solve in the past? If so, How?

Was there a budget set?

49. Creative Problem Interviews
Fake Ad

50. Gated Outcomes

12 Customers confirmed Problem

High Value Problem
Ranked Problem as MUST HAVE
Solution Commitment

Market is large & accessible enough.
Scalable Solution
10 Customers
100 Customers
Scale

51. High Value Problem
Solution Commitment
Solution Commitment
What is the minimum proposed solution
customers will commit to?
Scalable Solution
10 Customers
100 Customers
Scale

52. Solution Interviews
1.
Problem Confirmation
2.
Usage Scenarios = Feature Validation
Event:
Question:
Player:
Action:
When asleep at night
Would you & your family feel more safe
If a device
Monitored your home for carbon monoxide gas
and woke you up in case of an emergency?
3.
Demo - Low Fidelity MVP
4.
How well would your problem be solved with this solution?
5.
Pricing Never ask what people will pay!
6.
Ask for Commitment!

53. Low-Fidelity MVP

Ad words + Landing Page MVP

Video MVP

Clickable Mockups MVP

App demo MVP

Wizard of Oz MVP

Concierge MVP

No code MVP

Pre-orders, Capture Commitments!

Start Removing Features!

54. Gated Outcomes

Quantified Problem Value to Buyer

Minimum Solution will solve Problem

Validated Pricing

5 Early Adopters committing to pay for it

Letters of Intent…. Pre-sales are even better!

High Value Problem
Am I ready to COMMIT to making this go?
Solution Commitment
Scalable Solution
10 Customers
100 Customers
Scale

55. High Value Problem
Solution Commitment
Scalable Solution
Can I mold this into
a Scalable Business Model?
Scalable Solution
10 Customers
100 Customers
Scale

56. Metrics that Matter

57. Continuous Delivery
Development
Production
source: CollabNet

58. High-Fidelity MVP

Silent Launch

Split A/B Tests

Fake Door / Mock Features

Sales & Marketing Positioning

All aspects of Business Model

59. Innovation Accounting

Flow Metrics

# of Customer Interviews

# of Hypotheses Tested

60. Pivot, Persevere, or Reboot?
Instant Messaging Plug-in
The Point

61. Gated Outcomes

Paying customers (100+)

Sales Roadmap

Scalable Business Model
High Value Problem
Solution Commitment
Scalable Solution
Revenue per customer
10 Customers
100 Customers
exceeds
Customer acquisition cost
Scale

62. Do This Tomorrow

63. Do this Tomorrow
1.
Lean Canvas
2.
Rank Highest-Risk Assumptions
3.
Identify fastest test possible.

64. Scalable Business
Launch Weekend

65. Test for Value.
Then Execute.

66. Lean Startup
Ryan D. Hatch
February 2014
rdkhatch
#LeanStartup

67. Myths of
Product Development

68. Myth: We just need to hit Scale
Truth
Traffic & Hits are not a business.
Premature scaling is the #1 cause of startup failure.
Spending money faster cannot fix a business model.
Product must be fit to Customer before scaling.

69. Myth: It’s all about Execution
Truth
Achieving Failure =
Successfully executing a flawed plan.
Startups don’t know enough to just execute.

70. Myth: I must be the Hero
Truth
Share your struggles.
Transparency sets you free from the hero burden
Builds Trust
Team effort – Let’s solve this together.
Be fair to employees & their families.

71. Lean Startup
Ryan D. Hatch
February 2014
rdkhatch
#LeanStartup