Test 2

In English, it is usually translated as a directive to

"go and see for yourself" so that business decisions can be based on deep firsthand knowledge

A startup's job is to

(1) rigorously measure where it is right now, confronting the hard truths that assessment reveals, and then (2) devise experiments to learn how to move the real numbers closer to the ideal reflected in the business plan

Definition of failure is

not trying

general​ partnership

operates like a sole ​proprietorship​, but with multiple people involved. Each partner is personally responsible for the actions of the business, the other partners, and the partnership's employees.

Equity

ownership in a business

Soft launch

quiet business start to test market and then make internal adjustments

a zoom-in pivot

refocusing the product on what previously had been considered just one feature of a larger whole

Direct Marketing

self promoting and selling goods or services to consumers or other businesses without use of outside distributors

innovation accounting

startups have a strong need for a new kind of accounting geared specifically to disruptive innovation

The entrepreneurial mindset is

the ability to recognize opportunity, be aware of your abilities, think outside the box and take a risk

the runway that their startup has left:

the amount of time remaining in which a startup must either achieve lift-off or fail

MVPs require

the courage to put one's assumptions to the test

Break Even Point

the point where a startup business income equals it's expenses

Due Diligence

the process of investigating a business or product to determine it's value

Venture Value Creation

the process of writing out a broad description of your business concept and determining its possible value in the marketplace

What differentiates the success stories from the failures is that

the successful entrepreneurs had the foresight, the ability, and the tools to discover which parts of their plans were working brilliantly and which were misguided, and adapt their strategies accordingly

Acquisition Cost

the total cost of acquiring a business or asset, including purchase price and due diligence costs of travel, accounting, product research, etc...

In a concierge MVP

this personalized service is not the product but a learning activity designed to test the leap-of-faith assumptions in the company's growth model

As we saw in the Facebook story

two leaps of faith stand above all others: the value creation hypothesis and the growth hypothesis

success theater

using the appearance of growth to make it seem that they are successful

vanity metrics in contrast to the nuts-and-bolts usefulness of actionable metrics

which help to analyze customer behavior in ways that support innovation accounting.

Entrepreneurs accept a high level of risk

with no certainty of success

Rewards of being an entrepreneur are

you manage your own time, personal fulfillment, ownership, unlimited salary with financial rewards

Zoom-in Pivot

In this case, what previously was considered a single feature in a product becomes the whole product

JV Agreement

Regardless of the legal structure used for the JV, the most important document will be the JV agreement that sets out all of the partners' rights and obligations. The objectives of the JV, the initial contributions of the partners, the day-to-day operations and the right to the profits (and responsibility for losses) of the JV are all set out in this document. It is important to draft it with care, to avoid litigation down the road.

Three important R's for an entrepreneur are

Relationships, Results and Rewards

minimum viable product (MVP)

The MVP is that version of the product that enables a full turn of the Build-Measure-Learn loop with a minimum amount of effort and the least amount of development time

A Limited liability corporation (LLC)

The United States specific form of a private limited company. It is a business structure that combines the pass-through taxation of a partnership or sole proprietorship with the limited liability of a corporation

If too much analysis is dangerous but none can lead to failure, how do entrepreneurs know when to stop analyzing and start building?

The answer is a concept called the minimum viable product

Acting as if these assumptions are true is a classic entrepreneur superpower

They are called leaps of faith precisely because the success of the entire venture rests on them

cohort analysis

This is one of the most important tools of startup analytics. Although it sounds complex, it is based on a simple premise. Instead of looking at cumulative totals or gross numbers such as total revenue and total number of customers, one looks at the performance of each group of customers that comes into contact with the product independently. Each group is called a cohort

Business Architecture Pivot

This pivot borrows a concept from Geoffrey Moore, who observed that companies generally follow one of two major business architectures: high margin, low volume (complex systems model) or low margin, high volume (volume operations model).

A startup's earliest strategic plans are likely to be hunch- or intuition-guided, and that is a good thing

To translate those instincts into data, entrepreneurs must, in Steve Blank's famous phrase, "get out of the building" and start learning

the pivot

Upon completing the Build-Measure-Learn loop, we confront the most difficult question any entrepreneur faces: whether to pivot the original strategy or persevere. If we've discovered that one of our hypotheses is false, it is time to make a major change to a new strategic hypothesis

Bootstrapping

Using your existing owned resources such as content, finances, physical assets and personnel to start your business instead of seeking outside funding.

customer archetype

a brief document that seeks to humanize the proposed target customer

Elevator Pitch

a brief, carefully constructed explanation of a business or business opportunity that includes quick visual description, top current achievements, and future plan. Should be less than 60 seconds and use words carefully chosen to intrigue a listener in conversation

At its heart, a startup is

a catalyst that transforms ideas into products

Early adaptors

a customer base that is quickly involved or purchase new concepts and products typically due to a keen interest in the product or possible prior knowledge of new products

system innovation accounting

a disciplined, systematic approach to figuring out if we're making progress and discovering if we're actually achieving validated learning

Corporation

a legal entity formed by filing documents with state and national government to carry out business

innovation accounting

a quantitative approach that allows us to see whether our engine-tuning efforts are bearing fruit

Business Plan

a written document describing aspects of a business venture

the three A's of metrics:

actionable, accessible, and auditable

Full launch

all aspects of business to full power with full marketing push

Sole Proprietorship

also known as the sole trader or simply proprietorship, is a type of business entity that is owned and run by one natural person and in which there is no legal distinction between the owner and the business

Effectuation

an entrepreneurial approach that emphasizes creating opportunity or sales by leveraging existing resources and relationships

Accelerator

an organization that supports a start up business

entrepreneurs can fall victim to

analysis paralysis, endlessly refining their plans

visionary early customers

called early adopters

The inability to make a decision and move ahead

can be detrimental to an entrepreneur's success

Intrapreneurship inside a corporation requires a

climate of innovation, encouragement, initiative, rewards, and willingness to rethink existing ways of doing things. An example of this is Google employees get 20% free focus time for job imagination and innovation

Down sides of being an entrepreneur are

constant obstacles, financial insecurity, long hours and strain on personal relationships

Intrapreneurship is

creating an entrepreneurial environment and culture inside a large corporation by combining creativity and risk with corporate discipline structures

Entrepreneurs innovate to earn profits through

creative production and distribution

Every entrepreneur eventually faces an overriding challenge in developing a successful product:

deciding when to pivot and when to persevere

Successful entrepreneurs

do not give up at the first sign of trouble, nor do they persevere the plane right into the ground. Instead, they possess a unique combination of perseverance and flexibility

Innovation accounting works in three steps:

first, use a minimum viable product to establish real data on where the company is right now. Second, startups must attempt to tune the engine from the baseline toward the ideal. This may take many attempts. the third step: pivot or persevere

poor quantitative results

force us to declare failure and create the motivation, context, and space for more qualitative research. These investigations produce new ideas—new hypotheses—to be tested, leading to a possible pivot

A minimum viable product (MVP)

helps entrepreneurs start the process of learning as quickly as possible

Joint Venture (JV)

is a business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task. This task can be a new project or any other business activity. In a joint venture (JV), each of the participants is responsible for profits, losses and costs associated with it. However, the venture is its own entity, separate and apart from the participants' other business Interests.

Limited liability partnership (LLP)

is a partnership in which some or all partners (depending on the jurisdiction) have limited liabilities. It therefore exhibits elements of partnerships and corporations. In an LLP, one partner is not responsible or liable for another partner's misconduct or negligence

​S corporation​ (sometimes referred to as an ​S Corp​)

is a special type of corporation​ created through an IRS tax election. An eligible domestic ​corporation​ can avoid double taxation (once to the ​corporation​ and again to the shareholders) by electing to be treated as an ​S corporation​.

"This Build-Measure-Learn feedback loop

is at the core of the Lean Startup model"

A split-test experiment

is one in which different versions of a product are offered to customers at the same time

Every business plan begins with a set of assumptions

it lays out a strategy that takes those assumptions as a given and proceeds to show how to achieve the company's vision

For a report to be considered actionable

it must demonstrate clear cause and effect

a customer segment pivot

keeping the functionality of the product the same but changing the audience focus

The US is the

largest venture capital market accounting for about 20% of the US GDP

the riskiest elements of a startup's plan, the parts on which everything depends

leap-of-faith assumptions

Getting an unwanted result after trying something is defined as a

learning experience

Without a formal growth model

many companies get caught in the trap of being satisfied with a small profitable business when a pivot (change in course or strategy) might lead to more significant growth. The only way to know is to have tested the growth model systematically with real customers

Customer Need Pivot

As a result of getting to know customers extremely well, it sometimes becomes clear that the problem we're trying to solve for them is not very important. However, because of this customer intimacy, we often discover other related problems that are important and can be solved by our team

The importance of basing strategic decisions on firsthand understanding of customers is one of the core principles that underlies the Toyota Production System

At Toyota, this goes by the Japanese term genchi gembutsu

Executive Summary/Company Description

Business Description, Market Strategies, Competitive Analysis, Design and Development Plan, Operations and management Plan, Financial Projections including startup funds resources...These elements are included in writing a