MGMT 340: [ Lean Start-Up ]

economies of scale

Because the Japanese car market after the war was so small and capital was not available, they were unable to do mass production and take advantage of ______________.

faster than anyone else can

The reason to build a new team to pursue an idea is that you believe you can accelerate through the Build-Measure-Learn feedback loop __________.

Vanity metrics

_________ can allow entrepreneurs to form false conclusions and live in their own private reality.

learning

__________ is the oldest excuse in the book for failure of execution.

Innovation accounting

____________ enables startups to prove objectively that they are learning how to grow a sustainable business.

Innovation Accounting

______________ , a quantitative approach that allows us to see whether our engine-tuning efforts are bearing fruits.

strategy

If the numbers for early experiments don't look promising, there is clearly a problem with the _________.

mentors

If the performance of the mentor and mentee are linked, it will ensure that the ___________ take education seriously.

a crisis

If you reach the limits for new customer growth (they are exhausted) and the growth suddenly slows, it provokes ______________.

advertising

Many viral products do not charge customers directly but rely on indirect sources of revenue such as _________________.

product/market fit

Marc Andreessen coined the term ___________ to describe the moment when a startup finally finds a widespeard set of customers that resonate with its product.

cost per acquisition (CPA)

Suppose and advertisement costs $100 and causes fifty new customers to sign up for the service. This ad has a ____________ of $2.00.

How would you define a startup success/startup productivity?

Systematically determining the correct things to build, or learning how to solve a customer's problem

True

T/F A solid process lays the foundation for a healthy culture, one where ideas are evaluated by merit and not by job title.

True

T/F Companies are able to design, develop, and ship out new features one at a time, taking advantage of the power of small batches.

True

T/F In the Lean Startup model, an experiment is more than just a theoretical inquiry; it is also a first product.

True

T/F One of the most vexing aspects of the minimum viable product is the challenge it poses to traditional notions of quality.

False

T/F Pivots are a permanent fact of life for any growing business. Unless they achieve initial success.

True

T/F Startup organizations must attempt to tune the engine from the baseline toward the ideal.

True

T/F Startup success can be engineered by following the right process, which means it can be learned, which means it can be taught.

True

T/F Startups need to conduct experiments that help determine what techniques will work in their unique circumstances.

False

T/F Strategic planning takes months to complete and experiments should not begin until it is completed.

True

T/F The amount of time a company can count on holding on to market leadership to exploit its earlier innovations is shrinking.

False

T/F The author Eric Ries explains "hard work and perserverance does lead to success.

True

T/F The author felt he had committed the biggest waste of all - "building a product that our customers refused to use."

True

T/F We must be willing to set aside our traditional professional standards to start the process of validated learning as soon as possible.

True

T/F We must learn the truth about which elements of our strategy are working to realize our vision and which are just crazy.

False

T/F With proper managerial structure innovation is a top-down, centralized, and predictable thing that can be managed.

to test fundamental business hypothesis

The MVP's ultimate goal is to ________________.

value

The __________ hypothesis tests whether a product or service really delivers value to customers once they are using it.

engine of growth

The ______________ is the mechanism that startups use to achieve sustainable growth.

churn rate

The __________________ is defined as the fraction of customers in any period who fail to remain engaged with the company's product.

synthesis

The author adopted the view that their job was to find ________________ between their vision and what customers would accept.

vision

The goal of every startup experiment is to discover how to build a sustainable business around the entrepreneur's ______________.

you have zero revenue, zero customers, and zero traction

The irony is that it is often easier to raise money or acquire other resources when you have _________________.

waste

The lesson of the minimum viable product is that any additional work beyond what was required to start learning is ___________, no matter how important it might have seemed at the time.

small batches

The one envelop at a time approach is called "single-piece flow" in lean manufacturing. It works because of the surprising power of _______________.

Who are early adopters and why are they important to validated learning?

The product must be sold to early adopters, a special breed of customer who prefer to be the first ones using a product, before it can be sold to the mass market. The lessons about what works and what doesn't come from these early adopters.

What is a startup's strategy?

The strategy is to figure out the right questions to ask First challenge: Build an organization that can systematically test these assumptions. Second challenge: Perform rigorous testing without losing sight of the company's overall vision.

pivot

When a company _______, it starts the process all over again, reestablishing a new baseline and then tuning the engine from there.

classic startup trap

When an organization is successful in their early efforts and ignore the principles behind their success, they have fallen into the ______________.

pivot

Without a formal growth model, many companies get caught in the trap of being satisfied with a small profitable business when a ______ might lead to more significant growth.

Delay

______________ prevents many startups from getting the feedback they need.

worse, better

The author finds that when switching to validated learning, it feels ________ before it feels ___________.

quality problems can be identified much sooner

The biggest advantage of working in small batches is that ___________________.

What risks does the company take when expanding its product mix?

The company may incur unwieldy development expenses. The market may not accept the new product. Unsuccessful products can damage the brand. all of the above

Which of the following is the main component of a business model?

The cost model and the revenue model

A highly priced product will usually be perceived as better quality by the customer.

True

A pivot requires that we keep one foot rooted in what we've learned so far, while making a fundamental change in strategy in order to seek even greater validated learning.

True

An important end result of the business planning process is that it allows the entrepreneur to articulate the business opportunity to various stakeholders in the most effective manner

True

An important end result of the business planning process is that it allows the entrepreneur to articulate the business opportunity to various stakeholders in the most effective manner.

True

What four questions should you ask when determining what to build?

1. Do consumers recognize that they have a problem you are trying to solve? 2. If there was a solution, would they buy it? 3. Would they buy it from us? 4. Can we build a solution to their problem?

The S-curve is a forecasting tool designed to measure the power of competition.

True

You will likely fail if you start a business in an area you have no experience in

True

Runway

True measure of startup's runway is how many pivots they can make prior to running out of money. Pivoting faster can extend the runway.

Engines of growth

________________ are designed to give startups a relatively small set of metrics on which to focus their energies.

This approach leases to chaos more often than it does success.

a "just do it" attitude

One form of primary research is _____

a focus group

In a survey of members of Generation Z, ________ percent said they would rather save money than spend it.

57

uncertainty

A startup is a human institution designed to create a new product or service under conditions of extreme __________.

Pivot(definition)

A structured course correction designed to test a new fundamental hypothesis about the product, strategy and engine of growth. It requires that we keep one foot rooted in what we have learned so far, while making a fundamental change in strategy in order to seek even greater validated learning.

A proper organization is critical to making a business plan easy to read. Thus, it should include which of the following?

Appendicies SubSections exhibits Major Sections all of the above

Lean Startup

Application of lean thinking to the process of innovation

The author Eric Ries explains "hard work and perserverance does lead to success.

False

Vanity Metric

Common metrics used to evaluate startups (gross revenue, number of customers, etc.) These do not prove Value or Growth Engines are working.

W. Edwards Deming View of Customer

Customer is the most important part of the production process - should focus all energy on producing outcomes the customer finds valuable.

Wizard of Oz testing

Customers believe they are interacting with the actual product, but behind the scenes human beings are doing the world.

Early Adopters

Customers who feel the need for the product most acutely, tend to forgive mistakes and eager to give feedback.

Learning Milestone

Data collected from MVP experiments that provide baseline data on customer reaction to product or service. Examples include conversion rate, sign-up or trial rate, customer lifetime value, etc.

Lean thinking

Defines value as providing benefit to the customer, anything else is waste. In a manufacturing business, customers don't care how the product is assembled, only that it works correctly. But in a startup, who the customer is and what the customer might find valuable are unknown, part of the very uncertainty that is an essential part of the definition of a startup.

Accessible Metrics

Departments often spend their energy learning how to use data to get what they want rather thanks genuine feedback to guide their future actions.

Describe product/market fit.

Describes the moment when a startup finally finds a widespread set of customers that resonate with its product.

During the incubation phase of the creative process, the entrepreneur might do all of the following except which of the following to let ideas "marinate" in his mind?

Don't allow one's self to daydream.

Business planning, in a literal sense, begins when you start to look for external funds.

False

It is important to lower your gross margins early in the venture's life

False

Low-tech businesses, such as convience stores, are not typically considered a part of entrepreneurship because of their lack of innovation and intellectual property.

False

Most tools from General Managemnet are designed to flourish in the harsh soil of extreme uncertainty in which startups thrive.

False

No one knows about your strengths better than you do.

False

Raising venture capital is a critical step for most successful ventures

False

The suthor explains "hard work and perserverance does lead to success.

False

To be successful, a company must possess a unique and novel idea

False

what is not cited by the chapter as a primary reason that entrepreneurs choost to go into business for themselves

Fame Innovation Financial success\ Independence Self-realization

The focus of which of the following step in the creative process is to transform the idea into reality?

Implementation

In general, the most important source of capital for a new entrepreneurial venture is which of the following?

Informal Investors Venture Capitalists Banks Incubators

Which of the following is not related to Dickson's eight primary means to expand globally?

Initial Public Offering

The biggest advantage of working in small batches is that ___________________________________.

Quality problems can be identified much sooner

Small Batches

Quality problems can be identified much sooner. Ensures that a startup can minimize the expenditure of time, money and effort that ultimately turn out to have been wasted.

All innovations need to be ____________?

Quantifiable

Leap of Faith Questions

Questions that can validate either your Value Hypothesis or your Growth Hypothesis.

Platform Pivot

Refers to a change from an application to a platform or vice versa

How does the US Government support entrepreneurship?

Registration of a new business is a relatively short process The level of regulations is generally low US taxes are lower than other nations All of the above None of the above

Which of the following entrepreneurs was one of the pioneers of the biotechnology industry?

Robert Noyce Author Blank George Gendron Robert Swanson

All businesses exist to do what?

Solve a problem.

True

T/F If we do not know who the customer is, we do not know what quality is.

False

T/F If you are building the wrong thing, optimizing the product or its marketing will yield significant results.

True

T/F Lean Startup is a principled approach to new product development.

With all pivots, we have to get back to the basics and start the ________________ over.

innovation accounting cycle

Just do it attitude

this approach leases to chaos more often than it does success.

Low capital requirements, cost advantages that are not related to company size, and the lack of brand loyalty are considerations regarding the ___

threat of new entrants to the industry

Everyone who goes into business is actually ________ people in one?

three

Where do most entrepreneurs get the idea for their business

through brainstorming from mentors from exposure to an industry by reading entrepreneurship books from venture capitalists

Upon completing the Build-Measure-Learn loop, startups confront the most difficult question any entrepreneur faces:

to pivot or persevere

The higher-quality of the existing playbook is, the easier it will be for it to evolve over time.

true

The importance of small-batch approach produces a finished product every few seconds, whereas the large-batch approach must deliver all the products at once, at the end.

true

The innovation accounting framework makes it clear when the company is stuck and needs to change direction.

true

Using focus groups is an example of primary research.

true

We must be willing to set aside our traditional professional standards to start the process of validated learning as soon as possible.

true

The imperative for new startups to innovate is ______________.

unrelenting

The critical first question for any lean transformation is:

which activities create value and which are a form of waste?

"It's not your business you have to fear losing. It's something much bigger than that. It's _______?

your self

Genchi Gembutsu

"Go and see for yourself." Most important part of lean manufacturing vocabulary, critical part of the Toyota Way. Do not rely on anything other than what you see firsthand.

Genchi Gembutsu

"Go and see for yourself."=business should be based on deep firsthand knowledge. Until you have seen something for yourself firsthand, you can't be sure you really understand any part of the business problem.

Minimum Viable Product Design Principle

"Remove any feature, process or effort that does not contribute directly to the learning you seek."

The young, job-creating small companies are known as ________

"gazelles"

_______ thinking is the ability to see similarities and ________ thinking is the ability to see differences among various data and events.

. Convergent; divergent

4 Questions for Product Development

1) Do customers recognize they have the problem you are trying to solve? 2) If there was a solution, would they buy it? 3) Would they buy it from us? 4) Can we build a solution for that problem?

2 Dangers of Market Research and the Solution

1) Just-do-it types who start building after only cursory customer conversations; 2) Analysis paralysis types. Answer is to keep researching until you can conceive of a Minimum Viable Product to test, but to stop researching at that point and test the MVP.

3 Steps of Innovation Accounting

1) Minimum Viable Product establishes real data to set baseline; 2) Attempt to tune engine from baseline to ideal; 3) If no more experiments can move closer to the ideal decision point: pivot or persevere.

What percent of American, four-year colleges have courses in entrepreneurship?

13 43 55 60 78

Generally speaking, what is the lowest level of total revenue in which a market becomes attractive for new entrants?

15 million 20 million 25 million 30 million 35 million

The stock market collapse that led to the Great Depression occurred in what year?

1928 1929 1930 1931 1932

By 2009, what percentage of the world's population had become Internet users?

2 16 24 60 57

According to the GEM model, how many sets of activities create the basis for national economic growth?

2 3 4 5 6

According to the chapter, people of Hispanic descent will comprise 25% of the US population by what year?

2020 2030 2035 2040 2050

It is estimated that ________ percent of new businesses fail within two years, while ________ percent fail within five years.

21,51

How many business incubators were in the US in 2003?

240 764 850 1113 2076

What was the increase in Benchmark Capital's investment of $5 million in eBay?

30 fold in 2 years 300 fold in 2 years 700 1500 4000

analysis paralysis

A common problem entrepreneurs can fall victim to is _______, endlessly refining their plans.

Engine of Growth Pivot

A company changes its growth strategy to seek faster or more profitable growth.

Innovation factory

A company's only sustainable path to long-term economic growth is to build an 'innovation factory' that uses lean startup techniques to create disruptive innovations on a continuous basis.

Define "startup"

A human institution designed to create a new product or service in conditions of extreme uncertainty

What is a startup according to Eric Ries?

A human institution designed to create a new product or service under conditions of extreme uncertainty.

Every ____________ business reaches a point where it pushes beyond its owner's comfort zone?

Adolescent

pivot or persevere

After the startup has made all the micro changes and product optimizations it can to move its baseline toward the ideal, the company reaches a decision point. At this point they _________________.

Which of the following question(s) should you consider before entering a lawsuit to protect intellectual property?

All of these

The Lean Startup model offers a way to test an organization's hypotheses __________.

All of these are correct

The more _________ a system is, the more effective your Franchise Prototype will be?

Automatic

How do we search?

Begin with an educated guess, Change guesses into facts using experiments, Move through the loop quickly.

Of the following differentiators, which most commonly determines the success of a company?

Better execution than the competition

Which of the following industries was the prime example of venture capital fueling the pace of commercial innovation?

Semi Conductors Mini- computers Biotechnology Personal Computers All of the Above

Which of the following is NOT one of the forces driving the entrepreneurial trend in our country?

Shift away from a service economy.

What does SBIR stand for?

Small Business Innovation Research.

The one envelop at a time approach is called "single piece flow" in lean manufacturing. It works because of the surprising power of ______________

Small batches

Which of the following is not one of the three types of systems?

Starter System

School of One

Students have daily playlists of their learning tasks that attuned to each student's earning needs.

Through Repeat Purchase or Use

Subscriptions or Voluntary Repurchases

one

Successful startups usually focus on ______ engine(s) of growth, specializing in everything that is required to make it work.

False

T/F If you are causing (or missing) quality problems now, the resulting defects won't slow you down later.

False

T/F Innovation accounting will still work even if a startup is being misled by vanity metrics such as gross number of customers and so on.

True

T/F Most of the time customers don't know what they want in advance.

False

T/F Most tools from general management are designed to flourish in the harsh soil of extreme uncertainty in which startups thrive.

True

T/F New start-up organizations should be committed to making mistakes.

True

T/F Once IMVU's efforts were aligned with what customers really wanted, their experiments were much more likely to change their behavior for the better.

False

T/F The author agrees that a good plan, a solid strategy, and thorough market research works for startups.

What is the key question a startup should revolve around answering?

Can we build a sustainable business around this set of products and services? Approach this question as a science experiment

One of the Most Important Discoveries of the Lean Manufacturing Movement

Can't trade quality for time. If you are causing or missing quality problems now the result defects will slow you down later.

When a venture capital firm invests in a company, they typically except what in return:

Cash Shares of the company Debt A personal guarantee intellectual property

Pivot

Change in strategy when tests prove that Growth or Value Engine cannot maintain a viable business under current strategy.

When an organization is successful in their early efforts and ignore the principles behind their success, they have fallen into the ______________________.

Classic startup trap

Sustainable AND Disruptive

Companies must learn to master these 2 concepts

In the development plan, which issue should be the focus?

Devlopment strategy and timeline

Which of the trends below converged to spark the Internet revolution of the 1990's?

Digital Technology, Information Technology, Entrepreneurship

Technology Pivot

Discovering a technology to achieve the same solution by using a completely different technology.

4 questions

Do consumers recognize that they have the problem you are trying to solve? If there was a solution, would they buy it? Would they buy it from us? Can we build a solution for that problem

Which of the following is not one of the 10 D's of successful Entrepreneurs

Driven Details Dedicated Distribute Dream

The Paid Engine of Growth

Each customer pays a certain amount of money for the product over his or her lifetime as a customer.

Baby boomers" is the term used for Americans born in:

Early 1920's Early 1930's Mid 1940's and Early 1960's

The point is not to find the average customer nut to find _____________ the customers who feel the need for the product nost acutely.

Early adopters

The more specific the symptoms are, the _________ it will be for everyone to recognize when it's time to schedual a Five Whys meeting.

Easier

True

T/F The challenge of entrepreneurs is to find ways to achieve the same amount of validated learning at lower cost or in a shorter time.

True

T/F The goal of a startup is to figure out the right thing to build - the thing customers want and will pay for - as quickly as possible.

True

T/F The higher-quality of the existing playbook is, the easier it will be for it to evolve over time.

True

T/F The importance of small-batch approach produces a finished product every few seconds, whereas the large-batch approach must deliver all the products at once, at the end.

Growth Hypothesis

Tests how new customers will discover a product or service.

Value Hypothesis

Tests whether product or service really delivers value to customers once they use it.

tests

The "growth hypothesis" _______ how new customers will discover a product or service.

tests

The "value hypothesis" __________ whether a product or service really delivers value to customers once they are using it.

continuous

The Build-Measure-Learn feedback loop is a __________ process.

According to the survey cited in this chapter, which of the following was not one of the most important innovations since 1980?

The Internet Cell phones Personal Computers Digital Email Imagery

customers often don't know what they want.

The Lean Startup Model often works because _______________.

thoroughly immediately rigorously

The Lean Startup model offers a way to test an organization's hypotheses __________.

the challenges it faces

The Lean Startup works only if we are able to build an organization as adaptable and fast as ____________.

Why are small batches important?

Ensures that a startup can minimize the expenditure of time, money, and effort that ultimately turns out to have been wasted. Lets people discover the truth faster.

Which personality did Sarah say that she did not have?

Entrepreneurial

The _________ is the dreamer in us?

Entrepreneurial personality

Entrepreneurship

Entrepreneurs are everywhere (anyone creating product or service under extreme uncertainty). "Entrepreneur" should be a job title in all companies. (Principles 1 and 2 of Lean Startup).

managerial discipline

Entrepreneurship requires a ______________ to harness an entrepreneurial opportunity.

Who was lean startup first proposed by in 2008?

Eric Ries.

The truth is every engine of growth __________________.

Eventually runs out of gas

Tuning the engine

Every product development, marketing other initiative that a startup undertakes should be targeted at improving one of the drivers of it growth models.

Which of the following is the most important part of the business plan?

Executive Summary

A strategy that attempts to capture the first-mover's advantage is usually the most inexpensive.

False

According to IDEO, the first step in the creation of a product is to make a set of assumptions.

False

An entrepreneur should try to broaden his or her customer base definition at the early stages of developing an idea.

False

Anyone who wishes to pursue an entrepreneutrial venture would be wise to take at least three of the widely distributed entrepreneur attribute tests beforehand

False

Approximately 66% of all businesses start in the owner's home, but fail to grow primarily because the entrepreneur hires too many full-time workers.

False

As mentioned in earlier chapters and reiterated in this chapter, "cost plus" pricing is the best strategy, because it wastes the least amount of time.

False

Asking leading questions is the best method of discovering the appeal of a potential product or concept.

False

COGS is a cost measure that applies to companies that manufacture tangible products; COGS cannot be computed for firms that deal exclusively in a service-based revenue model

False

Customer and market trends change too rapidly to be of any predictive use for an entrepreneur.

False

Entrepreneurs often enter markets and find, to their surprise, either that direct competition does not exist, or that it is complacent and slow to react.

False

Entrepreneurs should always seek to own the resources that they utilize while building a comapny./

False

Entrepreneurship reduces the overall health of an economy by destroying jobs in traditional industries

False

Examining how customers currently acquire similar products is a poor use of time for an entrepreneur launching an innovative, new product.

False

Exporting is one of the most expensive ways to enter new markets.

False

For a company that goes public, the founding entrepreneur typically owns a majority of the shares of the corporation

False

For fledgling entrepreneurs there are few free resources avaliable for input and guidance

False

Franchising speeds growth, but lowers a company's revenue overall.

False

General Motors became the first company to earn over one billion dollars in a single year on December 31, 1985.

False

Hiring a corporate lifer who is used to working in one functional area and has experience with comprehensive administrative support is always the right strategy for a startup firm.

False

If you are building the wrong thing, optimizing the product or its marketing will yield significant results.

False

In 2005, North American incubators assisted more than 350,000 startup companies

False

Innovation accounting will still work even if a startup is being misled by vanity metrics such as gross number of customers and so on.

False

Non-profit organizations do not need revenue to operate.

False

most extreme position

The best way to influence the boss and get what you want is to take the ___________ possible.

which activities create value and which are a form of waste?

The critical first question for any lean transformation is:

a clear-eyed and objective mind-set

The decision to privot requires a ___________________.

External Customer Data

The facts that we need to gather about customer exist only outside the building

plan

The first problem for startups failure is the allure of a good _______.

larger

The focus of each team is iterating with customers as rapidly as possible, running experiments, and then using validated learning to make real-time investment decisions about what to work on. No team is _________ than five people.

Actionable Metrics(definition)

The kind of metrics we use to judge our business and our learning milestones

Since the executive summary is the most important part of the finished plan, an entrepreneur should write that section first, in order to frame the rest of the plan.

False

Startups that tend to focus on multiple markets are the most successful

False

Venture Capital is a source of growth funding exclusively for technology companies with the potential for rapid, scalable growth.

False

Whether a company is successful is largely a matter of luck

False

With proper management struture innovation is a top-down, centralized, and predictable thing that can be managed.

False

Yahoo! Inc.'s IPO set the all-time record, in terms of capital raised, for Silicon Valley companies.

False

having multiple layers of management is the best way to ensure that a startup is flexible and quick to reack to changes

False

As a Side Effect of Products Usage

Fashion or status, drive awareness of themselves whenever they are used.

What is the root cause of most small business failure?

Fatal Assumption

When an organization starts making cuts that result in a slowdown of the ___________________, all they have accomplished is to help the startup go out of business more slowly.

Feedback Loop

The _________ hypothesis tests how new customers will discover a product or service.

Growth

Which of the following is not in the contents of marketing plan?

Growth Strategy

The Land of the Living Dead

Happens when a company has achieved a modicum of success but is not living up to the expectations of its founders and investors. Neither growing or dying.

Which of the following is not a question to ask to evaluate an industry?

How sparse is the industry?

At the root of every seemingly technical problem is a ___________ problem.

Human

Startup Defined

Human institution designed to create a new product or service under conditions of extreme uncertainty.

built

In modern economy, almost any product that can be imagined can be built. The more pertinent question is "Should this product be _____?"

Having a low-quality product can _____________ learning when the defects prevent customers from experience (and giving feedback on) the product's benefits.

Increase

What opportunity do you lose when choosing to use Technology Licensing as a means to grow?

Increase your brand name recognition

"__________ is the signature of a bold, imaginative hand"?

Innovation

What step is after Organizational Strategy in the business Development Program?

Management Strategy

Minimizing the Total Time

Many people have training that emphasizes one element of the feedback loop. But having the best business idea or the best designed product isn't enough; we need to focus our energies on minimizing the total time through this feedback loop.

Which of the following influence a company's revenue?

Markers and Headers

How can entrepreneurs minimize risk?

Market research beta testing focus groups All of the above

Who reasoned that capitalism would be inevitably destroyed by elites?

Marx Whyte Lynen Schumpeter

A __________ business knows how it got to be where it is, and what it must do to get where it wants to go?

Mature

Turn-Key Revolution started in what fast food restaurant?

McDonalds

Which of the following is NOT a common category in the critical risks section?

Offering of financing

more

On an average each person who signs up will bring, on an average _______ than one other person with him or her.

Minimum Viable Product

Once clear on the leap-of-faith decisions, the first step is to enter the build phase as quickly as possible with a minimum viable product - MVP. The MVP is that version of that 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.

Sandbox

Part of existing product or service that teams are allowed to experiment on (while remainder of product or service is "off limits" for experimentation). Primarily for established businesses and products.

Commonly outsourced responsibilities include all of the folloowing except_______________________________

Payroll Accounting Legal Work Janitorial Services Customer Service

Just-In-Time

Reduces the need for in-process inventory

MVP rule

Remove any feature, process or effort that doesn't contribute directly to the learning you seek.

Which hemisphere of the brain is responsible for the body's emotional, intuitive, and spatial functions?

Right hemisphere

____ lateral thinking is somewhat unconventional and unstructured.

Right-brained

Startup Strategy

Role of strategy is to help figure out the right questions to ask. Build an organization that can test theses assumptions systematically. Perform that rigorous testing without losing sight of the company's overall vision.

A startup is a human institution designed to create a new product or service under________________.

conditions of extreme uncertainty

A startup is a human institution designed to create a new product or service under ____________________.

conditions of extreme uncertainty.

The Build-Measure-Learn feedback loop is a __________ process.

continuous

A ________ is an exclusive right that protects the creators of original works such as literary, dramatic, musical, and artistic works

copyright

Melinda and John Perez, both corporate attorneys in New York City, have grown tired of their lengthy daily commute, the stress of their jobs, and the overbearing policies of their employers. They have decided to leave their six-figure jobs and together open a guide service in Wyoming. Melinda and John are examples of ________.

corporate dropouts and copreneurs

A(n) ________ group involves enlisting a small number of potential customers to get feedback on specific issues about the company's product or service.

focus

general management

The reason is that in _______________, a failure to deliver results is due to either a failure to plan adequately or failure to deliver results is due to either a failure to plan adequately or a failure to execute properly.

Leap-of-faith Assumptions

The riskiest elements of a startup plan. Two most important are value hypothesis and the growth hypothesis. MAKE OR BREAK YOUR BUSINESS.

The Runaway

The true measure of this is how many pivots a startup has left: the # of opportunities it has to make a fundamental change to its business strategy.

Large Batches

The work that goes into the development of a new product proceeds on a virtual assembly line.

The more products you sell through your distribution channels, the greater your negotiating power.

True

A simple, flat organization chart is often useful to visualize what roles you have filled and what gaps remain.

True

A startup will likely fail if the entrepreneur ignores feedback from his or her customers.

True

A three-ring binder filled with initial intelligence can be a good starting point in the business planning process.

True

According to ACNielsen International Research, the most common reason for a person's desire to start a business is to increase his or her income.

True

An 'A' entrepreneur with a 'B' idea is better than a 'B' entrepreneur with an 'A' idea."

True

An engine of growth can be defined quantitatively.

True

Entrepreneurs benefit from developing and following a coherent geographic expansion strategy

True

Entrepreneurs need a personal stake in the outcome of their creations.

True

Entrepreneurs should humbly test their theories and approach to see what the market thinks. Listen to the feedback honestly. And continue to innovate in the directions they think will create meaning in the world.

True

Entrepreneurship did not grow very much after the Great Depression, until it began increasing in the 1970's.

True

Entrepreneurship is a process that can be learned

True

Going global increases risk and requires capital.

True

It's a common misperception that a business plan is primarily used for raising capital.

True

It's possible for a company to have a positive cash flow and be unprofitable

True

Lean Startup is a principled approach to new product development.

True

Lowering COGS allows companies to reach their break even date earlier.

True

Maintaining trade secrets is one way to protect a company's competitive advantage.

True

Market analysis looks at current trends in the market; anticipating future trends is reserved for later steps in the business planning process.

True

Markets that truly do not have competition are the most profitable, though such markets are nearly impossible to find.

True

Mergers and acquisitions are likely to increase a company's survival rate when used as a means for growth.

True

More than one engine of growth operate in a business at a time.

True

Most of the time customers don't know what they want in advance.

True

Secrecy about one's idea is more likely to hurt the development of the business than help it

True

Small batches normally allow new versions of products to be released to customers on a monthly, quarterly, or yearly cycle.

True

Small batches normally allow new versions of products to be released to customers on a monthly, quaterly, or yearly cycle.

True

Startup organizations must attempt to tune the engine from the baseline toward the ideal

True

The two types of startup capital are debt and equity

True

The vast majority of entrepreurs start their companies with their own personal savings.

True

There was a burst of venture capital backed startups in the last half of the 1960s.

True

Virtual companies are so called because they outsource much of their work.

True

We must be willing to set aside our traditional professional standards to start the process of validated learning as soon as possible.

True

We must learn the truth about which elements of our strategy are working to realize our vision and which are just crazy.

True

Lean Management requires treating work as a system and then dealing with the batch size and cycle time of the ___________.

Whole process

What is an engine of growth?

The mechanism that startups use to achieve sustainable growth. Sustainable growth is characterized by one simple rule: New customers come from the actions of past customers.

pivot

The more money, time, and creative energy that has been sunk into an idea, the harder it is to _________.

The sign of a successful pivot

The new experiments you run are overall more productive than the experiments you were running before

early adopters

The point is not to find the average customer but to find ___________: the customers who feel the need for the product most acutely.

Customer Segment Pivot

The product hypothesis is partially confirmed, solving the right problem, but for a different customer than originally anticipated.

Customer Need Pivot

The product hypothesis is partially confirmed: The target customer has a problem worth solving, just not the one that was originally anticipated.

Engine of Growth

The profit making engine of the business; every new version or feature of product, every new marketing innovation, all experiments are designed to tune the engine of growth.

The author finds that when switching to validated learning, it feels ________ before it feels ___________.

Worse; better

An important technique in brainstorming is to say:

Yes and Yes but Nice

The decision to privot requires a ___________________.

a clear-eyed and objective mind-set

The Lean Startup Model often works because _______________.

customers often don't know what they want.

To protect patent claims, an inventor should be able to verify and document the ____

date on which the idea was first conceived

_____________ prevents many startups from getting the feedback they need.

delay

Women in business still experience ________ as they attempt to break the "glass ceiling.

discrimination

Lean Startup is a scientific approach to manage ------ ------

disruptive innovation.

Lean thinking(thought process)

drawing on the knowledge and creativity of individual workers, shrinking batch sizes, just-in-time production and inventory control, acceleration of cycle times.

The truth is every engine of growth __________________.

eventually runs out of gas

The truth is every engine of growth _________________________.

eventually runs out of gas

If you are thinking about venturing into a market and cannot find any competitors, what should you do as an entrepreneur?

expand your definition of the market

One of the most important lessons of the scientific method: if you cannot ____, you cannot learn.

fail

One hallmark of successful entrepreneurs is the ability to ________.

fail intelligently

________________ defines value as providing benefit to the customer; anything else is waste.

lean thinking

The _______________ about how to build a sustainable business is the outcome of experiments.

learning

Most tools from general management are designed to flourish in the harsh soil of extreme uncertainty in which startups thrive.

false

Starting a company in a sphere of business that you really enjoy is not the best idea, in terms of the chance of success.

false

Startups are different - too much budget is as harmful as too little.

false

Structure is a prerequisite - it does guarantee success.

false

The author Eric Ries explains "hard work and perserverance does lead to success.

false

The author agrees that a good plan, a solid strategy, and thorough market research works for startups.

false

The first domain name on the Web was assigned in 1986.

false

With proper managerial structure innovation is a top-down, centralized, and predictable thing that can be managed.

false

Pivots are a permanent fact of life for any growing business. Unless they achieve initial success.

fasle

The process of determining whether an entrepreneur's idea is a viable foundation for creating a successful business is known as a ______

feasibility analysis

Time out of cash is relevant to ________ analysis.

financial feasibility

Without a ____________ many companies get caught in the trap of being satisfied with a small profitable business when a pivot might lead to more significant growth.

formal growth model

Having a low-quality product can _____________ learning when the defects prevent customers from experience (and giving feedback on) the product's benefits.

inhibit

The ability to apply creative solutions to problems and opportunities to enhance or to enrich people's lives is called ________.

innovation

__________ is the oldest excuse in the book for failure of execution.

learning

According to the chapter, what portion of all firms receives venture capital?

less than 0.1%

"Your business and your ______ are two totally separate things"?

life

To truly understand your customers, you MUST ___

listen carefully and adapt

For Under Armour, its top 10 suppliers manufacture less than half of its products. To Under Armour, supplier power is likely to be ______

low

What is the revenue strategy of both Walmart and Amazon?

low margins,high volumes

The Franchise model uses workers with the ________ level of skill?

lowest

Entrepreneurship requires a _____________ to harness an entrepreneurial opportunity.

managerial discipline

Entrepreneurship requires a ______________ to harness an entrepreneurial opportunity.

managerial discipline

A ________________ helps entrepreneurs start the process of learning as quickly as possible.

minimum viable product

The enactment of the Affordable Health Care Act in 2010 is an example of a ________ change.

political and legal

Entrepreneurs should focus on the key success factors that often lead a customer to buy one product over another, such as ___.

price, quality, and speed

Research into the operation of the human brain shows that each hemisphere of the brain ________.

processes information differently

Marc Andreessen coined the term ___________ to describe the moment when a startup finally finds a widespeard set of customers that resonate with its product.

product/market fit

the majority of small companies are concentrated in the ________ and ________ industries.

retail; service

Which of the following is true about all of the large, retail corporations in existence today?

roots in one geographic area

The one envelop at a time approach is called "single-piece flow" in lean manufacturing. It works because of the surprising power of _______________.

small batches

If the numbers for early experiments don't look promising, there is clearly a problem with the _________.

strategy

The author adopted the view that their job was to find ___________ between their vision and what customers would accept.

synthesis

The author adopted the view that their job was to find ________________ between their vision and what customers would accept.

synthesis

Upon completing the Build-Measure-Learn loop, startups confront the most difficult question any entrepreneur faces:

the pivot or persevere

Validated learning

the process of demonstrating empirically that a team has discovered valuable traits about a startup's present and future business prospects.

Define "validated learning"

the process of empirically demonstrating that a team has discovered valuable truths about a team's present and future business prospects. It is more concrete, more accurate, and faster than market forecasting or classical business planning.

This is true startup productivity: systematically figuring out _______________.

the right things to build

Harvard's Ted Levitt says that creativity is ________ new things, and innovation is ________ new things

thinking; doing

The Lean Startup model offers a way to test an organization's hypotheses _________

thoroughly, rigorously, and immediately

One of the most vexing aspects of the minimum viable product is the challenge it poses to traditional notions of quality.

true

Startup organizations must attempt to tune the engine from the baseline toward the ideal.

true

Startup success can be engineered by following the right process, which means it can be learned, which means it can be taught.

true

The amount of time a company can count on holding on to market leadership to exploit its earlier innovations is shrinking.

true

The author felt he had committed the biggest waste of all - "building a product that our customers refused to use."

true

the author finds that when switching to validated learning, it feels ________ before it feels ___________.

worse, better

What does the author say to the question "How do I get my people to do what I want"?

you can't

The irony is that it is often easier to raise money or acquire other resources when you have _________________.

you have zero revenue, zero customers, and traction

The irony is that it is often easier to raise money or acquire other resources when you have _________________

you have zero revenue, zero customers, and zero traction

What are the 5 why's and why are they used?

At the root of every seemingly technical problem is a human problem. The 5 why's provides an opportunity to discover what that human problem might be.

A High-Expectation Nascent Entrepreneuris an individual who expects to employ at least 50 employees within four years' time, through his or her new firm.

False

A head start is usually large enough to matter, and time spent in stealth mode- away from customers- is likely to provide a head start.

False

A majority of the businesses started each year will eventually go bankrupt

False

A penetration pricing strategy is one of the most simple and successful initial approaches for a new venture.

False

Technology licensing is a good opportunity to extend your brand image into new markets.

False

easier

The more specific the symptoms are, the _________ it will be for everyone to recognize when it's time to schedual a Five Whys meeting.

What is a minimum viable product?(according to Eric Ries)

The version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort.

A company will make a better growth decision by identifying the most lucrative PTA.

True

A serial entrepreneur is one who starts multiple companies one after the other

True

If we do not know who the customer is, we do not know what quality is.

True

If you do not fully understand your revenue drivers, you cannot achieve the highest success.

True

In aggregate, baby boomers create powerful trends for US businesses.

True

In general, the number of female entrepreneurs is 2/3rds the number of male entrepreneurs.

True

It is appropriate to discuss the geographic location of production facilities and how this enhances your firm's competitive advantage.

True

The irony if that it's often easier to raise money or acquire other resources when you have _______________.

0 revenue, 0 customers, 0 traction

What ratio best reflects the number of companies that begin with venture capital in hand

1 in 2 companies 1 in 20 companies 1 in 500 companies 1 in 2000 companies 1 in 10,000 companies

The 8 year survival rate for new businesses is

1% 12% 25% 50% 73%

The innovation accounting framework makes it clear when the company is stuck and needs to change direction.

True

The market enters a fast growth phase when customer awareness and demand exceed supply.

True

Concierge MVP

Type of Minimum Viable Product. One-on-one product or service you can offer to first customers (often delivered by entrepreneur personally) to get real-time feedback on experiments before scaling.

Smoke Test MVP

Type of Minimum Viable Product. Signup page for "wait list" but no product. Could be a video describing product (Dropbox example).

Prototype MVP

Type of Minimum Viable Product. This is an actual prototype of the product or service with minimum number of features to conduct one turn of the Build-Measure-Learn loop.

time

Under pressure, teams may feel that they don't have _______ to waste on analyzing root causes even though it would give them more time in the long term.

Minimum Viable Product

Version of the product that allows a full turn of the Build-Measure-Learn loop with minimum effort and least development time.

feedback loop

When an organization starts making cuts that result in a slowdown of the ___________, all they have accomplished is to help the startup go out of business more slowly.

Productivity

When people are used to evaluating their productivity locally, they feel that a good day is one in which they did their job well all day. The lean startup asks people to figure out the right thing to build - the thing customers want and will pay for - as quickly as possible.

When an organization starts making cuts that result in a slowdown of the ___________, all they have accomplished is to help the startup go out of business more slowly.

feedback loop

The Lean Startup methodology reconceives a startup's efforts as experiments that _______ its strategy to see which parts are brilliant and which are crazy.

test

The "growth hypothesis" _______ how new customers will discover a product or service.

tests

The Lean Startup works only if we able to build an organization as adaptable and fast as ____________________________.

the challenges it faces

Which of the following is not a critical component for a successful new business

the opportunity the management team the age of the lead entrepreneur the resources avaliable none of the above

Mainstream customers have ________ requirements and are much more demanding.

different

Mainstream customers have __________ requirements and are much more demanding.

different

The more specific the symptoms are, the _________ it will be for everyone to recognize when it's time to schedual a Five Whys meeting.

easier

Because the Japanese car market after the war was so small and capital was not available, they were unable to do mass production and take advantage of ______________.

economies of scale

A head start is usually large enought to matter, and tyime spent in stealth mode - away from customers -is likely to provide a head start.

false

Cocktail party entrepreneurs can provide you with invaluable advice about how to run a venture

false

_________ can allow entrepreneurs to form false conclusions and live in their own private reality.

vanity metrics

Startups have a true north, a destination in mind: creating a thriving and world-changing business. This is called a startup's _____.

vision

The goal of every startup experiment is to discover how to build a sustainable business around the entrepreneur's ______________.

vision

What are the two methods of forecasting future revenues, as stated in the chapter?

Comparable method and build up method

Through funded Advertising

Cost of acquiring a new customer is less than he revenue that customers generates the excess can be used to acquire more customers.

Which of the following is part of the first-mover myth?

Creating a market is inexpensive and creating a new market is easier than entering an existing one

The lean startup model often works because _____________________

Cusomers don't know what they want.

Most tools from general management are designed to flourish in the harsh soil of extreme uncertainty in which startups thrive.

False

Strategic partners are required by law to be offered seats on your Board of Directors.

False

To target goods and services specifically to Hispanic populations in the US is to focus one's market too narrowly.

False

Under the Foreign Direct Investment strategy, the startup retains control of the assets and facilities, which results in a cheap and easy means to go global.

False

Build-Measure-Learn really works in the reverse order

Figure out what we need to learn and then work backwards to see what product will work as an experiment to get that learning.

Vision

Goal of lean startup is to find a synthesis between the vision and what customers will accept.

What are the natural dispositions of every business?

Grow or Contract

What markets are characterized by "stealth" competition?

Growing Primitive Developed Emerging

MVP definition(Minimum Viable Product)

Helps entrepreneurs start the process of learning as quickly as possible. It's the fastest way to get through the build-measure-learn feedback loop with the minimum amount of effort. It's designed not just to answer product design or technical questions. The goal is to test fundamental business hypotheses. The first step on a journey of leaning.

Why did Sarah start selling pies?

Her best friend said she should because she was so good at making pies

Value Capture Pivot

How do companies capture it?

Quality Principle

If we do not know who the customer is, we do not know what quality is.

Scientific Method Lesson

If you cannot fail, you cannot learn

sustainable

In modern economy, almost any product that can be imagined can be built. The more pertinent question is "Can we build a __________ business around this set of products and services?"

What does moving a seed of an idea to a more concrete possibility require?

Input from others

Which hemisphere of the brain is responsible for language, logic, and symbols?

Left hemisphere

An understanding of your STA helps you to:

Make better growth decisions

Which term is used to describe business churning?

Making the butter Artificial evolution creative destruction business expansion

Actionable Metric (3 A's)

Measuring based on cohorts, split tests, and reaction to MVP tests. Each metric must be Actionable, Accessible, and Auditable.

Which of the following is not a part of IDEO's product design steps?

Multiple stimuli Gather Stimuli Create Stimuli

In which stage is it important to play devil's advocate?

Multiple stimuli Gather stimuli Create stimuli Optimize practicality

The Viral Engine of Growth

Products that exhibit this growth depends on person-to-person transmission as a necessary consequence of normal product use.

Who said "Creativity thinks up new things"?

Professor Levitt

The 5's ways

Provides an Opportunity to discover what that human problem might be. Approach acts as a natural speed regulator. 1. Why did the machine stop? 2. Why was there an overload? 3. Why was it not lubricated sufficiently? 4. Why was it not pumping sufficiently? 5. Why was the shaft worn out?

Value

Providing benefit to the customer; anything else is waste.

Zoom-out Pivot

What was considered as the whole product becomes a single feature of a much larger product.

The "theory of inventive problem solving" is a left-brained, scientific, systematic process based on innovative patents and is referred to as ________.

TRIZ

After Infancy most _______ lock the door?

Technicians

The lean starup methodology reconceives a startup's efforts as experiments that ___________ its strategy to see which part are brilliant and which are crazy.

Test

The Growth Hypothesis

Test how new customers will discover a product or service.

The Value Hypothesis

Test whether a product or service really delivers value to customers once using it.

The "growth hypothesis" _______ how new customers will discover a product or service.

Tests

At its heart what is lean startup methodology?

The application of the scientific method to building a business.

delaying the decision to pivot

The following are all examples of ______________: 1. Vanity metrics 2. Unclear hypothesis 3. Fear

Learning Milestones Goal

The goal of creating this is not to make the decision easy; it is to make sure that there is relevant data in the room when it comes time to decide

The myth of the loss of manufacturing capabilities

The huge productivity increases made possible by modern mismanagement and technology have create more productivity capacity than firms know what to do with. More output=less jobs.

unrelenting

The imperative for new startups to innovate is ______________.

smaller and larger

The investment shoud be _________ when the symptom is minor and ______ when the symptom is more painful.

Detailed financial investigation of comparable companies, because the results can lead to deceptive conclusions.

True

Developments in technology have spurred companies to expand to other countries increasingly early in their business

True

Entrepreneurial companies should consider outsourcing responsibilities and function that are not critical to the company's success.

True

Five percent of American adults report they "invested" in someone else's venture in the last three years.

True

It is important to explain why the team's compensation is appropriate.

True

New Startup organizations should be committed to making mistakes.

True

New start-up organizations should be committed to making mistakes.

True

Once IMVU's efforts were aligned with what customers really wanted, their experiments were much more likely to change their behavior for the better.

True

One of the most vexing aspects of the minimum viable product is the challenge it poses to traditional notions of quality.

True

Only the most skilled entrepreneurs should attempt to build a business around social and cultural facts

True

Playing the role of devil's advocate is important at the "optimize practicality" stage of concept development.

True

Startup success can be engineered by following the right process, which means it can be learned, which means it can be taught.

True

The Scope of Operations section should discuss partnerships with vendors, suppliers, and partners.

True

The challenge of entrepreurs is to find ways to achieve the same amount of validated learning at lower cost or in a shorter time.

True

The chapter takes the view that the self-examination required to develop a tight, well written business plan is more important than the plan itself.

True

The first step in understanding a new product or service is to figure out if it is fundamentally value-creating or value-destroying.

True

The goal of a startup is to figure out the right thing to build - the thing customers want and will pay for - as quickly as possible.

True

The importance of small-batch approach produces a finished product every few seconds, whereas the large-batch approach must deliver all the products at once, at the end.

True

__________ is the oldest excuse in the book for failure of execution.

Learning

False

T/F Startups are different - too much budget is as harmful as too little.

Both positive and negative trends will help shape the businesses.

True

Certain stages of the "initial market test" can be cheap or even free.

True

Single-Piece Flow

Batch size of one.

Delay

prevents many startups from getting the feedback they need.

Typically, survival is the most pressing concern for a startup during the first:

1-2 years 2-3 years 4-5 years

Based on existing research, how long in the life of a startup do operating costs take to stabilize?

1-2 years 3-5 years 4-6 years 6-7 years 8 years

3 mA's of metrics

1. Actionable 2. Accessible 3. Auditable

What are the qualities of a good metric?

1. Actionable - You understand a clear cause and effect 2. Accessible - They can be easily understood 3. Auditable - We must ensure the data is correct

7 Sandbox Rules

1. Any team can create a split tests that only effects "sandboxes" parts of product or service; 2. One team must see experiment through to end; 3. Experiment must have specified end; 4. Experiment can only impact certain number of customers; 5. Experiment evaluated based on standard report of 5-10 actionable metrics; 6. Every team that works inside sandbox and every product built must use same metrics; 7. Team must monitor metrics and customer reactions while experiment is in progress, or end experiment if there is major problem.

2 Rules for Root Cause Analysis

1. Be tolerant of all mistakes the first time; 2. Never allow the same mistake twice.

5 Principles of Lean Startup

1. Entrepreneurs are everywhere 2. Entrepreneurship is management 3. Validated learning 4. Build-Measure-Learn 5. Innovation Accounting

3 engines of Growth

1. Paid 2. Viral 3. Sticky

A Starup's Job

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

4 Phases of Business

1. Scale (building product or service, getting into hands of customers); 2. Product Focus (product becomes public face, attracts competitors and copycats); 3. Operational Excellence (focus on increase margins, lower costs, differentiation, optimization); 4. Legacy (focus on reducing operating costs, maintaining market for product as long as possible).

Describe the core principles of the Lean Startup Methodology

1. Startups require management geared towards extreme uncertainty. 2. Startups exist to learn how to build a sustainable business. This learning should be validated scientifically by running frequent experiments. 3. BML (Build-Measure-Learn) is the process of turning ideas into products, measuring how customers respond, and learning whether to pivot or persevere. 4. Innovation Accounting. To improve entrepreneurial outcomes, we must measure progress, set up milestones, and prioritize work, i.e, focus on the boring stuff.

4 Tips for Using 5 Whys

1. Use a 5 Why's Master to facilitate; 2. Only apply to new problems that arise; 3. Everyone involved in issue must be involved in the meeting; 4. Remind everyone the purpose of 5 Why's each time you use it.

What are the two most important assumptions an entrepreneur must make?

1. Value Hypothesis - does the product or service deliver value to customers? 2. Growth Hypothesis - how well does the product grow among customers?

What are the primary ways of driving sustainable growth?

1. Word of mouth 2. A side effect of product usage (i.e., someone seeing a fashion, etc.) 3. Through funded advertising (as long as cost of acquiring a customer is less than the revenue the customer generates) 4. Through repeat purchase or use

9 Pivots

1. Zoom In Pivot - Single feature becomes whole product or service. 2. Zoom Out Pivot - Whole product becomes single feature of bigger product. 3. Customer Segment Pivot - Product solves problem for different customers than originally thought. 4. Customer Need Pivot - Customers have different problem than originally thought. 5. Platform Pivot - Change from platform to application or vice versa. 6. Business Architecture Pivot - Switch from high margin/low volume to high volume/low margin or vice versa. 7. Value Capture Pivot - Change to the way the company captures value (monetization, revenue model, subscription, etc.) 8. Channel Pivot - Change in way product or service is delivered to customer (direct sale, network, affiliate, etc.) 9. Technology Pivot - Use of different technology to deliver same product or service.

What are 10 different types of pivots?

1. Zoom-in pivot: What was considered a single feature in a product becomes the whole product 2. Zoom-out pivot: What was considered the whole product becomes a single feature in a much larger product. 3. Customer segment pivot: The product hypothesis is partially confirmed, solving the right problem, but for a different customer than originally anticipated. 4. Customer need pivot: The product hypothesis is partially confirmed. The target customer has a problem worth solving, just not the one you anticipated 5. Platform pivot: A change from an application to a platform or vice versa 6. Business architecture pivot: example, when a startup goes from a high margin/low volume to mass market or vice versa. 7. Value capture pivot: How do companies capture value? 8. Engine of growth pivot: A company changes its growth strategy to seek faster or more profitable growth 9. Channel pivot: The same basic solution could be delivered through a different channel with greater effectiveness. 10. Technology pivot: When discovering a technology to achieve the same solution by using a completely different technology.

What percent of the workforce did Fortune 500 companies employ in 1960's?

10 15 20 25 30

What percentage of new business ventures typically survive their first 5 years of operation?

100 81 65 40

How much do informal investors contribute to startup businesses annually?

12 billion 50 billion 67 billion 86 billion 100 billion

Approximately what share of all new products are failures?

40 80 90

Investors typically expect an annual rate of return in the range of __________ from a growing startup.

40-60% 20-40% 60-80%

In 2008, Microsoft earned an operational cash flow of approximately what amount per second

450 930 1200 2900 12,200

Build-Measure-Learn

4th principle of Lean Startups. The fundamental activity of startups is to 1) turn ideas into products, 2) measure customer response, 3) then pivot or persevere. All successful startup processes exist to accelerate feedback.

Research suggests that a gross margin of what percent is a good benchmark for distinguishing more attractive opportunities from less attractive ones?

5% 15 40 70

Within five years, ________ percent of new businesses will fail.

51

What is the approximate number of baby boomers in the US?

55-60 M 60-65 M 65-70 70-75 75-80

What percent of GDP did venture capital backed companies generated in 2008?

7 21 28 31 50

To replace $70,000 of forgone salary and benefits, an entrepreneur will need the new venture to generate approximately how much in annual revenue?

70,000 200,000 400,000 600,000 800,0000

Ideally, a focus group should have ________ members.

8-12

What percent of startups fail?

90 percent.

Of the 28 million businesses in the United States, more than ________ percent are considered small.

99

adaptive

A ___________ organization is one that automatically adjusts its process and performance to current conditions.

minimum viable product

A ______________ is the fastest way for entrepreneurs to learn.

Which of the following is not a characteristic of a successful working relationship between copreneurs?

A clear definition of one partner as "boss" and the other as "subordinate"

Vanity Metrics Prevents Pivoting

Allows entrepreneurs to form false conclusions and live in their own private reality. When an entrepreneur has an unclear hypothesis, it's almost impossible to experience complete failure, and without failure there is usually no impetus to embark on the radical change it requires.

Vanity metrics

Allows the entrepreneur to form false conclusions and live their own private reality.

Learning Milestones

Alternative to traditional business and product milestones. Learning milestones are useful for entrepreneurs as a way of assessing their progress accurately and objectively.

Learning Milestone

An MVP allows a startup to fill in real baseline data in it growth model - conversion rates. Sign up and trial rates, customer life value etc. - and this is valuable as the foundation for learning about customers and their reactions to product even f that foundation begins with extremely bad news.

What is the second standard of a Strategic Objective?

An Opportunity Worth Pursuing

The author strongly recommend that startup teams be _____________.

Completely cross-functional

A startup is a human institution designed to create a new product or service under ____________________.

Conditions of extreme uncertainty

waste

Consider all the ______ caused by our incorrect strategic assumptions.

Think of your company as a _________ instead of a partnership?

Corporation

Suppose and advertisement cost $100 and cause 50 new customers to sigh up for the service. This ad has a ____________________________ of $2.00.

Cost Per Acquisition (CPA)

A company's sales channels can include all of the following except:

Cost reduction

The Board of Directors' primary role is to oversee the company on behalf of the employees, and to that end the board has the power to replace top executives if it feels doing so would be in the best interests of the staff.

False

The Dow Jones Industrial Average is the average price of all the companies traded on the New York Stock Exchange.

False

The Global Entrepreneurship Monitor (GEM) is an organization created to gather information about the most successful start-ups for potential investors

False

The author agrees that a good plan, a solid strategy and thorough maket research works for startups.

False

The author agrees that a good plan, a solid strategy, and thorough market research works for startups.

False

The biggest difference between an internal operation plan and the one that you might present to a potential investor is the level of detail, which tends to be greater in the disclosure to the investor.

False

The biggest risk any new venture faces is dilution of equity.

False

The cost-plus pricing technique is the most reliable one as it sets the price equal to the product's value.

False

The first two NASDAQ stocks to be included in the Dow Jones Industrial Average were Microsoft and Apple.

False

The former dean of the Nomura School of Advanced Management in Japan, Jiro Tokuyama, once said that the venture capital firms in Japan comprise one of the chief advantages for Japanese, technology start-ups.

False

The key to success in comedy improvisation is to always say, "Yes, but..."

False

The professionalization of the entrepreneurial process, which has developed over the last 20 years, has almost eliminated the need for young entrepreneurs to write business plans themselves.

False

There are formulas available to decide exactly how complex you want to make your mvp.

False

There are formulas avaliable to decide exactly how complex you want to make your mvp.

False

There is a way to remove the human element - vision, intuition, judgment - from the practice of entrepreneurship.

False

There is a way to remove the human element- vision, intuition, judgement- from the practice of entrepreneurship.

False

When determining how to allocate scarce resources, an entrepreneur should

Focus on the company's key success factor Spread resources arount to gain experience Focus exclusively on marketing Focus on technology None of the above

When writing a business plan it is best to:

Follow a common outline which is better for spot reading

High-quality experiences

For customers as a primary principle. This presupposes that the company knows what attributes of the product the customer will perceive as worthwhile. This is a risky assumption in a startup. If we don't know who the customer is, we don't know what quality is.

What is the secret behind the success of the Business Format Franchise?

Franchise Prototype

If you have a replicable business model, it is wise to use which of the following strategies to expand internationally:

Franchising

Most companies organize around personalities rather than around ________

Functions

What is an example of a relatively inelastic product?

Gas Burgers Train Tickets Notebooks

What opportunity do you lose when choosing to use Technology Licensing as a means to grow?

Generate more Income COnserve resources Increase your brand image All of the above

___________ enables startups to prove objectively that they are learning how to grow a sustainable business.

Innovation accounting

With all pivots, we have to get back to the basics and start the ___________________ over.

Innovation accounting cycle

which of the following would be the best expanation for the lack of minority owned businesses in the united states

Lack of entrepreurial role models Small market potential for minority owned businesses Legal roadblocks Satisfaction with job

whole process

Lean Management requires treating work as a system and then dealing with the batch size and cycle time of the ___________.

What did lean startup emerge from?

Lean Manufacturing.

___________________ defines value as providing benefit to the customer; anything else is waste.

Lean thinking

What is a leap-of-faith assumption?

Leap-of-faith assumptions - The two most important assumptions a business makes are: Value hypothesis Growth hypothesis Leap of faith assumptions make or break your business, and it is the startups job to tune these assumptions as quickly as possible.

Kanban

Method of limiting work until it is validated, which forces priority on validation throughout the work process. 4 buckets (backlog, in progress, built, validated) with rule limiting each bucket to set number of items (i.e. Only 4 things can be in the progress bucket at one time - to begin work on something new it must either be validated or abandoned).

Many of the big names in retail revolutionized and unified fragmented markets. Which of the following should NOT be on such a list?

Microsoft Walmart Home Depot

Which software application was the predecessor to the Lotus 1-2-3 spreadsheet?

Microsoft Excel Masterfile Financial Works FileMaker VisiCalc

Which of the following statements is not true regarding the diversity of entrepreneurs?

Minority-owned businesses now account for approximately 22 percent of all businesses in the U.S

One of the most pressing challenges for entrepreneurs is to maintain adequate levels of cash. Which of the following is the best way to ensure that a lack of cash does not bankrupt your startup?

Monitor your burn rate

Blame

Most senior people in the room should repeat this mantra: if a mistake happens, shame on us for making it so easy to make that mistake.

Large-Batch Death Spiral

Moving the batch forward often results in additional work, rework, delays, and interruptions, everyone has an incentive to do work in ever-larger batches, trying to minimize this overhead

Pattern for making a pivot or preserve

Poor quantitative results force us to declare failure and create the motivation, context, and space for more qualitative research. Theses investigations produce new ideas - new hypotheses - to be tested, leading to a possible _____. They unlock new opportunities for further experimentation and the cycle repeats. Each time we repeat this simple rhythm: establish the baseline, tune the engine, and make a decision to pivot or preserve.

Which of the following most typifies a "cocktail entrepreneur?"

Popular Productive Fails to take action Decisive

What does moving a seed of an idea to a more concrete possibility require?

Practical thinking Market research Input from others a business plan Maturity

Zoom-in Pivot

Preciously was considered a single feature in a product becomes the whole product.

In entrepreneurship, luck is where __________________ and opportunity meet

Preparation

The 5 Whys

Process of asking "why" 5 times to discover root cause of an identified problem. Tends to uncover human managerial or system issues versus surface issues.

Adaptive Organization

Process of orientation was subject to constant experimentation and revision so that it grew more effective. Automatically adjusts its process and performance to current conditions.

What are the engines of growth? What metrics are important for each?

Successful startups usually focus on just one, specializing in everything that makes it work. Engines of growth are designed to give startups a relatively small set of metrics on which to focus their energies. 1. Sticky engine of growth - track their attrition or churn rate a. Churn rate - fraction of customers in any period who fail to remain engaged in the company's product. b. If the rate of new customers exceeds the churn rate, the product will grow. 2. Viral engine of growth - depends on person-to-person transmission as a consequence of normal product use a. Viral coefficient - how many new customers will use the product as a consequence of each new customer signing up. b. A viral coefficient > 1 will lead to exponential growth 3. Paid engine of growth - each customer pays a certain amount of money for the product over his or her lifetime as a customer. a. Cost per Acquisition (CPA) b. Customer Lifetime Value (LTV) c. The margin between the LTV and the CPA will determine rate of growth. The company cannot grow if LTV isn't greater than the CPA

The author adopted the view that their job was to find ________________ between their vision and what customers would accept.

Synthesis

True Startup Productivity

Systematically figuring out the right things to build. In the lean startup, every product, every feature, every marketing campaign - everything a startup does - s understood to be an experiment designed to achieve validated learning.

False

T/F A head start is usually large enought to matter, and tyime spent in stealth mode - away from customers -is likely to provide a head start.

Early adopters

These people are a special breed of customer. They use their imagination to fill in what a product is missing. They prefer that state of affairs because they care about above all is being the first to use or adopt a new product or technology. They are suspicious of something that is too polished.

Why do startups fail?

They do not fail because they do not have a product, they fail because they lack customers and a profitable business model.

rocket

They prescribe the steps to take and the results to expect in excruciating detail, and as in planning to launch a ______, they are set up in such a way that even tiny errors in assumptions can lead to catastrophic outcomes.

a "just do it" attitude

This approach leases to chaos more often than it does success.

the right things to build

This is true startup productivity: systematically figuring out _______________.

Ways past customers drive sustaintable growth:

Through funded advertising, word of mouth, as a side effect of product design, through repeat purchase or use.

Explain why adaptive processes are important.

To accelerate, lean startups need a process that provides a natural feedback loop. Adaptive processes force you to slow down and invest in preventing the kinds of problems that are currently wasting time. As those preventative efforts pay off, naturally speed up again.

Startup's job

To devise experiments to learn how to move the real numbers closer to the ideal reflected in the business plan & rigorously measure where it is right now, confronting the hard truths that assesment reveals.

Goal of Startups

To figure out the right thing to build - the thing customers want and will pay for - as quickly as possible. Emphasis is 1) fast iteration, 2) customer insight, and 3) huge vision/ambition

Which of the following is not a goal of business planning?

To inform competitors of your intentions

The MVP's ultimate goal is to ________________.

To test fundamental business hypothesis

the early franchise businesses were called "___________" Franchises?

Trade Name

Most problems that at first appear to be individual mistakes can be traced back to problems in ____________.

Training

The amount of time a company can count on holding on to market leadership to exploit its earlier innovations is shrinking.

True

The appendices of a business plan can include anything and everything that you think adds further validation to your concept, but does not fit in the main parts of the plan

True

The appendices of a business plan can include anything and everything that you think adds further validation to your concept, but does not fit in the main parts of the plan.

True

The author felt he had committed the biggest waste of all - "building a product that our customers refused to use."

True

The business plan must establish that there is an opportunity worth exploiting and must detail how to take advantage of it.

True

The decision to pivot requires a clear-eyed and objective mind-st.

True

rocket

Unfortunately, too many startup business plans look more like they are planning to launch a _______ ship than drive a car.

What is the most successful US airline?

United Airlines Continential Airlines Southwest Airlines Delta

The imperative for new startups to innovate is ______________.

Unrelenting

to pivot or persevere

Upon completing the Build-Measure-Learn loop, startups confront the most difficult question any entrepreneur faces:

Which of the following is the key to creating visual catch-points in a business plan?

Use clearly marked headers and sub headersz

Toyota's Small Batches

Used smaller general-purpose machines that could produce a wide variety of parts in small batches. It required figuring out ways to reconfigure each machine rapidly to make the right part at the right time. Created a greater Diversity of products.

Startups have to focus on the big experiments that lead to _________________________.

Validated Learning

Startups have to focus on the big experiments that lead to _________________.

Validated learning

__________________ is the process of demonstrating empirically that a team has discovered valuable truths about a startup's present and future business prospects.

Validated learning

The _______________ hypothesis test whether a product or service really delivers value to customers once they are using it.

Value

Startups have a true north, a destination in mind: creating a thriving and world-changing business. This is called a startup's _____.

Vision

The goal of every startup experiment is to discover how to build a sustainable business around the entrepreneur's ______________.

Vision

Vision-Strategy-Product Triangle

Vision at base, followed by Strategy, with Product at the top. Products change constantly. Strategy changes sometimes (called a Pivot). Vision rarely changes.

The lesson of the minimum viable product is that any additional work beyond what was required to strat learning is _______________________, no matter how important it might have seemed at the time.

Waste

numbers

We could have tried marketing gimmicks, bought a Super Bowl ad, or tried flamboyant public relations as a way to juice up our gross ________. That would have given investors the illusion of traction, but only for a short time.

Hardware Becoming Software

What can be built out of software can be modified much faster than a physical or mechanical device can.

We must always ask

What if the user doesn't care about the design in the same way we do? We must be willing to set aside our traditional professional standards to start the process of validated learning as soon as possible. The only way to win is to learn faster than anyone else

Describe innovation accounting.

a disciplined, systematic framework that makes it clear when the company is stuck and needs to change direction. 1. Use MVP to establish real data on where the company is right now 2. Startups must attempt to tune the engine from the baseline through product development, marketing, or other initiative toward improving one of the drivers of its growth model. 3. After the startup tunes optimizations through its MVP, the company decides whether to pivot or persevere. If tuning the MVP doesn't lead to growth, it is probably time to pivot.

What is a customer archetype?

a document that seeks to humanize your proposed target customer, and that is iterated through as assumptions are.

Innovation accounting

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

One of the most important things to note about MVP is its ____________

acceleration

One of the most important things to note about MVP is its ____________.

acceleration

A common problem entrepreneurs can fall victim to is ____________ endlessly refining their plans

analysis paralysis

Small companies ________

are the leaders in offering training and advancement opportunities to workers

Entrepreneurs may find benefit from the Internet due to its potential ________.

as a relatively low-cost solution to expand its revenue-generating abilities

the process in which entrepreneurs test their business models on a small scale before committing serious resources to launch a business that might not work is known as ________

business prototyping

the financial feasibility analysis takes these aspects into consideration ______

capital requirements, estimated earnings, and return on investment

The term "free cash flow" refers to _______________________________________.

cash that is generated in excess of funds required to sustain operations and purchase assets

The __________________ is defined as the fraction of customers in any period who fail to remain engaged with the company's product.

chum rate

What did the Boss offer the manager when he first started working for the hotel? This gesture was very surprising to the manager.

coffee

Suppose and advertisement costs $100 and causes fifty new customers to sign up for the service. This ad has a ____________ of $2.00.

cost per acquisition

Successful startups usually focus on ______ engine(s) of growth, specializing in everything that is required to make it work.

one

Split- Test experiment

one in which different versions of a product are offered to customers at the same time. By observing the 2 different groups you can make inferences about the impact of the different variations.

It is a good idea for a startup to hire employees who are:

overqualified for their initial roles

If business planning predicts that your gross margins will be 5%, you would be best advised to:

to redesign or abandon your concept

The MVP's ultimate goal is to ________________.

to test fundamental business hypothesis

We need to focus our energies on minimizing the ___________ through the feedback loop.

total time

Most problems that at first appear to be individual mistakes can be traced back to problems in ____________.

training

Once an organization entered a period of rapid hiring, repeated Five Whys sessions revealed that problems caused by lack of ___________ were slowing down product development.

training

A company will make a better growth decision by identifying the most lucrative PTA.

true

It is important to focus on establishing the _________ under which autonomous startup teams operate.

ground rules

____________ enables startups to prove objectively that they are learning how to grow a sustainable business.

innovation accouting

A venture must produce an attractive rate of return relative to the level of risk it requires.

true

As you consider building your own minimum viable product, let this simple rule suffice: remove any feature, process, or effort that does not contribute directly to the learning you seek.

true

Companies are able to design, develop, and ship out new features one at a time, taking advantage of the power of small batches.

true

Early adopters use their imagination to fill in what a product is missing.

true

Entrepreneurs should humbly test their theories and approach to see what the market thinks. Listen to the feedback honestly. And continue to innovate in the directions they think will create meaning in the world.

true

In the Lean Startup model, an experiment is more than just a theoretical inquiry; it is also a first product.

true

More than one engine of growth can operate in a business at a time.

true

New start-up organizations should be committed to making mistakes.

true

The first step in understanding a new product or service is to figure out if it is fundamentally value-creating or value-destroying.

true

The goal of a minimum viable product is to begin the process of learning, not end it.

true

Startups have to focus on the big experiments that lead to _________________.

validated learning

All of the following are characteristics of the typical entrepreneur except ________.

value of money over achievement

"Verification" refers to ________.

All of these

Research shows that anyone can learn to be creative. The problem is ________

All of these

Steps in the patent process include ____

All of these

The nation's small businesses ________.

All of these

The lesson of the minimum viable product is that any additional work beyond what was required to start learning is ___________, no matter how important it might have seemed at the time.

waste

Lean Management requires treating work as a system and then dealing with the batch size and cycle time of the ___________.

whole process

3 Advantages of Validation

1) More accurate data about customer demand (real customer behavior vs. hypothetical; 2) Interaction with real customers to learn about needs; 3) Allows you to be surprised when customer acts unexpectedly

3 Engines of Growth

1. Sticky engine of growth - focus on attracting and retaining customers over long term (rate of acquiring customers must exceed churn rate); 2. Viral engine of growth - customers do majority of marketing like Tupperware, network marketing (viral coefficient must be greater than 1 to succeed); 3. Paid engine of growth - each customer brings in enough revenue to advertise and bring in additional customers (lifetime value of customer must exceed cost per acquisition).

What percentage of venture backed companies survive the five year mark

12% 20% 50% 67% 80%

How much does the Bayh-Dole Act contribute annually to the US economy?

300 million 950 million 12 billion 32 billion 40 billion

Validated Learning

3rd principle of Lean Startups. Startups exist to LEARN how to build a SUSTAINABLE business which can be validated scientifically by running frequent experiments. Unit of progress for a business.

At the turn of the 20th century, about 50% of US workers worked in either the agricultural or the domestic service spheres. Approximately 100 years later that percentage had decreased to which of the following figures?

4% 10% 16% 22% 30%

What is lean startup?

A method for developing business and products.

The concierge MVP

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

The heart of the Lean Startup

A pivot is not just an exhortation to change. It is a special kind of structured change designed to test a new fundamental hypothesis about the product, business model and engine of growth.

What is a startup according to Steve Blank?

A temporary organization in search of a scalable, repeatable, profitable business model.

Which of the following is the primary means for FDI?

Acquire foreign assets Build new facilities expand current facilities oversees All of the above

___________ begins at the point in the life of your business when you decide to get some help?

Adolescence

the Lean Startup model offers a way to test an organization's hypotheses __________.

All of these are correct.

Innovation Accounting

An alternative to traditional accounting designed specially for startups, and begins by turning the leap-of-faith assumptions into a quantified financial model. 1. Use a MVP to establish real data on where the company is right now. 2. Startups must attempt to tune the engine from the baseline toward the ideal. 3. After the startup has made all the micro changes and product optimizations it can move its baseline toward the ideal, the company reaches a decision point: pivot or preserve. Framework makes it clear when the company is stuck and needs change direction

Toyotas Andon Chord

An assembly line works best when it is functioning smoothly, rolling car off the end of the line. Can interrupt this careful flow as the line is halted repeatedly.

A common problem entrepreneurs can fall victim to is _______, endlessly refining their plans.

Analysis paralysis

How many beta-tests of the product should the company do before releasing it to the market?

As many as neccessary

Experiment Early

As soon as a hypothesis is something they want to test, the product development team should be engineered to design and run this experiment as quickly as possible, using the smallest batch size that will get the job done.

at the same time

As startups grow, entrepreneurs can build organizations that learn how to balance the needs of existing customers with the challenges of dinding new customers to serve, managing existing lines of business, and exploring new business models - all ____________.

Pivot sooner than Later

Ask most entrepreneurs who have decided to do this and they will tell you that they wish they had made the decision sooner.

Fast production change

Assembly lines are set up to allow each new product that comes off the line to be customized completely without sacrificing quality or cost-effectiveness.

Considering competitor actions and reactions, which of the following would be dangerous for entrepreneurs?

Assume competition will never change

The Experiment Phase

Begins with a clear hypothesis that makes predictions about what is supposed to happen. Startup experimentation is guided by the startups vision. The goal of every startup experiment is to discover how to build a sustainable business around that vision. Even when experiments produce a negative result, those failures prove instructive and can influence strategy. In the lean startup model, an experiment is more than just a theoretical inquiry; it's also a first product.

Customer Archetype

Brief document describing the proposed target customer.

Constant feedback

Bring continually in people to react to mockups, prototypes and simulations.

The essential lesson the be learned from small batch sizes is that by reducing batch sizes, organizations can get through the _______________________ more quickly than competitors.

Build-Measure- Learn Feedback Loop

The decision to pivot requires a _______________________

Clear Eyed and Objective Mindset

What did lean startup do?

Combined Ford's principles.

Product/Market Fit

Describes the moment when a startup finally finds a widespread set of customers that resonate with its product.

Taiichi Ohno and Shigeo Shingo

Developed Lean Manufacturing revolution at Toyota

Customer Archetype

Early contact with the customer clarifies a basic coarse level that we can use to craft - a brief document that seeks to humanize the proposed target customer.

Because the Japanese car market after the war was so small and capital was not avaliable they were unable to do mass production and take advantage of ________________

Economies of Scale

Word of Mouth

Embedded in most products is a natural level of growth that is caused by satisfied customer's enthusiasm for the products

The ______________ is the mechanism that startups use to achieve sustainable growth.

Engine of growth

Auditable Metrics

Ensure that the data is credible to employees

Which of the following is the cheapest and easiest way to enter new markets?

Exporting

Investors in small, growing startups typically expect to earn the same rate of return as they would if they invested in a public company that is listed on the New York Stock Excahange.

False

It is better to formulate the organizational culture after your company begins to grow, rather than at the company's inception.

False

Cohort Analysis

Instead of looking at cumulative totals or gross numbers such as total revenue or total number of customers, one looks at the performance of each group customers that comes into contact with the product independently.

Build-measure-learn feedback loop

Instead of making a lot of assumptions, you can make constant adjustments with a steering wheel called build-measure-learn. Through this process we can learn if and when to make a sharp turn - a pivot.

Progress measure

Instead of measuring progress in manufacturing by the production of high-quality physical goods, the lean startup measure progress through validated learning.

Fares user stories

Instead of writing a specification for a new feature that described it in technical terms, he would write a story that described the feature form the point of view of the customer

Which stage of the creative process requires one to develop a solid understanding of the problem or decision?

Investigation

Which of the following is not a venture stage specifically enumerated in the chapter?

Investigation Launch Growth Operations All are Stages

Channel Pivot

Is the recognition that the same basic solution could be delivered through a different channel with greater effectiveness.

Which of the following is not mentioned in the chapter as a factor you need to weigh when planning geographic expansion?

Is your brand name well known

Choosing Engine of Growth

It can direct energy where it will be most effective in growing the business. Requires a focus on unique metrics to evaluate the success of new products and prioritize new experiments

ground rules

It is important to focus on establishing the _________ under which autonomous startup teams operate.

Actionable Metrics

It must demonstrate clear cause and effect. People are better able to learn from their actions.

Pivot or preserve

It starts the process all over again, establishing a new baseline and then tuning the engine from there. Sign of being it successful: engine-tuning activities are more productive after the pivot than before.

Culture and systems

It's moving leaders from playing Caesar with their thumbs up and down on every idea to - instead - putting in a culture and the systems so that teams can move and innovate at the speed of the experimentation system.

Common with Pivots

It's not necessary to throw out everything that came before and start over. Instead, it's about repurposing what has been built and what has been learned to find a more positive direction.

The Viral Loop

It's speed determined by a single Mathematical term called the viral coefficient. The higher the coefficient is, the faster the product spreads. Measure how many new customers will use a product as a consequence of each new customer who signs up. Greater than 1 will grow.

4 Methods of Sustainable Growth

New customers come from the actions of past customers. Happens 4 ways: 1. Word of mouth; 2. Side effect of product usage (other see it being used and want it); 3. Self-Funded advertising (ads paid for completely out of revenue); 4. Repeat purchase or use.

3D Printing and Rapid Prototyping Tools

New technologies are allowing entrepreneurs to build small batches of products that are of the same quality but at much lower cost and must fast

_______ percent of all U.S. businesses are family-owned and managed.

Ninety

Validated Learning

Not after-the-fact rationalization or a good story designed to hide failure. It is a rigorous method for demonstrating progress when one is embedded in the soil of extreme uncertainty in which startups grow. It's the process of demonstrating empirically that a team has discovered valuable truths about a startups present and future business prospects. It is more concrete, more accurate and faster than market forecasting or classical business planning. It is always demonstrated by positive improvements in startups core metrics. It's backed up by empirical data collected from real customers.

Value in a Startup

Not the creation of stuff, but rather validated learning about how to build a sustainable business.

What is the only action that the "gather stimuli" stage requires of the entrepreneur?

Observe

Successful startups usually focus on _____, engine(s) of growth, specializing in everything that is required to make it work.

One

What is the name of the process that is the equivalent of brainstorming, but with a focus on writing rather than verbal communication?

Paper writing Brain writing Brain storming

After thr startup has made all the micro changes and product optimizations it can move its baseline toward the ideal, the company reaches a decision point. At this point they __________ or _______________.

Pivot or Perserve

The Importance of Innovation Accounting

Product prioritizing decisions, deciding which customers to target or listen to, and having the courage to subject a grand vision to constant testing and feedback

Marc Andreessen coined the term ________________ to describe the moment when a startup finally finds a widespread set of customers that resonate with its product.

Product/Market fit

Marc Andreessen coined the term ___________ to describe the moment when a startup finally finds a widespeard set of customers that resonate with its product.

Product/market fit

According to the chapter, into what type of opportunity should a business idea translate?

Realistic Attractive Unique

Who was the author of the book "Man's Search for Himself" that Michael Gerber read three times?

Rollo May

Startups are in a life-or-death struggle to learn how to build a sustainable business before they ______________________.

Run out of resources and die

On what category of customers should a startup business focus most of its attention?

STA PTA TTA

Split Test Benefits

Save tremendous amount of time in the long run by eliminating work that doesn't matter to customers. Helps teams refine their understanding of what customers want and don't want.

What does MacDonald call its self "The most successful _____________ in the world"?

Small Business

Engines of Growth

Sources of sustainable growth power feedback loops. The fast the loop turns, the faster the company will grow. They are designed to give startups a relatively small set of metrics on which to focus their energies.

Business Architecture Pivot

Startup goes from high margin/low volume to mass market or vise versa.

run out of resources and die

Startups are in a life-or-death struggle to learn how to build a sustainable business before they ______________________.

Startups vision

Startups have a true north, a destination in mind : creating a thriving and world changing business.

Structures

Startups need organizational this to combat the extreme uncertainty that is a startups chief enemy.

True

Strategic partners are required by law to be offered seats on your Board of Directors.

True

T/F Entrepreneurs need a personal stake in the outcome of their creations.

From Early Adopters to Mainstream

The rationale for building low-quality MVPs is that developing any features beyond what early adopters require is a form of waste. They have different requirements and are much more demanding.

Which of the following is an example of a perfect business?

There is no such thing as a perfect business

The Sticky Engine of Growth

Track their attrition/churn rate very carefully. Churn rate is the fraction of customers in any period who fail to remain engaged with the company's product. Rules: If the rate of new cuter acquisition exceeds the churn rate, the product will grow. The speed of growth is determined by what the churn rate compounding, which is simply the natural growth rate minus churn rate.

What is the TWI program?

Training With Industry program which was developed for the Japanese industry to help them quickly rebuild their industrial base.

Baby boomers are not as concerned about job security as were their parents.

True

Continuous Deployment / Andon Cord

When system detects a problem everything stops (like Andon Cord in Toyota Production System) until: 1. The defective change is removed immediately and automatically; 2. Everyone on team is notified of problem; 3. Team is blocked from introducing any other changes until... 4. The root cause of the problem is found and fixed.

The critical first question for any lean transformation os ________________

Which activities create value and which are a waste.

A ___________ organization is one that automatically adjusts its process and performance to current conditions.

adaptive

Many viral products do not charge customers directly but rely on indirect sources of revenue such as _________________.

advertising

Innovation accounting will still work even if a startup is being misled by vanity metrics such as gross number of customers and so on.

false

the primary purpose of the five forces matrix is to ___

assign values to each of the five elements

As startups grow, entrepreneurs can build organizations that learn how to balance the needs of existing customers with the challenges of dinding new customers to serve, managing existing lines of business, and exploring new business models - all ____________.

at the same time

Switching costs, the number of buyers, and if the items represent a relatively small portion of the cost of finished products are key considerations regarding the ____

bargaining power of buyers

According to Porter's 5-forces model, a substitute for Coca-Cola, the carbonated cola drink, would be ___

bottled water

The essential lesson the be learned from small batch sizes is that by reducing batch sizes, organizations can get through the _____________ more quickly than competitors.

build-measure-learn feedback loop

An entrepreneur is one who ________.

creates a new business concept for the purpose of achieving profit and growth by assembling the necessary resources to capitalize on identified opportunities

Entrepreneurship is a constant process that relies on ______

creativity, innovation, and application in the marketplace

If you reach the limits for new customer growth (they are exhausted) and the growth suddenly slows, it provokes ______________.

crisis

Which of the following subsections is traditionally NOT placed in the executive summary?

critical risks

______________ prevents many startups from getting the feedback they need.

delay

The following are all examples of ______________: Vanity metrics Unclear hypothesis Fear

delaying the decision to pivot

Prototypes usually point out potential problems in a product's ___

design

The point is not to find the average customer but to find ___________: the customers who feel the need for the product most acutely.

early adopters

If you are building the wrong thing, optimizing the product or its marketing will yield significant results.

false

If you are causing (or missing) quality problems now, the resulting defects won't slow you down later.

false

On average each person who signs up will bring, on an average ______ than one other person with them.

more

The majority of new business owners work ________.

more than 40 hours per week

To accelerate, Lean Startups need a process that provides a __________ feedback loop.

natural

Entrepreneurs who start businesses because they cannot find work any other way are _______

necessity entrepreneurs

When a company _______, it starts the process all over again, reestablishing a new baseline and then tuning the engine from there.

pivot

Without a formal growth model, many companies get caught in the trap of being satisfied with a small profitable business when a ______ might lead to more significant growth.

pivot

After the startup has made all the micro changes and product optimizations it can to move its baseline toward the ideal, the company reaches a decision point. At this point they _________________.

pivot or persevere

Most entrepreneurs believe that ________ is what matters most, but ________ is the most important financial resource for a small business owner.

profit; cash

An example of entrepreneurial frugality is

purchasing used office equipment and machinery

The biggest advantage of working in small batches is that ___________________.

quality problems can be identified much sooner

Zappos' initial experiment provided a clear, _______.

quantifiable outcome

Every game has to have _________ for people to be good at it?

rules

The graphical depiction that highlights the diffusion of product acceptance over time is:

s-Curve c- Curve U-Curve V- Curve

All of the following represent barriers to creativity that entrepreneurs impose upon themselves except _______

searching for more than one answer

The investment shoud be _________ when the symptom is minor and ______ when the symptom is more painful.

smaller and larger

A ________ experiment is one in which different versions of a product are offered to customers at the same time. By observing the changes in behavior between the two groups, one can make inferences about the impact of the different variations.

split-test

Before raising capital, the company should identify which of the following?

stategy customers cost categories competitive advantage all of the above

The "value hypothesis" __________ whether a product or service really delivers value to customers once they are using it.

tests

Under pressure, teams may feel that they don't have _______ to waste on analyzing root causes even though it would give them more time in the long term.

time

Employees must be given the tools and resources they need to be creative. One of the most valuable set of resources is ________.

time, support and encouragement

What is the MVP?

A product with the least amount of work required to test fundamental business hypotheses. Remove all features that do not contribute directly to the learning you seek.

conditions of extreme uncertainty.

A startup is a human institution designed to create a new product or service under ____________________.

All of these are ways past customers drive sustainable growth. Through repeat purchase or use. Word of mouth. As a side effect of product design. Through funded advertising.

All of the following are primary ways past customers drive sustainable growth EXCEPT