Lean Startup Chapters
Genchi gembutsu
"Go and see for yourself" -you cannot be sure you really understand any part of any business problem unless you go and see for yourself firsthand
Kodak Gallery
- Started with really nice holiday cards, that didnt work - Tested photo sharing for consumer assumptions
Get out of the building method
Actually talking to consumers (like cold calling them)
Actional metric
Analise consumer behavior, ones that actually matter
Components of Feedback Loop
Build-Measure-Learn The fundamental activity of a startup is to turn ideas into products, measure how customers respond, and then learn whether to pivot or persevere. All successful startup processes should be geared to accelerate that feedback loop.
Intuit (snaptax)
Founder Scott Cook called random people from a phonebook to test his assumption that people found it frustrating to pay bills by hand - His vision was to implement his solution of a personal computer being used to track bills and pay expenses - Started with simple MVP (only California)
Dropbox
Founder/CEO Drew Houston created a MVP of a video showing how DropBox would work and had 75,000 people sign up on the beta list, showing that customers actually wanted the specific product he was developing
Consumer Federal Protection Bureau
Government organization to help protect citizens from predatory lending services (eg. credit card companies, student lenders, payday loan officers) o Started on a small, targeted scale to test the assumption that there would be a high volume of Americans calling once they discovered the service
Sustaining Inovation
Incremental improvement and discovery opportunities
Initially tested value hypothesis (more than 50% of users used it multiple times a day) and growth hypothesis (75% of Harvard undergrads were using it within the month it launched)
Value vs. Waste (Lean thinking)
Lean thinking defines value as providing benefit to the customer; anything else is waste.
Concierge MVP
Manually doing something so you don't have to spend on development
Network effect
Network of users that are currently using a product, makes it hard to change (having to convince friends to do so)
The Audacity of Zero
Often easier to raise revenue or money when have 0 everything than having small amount. - 0 invites imagination, but small numbers invite questions about whether large numbers will ever materialize.
Lean thinking
Root of lean startup. Drawing on knowledge and creativity of individual workers, shrinking of batch sizes, just-in-time production, and inventory control, an acceleration of cycle times.
Groupon
Started as a collective activism project buy pivoted to be a group coupon site; was successful due to an early MVP of a WordPress blog and handmade PDFs. Just wanted to prove his concept. Immediately grew a lot
Zappos
Started with a MVP to test if there was demand for an online shoe store (listed pictures of shoes and bought them from stores at full price to deliver to customers)
Village Laundry Services
Started with a washing machine on a truck, developed into a mobile kiosk Started small to test assumptions --Iterations revealed that customers were willing to pay double to get their laundry back in 4 hours rather than 24 hours -- Showed people are scared of loosing clothes on truck
Vanity metrics
Stats that are used to make company look good, but don't mean anything to consumer (growth / value)
MVPs
That version of the product that enables a full turn of the build-measure-learn loop with a minimum amount of effort and the least amount of development type
Validated learning:
The process of demonstrating empirically that a team has discovered valuable truths about a startup's present and future business prospects -Start small (like zapos) and learn
IMVU
Tries to enter as an IM accessory, had no success. Eventually listened to the customers and made it its own chat. - Focus on customer development, not product development - First products aren't meant to be perfect - Wanted to test the MVP movement, so had "teleporting" feature
Analogs
Use other companies to confirm assumptions
Antilogs
Use other companies to refute assumptions
Food on the Table
Used a concierge MVP model where they initially took on one customer and had no automation--everything was done by humans as a personalized service to test the growth model and learn. Was not efficient, but was effective in allowing them to learn from consumers.
HP - Global Social Innovation Division
Volunteering campaign to encourage pro-bono or work-based skills outside the company - Experimenting with different ways to encourage employees to make use of this
Aardvark
Went through an initial ideation period where they built a series of functioning products and offered them to beta testers to validate or refute specific hypothesis o Ended up with positive reinforcement from Aardvark; brought in teams of customers to simulate use and make real time modifications (used Wizard of Oz testing where customers believe they are interacting with the actual product, but behind the scenes human beings are doing the work)
Toyota Sienna 2004
Went to USA and road tripped all 50 states to directly observe consumers -Discovered kids were an important part of minivans and focused more development budget on internal comfort features (2004 model sales were +60%, 2013) - Example of "Genchi gembutsu" because product developer drove around US
customer archetype
a brief document that seeks to humanize the proposed target customer (not real person)
Customer profile
considered temporary until the strategy has shown via validated learning that we can serve this type of customer in a sustainable way
Lean manufacturing
drawing on the knowledge and creativity of individual workers, shrinking of batch sizes, just-in-time production and inventory control, and acceleration of cycle times
Analysis Paralysis
endlessly refining their plans. In this case, talking to customers, reading research reports, and whiteboard strategizing are all equally unhelpful. The problem with most entrepreneurs' plans is generally not that they don't follow sound strategic principles but that the facts upon which they are based are wrong.
Disruptive innovation
game changer, industry changer
"Just do it Mentality"
impatient to get started and don't want to spend time analyzing their strategy
Engine of Growth
in startups - markets and customers for startups are diverse, but they all have same engine of growth
innovation accounting
requires that a startup have and maintain a quantitative financial model that can be used to evaluate progress rigorously
leap-of-faith assumptions
riskiest elements of a startup's plan, the parts on which everything depends (two most important assumptions are the value hypothesis and the growth hypothesis)
"Achieving failure":
successfully, faithfully, and rigorously executing a plan that turned out to have been utterly flawed.
Growth hypothesis
tests how new customers will discover a product or service. Viral growth? Need to measure behavior.
Value hypothesis
tests whether a product or service really delivers value to a customer once they are using it
early adopters
visionary early customers who want to be the first to use or adopt a new product or technology and use their imagination to fill in what a product is missing