and Minimum Viable Product Thanks to Steve Blank Erik Ries Sean Ellis What are the Lean Startup Principles Nail it then scale it Rapid hypothesis testing about market pricing customers customers amp markets unknown ID: 782111
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Slide1
Lean Start-Up PrinciplesandMinimum Viable Product
Thanks to Steve Blank, Erik
Ries
, Sean Ellis
Slide2What are the Lean Startup Principles?Nail it then scale itRapid hypothesis testing about market, pricing, customers (customers & markets unknown)
MVP (Minimum viable product)
Low burn by design (no scaling until revenue)
Metrics, iteration, agile development
Learn fast (fail fast)
Slide3Founder’s JobSearch for Minimum Viable Product (“MVP”) and Scalable Business ModelHow?
Scalable
Startup
Transition
Real Business
Unknown customer needs
Unknown feature set
Unknown business model
Model found by iteration
Source: Steve Blank
Slide4What is MVP?Minimum Viable ProductPart of the “Lean Startup” methodology espoused by Eric RiesEric Ries’ definition:
The minimum viable product is that version of a new product which allows a team to collect the maximum amount of
validated learning about customers
with the least effort.
Big vision meets rapid, metrics-based iteration
Slide5Slide6Problem Definition ProcessWhat is the basic need/problem?What is the desired outcome?Who stands to benefit and why?How is it solved now?
Slide7Before CodingTest/validate that the problem you are solvingActually existsIs (painful) worth solving
(customers will
pay
for it)
Is widespread
(
big market
)Is solved by your minimum feature set
Minimum Viable Product
http://web.archive.org/web/20070701074943/http://blog.pmarca.com/2007/06/the-pmarca-gu-2.html
Slide8Why?Save time and moneySpend imagination before moneyEngineer risk out of product and modelRun lots of experiments
Slide9Value PropositionWhat Are You Building and For Who?
Slide10© 2012 Steve Blank
Slide11Product/Market
Fit
Slide12Pain KillersReduce or eliminate wasted time, costs, negative emotions, risks - during and after getting the job done
Slide13Pain = Customer ProblemGain = Customer Solution
Slide14MVP
Products
&
Services
Gain Creators
Pain Killers
The Value Proposition
Slide15Pain Killers - HypothesesProduce savings? (e.g. time, money, or efforts, …)
Make your customers feel better?
(e.g. kills frustrations, annoyances, things that give them a headache, ...)
Fix underperforming solutions?
(e.g. new features, better performance, better quality, ...)
Ends difficulties and challenges customers encounter?
(e.g. make things easier, helping them get done, eliminate resistance, ...)
Wipe
out negative social consequences?(e.g. loss of face, power, trust, or status, ...)...
Eliminate risks (e.g. financial, social, technical risks, or what could go awfully wrong, ...)
Slide16Pain Killer – Is it a Problem or Need?Are you solving a Problem?Are you fulfilling a Need?For who?
How do you know?
Slide17Pain Killer - RankingRank each pain your products and services kill according to their intensity for the customer. Is it very
intense (appendicitis)
or very
light (annoying)?
For each pain indicate the frequency at which it occurs
Slide18Gain CreatorsHow do you create benefits the customer expects, desires or is surprised by, including functional utility, social gains, positive emotions, and cost savings?
Slide19Gain Creators- HypothesesCreate savings that make your customer happy?(e.g. in terms of time, money and effort, ...)
Produce expected or better than expected outcomes?
(e.g. better quality level, more of something, less of something, ...)
Copy or outperform current solutions that delight customer?
(e.g. regarding specific features, performance, quality, ...)
Make your customer’s job or life easier?
(flatter learning curve, usability, accessibility, more services, lower cost of ownership, ...)
Create positive consequences that customer desires?
(makes them look good, produces an increase in power, status, ...).
Slide20Gain Creator- RankingRank each gain your products and services create according to its relevance to the customer. Is it substantial or insignificant
?
For each gain indicate the frequency at which it occurs.
Slide21Minimum Viable Product
Slide22Define Minimum Viable Product – PhysicalFirst, tests your understanding of the problem (pain
)
Next tests your understanding of the solution (gain)
Proves that it solves
a core problem
for customers
The minimum set of features needed to learn from early evangelists
Interviews, demos, prototypes,
etcLots of eyeball contact
Slide23Define the Minimum Viable Product – Web/Mobile
NOW build a “low fidelity” app for customer feedback
tests your understanding of the
problem
LATER build a “high fidelity” app tests your understanding of the solution
Proves that it solves
a core problem
for customers The minimum set of features needed to learn from
earlyvangelistsAvoid building products nobody wants
Maximize the learning per time spent
Slide24The Art of the MVPA MVP is not a minimal product“But my customers don’t know what they want!”At what point of “I don’t get it!” will I declare defeat?
Slide25Things to Consider
Slide26Value Proposition – Common MistakesIt’s just a feature of someone else’s product
It’s a “nice to have” instead of a “got to have
”
Not enough customers care
Slide27Questions for Value PropositionCompetition: What do customers do today?Technology / Market Insight: Why is the problem so hard to solve?
Market Size:
How big is this problem?
Product:
How do you do it?
Slide28Key Questions for Value PropProblem Statement: What is the problem?Ecosystem: For whom is this relevant?Competition:
What do customers do today
?
Technology / Market Insight:
Why is the problem so hard to solve
?
Market Size:
How big is this problem?Product: How do you do it?
Slide29Technical Versus Market Insight
Slide30Technology and Market InsightTechnology Insight
Moore’s Law
New scientific discoveries
Typically applies to hardware, clean tech
and biotech
Market Insight
Value chain disruption
Deregulation
Changes in how people work, live and interact and what they expect
Slide31Examples of Technical InsightSecurity framework to secure the internet of things
Re-programmable
ASICs
Slide32Examples of Market InsightPeople want to play more involved games than what is currently offeredFacebook can be the distribution for such games
Masses of people are more likely to micro-blog than blog
The non-symmetric relationships will allow companies and individuals to self-promote and will impact distribution
European car sharing sensibilities could be adopted in North America
People, particularly in urban environments, no longer wanted to own cars but wanted to have flexibility.
Slide33Types of Value Propositions
Comes from
Technical Insight
Comes from
Market Insight
Smaller
More Efficient
Faster
Simpler
Lower cost
Better Bundling
Better Branding
Better Distribution
Slide34Growing Valuable “Normal” Startup
Slide35Creating Value: Normal Startup
Product/market fit = product is “must have” (value)
Become a “must have” with
customer development
Validate “value” assumptions early (who needs/why?)
Get users on first release ASAP
Find “must have” users/use cases
Facts outside building (interviews then surveys)
Pivot if necessary to create value
Slide36Key “Value” Question in Surveys
“Very Disappointed”
My Recommendation
0% – 25%
Keep burn low, engage, iterate
26% – 39%
Try repositioning, retargeting
40% – 100%
Proceed up pyramid
“How would you feel if you could no longer use Product?”
Slide37Iterate, Pivot, A/B TestingSource: Steve Blank
Customer
Discovery
Customer
Validation
Customer
Creation
Build
Company
Run lots of experiments
Talk to lots of customers
Test hypothesis
Rinse and repeat
Slide38How Zynga Uses MVPFrom Mark Pincus, CEO & FounderCreate a 5-word pitch for a new product or feature
Put it up on a high traffic webpage
If it gets clicks, collect the emails of interested customers
Build a ‘ghetto’ version of the product or feature
Test everything
Iterate constantly
Source:
http://grattisfaction.com/2010/01/how-zynga-does-customer-development-minimum-viable-product/
Slide39In-Class ExercisePick any 3 teams who presented todayTell us who you think their customers will be. Why?
How many customers do they need to talk to before they have relevant data?
Slide40Deliverables for Next WeekUser / customer hypotheses? Did you learn anything different? Did your Value Proposition change?
What are your customer acquisition cost hypotheses?
What are the benefits (economic or other)?
If part of a company, who’s the decision maker, how large is the budget and how will the buying decision be made?
Web startups: start coding the product
!
Slide41One Way