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The Basics of Lean Startup
Todd Strother, PhD
UW-Extension: Business and Entrepreneurship
The Center for Technology Commercialization
Build
Measure
Learn

Introductions
•Developer and Program manager of SBIR Advance, and teaching team member for Ideadvance•Assisted over 40 companies through Lean Startup learning
• Two grants: $25K & $50K grants• Faculty, staff, student ‘treps
(excludes UW-Madison)• Licensed tech from WiSys or
UWMRF• www.uwideadvance.org
• Up to $75K in grants• Match current Stage 1 and/or
Stage 2 SBIR/STTR funding• www.wisconsinsbir.org

Goals and Objectves
•Learn what Lean Startup is, and isn’t
•Show where Lean Startup is being used
•Compare Lean Startup to conventional practices
•Become familiar with Business Model Canvas tool
•Recognize Minimal Viable Products and their value

• A method primarily for software startups.
• Lean Startup is the business model canvas.
• Lean Startup focuses on getting companies to fail fast.
• You can learn Lean Startup by reading Steve Blank and Eric Ries books or watching videos
Well, there’s only two of us, so we are running pretty “Lean”
Yes, I’ve worked in Lean manufacturing and have “Lean Six Sigma” Certification
What is Lean Startup? (have you heard these?)

What is Lean Startup?
Process to identify, prioritize and test your most critical business model assumptions to reduce risk.
Process to identify, prioritize and test your most critical business model assumptions to reduce risk.

What is Lean Startup?
Process to identify, prioritize and test your most critical business model assumptions to reduce risk.
Process ideal for innovative concepts where the market opportunity (product/market fit) are
unknown or uncertain

Why Lean Startup
• Data-driven approach to entrepreneurship
• Way to visualize and organize activities
– To easily learn
– Make changes quickly
• Scalable and effective
• Customizable

The heart of Lean Startup--
Application of the Scientific Method to Business
• Set up and RECOGNIZE your hypotheses
• Test them
– By collecting Data
– INTERVIEWS!!
• Revisit/change/pivot to new hypothesis

Goals and Objectves
•Learn what Lean Startup is, and isn’t
•Show where Lean Startup is being used
•Compare Lean Startup to conventional practices
•Become familiar with Business Model Canvas tool
•Recognize Minimal Viable Products and their value

Lean Startup is Taking Hold
Established Companies
Innovative Companies
Colleges and Universities

Lean Startup is Taking Hold
Federal Government
• NSF• NIH• NASA• Dept of Energy

Lean Startup is Taking Hold

Goals and Objectves
•Learn what Lean Startup is, and isn’t
•Show where Lean Startup is being used
•Compare Lean Startup to conventional practices
•Become familiar with Business Model Canvas tool
•Recognize Minimal Viable Products and their value

What people want their business to do
Idea Research Prototype Product

IDEA BUSINESS
IDEA BUSINESS
This is a startup path
This is a not a startup path
What really happens
Failure

“Forget” about Market Track
Parallel Market Track
Customer Research PM Fit Validation
Idea Research Prototype Product

What we hope becomes reality

The Many Things to Learn
• What is my target market? • How big is my target market?• Do I know how this market works?• Do I understand the market
barriers?• Do I truly understand what my
customer needs?• How much better than my
competition do I have to be to attract customers?
• What are the customer acquisition costs?
• What are the channels?• What are my get, keep, grow
customer strategies?
• Do I know all the costs?• Do I know that customers want to
buy what I have to offer? • Do I know how much they will
really pay?• Will that pricing model work for my
business model?• What key resources do I need to
have?• Who are my key partners?• Do I know my key activities?• Who do I need to have on my
team?

No Business Plan survives first contact with customers
You were so preoccupied with whether you could, that you didn’t stop to think if you should

The Wrong Process & Theory
Scalable Startup*high growth
potentialMature Business

Wrong way to think of a Start-Up
scientistChief Scientific Officer CEO
CFO
Patent Agent
Production engineer
Sales Manager
Why?: Because that’s what a ‘real’ Business has
We had:No productNo SalesNo Customers
And No Idea

More startups fail from
a lack of customers than from a
failure of product development

Lean Startup Tests Business Hypotheses
Hypotheses• are not just ideas requiring a plan • are educated guesses
– Require experimentation – data
• validate or invalidate
Hypothesis
Design Experiment
Test
Insight

Goals and Objectves
•Learn what Lean Startup is, and isn’t
•Show where Lean Startup is being used
•Compare Lean Startup to conventional practices
•Become familiar with Business Model Canvas tool
•Recognize Minimal Viable Products and their value

Business Model Canvas- Identify Assumptions
GuessGuess
Guess
Guess
GuessGuessGuess
Guess
Guess
Business Model Canvas as the Scorecard

Where to Focus- Customer DiscoveryDoes the customer have REAL pain? Who really is your customer?
Requires shift from thinking about your idea to focusing on value customers will “pay” for


First Customers To Identify
You want to identify the “Day One” people who are ready tobuy or use your product.
Steve Blank’s Earlyvangelist Definition

User Recommender Economic BuyerDecision Maker SaboteurInfluencer
Who Should You Know?
“Customers” have many roles
Need to understand archetypes for each.
This means understanding how they interact to buy. Can you make an organizational chart, influence map or sales road map?

BMC 3VALIDATION
Grypmat

Learn: Ask about the customer’s life What are their pain points?Don’t talk about the product or the business ideaStart The process by listening- not Pitching!
Confirm: Get commitments, not opinions (i.e. commit time, reputation, money)
Lean Startup is a Contact Sport

Lean Startup is a Contact Sport

Goals and Objectves
•Learn what Lean Startup is, and isn’t
•Show where Lean Startup is being used
•Compare Lean Startup to conventional practices
•Become familiar with Business Model Canvas tool
•Recognize Minimal Viable Products and their value

Minimum Viable Product (MVP)Testing Key Assumptions
• Laura Klein, VP of Product at Hint Health, puts it bluntly (and effectively). “An MVP is not an excuse for a crappy product. MVPs are all about learning, and you don’t learn anything from a crappy product except that people don’t like crappy products.”

Website to gauge interest in products
neuron cardio blood hepatic
Text about products and services: We
provide kits to directly convert
progenitor cells into your target cells,
and partially differentiated cell lines that
you can take to completion.
Click on the cell products of interest
neuron
Technical
data
References
and
published
work:
Marketing
blather
Bulleted list of products and uses.• Progenitor cells
• do your own thing
• Partially diff cell • Takes a load of
work off of you• Kits and supplies
• Do the entire work directly
Kits Cells
MVP also tracks if customers are interested
in Kits or Cells. Which button they click on
is a data point.
This will lead us to see what they want
more: the Kit products to do the entire
work, or the cell line.
4
MVP tracks where the customers click.
Do they click on Neurons, Cardio, Blood,
Hepatic? This will provide quantitative
information on what cell type is of interest.
This will lead us to see what product line
is potentially most important.

MVP examples
1. Explainer Video (Dropbox)
2. Email Campaigns
3. Landing Page(s)
4. Sell it before you build it (crowdfunding validation)
5. “Wizard of Oz” (Zappos)

Questions?
Cheating on customer discovery interviews is like cheating in your parachute packing class- Steve Blank