My LeanStartup Journey and learning so far:

You know early on when I started off trying to build innovative startups, the disruptive kind, I had a feel in my stomach something is amiss with the approach then. But when my wiser friends talked about going back to fundamentals we learned at MBA, that did not make much sense either. Of course as all startups from early 2000’s all 3 efforts went down crashing and burning, but of course less spectacularly than those in the valley, because we had less fuel to rise high or burn as you would expect from a startup done in the Philippines at that time. It’s quite a different story today, when it comes to doing startups in Philippines, but that would be another discussion for another day.

When I came across LeanStartup and the pitch of Steve Blank, “Startups are not a smaller version of Larger Companies” it made sense immediately.

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I bought both of Steve’s books, watched countless video’s and read several of his blog posts. Learned a lot to say the least specially his use of Business Model Canvas as a planning and tracking tool, it was a genius reuse/repurposing of the strategy tool from Alexander Osterwalder.

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The concepts are great, yet I was still having questions in my mind on how to conduct the experiments to de-risk the business model.

At this stage I got introduced to Eric Rice and Ash Maurya (not in person though its hard to differentiate at this age on internet) and their book about LeanStartup and Running Lean. I got some examples of how validation based startups were done by them. Ash came up with this wonderful blog which he scaled into the book and one of the key take away was his mods to the business model canvas, into Lean Canvas, that focused on the problem, solution and key metrics. I learned and tried applying the interview and observing users with the MVP approach, yet, SOMETHING was still MISSING.

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Then I came across a talk by Scott Bales on Lean Startup Machine and Validation board. Bang, that hit me like ‘yes, this is it!!’

Validation Board or their further evolved Javelin Board, was like the missing link between concept from the above thinkers and steps to implement it in a more defined way. The concept of getting out of the building became more crystal clear, no so much about the need, that was hammered in by Steve, but what the heck to do, when you are out with potential users.

Concepts of Explorations, Pitching and Concierge to run validation experiments are like the headlight on the foggy avenue of LeanStartup, you know the way in front and more or less the direction, but this provided the ‘how to’ steps.

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All of a sudden we had a framework and steps defined on how to apply LeanStartup in a real startup in the ‘fog of war’. There ware no excuse for not implementing it for the early stage startups we were running, other than the warm comforting reality distortion zone we founders love to live in.

We now have a defined path to establish ‘product market fit’, on how and when to ‘Pivot’ or just refine the elements of the canvas. Its all about confirming the PROBLEM is REAL and compelling enough for the CUSTOMER segment to go out of their way to solve it, and that we have identified the best possible SOLUTION viable and feasible for the customer segment.

BUT what about those who already have the product and users, what about them, how will they apply LeanStartup, as it seems Validation board is something they should have used earlier. For them its not so much of a challenge of ‘product market fit’ but how to achieve the hockey stick like growth without spending tons of money.

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Then it dawned on me that; actually Validation Board is a tool for SEARCH, not EXECUTION. Looking at the 4 steps from Steve’s original concept, the Customer Discovery and Customer Validation are done very well with the concepts of LeanStartup Machine, including the Pivots, that you can need to go through to reach that critical ‘Product Market Fit’, but next steps require different tools.

 

Enter GROWTH HACKING!

Growth hacking is a set of tactics and best practices for dealing with user growth, once the product market fit is achieved. It’s a mix of marketing tactics applied through digital technology in scaling users and revenue. Remember Growth Hacking comes after PROBLEM, CUSTOMER and the SOLUTION is clearly established, jumping too early into it is a recipe for disaster.

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All things needed to push through the steps top down in a predictable manner to achieve the VIRAL GROWTH every startup founder dreams of.

 

Things that generally needs refining at this stage are:

 

  • Search Engine Optimization and Content Marketing to drive traffic to the website
  • Landing Page Optimization with the right messaging to make the visitor signup
  • Proper onboarding to ensure Activation and Retention
  • Reminder loops through emails or similar to bring them back
  • Incentivizing users to share and invite others
  • Revenue Model, ultimately revenue is what will keep you in business

They are not done all together but step by step, to achieve the desired growth.

Below a good metrics from Dave McClure of 500 Startup fame of the above stages and value of an user

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To conclude, experimentation, validation and measuring is the fundamental concept of LeanStartup, yet what to experiment on and what to measure at what stage are the real open secrets out there and I hope you can make your learning faster through my experience and like Richard Quest says at CNN, “wherever your travels may take you, I hope it’s profitable”

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User empathy as core of product design

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                           (photo courtesy: bigpicturecoaching.net)

Software product design used to involve ‘requirement gathering’ then developing them into a usable product, adding in some of your own understanding and experience of how it should be done. The word ‘empathy’ was not a commonly heard term in the business of software, until late.

I was engaging with user experience design when I first encountered the term ‘empathy’, which itself is relatively a new science. That time, I was developing a User Persona, looking into a specific person’s life and trying to walk in their shoes while designing the interaction with the system.

This got more intense as I started diving into Lean Startup practices in product development and building startups. It takes some time, particularly for my MBA students, to grasp the concept – why market data and survey results are not acceptable forms of information when testing an assumption for the core hypothesis – when building entrepreneurial business models. This holds especially true for them because they come from traditional management thinking for the last 12 or 16 months where they learned how to do market research and only accept statistically relevant findings.

Lean Startup talks about first defining your customers to very fine specifics, then meeting them face to face and understand their experience with a problem that you are trying to solve. It does not even recommend suggesting a solution till you can fully understand the pains, the aspirations, and the workarounds of your user for the given situation. When talking to customers, you limit discussion to facts and real experiences rather than hypothetical/what-if questions. This activity of talking to your customers is what builds empathy. You become intimate with their problems and you understand their personalities, wants, and needs. The insights that you gather will give you a clearer sense of the product that you are designing, from its features down to the colors that you will use.

Once you’ve started talking about their problem and pain points, you then find what they are trying to do about it, whether they can get by or they’re really seeking a solution. If the potential customers you are interviewing can live without a solution, there are two possible conclusions: 1) you are talking to the wrong customers, meaning there might be a different set of people who are craving for a solution, or 2) it’s not pressing enough an issue and building a product to solve it a waste of time and energy for everyone. However, if the potential customers cannot get by with the solutions that they currently have, then you are definitely on to something.

The concept of not writing a single line of code or even a mockup solution until you’ve walk in the shoes of your customers and you’ve identified a solution that they’ve been looking for – this is scary in the beginning. Especially for technology people, it’s not easy going out to the streets and doing ambush interviews with people (who match your customer persona) and getting them to share their experiences is not easy. However, if we are to build something that we want people to use and be thankful about, there is no better way.

Perhaps the dreaded concept of “vapor ware” makes more sense now, once you understand lean better. After building that empathy, you sell the concept or pitch it and see how many ready to buy, before you even spend any money on it. Focusing on pull over push is the new game changer in the product engineering business, and it’s changing how we all approach it.

Welcome to the new world of user empathy: it’s not any more about opening your eyes as much as it is about opening your heart, and it’s not about IQ as much as it is about EQ.

Maximum miss-understanding about Minimum Viable Product (MVP)

Minimum Viable Product or MVP is one of the most misunderstood terms from the concept of Lean Startup in my humble opinion. Some people start associating the term ‘viable’ with ‘usable’ for the customer. I have seen arguments about how MVP for enterprise products can’t be too minimum or else the customer wont let you in the next time or overloading of features or users and not buyers etc etc. Sorry, but I think this is a mistake in understanding the concepts of MVP clearly.

MVP is not always something you ship to your customer, its not the output of SCRUM (agile development methodology) that has to be shippable increment and no the customer or user does not have to use it for their business to give you feedback about what to build next, thats not the purpose of MVP but of Agile development.

So what is the purpose of MVP then? lets first understand the key hypothesis behind Lean Startup thinking. Startups as we all know are risky business, a lot of assumptions about the product is in the mind of the entrepreneur from his world view, which most of the time is little to very different from the customer point of view. There are two key hypothesis to be proven before trying to scale a startup:

  • Value Hypothesis
  • Growth Hypothesis

Value is the real solution to a burning problem for which the customer is actively seeking a resolution and is willing to pay to get your solution (though sometimes the solution might be free and making money from another segment). I would think we are not talking incremental improvement over a bunch of existing product, but something that can be considered as an unresolved issue (Blue Ocean rather than a Red Ocean) for a interested segment.

After we have established that the proposed solution has Value for a segment, then comes the question of whats the growth potential for the solution in the market, locally, regionally and globally. Even though the problem and solution might be real, the potential buyers might be too small to make a profitable and viable business, or the effort and knowledge required might be such that it would be hard to scale beyond certain market or cost can be a major hindrance. Even if the solution has value and there is a market, there is still the question of how to reach out and sell it in a way the buyers are willing to buy it.

All the above are RISK that a startup has to face in its initial phase, if the venture got to see success, there has to be a systematic way to de-risk the venture without spending too much in the wrong things and running out of money. This process is what Steve Blank calls ‘customer development’ and approaching a startup with all this in mind in a scientific manner is the whole philosophy of Lean Startup.

So now the question is how do you go about de-risking the venture, the answer is through series of experiments to test the various assumptions and key concepts in the solution. MVP is a tool to run these experiments, not the only tool, but probably the most used tool. Smoke Testing, A/B testing and Statistical Hypothesis Testing are some of the methods for experimentation to confirm with customer, the theories for the startup solution as well the problem perspective.

MVP can be a smoke test website that tries to establish demand for a solution in the market, or the segment that needs it most. Smoke test does not intend to be dishonest with the customer, instead it paints a picture of a solution to come and get interested parties pre-register for invite or information when it is ready.

At various stage of the product lifecycle the MVP can be very different in its form, but the purpose in the world of Lean Startup is to use it to proof or disprove another hypothesis and thus lower another risk to the venture.

Its probably also worthwhile to remember not every kind of customer or user are ideal target for MVP or experimentations, early adaptors are usually the ones we should be looking for, they might not form the bulk of the user segment when the product flys, but they definitely are those who would be ready to touch your buggy barely working concepts and give you inputs that bring your product in the track to be a reality. Will discuss more on Early Adapters in another post one of these days, thanks for reading.

Lean Startup, Business Model Canvas & Agile Development

If you are into software business and hearing one or more of the three terms for the first time you are missing out a lot, like I was a year or so ago. Learning about how all three work together specially in cutting down waste and reducing the need for funding to grow ones venture has been an eye opener. This is after 4 startups and about 20 years in business felt like the first week at the B School, and its not only me, when I shared some of this with the group (Philippines Software Development Association’s Special Interest Group for Product and IP development) it was eye opener for all.

In fact one of the adapter and loudest proponent of these concept today in one of our founding member of the sub-group with decades of experience in product development in companies like Microsoft and Apple at its early and growth phase, and several successful ventures over the years.

In this post and several others I will share our learnings, success and failures in following the concepts. Personally my exposure and experimentations would be for our flagship product Xamun.com and secondary exposure from the sharing of others in the subgroup and interesting findings from the web.