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Are you designing an amazing solution that solves no problem? - Franki ChamakiFranki ChamakiTrends and threats put push on usConstant connectivity, collaboration and crowdsourcing, customised consumption, cloud computing, convergence and competitor pressuresFranki Chamaki2Traditional way to secure funds and bring ideas to marketFranki Chamaki3Got a great idea brainstorm business plan pitch cha-ching build an awesome product (and in sleuth mode) booom! Big launch! Yay!!

3Got an ideaWe brainstormCreate a business planFranki Chamaki4Got a great idea brainstorm business plan pitch cha-ching build an awesome product (and in sleuth mode) booom! Big launch! Yay!!

4Design the product (mostly in sleuth mode)

Cha-ching $$

Big launch Yay!! booom! Franki Chamaki5Got a great idea brainstorm business plan pitch cha-ching build an awesome product (and in sleuth mode) booom! Big launch! Yay!!

5If you like this story and you like should read this bookFranki Chamaki6

Franki Chamaki7A startup is an organization formed to search for a repeatable and scalable business model.- Steve Blank8Franki Chamaki89A startup vs. company?Franki Chamaki910Start upCompanyTransitionFranki Chamaki10Start upTransitionCompanyStart upCompanyProblem/ Situation FitScaleTransitionProduct/ Market FitFranki Chamaki1112Do we have a problem worth solving?Have we built something people want?How do we accelerate growth?Start upTransitionCompanyStart upCompanyProblem/ Situation FitScaleTransitionProduct/ Market FitFranki Chamaki1213Start upTransitionCompanyStart upCompanyProblem/ Situation FitScaleTransitionProduct/ Market FitFocus: Validated learning

Process: PivotsFocus: Growth

Process: OptimizationFranki Chamaki1314Start upCompanyProblem/ Situation FitScaleSearchExecuteTransitionProduct/ Market FitFocus: Validated learning

Process: PivotsFocus: Growth

Process: OptimizationFranki Chamaki14Franki ChamakiSo how do we go about searching for the right business model?15Method: Lean Startup16Franki Chamaki16A Lean Startup is an iterative process to reduce risk in searching for the right business model based on validated learning 17Franki Chamaki17So, how to we actually do this?18Franki Chamaki18There are three key principles19Franki Chamaki19Document our plan A 20Franki Chamaki20Document our plan A 212. Identify the riskiest parts of plan Franki Chamaki21Document our plan A 222. Identify the riskiest parts of plan 3. Systematically test our plan. Get out of the office! Franki Chamaki2223Document our plan A Franki Chamaki2324Document our plan A http://www.ashmaurya.com/2012/02/why-lean-canvas author of Running Lean

Franki Chamaki24Traditional view in has been to prepare Business Plan but no business plan survives first contact with customers. Why? Its based on series invalidated assumptions from solution right through to customer how it would be distributed.1. Problem list the top one to three problems need to be solved? How are their solved today? Existing alternatives?2. Customer Segment who are we solving it for? Who are the early adopters - main segment to solve first3. UVP - Why are we different and worth getting peoples attention? High level pitch - getting the idea across quickly Aliens: Jaws in space , Star wars cowboys and Indians in space4. Solution - how we are going to solve the problem5, Channels- very important the path to customers (ie inbound blogs, SEO vs outbound SEM, ads, cold calling)6. Revenue stream how going to charge and make money7. Cost structure cost to build mvp, interview 30 to 50 people, burn rate (fixed and variable costs) What is the break even point?8. Key metrics AARRR - acquisition (make interest to your solution), activation ( sign up or walk into your store), retention (come back), revenue (get money from them) and referrel (NPS refer others)9. Unfair advantage- something that cant be copied or brought easily Dream team - FB purchase of Instgram for $1b, Steve Job and Pixa or Community FB vs Google +

Each 9 areas of the busines model needs to be tested. These are all GUESS. Need to turning them in FACT24

25What are the product, customer and market risks?2. Identify the riskiest parts of plan pppmmmmcccpFranki Chamaki25How do we systemically turn theses GUESS into FACT? We priorities else it would be to overwhelming.

Order: Problem - are we solving the right problem for our customers? Channel - do we have easy and sustainable path to our customers?Revenue stream/Cost structure what we charge to customers is based on WHO we target (eg Fuji water customers)Customer segment is the market big enough? Is the problem worth solving?Solution - is it feasible to build and maintain?

Often use Advisors to first validate the model by asking What do they think is the riskiest aspect of the plan? Have that overcome similar risks? How? How would they go about testing the risks? Are there other people we should speak with?

One approach is use Analogs and Antilogs, as described by John Mullins and Randy Komisar in their book; Getting to Plan B. This approach looks at the history of successful companies and uses this knowledge to learn what the risky assumptions within your business model may be.

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Problem interviews Validate top problems? Any new problems? Rank the problems? How they solve it today? 2. Identify the riskiest parts of plan Franki Chamaki2627

Solution interviews Does it resonate? What most important? Missing? Add? Remove? Will they pay $X?2. Identify the riskiest parts of plan Franki Chamaki27Arm with a clearer understanding of the problem we are trying to solve, prioritized problem2728

Systemically eliminate risk: customer side1234Franki Chamaki281. Product risk scenario might be understand the (1), with this understanding we define a minimal set of features to test with customers (2) and we validate MVP and see if we can realize the UVP (3) and early adopters. We track this against our metrics (4)2829

1234Systemically eliminate risk: product sideFranki Chamaki291. Product risk scenario might be understand the (1), with this understanding we define a minimal set of features to test with customers (2) and we validate MVP and see if we can realize the UVP (3) and early adopters. We track this against our metrics (4)2. Customer risk scenario might be identify who is experience pain points (1), narrow down to early adopters (2), establish a channel to keep engaging segment (3), keep building channel to scale to acquire customers (eg community base solution) (4)2930

1234Systemically eliminate risk: market sideFranki Chamaki301. Product risk scenario might be understand the (1), with this understanding we define a minimal set of features to test with customers (2) and we validate MVP and see if we can realize the UVP (3) and early adopters. We track this against our metrics (4)2. Customer risk scenario might be identify who is experience pain points (1), narrow down to early adopters (2), test channels to keep engaging segment (3), keep building channel to scale to acquire customers (eg community base solution) (4)3. Market risk scenario might be identity competition/ alternative solutions (1), than test price what customers would verbal say they will pay (2) and than (3) what they actually will pay (3) and optimize cost3031How do we actually test our riskiest assumptions? Franki Chamaki3132Minimum Viable Product (MVP) is a minimum set of solution features we can use to test.

But its really more like

MVE - minimum viable experimentFranki Chamaki32Full solution is time consuming and could lead to waste, We want to build something that is just enough of a solution in front of customers to test and get their reaction and help define further changes or pivots3233Minimum Viable Product (MVP) is a minimum set of solution features we can use to testFranki Chamaki33Full solution is time consuming and could lead to waste, We want to build something that is just enough of a solution in front of customers to test and get their reaction and help define further changes or pivots3334We test our MVP by making falsifiable statements rather the leap of faith assumptionFranki Chamaki34This turns our Leap of Faith assumption from: Our event will attract a large enough audience to make the project sustainable. To the falsifiable hypothesis: 20% of the customers we speak to will register for our event

Eg Being know as an Expert will drive early adapters vs A blog post will drive 10 sign up

Falsifiable hypothesis: Specific Repeatable action will generated Expected measureable outcome3435It gives us the permission to move forwardFranki Chamaki35Positive results means we can go forward, else we need to quickly refine (pivot) or abandon the test.35A36

People will be interested in renting their physical space to unrelated people?

Launch page will drive 500 sign up?

BFalsifiable hypothesis: ORFranki Chamaki36We need to first test qualitatively (eg customer interviews) THEN quantitatively. This example is about quantitatively testing the experiment.3637

Success metric: 500 people or more in a given month interestedYAY!!Franki Chamaki3738

Exchange value: Do people exchange currency (e.g. sign up)?What da?!Franki Chamaki3839Pivot the customer segmentFranki Chamaki39Full solution is time consuming and could lead to waste, We want to build something that is just enough of a solution in front of customers to test and get their reaction and help define further changes or pivots3940Target earlier adaptors (e.g. car enthusiasts and owners of classic and vintage cars in the key city areas (eg Potts Point)Franki Chamaki40Full solution is time consuming and could lead to waste, We want to build something that is just enough of a solution in front of customers to test and get their reaction and help define further changes or pivots40We will validate the problem and customer of your idea!

Franki Chamaki41Quick tutorial video (4mins)

Franki Chamaki4243So you have a great idea? Franki Chamaki43Positive results means we can go forward, else we need to quickly refine (pivot) or abandon the test.4344Prove it! Franki Chamaki44Positive results means we can go forward, else we need to quickly refine (pivot) or abandon the test.44

Reading options URL: http://hbr.org/2013/05/why-the-lean-start-up-changes-everything/ar/prFranki Chamaki