1. STARTUPS
a. The boring stuff matters most
b. 95% of entrepreneurship is gritty work
c. “A startup is a human institution designed to create a new product or service under conditions of extreme uncertainty”
2. CUSTOMERS
a. Goal – figure out the right thing to build – the thing that customers want and will pay for – as quickly as possible
b. “You cannot be sure you really understand any part of any business problem until you go and see for yourself first hand.”
c. Customer contact “merely reveals what assumptions require the most urgent testing.”
d. Build a customer archetype – humanises the proposed target customer
e. “If we do not know who the customer is, we do not know what quality is.”
f. Focus on who pays
g. What products do customers really want, how will the business really grow, who is our customer, which to listen to, which to ignore
h. Find a widespread set of customers that resonate with the product – those customers will pull product out of the startup
i. Do customers:
a. Recognise problem?
b. Happy to buy a solution?
c. From us?
d. (Then finally) can we build one?
j. “Until we could figure out how to sell (and make) the product, it wasn’t worth spending any engineering time on.”
k. Not can it be built, but should it be built
l. Watch out for:
i. The audacity of zero (customers) – zero invites imagination whereas small numbers invite questions about whether large numbers will ever materialize
ii. Letters of intent seemed to validate product but when product ready companies shied away – they were not early adopters
3. MVP - Minimum Viable Product
a. “used by a small niche of people who are willing to give it a shot before it is ready”
b. Start small and be specific
c. Don’t necessarily need to build something:
i. Video – this is what it will do
ii. Concierge – do it manually – only scale when you need to
iii. Smoke test – pre-order a product that doesn’t yet exist
4. COMPETITORS
a. “If a competitor can out-execute a startup once the idea is known, the startup is doomed anyway.”
b. “The only way to win is to learn faster than anyone else.”
5. EXPERIMENTS
a. Build a product -> Measure data -> Learn ideas -> start again = feedback loop
b. Small experiments:
i. Hypothesis
ii. Prediction
iii. Test
c. What to test first?
i. The leap of faith assumptions (not the obvious stuff)
ii. The riskiest assumptions
d. Strategy = working out the right questions to ask
e. When in doubt, simplify
f. Split tests
i. “Many features that make the product better in the eyes of the engineers and designers have no impact on customer behaviour.”
ii. “Split tests seem to be more difficult because it required extra accounting and metrics to keep track of each variation, it almost always saves tremendous amounts of time by eliminating work that does not matter to customers.”
6. ANALYSIS
a. Usage types
i. Looking
ii. Registered but not logged in
iii. Logged in once
iv. Activated
v. Active
vi. Paid
b. Cohort analysis – “measure performance of each group of customers that comes into contact with the product independently.”
c. Metrics
i. actionable – shows clear cause and effect – vanity metrics do not have this – so things go up, it is what I did that caused it, but if down then it’s your fault
ii. accessible – simple, everyone gets it
iii. auditable – data is credible to employees – can drill down to real customers – reporting methods not too complex
7. PIVOT OR PERSEVERE?
a. Pivoting requires courage
b. MVP must get real data to base this decision on
c. Regular meetings to review and decide
d. A startup’s runway is the number of pivots it can make – each pivot has the build – measure – learn feedback loop
e. Different types of pivot
i. Zoom in (to one feature)
ii. Zoom out (to add more)
8. GROWTH
a. Wrong approach – customers deluged with features, every request becomes an emergency, no idea if they actually mattered to customers
b. Capacity constraint funnel of user stories
i. Backlog -> in progress -> built (as part of a split test) -> validated.
ii. Cannot move to built until previous ones validated (= was it actually a good idea?)
c. The challenge of entrepreneurship is to balance all these activities (new customer acquisition, existing customer servicing, tuning, etc.)
d. Small batch idea
i. single piece flow – how much moves from stage to stage – performance of each stage is less important than the performance of the whole system – problems at each stage are found as fast as possible
ii. get something to customer fast to see if it actually needed
e. New customers come from actions of past customers:
i. word of mouth
ii. side effect of product usage
iii. advertising paid from prev customer sales
iv. repeat purchase/use
f. Three engines of growth:
i. sticky (like compound interest)
ii. viral feedback loop
iii. paid – advertising effectively
9. PROCESSES
a. Adapt as you grow – need new processes but they can ossify – how to decide what to manage?
b. Organisations have muscle memory – hard to change
c. HR
i. Training programmes – new hires productive from day 1 – new hires have a mentor – performance of both need to be linked
ii. Rewards – need objective criteria, motivates teams to take real risks
d. 5 whys
i. Avoid 5 blames - all involved need to attend otherwise absentee will be blamed
ii. Require mutual trust and empowerment - be tolerant of all first mistakes, but never make them again
iii. Authority leads, insists process is followed, keep on topic, recommendations implemented, referee
10. QUALITY
a. Toyota andon cord = a worker can stop the entire production line if a fault is found
b. Cannot trade quality for time – defects are bad all around
11. PITFALLS
a. Misguided perseverance = land of the living dead = achieved a modicum of success - just enough to stay alive – success is just around the corner
b. Can run out of gas when customer set is exhausted
c. Achieving failure – successfully executing a flawed plan
a. The boring stuff matters most
b. 95% of entrepreneurship is gritty work
c. “A startup is a human institution designed to create a new product or service under conditions of extreme uncertainty”
2. CUSTOMERS
a. Goal – figure out the right thing to build – the thing that customers want and will pay for – as quickly as possible
b. “You cannot be sure you really understand any part of any business problem until you go and see for yourself first hand.”
c. Customer contact “merely reveals what assumptions require the most urgent testing.”
d. Build a customer archetype – humanises the proposed target customer
e. “If we do not know who the customer is, we do not know what quality is.”
f. Focus on who pays
g. What products do customers really want, how will the business really grow, who is our customer, which to listen to, which to ignore
h. Find a widespread set of customers that resonate with the product – those customers will pull product out of the startup
i. Do customers:
a. Recognise problem?
b. Happy to buy a solution?
c. From us?
d. (Then finally) can we build one?
j. “Until we could figure out how to sell (and make) the product, it wasn’t worth spending any engineering time on.”
k. Not can it be built, but should it be built
l. Watch out for:
i. The audacity of zero (customers) – zero invites imagination whereas small numbers invite questions about whether large numbers will ever materialize
ii. Letters of intent seemed to validate product but when product ready companies shied away – they were not early adopters
3. MVP - Minimum Viable Product
a. “used by a small niche of people who are willing to give it a shot before it is ready”
b. Start small and be specific
c. Don’t necessarily need to build something:
i. Video – this is what it will do
ii. Concierge – do it manually – only scale when you need to
iii. Smoke test – pre-order a product that doesn’t yet exist
4. COMPETITORS
a. “If a competitor can out-execute a startup once the idea is known, the startup is doomed anyway.”
b. “The only way to win is to learn faster than anyone else.”
5. EXPERIMENTS
a. Build a product -> Measure data -> Learn ideas -> start again = feedback loop
b. Small experiments:
i. Hypothesis
ii. Prediction
iii. Test
c. What to test first?
i. The leap of faith assumptions (not the obvious stuff)
ii. The riskiest assumptions
d. Strategy = working out the right questions to ask
e. When in doubt, simplify
f. Split tests
i. “Many features that make the product better in the eyes of the engineers and designers have no impact on customer behaviour.”
ii. “Split tests seem to be more difficult because it required extra accounting and metrics to keep track of each variation, it almost always saves tremendous amounts of time by eliminating work that does not matter to customers.”
6. ANALYSIS
a. Usage types
i. Looking
ii. Registered but not logged in
iii. Logged in once
iv. Activated
v. Active
vi. Paid
b. Cohort analysis – “measure performance of each group of customers that comes into contact with the product independently.”
c. Metrics
i. actionable – shows clear cause and effect – vanity metrics do not have this – so things go up, it is what I did that caused it, but if down then it’s your fault
ii. accessible – simple, everyone gets it
iii. auditable – data is credible to employees – can drill down to real customers – reporting methods not too complex
7. PIVOT OR PERSEVERE?
a. Pivoting requires courage
b. MVP must get real data to base this decision on
c. Regular meetings to review and decide
d. A startup’s runway is the number of pivots it can make – each pivot has the build – measure – learn feedback loop
e. Different types of pivot
i. Zoom in (to one feature)
ii. Zoom out (to add more)
8. GROWTH
a. Wrong approach – customers deluged with features, every request becomes an emergency, no idea if they actually mattered to customers
b. Capacity constraint funnel of user stories
i. Backlog -> in progress -> built (as part of a split test) -> validated.
ii. Cannot move to built until previous ones validated (= was it actually a good idea?)
c. The challenge of entrepreneurship is to balance all these activities (new customer acquisition, existing customer servicing, tuning, etc.)
d. Small batch idea
i. single piece flow – how much moves from stage to stage – performance of each stage is less important than the performance of the whole system – problems at each stage are found as fast as possible
ii. get something to customer fast to see if it actually needed
e. New customers come from actions of past customers:
i. word of mouth
ii. side effect of product usage
iii. advertising paid from prev customer sales
iv. repeat purchase/use
f. Three engines of growth:
i. sticky (like compound interest)
ii. viral feedback loop
iii. paid – advertising effectively
9. PROCESSES
a. Adapt as you grow – need new processes but they can ossify – how to decide what to manage?
b. Organisations have muscle memory – hard to change
c. HR
i. Training programmes – new hires productive from day 1 – new hires have a mentor – performance of both need to be linked
ii. Rewards – need objective criteria, motivates teams to take real risks
d. 5 whys
i. Avoid 5 blames - all involved need to attend otherwise absentee will be blamed
ii. Require mutual trust and empowerment - be tolerant of all first mistakes, but never make them again
iii. Authority leads, insists process is followed, keep on topic, recommendations implemented, referee
10. QUALITY
a. Toyota andon cord = a worker can stop the entire production line if a fault is found
b. Cannot trade quality for time – defects are bad all around
11. PITFALLS
a. Misguided perseverance = land of the living dead = achieved a modicum of success - just enough to stay alive – success is just around the corner
b. Can run out of gas when customer set is exhausted
c. Achieving failure – successfully executing a flawed plan