How to Start and Grow your Startup -Entrepreneurship & Innovation -Ideas -Starting Up -Growth

1. Startup University
How to Start and Grow your Startup
Entrepreneurship & Innovation | Ideas
Starting Up | Growth

2. Startup University
• Entrepreneurship & Innovation
– What Entrepreneurs do
– How to start a startup
• Ideas
– Idea Generation
– Idea shaping & evaluation
• Starting Up
– The Startup Process
– Customer Development
– Product Development for Startups
• Growth
– Diffusion of Innovations
– Market Development Strategy

3. Entrepreneurship & Innovation
What Entrepreneurs do
How to start a startup

4. What Entrepreneurs do
• Entrepreneurs innovate
• Innovation means creating something of value
• Entrepreneurs exploit change

5. What Entrepreneurs do
• Entrepreneurs innovate
– Entrepreneurs make something new
– Innovation is the tool of the entrepreneur
– Entrepreneurship can be learned
Source: Peter Drucker

6. What Entrepreneurs do
• Innovation means creating something of value
– Innovation creates wealth
– Innovation can be applied to both supply and demand
Source: Peter Drucker

7. What Entrepreneurs do
• Entrepreneurs exploit change
– Entrepreneurs see change as healthy
– 'Creative destruction' is the task of the entrepreneur
Source: Peter Drucker

8. What Entrepreneurs do
• Learn more
– Peter Drucker, “Innovation and Entrepreneurship”
– Paul Graham, “How to Make Wealth”

9. How to start a startup
• Startups need people, ideas and funds
• Just try it

10. How to start a startup
• Startups need people, ideas and funds
– Startups are hard but doable
– Ideas for making something people want
– Good people
– Spending as little as possible
Source: Paul Graham

11. How to start a startup
• Just try it
– Version 1.0 and iterate
– Getting to Plan B
“No battle plan ever survives contact with the enemy.”
Field Marshall Helmuth von Moltke
Source: Paul Graham and John Mullins & Randy Komisar

12. How to start a startup
• Just try it
– Innovation - Learning from failure
• The only way to avoid failure is to do nothing
Source: Bob Sutton and Diego
Rodriguez

13. How to start a startup
• Learn more
– Paul Graham, “How to Start a Startup”
– Paul Graham, “Six Principles for Making New Things”
– John Mullins & Randy Komisar, “Getting to Plan B”
– Diego Rodriguez, “Failure sucks, but instructs”
– Bob Sutton, “Failure Sucks But Instructs”

14. Ideas
Idea Generation
Idea shaping & evaluation

15. Idea Generation
• How to have ideas
• Where to find opportunities
• Idea generation techniques

16. Idea Generation
• How to have ideas
– How the process works
• Being in a learning environment
• Frame ideas as questions
• Let mind wander
• Apply known functions with new arguments
– Some starting points
• Things that people use but are broken
• Take a luxury and make it a commodity
• Make something easier/easier to use
• Look at what a big company should be doing and do it yourself
• Build stuff for yourself that doesn’t exist
Source: Paul Graham

17. Idea Generation
• Where to find opportunities
– Change is the source of innovation
– Look for opportunities
• The unexpected—the unexpected success, the unexpected failure,
the unexpected outside event;
• The incongruity—between reality as it actually is and reality as it is
assumed to be or as it “ought to be”;
• Innovation based on process need;
• Changes in industry structure or market structure that catches
everyone unaware.
• Demographics (population changes);
• Changes in perception, mood, and meaning;
• New knowledge, both scientific and nonscientific.
Source: Peter Drucker

18. Idea Generation
• Idea generation techniques
– Old approach to a new problem
• Translation – Where else would it work?
• Symmetry – Would flipping it work?
– New approach to an old problem
• No constraints – What would Croesus do?
• Internalization – Why aren’t you feeling my pain?
– Make lists, then make choices
• Generate lots of ideas to get the obvious ones out of the way
• Look for the best ones in the “third third”
Source: Barry Nalebuff & Ian Ayres and Tim Hurson

19. Idea Generation
• Learn more
– Paul Graham, “Ideas for Startups”
– Peter Drucker, “Innovation and Entrepreneurship”
– Gary Dushnitsky, “Idea Generation Workshop”
– Barry Nalebuff & Ian Ayres, “Why Not? How to Use Everyday
Ingenuity to Solve Problems Big And Small”
– Tim Hurson, “Think Better: An Innovator’s Guide to Productive
Thinking”

20. Idea shaping & evaluation
• Identify what customers are already trying to do
• Look for disruptive potential
• Match your strategy to the type of market
• The right Business Model
• Putting it all together

21. Idea shaping & evaluation
• Identify what customers are already trying to do
– Jobs to be done
– Objectives
– Barriers
– Solutions
Source: Innosight

22. Idea shaping & evaluation
• Look for disruptive potential
– Disruptive innovation
Performance
Disruptive
technologies
Time
Source: The Innovator’s Solution

23. Idea shaping & evaluation
• Look for disruptive potential
– Disruptive innovations
Digital photography Chemical photography
Minicomputers Mainframes
Personal computers Minicomputers
Telephone Telegraph
VOIP Telephone
Online software On-premise software
Solid State drives Hard disk drive
Online education Universities
– Target the low-end of market & non-consumption
Source: The Innovator’s Solution, Wikipedia

24. Idea shaping & evaluation
• Match your strategy to the type of market
– Types of markets
• Existing markets
• Re-segmented markets
• New markets
– Implications for:
• Market
• Sales
• Finance
Source: Steve Blank

25. Idea shaping & evaluation
• The right Business Model
– Business model innovation
• Being distinctive in the customer value proposition, the profit
model, key resources, or key processes
– Business models
Software as a Service Freemium Installed applications Advertising
Audience Aggregation Marketplace Lead generation Virtual goods
Crowdsourcing Content production Enterprise 2.0 Professional Open Source
– Value innovation
• Innovating on one dimension while keeping the others at a good
enough level
Source: Clayton Christensen, David Cohen, and Chan
Kim & Renee Mauborgne

26. Idea shaping & evaluation
• Putting it all together
– Product: Features & benefits, IP, dependencies, TCO
– Customer & Problem: Types of customers, problem, day in
the life of the customer, ROI, MVP
– Distribution & Pricing: Based on complexity of the product
– Demand creation: Activities to drive demand into channel
– Market type: Existing, resegmented, or new market
– Competition: Attributes (existing & resegmented markets),
surrounding markets (new markets)
Source: Steve Blank

27. Idea shaping & evaluation
• Learn more
– Clayton Christensen, “The Innovator’s Solution”
– Scott Anthony, “The Innovator’s Guide to Growth”
– Innosight, “JOBS Methodology”
– Innosight, “Disruptive Innovation Primer”
– Steve Blank, “The Four Steps to the Epiphany”
– Steve Blank, “The Lean Startup Operating Manual”

28. Idea shaping & evaluation
• Learn more
– Steve Blank, “The Customer Development Methodology”
– David Cohen, “Internet Business Models of the TechStars”
– Wikipedia, “Business Models”
– Clayton Christensen, “Reinventing Your Business Model”
– Innosight, “Business Model Innovation”
– Chan Kim & Renee Mauborgne, “Value Innovation: The Strategic Logic
of High Growth”

29. Starting Up
The Startup Process
Customer Development
Product Development for Startups

30. The Startup Process
The Startup Process:
Turning ideas into products that customer will pay for

31. The Startup Process
• Product/Market fit
• How to get to product/market fit

32. The Startup Process
• Product/Market fit
– Factors for startup success
• Market
• Team
• Product
– Product/Market fit
• Being in a good market with a product that can satisfy that market
Source: Marc Andreessen

33. The Startup Process
• How to get to product/market fit
– Multiple iterations
Observe Orient
Act Decide
– How to make a startup work
• Technology infrastructure commoditization
• Better methodologies: Customer and product development
• Online marketing: SEM, Social
• Global Labor Pool
Source: Eric Ries

34. The Startup Process
• Learn more
– Marc Andreessen, “The only thing that matters”
– Eric Ries, “Principles of Lean Startups”
– Eric Ries, “Lean Startups – Low Burn by Design, not Crisis”
– Paul Graham, “Six Principles for Making New Things”

35. Customer Development Process
Iteration Execution
The Search for a Business The Growth of a Business
Product/Market Fit
The Customer Development Process:
Learn what the market wants before scaling
Source: Steve Blank & Eric Ries

36. Customer Development Process
• Customer Development Principles
• The Customer Development Process

37. Customer Development Process
• Customer Development Principles
– Distinct phases of product & company growth
– Learning & iteration vs. linear execution
– Getting out of the building
– Different market types
– Finding the right market for the product
Source: Steve Blank & Eric Ries

38. Customer Development Process
• The Customer Development Process
Iteration Execution
The Search for a Business The Growth of a Business
Product/Market Fit
Test hypotheses - Build a Create end-user Scale via relentless
Problem and product repeatable and demand and fill the execution
concept scalable sales sales pipeline
process
Source: Steve Blank

39. Customer Development Process
• The Customer Development Process - Customer Discovery
– Principles
• There are no facts inside the building, so get outside
• Test problem and product concept hypotheses
– Exit Criteria
• What are customers’ top problems? How much will they pay to
solve them?
• Does the product concept solve them? Do customers agree? How
much will they pay?
• Draw a day-in-the-life of a customer – Before & after your product
• Draw the organizational chart of users & buyers
Source: Steve Blank

40. Customer Development Process
• The Customer Development Process - Customer Validation
– Principles
• Develop a repeatable and scalable sales process
• Only earlyvangelists are crazy enough to buy
– Exit Criteria
• Is there a proven sales roadmap? Organizational chart? Influence
map?
• Do you understand the sales cycle?
• Is there a set of orders ($’s) validating the roadmap?
• Does the financial model make sense?
Source: Steve Blank

41. Customer Development Process
• The Customer Development Process - Customer Creation
– Principles
• Creation comes after proof of sales
• Creation is a strategy not a tactic
– Exit Criteria
• Right startup strategy to execute
• Positioning tested & complete
• Launch strategy matches startup type
• Demand creation activities match startup type
• First year objectives match startup type
Source: Steve Blank

42. Customer Development Process
• The Customer Development Process - Customer Creation
– Customer Creation Activities
Market Type First Year Objectives Positioning Demand Creation Launch
Existing Market Market share Product Drive demand into Credibility
differentiation the sales channel Existing basis of
competition
Resegmented Market reframing & new Segmentation & Educate market & Segmentation &
Market market share innovation drive demand into innovation
channel New basis of
competition
New market Market adoption Defining the new Customer Credibility &
market, the need education innovation
& the solution Market education &
standards setting
Source: Steve Blank

43. Customer Development Process
• The Customer Development Process - Company Building
– Principles
• Move from earlyvangelists to mainstream customers
• Build your company’s organization & management
– Exit Criteria
• Sales growth plan matches market type
• Spending plan matches market type
• Right team for the stage of company
• Mission-oriented culture?
Source: Steve Blank

44. Customer Development Process
• Learn more
– Steve Blank, “The Four Steps to the Epiphany”
– Steve Blank, “The Customer Development Methodology”
– Eric Ries, “Lean Startups – Low Burn by Design, not Crisis”
– Steve Blank, “Web Startups and Customer Development”
– Eric Ries, “What is customer development?”

45. Product Development for Startups
Product Development for Startups:
Multiple iterations increase learning and flexibility
Source: IDEO

46. Product Development for Startups
• Product Development for Startups
• Customer Development Engineering

47. Product Development for Startups
• Product Development for Startups
– Known and unknown problems and solutions
Traditional Product Development
Unit of Progress: Advance to Next Stage
Waterfall
Requirements
Specification
Design
Problem: known
Solution: known Implementation
Verification
Maintenance
Source: Eric Ries

48. Product Development for Startups
• Product Development for Startups
– Known and unknown problems and solutions
Agile Product Development
Unit of Progress: A line of Working Code
“Product Owner” or in-house customer
Problem: known
Solution: unknown
Source: Eric Ries

49. Product Development for Startups
• Product Development for Startups
– Known and unknown problems and solutions
Product Development for Startups
Unit of Progress: Validated Learning About Customers
Customer Development
Hypotheses,
Experiments,
Problem: unknown Insights
Data,
Solution: unknown Feedback,
Insights
Source: Eric Ries

50. Product Development for Startups
• Product Development for Startups
– Development principles
• Embrace change: Build what you need today
• Process-oriented development so change is painless
• Prefer flexibility to perfection: Ship early and often
• Test-driven to find and prevent bugs
• Continuous improvement vs. ship-and-maintain
Source: Eric Ries

51. Product Development for Startups
• Customer Development Engineering
– Product Development Cycle
IDEAS
LEARN BUILD
DATA CODE
MEASURE
Source: Eric Ries

52. Product Development for Startups
• Customer Development Engineering
– Customer Development Engineering Tactics
• Build:
– Small batches
– Continuous Deployment
• Measure:
– Split-testing
• Learn:
– Building a Minimum Viable Product
– Five Whys Root Cause Analysis
Source: Eric Ries

53. Product Development for Startups
• Learn more
– Eric Ries, “Lean Startups”
– Eric Ries, “Customer Development Engineering”
– Eric Ries, “Lean Startups – Low Burn by Design, not Crisis”
– Eric Ries, “How to build a Lean Startup”

54. Growth
Diffusion of Innovations
Market Development Strategy

55. Growth
The Technology Adoption Life Cycle:
Adapt strategy according to the stage in the life cycle
Source: Geoffrey Moore

56. Diffusion of Innovations
• The Technology Adoption Lifecycle
• Selling to mainstream customers

57. Diffusion of Innovations
• The Technology Adoption Lifecycle
– The Diffusion of Innovations is a social process
Source:
Carnegie
Mellon
University

58. Diffusion of Innovations
• The Technology Adoption Lifecycle
– The Diffusion of Innovations is a social process
Source:
Carnegie
Mellon
University

59. Diffusion of Innovations
• The Technology Adoption Lifecycle
– The Diffusion of Innovations is a social process
Source:
Carnegie
Mellon
University

60. Diffusion of Innovations
• The Technology Adoption Lifecycle
– The Diffusion of Innovations is a social process
Source:
Carnegie
Mellon
University

61. Diffusion of Innovations
• The Technology Adoption Lifecycle
– The Diffusion of Innovations is a social process
Source:
Carnegie
Mellon
University

62. Diffusion of Innovations
• The Technology Adoption Lifecycle
– Technology Adoption profiles
Technology Visionaries Pragmatists Conservatives Skeptics
Enthusiasts (Early (Early (Late majority) (Laggards)
(Innovators) Adopters) majority)
Source: Geoffrey Moore

63. Diffusion of Innovations
• The Technology Adoption Lifecycle
– Technology Adoption responses
Stick with the
Hold on!
herd!
Get ahead of
No way!
the herd!
Try it!
Technology Visionaries Pragmatists Conservatives Skeptics
Enthusiasts (Early (Early (Late majority) (Laggards)
(Innovators) Adopters) majority)
Source: Geoffrey Moore

64. Diffusion of Innovations
• Selling to mainstream customers
– The Chasm
Chasm
Source: Geoffrey Moore

65. Diffusion of Innovations
• Selling to mainstream customers
– Crossing the Chasm: Establish a beachhead segment
Source: Geoffrey Moore

66. Diffusion of Innovations
• Selling to mainstream customers
– How Markets Develop
Tornado Main Street
Chasm
Early Market Bowling Alley
Source: Geoffrey Moore

67. Diffusion of Innovations
• Selling to mainstream customers
– Implications for Sales & Marketing
Chasm
Customer goal: Competitive Advantage Solve problem Adopt the obvious Extend paradigm
Customer need: Potential of technology Complete solution Make safe choice Better value
Vendor goal: Validate technology Segment share Market share Profitability
Source:
Strategy: Demo the technology Show ROI Set standards Segment focus The
Chasm
Skills: Technology proficiency Customer Intimacy Closing deals Relationship mgmt. Institute

68. Diffusion of Innovations
• Learn more
– Everett Rogers, “Diffusion of Innovations”
– Geoffrey Moore, “Crossing the Chasm: Marketing and Selling High-
Tech Products to Mainstream Customers”
– Geoffrey Moore, “Dealing with Darwin: How Great Companies
Innovate at Every Phase of their Evolution”
– The Chasm Institute, “Chasm Methodology”

69. Market Development Strategy
• Market Development Strategy
• Market creation variables
• Market attractiveness variables
• Market penetration variables

70. Market Development Strategy
• Market Development Strategy
– The Market Development Strategy checklist & stage in the
TALC
Source of money 1. Target customer
2. Compelling Reason to Buy Source of demand
To fulfill the compelling 3. Whole Product
reason to buy
4. Partners & Allies Needed for whole product
Function of whole product 5. Distribution
integration complexity
6. Pricing Function of all other factors
For the customer’s money 7. Competition
8. Positioning Relative to competition
Next move 9. Next Target
Source: The Chasm Companion

71. Market Development Strategy
• Market creation variables
– Target customer
• Identified economic buyer, accessible to the sales channel, and
sufficiently well-funded to pay the price for the whole product
– Compelling reason to buy
• Economic consequences sufficient to mandate any reasonable
economic buyer to fix the problem
– Whole product
• Ability (with the help of partners and allies) to provide a complete
solution to the customer’s compelling reason to buy
Source: The Chasm Companion

72. Market Development Strategy
• Market attractiveness variables
– Partners & allies
• Relationships with the other companies needed to fulfill the whole
product
– Distribution
• Sales channel in place that can call on the target customer and
fulfill the whole product requirements put on distribution
– Pricing
• Price of the whole product consistent with the target customer’s
budget and with the value gained by fixing the broken process
Source: The Chasm Companion

73. Market Development Strategy
• Market penetration variables
– Competition
• Target a space that has not been occupied by another company
– Positioning
• Establish credibility as a provider of products and services to the
target niche
– Next target customer
• Potential to facilitate entry into adjacent niches
Source: The Chasm Companion

74. Market Development Strategy
• Market Development Strategy
Target Customer: Visionary functional Pragmatist dept. Pragmatist End-users
executive manager technical buyer
Compelling Dramatic competitive Fix a broken Adopt new Better value with no
Reason to Buy: advantage business process infrastructure risk
Whole Product: Differentiated Standardized Standardized Differentiated
application application product product
Partners & Allies: BPR/SI service Recruited for Rationalize to Minimum required,
providers specific product reduce friction ideally none
Distribution: Direct sales Direct sales/VARs Higher-volume, Low-cost, high-
lower-touch touch
Pricing: Value-based, gain Value-based, pain Competition-based, Competition-based,
motivated motivated pain motivated pain motivated
Competition: Category vs. category Application vs. Company vs. Product vs. product
application company
Positioning: Technology-based Niche market Market share- Better experience for
leadership leadership based leadership end users
Next Target: Another visionary in a Adjacent niche New platforms, Next micro-niche
different industry market channels, geographies
Source: The Chasm Companion

75. Market Development Strategy
• Learn more
– Geoffrey Moore, “Crossing the Chasm: Marketing and Selling High-
Tech Products to Mainstream Customers”
– Geoffrey Moore, “Inside the Tornado: Strategies for Developing,
Leveraging, and Surviving Hypergrowth Markets”
– Paul Wiefels, “The Chasm Companion: A Field Guide to Crossing the
Chasm and Inside the Tornado ”
– The Chasm Institute, “Chasm Methodology”