Overview and “Real-life” Example John A. Printen, Ph.D. The Lean Start-up Overview and “Real-life” Example John A. Printen, Ph.D.

Presentation Overview What is a Lean Start-up? Why use Lean Start-up Methodology? Fundamentals of Lean Start-up Putting Lean Start-up into practice: The Cellara Story Questions (and maybe) Answers

Lean Start-up “A start-up is an organization dedicated to creating something new under conditions of extreme uncertainty” Eric Ries A Lean Start-up employs methodology to RAPIDLY determine what customers REALLY want, and will PAY for.

Why Lean Start-up? Traditional Start-up Lean Start-up High risk of market failure Capital Intensive Inflexible Lower risk of market failure Capital sparing Highly flexible

Entrepreneurs are everywhere Entrepreneurship is Management 5 Basic Principles Entrepreneurs are everywhere Entrepreneurship is Management Validated Learning Innovation Accounting Build-Measure-Learn The 5 Principles of The Lean Startup Methodology are: 1. Entrepreneurs are everywhere You don’t have to be in a garage to be a startup (but you can be). Entrepreneurs are at GE, in the IRS, in Hollywood. They are in Intuit, in healthcare and revolutionizing the government. 2. Entrepreneurship is management A startup is an institution, not just a product, so it requires management, a new kind of management specifically geared to its context. 3. Validated Learning Startups exist not to make stuff, make money, or serve customers. They exist to learn how to build a sustainable business. This learning can be validated scientifically, by running experiments that allow us to test each element of our vision. 4. Innovation Accounting To improve entrepreneurial outcomes, and to hold entrepreneurs accountable, we need to focus on the boring stuff: how to measure progress, how to setup milestones, how to prioritize work. This requires a new kind of accounting, specific to startups. 5. BUILD-MEASURE-LEARN

Validated Learning Validated learning is the process of demonstrating empirically that a team has discovered valuable truths about a start-ups present and future business prospects. The essential unit of progress for start-ups Validated learning is backed up by empirical data collected from real customers Foundation is in experimentation

Innovation Accounting Start-ups need a different set of metrics than established businesses Holds entrepreneur accountable with stakeholders Meaningful vs. vanity metrics Only 5% of entrepreneurship is the big idea; the other 95% is the gritty work that is measured by innovation accounting- product idea prioritization, which customers to target, constant testing and brutal honesty.

Build-Measure-Learn Key to Lean Start-up thinking Experimentation to empirically determine what will add value or what will be waste Seek to accelerate this feedback loop Saves time and capital, while building value Learning drives pivot or persevere decision

Types of Pivots The “Blind” Pivot The Buzzword Pivot

The Cellara Story Approached in mid-2014 to help commercialize a new concept in stem cell biology: A benchtop device to fully automate stem cell culture. Founders were engineers Over beers with a colleague, heard how tedious/time consuming/error prone, etc. stem cell culture was to conduct Stem cell research was a hot area of bioscience and set to grow rapidly (iPSCs recently described) Company founded in 2013 to drive product idea towards market

Pivot I Formed hypotheses “Built” MVP Talked to Customers

Microscope + Liquid Handler Pivot I Learnings: Customers liked idea of automated stem cell culture Ability to visualize cells crucial Microscope + Liquid Handler

Microscope + Liquid Handler Pivot II Formed hypotheses “Modified” MVP Microscope + Liquid Handler Talked to Customers

Microscope + Liquid Handler Pivot II Learnings: Customers worried about cells being left out in the open Strong expressed need for 24/7 “hands-off” maintenance of cell cultures (especially weekends) Wanted to do experiments under low-oxygen conditions Microscope + Liquid Handler

Pivot III Facing the brutal truth: Scanning Pipettor Label Printer Cells Culture Plates Media & Reagents Cloud Database Barcode Labels Projects Protocols Materials Tablet & App Planning & Design Reporting Management User/Lab Facing the brutal truth: Developing a stand alone, fully automated system was beyond the capabilities of a start- up However, the IT component to build a functional user interface had value to customer

Cloud database for lab group MVP Cloud database for lab group Tablet app Web application Create protocols Plan & execute daily tasks Search & report Manage projects

First Product Release- 11/16 “Electronic Health Records for Stem Cells” Established multiple “Early Access” partners in the area to provide rapid, user-centric feedback as the software was being developed Signed on a world-renowned stem cell lab as early adopter (Paid!) Used at Madison Technical College Stem Cell Training Program First Commercial release will be lacking features, but will be commercially viable