Rob Gleasure R.Gleasure@ucc.ie www.robgleasure.com IS3320 Developing and Using Management Information Systems Lecture 17: The Lean Start-Up Rob Gleasure R.Gleasure@ucc.ie www.robgleasure.com

IS3320 Today’s lecture Lean startup Minimum viable products Pivoting Famous examples criticisms

The harsh truths of new ventures Whether it’s a new company or a spin-off from existing companies, the traditional process says: Do market research Write a business plan Get investment Develop product or service Sell it! Quickly! More than 75% of these new ventures fail. Why? Ideas tend to be neat and logical, the world doesn’t Forecasting unknowns has limited value New ventures are different from existing ventures

The valley of death Image from http://www.forbes.com/sites/martinzwilling/2013/02/18/10-ways-for-startups-to-survive-the-valley-of-death/#7e12f0b75e40

The ‘Lean Start-Up’ approach ‘Don’t execute a business model; look for one’ Basic principles Experimentation over elaborate planning At the beginning, all you have are a set of untested hypotheses (i.e. ‘assumptions’ or ‘guesses’) These need to be sketched out and tested asap Flawed assumptions need to be identified quickly to minimise the cost Discovering a failed assumption should be considered a huge victory Fail quickly, fail often, fail better

The ‘Lean Start-Up’ approach Basic principles (continued) Feedback over intuition Mantra of ‘get out of the building’ Ask consumers, partners, or other actors involved for feedback on every assumption you have made This isn’t just about the product or service; all aspects of the business model should be tested, e.g. distribution, customer engagement channels, costs, resources, etc.

The ‘Lean Start-Up’ approach Basic principles (continued) Iterative design over ‘big design up front’ Old model was to keep idea hidden to maintain first-mover advantage, i.e. ‘stealth mode’ New model is to develop your customer base along the way Get something up and running Get people using it Adapt to their needs as quickly as possible Obvious synergies with agile development…

Pivoting Image from https://hbr.org/2013/05/why-the-lean-start-up-changes-everything

Minimum viable product Don’t try and build something complete Release it once it’s useable and spend your time observing use and feedback Drop anything that isn’t adding significant demonstrable value Integrate changes that you have seen actually work Image from https://hbr.org/2013/05/why-the-lean-start-up-changes-everything

Business Model Canvas Image from https://hbr.org/2013/05/why-the-lean-start-up-changes-everything

What start-ups do differently Image from https://hbr.org/2013/05/why-the-lean-start-up-changes-everything

Famous Examples: Buffer Buffer was designed to be an application that would allow people to queue social media posts in advance, along with the times they should be shared Rather than build it and hope it sold, the founders decided to launch the homepage and see how many people clicked on the pricing link (at which point a message popped up explaining the site was work in progress but users could send an email if they were interested) Once they had proof people wanted it, they then repeated the process a level deeper with pricing plans

Famous Examples: Bounce Bounce is a calendar that uses GPS and web data to tell people when they need to leave for specific meetings/appointments/events/etc. They set up a pre-purchase option to generate early revenue but they decided to A/B test* different price points 1.4% of visitors pre-purchased at $5 1.7% of visitors pre-purchased at $10

Famous Examples: BliVakker An online cosmetics vendor in Norway called BliVakker (about 20K visits/day) decided to add Facebook login to the checkout process Almost 50% of their visitors are probably logged in anyway Image and story from https://vwo.com/blog/facebook-login-reduces-sales-ecommerce-store/ They ran comparisons with and without by splitting half their visitors for each Better conversion rates without (3%, $10,000 per week) Why?

Criticisms Hasn’t really been proven to the same extent as agile development Not really any established toolkit – more of a series of a revelations shared by enthusiasts Susceptible to ‘local maxima’ Uses the idea of ‘scientific’ to gain a sort of false legitimacy?

Want to read more? Blank, S. (2013). Why the Lean Start-Up Changes Everything. Harvard Business Review, retrieved from https://hbr.org/2013/05/why-the-lean-start-up-changes-everything Wong, K. (2015). Making It Through The Startup 'Trough Of Sorrow, Forbes online, retrieved from http://www.forbes.com/sites/kylewong/2015/08/09/making-it-through-the-startup-trough-of-sorrow/ http://www.inc.com/magazine/201110/eric-ries-usability-testing-product-development.html https://hackerchick.com/5-mvp-examples/ https://buffer.com/ http://www.needtobounce.com/