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

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

3. 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

4. The valley of death
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5. 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

6. 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.

7. 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…

8. Pivoting
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9. 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
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10. Business Model Canvas
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11. What start-ups do differently
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12. 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 if they were interested)
Once they had proof people wanted it, they then repeated the process a level deeper with pricing plans

13. 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

14. 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
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They ran comparisons with and without by splitting half their visitors for each
Better conversion rates without (3%, $10,000 per week)
Why?

15. 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?

16. Want to read more?
Blank, S. (2013). Why the Lean Start-Up Changes Everything. Harvard Business Review, retrieved from
Wong, K. (2015). Making It Through The Startup 'Trough Of Sorrow, Forbes online, retrieved from