3. Kickoff Lecture: - Hi, - everyone. - This is Ash. - Um, - this is my first time doing a scale share class and doing a Google hangouts on air. - So if I mess up, - I apologize, - but I'll do the best that I can. - So this is the kickoff for the class that you were taking ready rods of building a - successful product. - So I'm going to switch to some slides and just introduce what we're going to be doing in - this class. - And then I will try to switch over and see if I can find questions that you guys might have - to start. - But let me walk through the slides first, - and then we'll go to the question section and you're in a little bit. - So we switched the slides. - Okay, - So by way of introduction, - I often like to tell myself So I would like to tell people that I identify myself first and - foremost as a practicing entrepreneur. - In the last couple of years, - I've been I've written a book and I've been traveling the world. - I teach workshops, - but first and foremost, - I'm an entrepreneur. - I build products much like I'm assuming most of you on the call. - You either build products or you want to build new products, - and so I kind of walk you through what I've learned. - I hate to start with bad news, - but most products fail, - and there's nothing surprising about this statistic. - We already know that the number is pretty high. - Whether it's 90% or less or more, - it's kind of irrelevant. - Most products just just fail. - The more interesting number, - though, - is that the products that do succeed report having drastically changing their plans along - the way. - So what that's really telling us. - It's that it's not so much about having that perfect plan a perfect vision, - perfect business model when you start out, - but rather finding, - getting to that point where you find a plan that works and the key part here is going to be - before running out of resources. - And that, - in a nutshell, - is what motivated me to start this journey of finding a better systematic process for going - from that initial spark of an idea. - So most entrepreneurs will most people in general get hit by ideas for some crazy reason. - Entrepreneurs want to act on those ideas, - and the acting part is the part that's really expensive because you can easily come it - years of your life to a particular idea. - So that was my real motivation for wanting to explore this. - And so I'm going to take a step back. - And first look at why building products is so hard. - You'll see some of this even in the first lecture. - But I thought it's important enough to cover it and reinforce it double multiple times, - and this is a common theme you will see throughout. - So if you take a step back, - it was a one of the main reasons that we often fall into Is this misconception off the - visionary entrepreneur? - And this is a myth that has been propagated by the media. - We like to think of people like Steve Jobs, - the late Steve Jobs, - Steve Jobs and others who are able to perfectly timed the market. - They're able to see where customers were going. - They're able to perfectly timed the market with these perfect products, - and the rest is history that have these overnight successes. - So this is what we've think product launches should be, - and when we see otherwise with our own products, - we feel like their failures and we can have quit too soon, - too early. - But even the you know the visionary Steve Jobs, - and I respect them dearly and for everything is done. - But even he has a string of failures, - and he himself, - on the launch of the iPad, - said that the iPad, - which he hold probably in his hands, - was years in the making. - On the right hand side, - I kind of got this timeline from some blogged that the references down there on all the - different things that could have had to happen for the iPad to be possible. - Some of these things are within Apple. - So even the iPad has a has a history in in the first Newton device that they that Apple - launched on the second Newton device, - which both were massive failures. - And then there's a string of other evolution of both software hardware to the iTunes music - store, - the iPhones, - the iPods. - All of those lead to the eventual iPad, - which was this revolutionary device, - and even though we like to think of it as this visionary launched, - it really has a long history that goes back in this case all the way to 1968. - So that's the part off the journey that we tend not to look at. - So we all want to have these instant overnight successes. - But the process of building successful products is really a long, - arduous, - uh, - sometimes learning and painful process. - The second myth that I like to throw out there is that a lot of us get into the in in front - of fall in love with this notion of building products and building products itself gets in - the way, - and this is a little counterintuitive because most startups are about building great - products. - So what? - What do I mean by this? - And I'll explain that with this slide over here. - If we look at the main reason why products fail as a state, - it was done in Silicon Valley. - It was not because the products failed to to be built. - All the companies that got sufficient funding and resource is to start build out their - original vision. - They were able to build what they set out to build, - but they failed because they were able to They were empty. - What? - They failed to find the right customers and mark pits for the product, - their products. - And so those products essentially didn't have a market for them and could not generate a - sustainable business model. - And so those companies just went out of business naturally. - But I spent all this time you spent years building this product only to find out they had - built something nobody wants. - And the reason that happens is because we get we fall in love with building products. - In a typical product development cycle, - there is this big middle that I've kind of labelled as very little learning. - That's where we often go away for several weeks, - months, - sometimes even years where we choose not to talk to customers because we're heads down - executing a plan. - And that's also where we go astray and either build too much or build the wrong product - altogether. - And this is something that ah, - Steve Blank also pointed at, - um also experienced in his own career and pointed out recently and something he labels as - customer development. - So one of his solutions that he proposes is not to be primarily focused on product - development, - but in parallel inject customers into the process. - And I will go one step further and say it's not just customers. - We have to be injecting conversations in general with people other than ourselves, - and I will kind of get into more of those details in the in the lecture. - The third thing that I see as a big contributor to start ups and products being hard is - this right here as we pay a lot of lip service to listening to customers. - But we really have to know how to listen to customers. - Often times people say I will not listen to customers because Henry Ford wouldn't have done - it because he was a visionary and I'm a visionary like him. - And what we failed to realize is that even in this coat there is a gem of a nugget. - There's a gem of information, - and that is that the customers may not be telling us to go and Master gives an automobile, - but they are clearly telling us what their problems are there, - telling us that they're not happy with their existing solution, - which happens to be a forest, - and the reason they're not happy is because the horse is too slow. - And so if a not front or where to go out and solve this problem, - they would be all ears, - and that's pretty much. - The directive that we have is entrepreneurs. - It's really our job to know what customers want. - It's not their job. - If you if you go into the customer, - want game, - you'll very quickly be speaking out Mars rocket rocket ship Um, - and not really what they need. - So that's kind of a key point there. - So number one reason that products fail, - I would say, - is because we waste time on an effort building the wrong product. - That's at the root of it. - And so what you're going to see in this class are techniques for working, - working in a different way where we try to systematically test what we build before we - commit to really building them a little bit about myself. - I've been an entrepreneur for many, - many years. - I started my first company in the right after the dot com crash, - and like many first time entrepreneurs, - I believe that stealth was the way to go. - I had this spark of an idea. - One day it was it was trying to build a social network before Social network was even a - term. - Um, - and I just kept it to myself as I felt the idea was so valuable if I told another living - person than the idea was just vaporize. - And so, - despite all myself that sometimes there comes a time for ideas of Friendster launched and - soon after there was a whole slew of social networks, - and even then I convinced myself that I was. - I was safe because what I was doing was very different. - I was building a private social network, - and so I rationalized that in my mind and kept building and building until I realized that - people didn't really care about privacy. - They do now there some services out that are doing private social networks. - But back in the early 2000 to 2004 timeframe, - no one really cared about private social network. - They was more a question of Give me a give me a handle where I can I can share away and - bring in friends on that was what what mattered the most, - and so that initial idea failed. - But there's a lesson in there, - and that is that Had I have been more open that I've been talking to customers, - I might have been able to avoid that two year cycle of building a product and realizing - that it was, - it was a difference, - but it was not a difference that mattered to my customers. - Um, - and that's kind of a key point there as well. - So instead of embracing stealth, - I tell people to embrace up security when you're first starting out. - No one really knows about you, - and that's actually a gift. - Our biggest challenge when we first start out is getting noticed at all. - And so what we can instead do instead of trying to be stealthy and not tell anyone about - our product. - We can be selective and tell other people people other than ourselves. - And I'll talk about who those are in some subsequent lectures, - but just to kind of name names. - I would say talking to customers is always a great idea talking to potential customers. - If they don't get excited by the problems you're solving, - then you don't really have anything they don't really say I want. - I want a solution to this problem. - Don't even have to tell them the solution. - As long as you say you're looking to solve this problem, - you can start there, - and no one can steal a problem. - People customers have problems. - You know they have have problems that people know about. - It's the solution is that it's It's the how you solve that will really matter at the end of - the day, - so you can go out there and openly talk about problems without fear of it being stolen. - Other places where you can have those conversations are with trusted advisers. - And so we'll have an exercise here in the next two weeks where you will go and do those - kinds of things, - talk to customers and potentially talk to advisers advisers before customers. - For me, - though, - I had after that first product failure, - I built other products, - and I felt like I got a little bit wiser with each product and I began to embrace failure. - I didn't have a problem with failing, - but what I was more interested in, - I was figuring out how to fail faster. - But more importantly, - how to learn and avoid failure altogether because you can get addicted to failing as well, - which is not a good thing. - So for me, - I was looking for when I get these sparks of ideas in my head, - what do I do with them? - How can I go and quickly bet them to see if these were problem worth solving or whether I - should go do something else. - Instead, - cut, - cut that idea loose and and disassociate myself. - And if you don't reach that closure, - the idea is just going to start the Fonte because you feel like you've got so many ideas - and you've not done anything with them and you don't know which one to start with, - and that also creates a paralysis. - So for me, - it was important to vet them as quickly as possible and then move on to the ones that do - work and weed out the ones that don't. - And that's what led to running Lean. - So around the 2000 and eight time frame, - I ran into the early works off Steve Blank and Erik Reece with customer development. - It means startup, - and what they were saying resonated with me so strongly at a, - uh, - a reasoning level at a theoretical level, - that I decided I would try those techniques out and I would start applying them on my next - product, - which I have just been had just started. - And in the process of doing that, - I felt that I had more questions than answers. - I started writing a blawg and publicly sharing my my learning along the way and that - eventually is what got turned into a book. - But even then, - as I said at the start, - I even after writing the book, - I still build products, - and a lot of what I do is is still building products and continue to share my learning. - So that's just a little bit of history about by kind of about where I've been and what I've - done. - A few disclaimers I like to throw out there is that I'm a very I'm very much of a - experiential learner learner. - Everything that I share with you is all built in firsthand experience, - either by way of building products of my own or by, - um, - working with other entrepreneurs, - helping them build products. - So everything here has been field tested and been refined, - and sometimes things are pretty rough, - but we kind of refined them over time, - and we will see these incremental improvements in the methodology. - If you read my belong you kind of Steve see things that start out very rough and they get - more refined over time. - But that's what I what I kind of do. - And that's the same thing that I did with customer development and lean Startup is in many - ways I decided to put them put these ideas through the wringer because there was a lot of - noise. - There still is a lot of noise about how to practice those kinds of things, - and that's what I feel like I I enjoy doing and I encourage everyone to do those kinds of - things because there is a lot of noise in the body of work and I will talk about one way to - get get around around that here in a second. - The other thing I like to throw out there is that there are no silver bullets. - There are no guarantees of success, - so just because you fall a particular methodology does not guarantee that you will build a - successful product. - But what I will pretty much guarantee is that it will raise your odds of building a - successful product so you will know whether you are on the right track or not. - And if you're not on the right track, - the solution is to course correct what we would again overly abused the start of term I'll - try to define it in some of the ah upcoming lectures, - but we will try to pivot your idea in that right direction. - And that is where I think the lean approach really shines is that it's not so much about - starting with that perfect plan. - But it's about building certain systems in place. - Where there is a feedback loop is a learning feedback loop that tells you whether you're on - the right track using weak signals at first and they get stronger over time or whether - you're way off course. - And if you're way off course, - you need to do something drastic initially to get on that right track did actually what the - process is in a nutshell. - It's a road map of what we're going to be talking about. - Um, - I mentioned I've read in the book so there. - A lot of these ideas are captured in the book, - and there's a lot of more detailed step by step instructions or not going to get into all - of those because we only have two weeks. - But I will say that one of the ways to avoid getting lost in the noise is separating - principles from tactics so If you look at the lean body of work, - there are things like split testing and continues deployment. - There's no customer interviews. - There's design thinking. - Type approaches is mean ux the analytics all kinds of different ways that that companies - claim to be to be practicing lean. - But in a nutshell. - There there really principles and not all of those tactics will apply to everyone. - So where I come from, - I say they're these core metal principles that you have to embrace and the reduction of - these to practice and very from product to product on. - And that is the where some of the challenge lies. - But that's also where a lot of the creativity lies that every company can implement lean in - their own way, - based on the culture based on the product they're building. - So these are the meta principles that I kind of embody in my in my book and what I what I - really talk about, - and I'll quickly walk through what these are. - So I mentioned how the entrepreneurs job is to go from that initial plan to one that works - . - You can get anywhere unless you have a plan to begin with, - and so the first step is really documenting that plan. - And so in the in the class, - we're going to be using a tool called Lillian Canvas, - which will allow you to capture that initial plan on a single one page document. - It won't take more than 20 minutes once you've read the video. - What, - you've watched the video and know what to do. - Another 20 minutes later, - you should have your initial plan dot and then what we're gonna do as a next step is begin - to start to refine that plan. - Before we refine it. - We actually identify what is riskiest. - So if you were going to build a complicated product, - you wouldn't start with what's easy. - But so why should we do the same thing when we're trying to build a complicated business - model? - You actually want to start with what is riskiest on that plan. - Sometimes it isn't Mr Lee building a product, - but again finding things like customers finding things like channels to those customers - that ends up being riskier. - Find finding out whether someone would actually pay for your product. - Period might be more riskier than building it and see if they do or do not so we'll talk - about what risk is and how you actually identify what's riskiest on the plan. - And then I will say I will introduce experiments. - We won't have much time to run any experiments in this two week, - but I'll introduce what an experiment is and how you think about experiments and how you - systematically test that plan. - So this is where I will stop limit, - get rid off. - I mean, - Mayor, - and I'm going to go over to the YouTube channel and see if there any questions I was still - that should be able to find questions down here. - If you have any questions, - you can go ahead and type them in the, - uh, - in the common section below. - Okay, - I don't see any questions. - I'm assuming it's not because I can't find them, - but that they really aren't any. - So I guess we'll end the kickoff over here And ah, - look forward to working with you in the ah, - in the coming days. - All right. - Thanks a lot. - Thank you, - everyone 4. Why Products Fail (13:13): - Hi, - this is Ash would spark 59 by way of introduction. - I'd like to say that first and foremost, - I am an entrepreneur and I love entrepreneurs, - so I hate to be the bearer of bad news. - But this is the sad reality most start ups fail. - Most products, - in general fail. - The more interesting number, - though, - is not the high failure rate, - but the fact that most startups that actually succeed report having drastically changing - their plans along the way. - So what that tells us is that what separates successful entrepreneurs from those that don't - quite make it is not necessarily starting with a better plan or vision, - but rather finding a plan that works before running out of resources. - That's what we're going to cover in this course, - a systematic process for quickly vetting new product ideas and raising your odds of - building a successful product. - But before we do that, - let's take a step back and see why building successful products is so hard. - First, - there's a general misconception around how successful products get built. - The media love stories of visionaries who see the future and chart a perfect course to - intersect it. - The reality, - however, - really plays out. - Quite a simply one of the most visionary entrepreneurs of our time is the late Steve Jobs. - But even the unveiling of the visionary computer, - the iPad in Steve Jobs own words where years in the making build in several incremental - innovations and lots of failures, - off software and hardware along the way. - The second reason why building products is hard is that part of development gets in the way - . - This one is a little counterintuitive because the main purpose of a startup is to build a - great product. - But here is how this happens. - Most products fail not because we failed to build what we set out to build, - but because we failed to find the right customers and markets for our products. - In a traditional product development cycle, - we engage customers and markets a little bit of the front end, - but mostly at the tail end of the process. - After we release our product, - there's a large middle where we disengage from customers for several weeks or months at a - time while we build and test or product. - It is usually during this time that we either build too much or are led astray and build - the wrong product, - and finally we pay a lot of lip service to listening to customers. - But you simply can't ask customers what they want. - You have to know how to listen to them. - A lot of people cite this coat and declared hopeless to talk to customers. - But even hidden in this code, - there is a nugget of information. - There is a customer problem statement. - Had customers really said they wanted faster horses, - they would have been asking for something faster than their existing alternative, - which happens to be a horse. - Given the right context, - customers can clearly articulate the problems they want solved. - But it's not their job to come up with solution. - That's your job as the entrepreneur simplifying even further, - I would say that the number one reason why products fail is because we waste time, - money and effort building the wrong product. - I attribute the entrepreneurs often unbridled and singular passion for their killer idea or - solution. - As a top contributor to this failure, - let's see how this story plays out. - When entrepreneurs get hit by an idea, - they typically fall in love with the solution or what I like to call awesome and - immediately rush to start building out their solution. - We're often told to build something unique or different, - so we purposely define the solution in such a manner that when we look around, - we find no competition. - While this makes us happy, - it can be a false positive. - True, - unfair advantages are rarely built from the solution will cover this in great detail later - in the course. - One of the most commonly cited unfair advantages is being first to market. - Take a look at these companies. - None of them were first movers in their markets, - but rather they were all fast followers. - One could actually argue that being really first to a market can be a unfair disadvantage - because the burden of learning and marketing a new product is all in the first mover. - Over time, - the legacy of being a first mover can actually create more mass or inertia, - allowing a fast follower to piggyback on the learning of the first mover and getting first - in the customer's mind, - which is really the advantage that can make a difference. - Not simply being first to move another more immediate and pressing reality, - though we faces entrepreneurs, - is affording our creative addiction In other words, - how do we establish enough runway for our product, - the first place we often turn to our people with bags of money. - These could either be internal stakeholders in the company or external stakeholders like - investors. - But when we pitched them only other solution. - We often get shown the door and given the polite no, - let's see why, - when external stakeholders like investors, - look at your company, - they don't care about your solution on Investor does not get excited because you're using - some cutting edge technology in an innovative way. - Rather, - investors are in the business of making a return on their investment, - and they view your company purely from that lens. - The first thing they look for is evidence of traction or engagement with your customers and - markets. - Next, - they care about the intersection of your cost structure and your revenue streams. - In other words, - they want to know how will you build a scalable and profitable business? - Yeah, - they don't really care about who your customers are, - but they do care about how many people they represent. - In other words, - how big is this market? - How big is this problem? - And finally, - they worry about things like defense ability. - They'd like to know if you were to build a successful business, - how you plan on keeping competition and copycats at bay because they will come. - But of all these things, - investors care about traction over everything else. - Since traction is the engagement of your product with customers, - it is actually logical. - Do not start with investors, - but rather start with customers. - So let's take a look and see what customers really care about. - When customers see her company or product, - they to don't care about your solution. - Customers don't wake up one day and say, - I need to buy a product. - Richard and Rails Django Objective C or the next hot programming language. - Customers buy products to solve underlying problems they have. - The way you tell them about your product, - though, - is not through your solution, - but rather by crafting an effective, - unique value proposition. - The unique value proposition is the intersection of your customers, - top problems and your solution. - The job of the unique value proposition is not to close the sale, - but to start the conversation. - People are constantly bombarded by advertising and offers from all over the place. - The first battle is just getting noticed. - As we'll discuss later. - Crafting an effective, - unique value proposition is more easily said than done. - On Important First Step is narrowing down on your prototypical early customer or early - adopter who needs your solution the most. - While we would all like to build a mainstream product like Facebook that is used by - practically everyone around the world, - even Facebook started with a very narrow definition of an early adopter, - which happened to be a college student at Harvard. - When you try to market to everyone, - you end up marketing to no. - One. - If you're able to get this far, - what matters next to customers is the price or currency you place on your product or - service. - In order for customers to part with their hard earned money, - the value of your promise has to be commensurate with your pricing. - It is important to point out that the currency of exchange might not be money, - but other things like attention or engagement, - such as in the case of a multi sided market that uses an ad based model. - There. - You are in charge of your users money to use your product, - but you're still building an asset in terms of how much time and attention that give you a - product, - which you hope to monetize in this case through advertisers. - The thing that matters the most of customers here, - though, - is your unique value proposition or promise. - That's what gets their initial attention, - they realize, - showed you all these different worldviews is so we can attempt to redefine the true product - often. - Entrepreneur, - the true Project An entrepreneur isn't just building on awesome solution but turning that - solution into a question mark and in fact, - turning everything on the canvas into a question mark. - The true product. - If an entrepreneur isn't the solution but a working business model and the true job often - entrepreneur is systematically de risking that business model over time through a series of - conversations. - So how do you do all of this? - You can find the long answer. - In a book I wrote called Running Lean in the book, - I systematically walk you through the process of vetting new product ideas and building - successful products. - It's chock full of real world case studies and field tested tactics for doing all this, - but here is the condensed version of the book shown here as three core meta principles. - The first man of principle document your plan A is critical because, - as entrepreneurs were especially gifted at creating a reality, - distortion fields around ourselves and convincing ourselves that we are on the right path. - While passion and determination are key attributes for success left unchecked, - they can also turn the journey into a faith based one largely driven by dogma versus facts - . - Traditionally, - we have used business plans for this purpose. - Raise your hand. - If you've Everett in a business plan before now leave your hand up if you enjoy the process - . - Usually when I ask a room full of people this question, - all but one or two hands go down. - The intention behind business plans a sound, - but the format is all wrong. - The biggest issue I have with business plans is that they take several weeks to write, - and the people that make you write them don't read these plans themselves. - They instead ask for the one page executive summary, - the 10 page slide deck or the 32nd elevator pitch. - If you're going to have to condense your business, - plan down anyway, - why don't start there and avoid the waste in the first place, - especially since the perfect plan is a myth, - and it's going to change a lot along the way. - The alternative is creating a more portable one page business model, - which looks something like this. - This is the lean cannabis format I adapted from Alex Oster, - Walter's original cannabis, - which I'll show in a second. - If you've ever heard in a business plan before, - he will immediately recognize most of the building blocks on the canvas. - Compared to a business plan, - the lean canvas takes just 20 minutes to create. - It forces you to be concise, - and because it fits on a page, - people can't help but read it and have an opinion. - That last part is absolutely key, - because conversations with people other than yourself is the key part to empirical learning - . - This is what Alex, - Oscar Walter's original cannabis looks like, - and here have highlighted the changes that I made. - I'm not going to go into the details of my changes, - but if you're curious, - you can check out this block post I wrote just on that topic. - But before we go on, - I do want to revisit the three Metta principles one more time. - These meta principles are deeply rooted in the realization that your business model, - not your solution, - is a true product off your startup. - Thinking about your business model as a product is particularly empowering because it - allows you to apply well known product development principles to the building off your - business model. - For instance, - the first principle documenting your plan A on the canvas is an application of the divide - and conquer technique. - You take a tough problem of building a successful business and break it up into its - component parts, - which makes them more manageable. - The next principle of tackling the riskiest parts first is also taken from the pro - development playbook. - If you had six months to deliver a product, - you wouldn't start with what's easiest but rather prioritized, - working on the riskier stuff first. - So there are no last minute surprises as you approach the deadline. - Similarly, - in a startup, - we need to prioritize testing what's riskiest in the business model. - Worse is what's easiest or more fun. - You can see what I'm going for most products. - The solution isn't what's riskiest. - Once you've got your starting plan and risks identified, - you, - then systematically test your plan. - Using experiments going from highest risk to lowest risk. - After you run an experiment, - there is a learning feedback loop that goes backwards. - And you use that to update your risks from there. - And eventually it goes all the way back to where you update your business model. - Next time, - I'm going to show you how you can capture your initial vision or plan in just 20 minutes. - And from there we'll dive a little deeper into the other two matter principles. - Until then, - take care. - Thanks. 6. Capture Your Business Model in 20 Minutes (11:30): - Hi, - this is ash would spark 59 by now. - You should have taken your business model as far as you can or should on paper. - Yes, - I know you can probably continue brainstorming possibilities, - but endlessly brainstorming possibilities grounded and uncertainty is a recipe for failure - . - It's time to get outside the building and gather empirical evidence from people other than - yourself. - This brings us to the second meta principle. - Your next goal should be identifying what's riskiest on your canvas because testing the - entire business model it once can be overwhelming. - Plus, - it will take too long as we'll see shortly. - Not everything needs to be tested. - At the same time, - it's more effective to incrementally test your business model and incorporate your learning - along the way. - This meta principle of tackling the riskiest parts first follows from the business model as - a product theme I shared earlier. - Given a hard deadline for a project, - you wouldn't start by building what's easiest but what's hardest or riskiest to avoid any - last minute thrashing. - The same applies to your business model. - I would go even further and say that building a successful product is fundamentally about - risk mitigation. - The true job. - Often, - entrepreneur is systematically de risking their business model. - Over time, - I'm often approached by solo founders looking to find other co founders. - The technical founders tell me they're building a product and need a business oriented co - founder. - The business oriented co founders tell me that they have this killer idea but can find a - technical co founder to build it with. - My answer to both of them is the same until you gather some additional evidence that your - idea has legs. - It's too risky for others to jump in on faith alone. - They can see what you see, - and it's your job as the entrepreneur to convince them that this is a project worth - committing to. - The same applies with customers customers. - We're constantly bombarded with product offers. - Good marketing is essentially about connecting with your customers needs and de risking the - offer so that they pick you versus the alternative. - The first thing that gets their attention is your unique value proposition or the promise - you make raising investment to isn't done solely on the merits of your solution, - but rather by de risking all these things traction being the one that gets the most - attention. - So with all that, - let's turn back to the canvas and see how you prioritize these kinds of risks. - The first thing to realize is that your canvas has lots of uncertainty. - When you first start out, - almost everything is uncertain. - But there's a difference between uncertainty and risk, - so it helps to start with some definitions. - Uncertainty is simply the existence of multiple possible outcomes. - For instance, - you may not know whether customer Segment A is a better early adopter than customer segment - be. - But at risk is a quantified state of uncertainty where we attribute a value to being wrong - . - So in the previous example, - customer segment A may represent a higher price point than customer segment. - Be if your business model hinges on being able to charge your customers that higher price - point missing that mark could have a catastrophic effect, - and so it would be, - ah, - higher risk. - Next, - let's talk about the different types of risks. - The first is product risk, - which is all about getting the product right on the canvas. - Product risk is represented by the problem solution and unique value proposition boxes. - I also include cost structure because it represents the resource is you need to build out - your product and revenue streams because pricing is very much part of your product to, - as you might remember from earlier, - where I showed you the bottled water. - Example. - Customer risk is all about building a scalable path to customers on the canvas. - It is represented by the customer segment, - early adopters and channel boxes. - And finally, - market risk is all about building a viable business, - which on the canvas are represented by these boxes. - Existing alternatives because they represent your true competition, - the key metrics you will use to measure traction. - The intersection between your cost structure and revenue streams will determine your - margins or viability of the business model. - And finally, - you're unfair advantage story to defend against competition. - So the good news is that while everything on your canvas is uncertain to some degree, - not all uncertainties are equal. - From a risk perspective, - the first step to prioritizing risk is understanding that three stages of a product what's - risk it on your canvas morphs as you move through each of these stages. - So let's walk through them. - The first stage is the problem solution fit stage Here, - you ask yourself whether you have a problem worth solving in the first place. - From a risk perspective, - the biggest risk initially lie in the customer segment and problem boxes. - If you don't understand customers and their problems, - you can build the right solution for them, - and everything else on the canvas falls apart. - This is why I push entrepreneurs to start with this quadrant in their initial testing. - Once you have a good enough problem and customer segment understanding, - you can then start formulating the first version all of your solution, - or what in the lean sense we'd call a minimum viable product. - You're then ready to move into the second stage, - where the key question is testing. - Whether you have built something enough people want from a risk perspective. - At this stage, - aspects of your product, - like your solution, - unique value proposition and pricing are probably most important. - It's also important to point out that this stage is more about learning versus optimization - , - and pricing is a good way to illustrate this distinction. - I consider revenue streams as one of the riskier aspects of your product. - If you find out later that customers won't pay for your product, - that can be fatal for your business model. - That's why I advocate charging for your product from day one. - Worse is hiding behind an Alfa or beta product. - Excuse. - That said, - at this stage, - I'm also MAWR interested in testing that people will actually pay something than trying to - find out that optimal price testing that people will pay is a learning goal. - Finding the optimal price is an optimization go better saved until the next stage. - Now, - once you have enough people using your product, - you're focused, - then shifts to the final stage where your goal is to scale your product. - At this stage, - you have demonstrated that your product does deliver value at least a small scale your - risks now shift to We're scaling your solution, - scaling your channels, - optimizing margins and establishing a competitive advantage against copycats and - competition. - Understanding these three stages of the start up and the underlying learning milestones is - very helpful in triaging your risks. - The problem we have is entrepreneurs isn't necessarily identifying things to work on, - but focusing on the right things to work on at the right time. - Incorrect prioritization of risks is one of the top contributors of waste here. - I'll show you a quick brainstorming exercise to do with your team for triaging your risks - in this way, - you had out post it notes to everyone on your team and have them write out their top 10 - risks. - You then triaged these risks first, - by when they matter. - That is, - when will the particular risk have the greatest impact? - You roughly group them by the three stages. - Problem solution. - Fit brought up market fit or scale. - Next, - you place them into one of the quadrants on the right, - based first on how uncertain you are about the risk and then based on the potential impact - or value of the risk coming true. - So, - using the pricing example again, - I may be reasonably certain that customers will pay something for my product because there - is evidence that they use other pain alternatives for solving this problem. - But because my business model works only at a certain premium price point, - that constitutes high risk. - Once you've done the 1st 1 Similarly, - go back and triage all your other risks. - The final step is quickly joining down your mitigation plan under the risk or on a second - posted card. - This is usually a one line or one sentence summary on how you might solve our address at - particular risk. - So, - for instance, - if one of the risk is that nobody will buy from us because they don't yet trust us, - one of the mitigation plants might be to go and get some third party social proof or third - party certification or validation that we are indeed trustworthy. - This is a good exercise to triage your known risks. - But what about the risks? - You don't yet know that you don't know. - The best way to uncover these kinds of risks is by having conversations with other people - people you would consider bringing on as advisors. - These air typically other entrepreneurs with prior domain knowledge and our experience who - can complement certain gaps on your own canvas. - For instance, - if you're trying to sell into the enterprise, - talking to someone who has successfully done this before might help uncover certain tactics - or risk areas that you might be able to avoid or employ to get into those markets. - When setting up these meetings, - I don't recommend simply emailing them a copy of her canvas and then asking them what they - think. - The reason is that the canvases like a good slide day. - A slide deck often assumes context that needs to be communicated in person. - And so if you just simply email them your canvas, - you may be subject to a lot of misunderstanding. - I instead recommends setting up a face to face meeting, - if possible, - or one over the phone with a potential advisor. - Using a learning context, - you're in pitching but seeking advice. - Spend 2 to 3 minutes walking them through your canvas. - Asked them what they think, - then shut up in lesson. - Pay particular attention to the immediate objections they raise. - Trying not to view the objection is a reflection on yourself or try to convince them - otherwise. - Instead, - view these objections as third party external prioritization of risks that you most likely - will need to address. - At some point, - you should ask them what they think you would need to do to overcome these objections after - the meeting. - Similarly, - triaged they're risks toe, - identify when they're important, - how important they are and what actions might be needed to mitigate them. - While potential advisors are a great source for prioritizing risks, - beware of the adviser paradox had the end of the day it is still your job to own your - business model. - No one can tell you what you do. - And even though advisers usually have the best intentions at heart, - they can give you bad advice. - So instead of blindly falling, - what advisers tell you, - synthesize it and apply it. - If they raise objections, - try to find ways to address them if they give you a prescriptive advice tested first. - That small scale the process for finding good advisers is very similar to that of finding - good early adopters. - It takes time when you do find a good advisor, - consider turning it into a more formal relationship. - So that's what I have to share on risks for today. - Remember that incorrect privatization of risk is the top contributor of waste, - so don't skimp out on the steppe. - It can also make the difference between accelerating your learning and simply spinning your - wheels with needless busy work. - Next time I'll talk about how you set up design and run experiments to mitigate your top - risks. - Until then, - take care 7. Top 10 Business Model Pitfalls (11:45): - Hi, - this is Ash would spark 59 by now. - You should have completed your first business model canvas. - Today we're going to spend some time putting your business model through the ringer. - The reasoning behind this is best summed up by Seth Coded. - All products go through some level of thrashing successful products do all their thrashing - at the beginning. - Yes, - Last time I stress that you can't reason your way to a plan that works. - And, - yes, - you have to get outside the building to empirically test your plan. - But you can get your initial plan to a much stronger starting point and save yourself a lot - of learning time simply by avoiding some common pitfalls that have tripped up other - entrepreneurs. - That is what today is really about. - I'm going to run down the top 10 business model pitfalls I have repeatedly seen by working - with hundreds of entrepreneurs and show you how to avoid them. - Here we go, - number 10. - Not clearly defining your success metric. - I've recently run into a number of entrepreneurs who from the outside seemed to have it all - together. - They have a nice office, - 20 plus people in the team and a product that customers do seem to like. - But they are unhappy. - They're unhappy because they want to grow their business even more. - When I asked them why they want to grow, - or more specifically to what they want to grow into, - they don't really have an answer. - They're pursuing growth for the sake of growth. - The reverse extreme is also common. - It's fairly common to find entrepreneurs who have achieved just enough lukewarm success to - keep plowing forward endlessly. - Both of these companies are what we call zombie companies. - They have mastered the art of creating just enough short term runway to keep them from - going out of business at the root. - The problem is that they don't really have a clear vision of what success should look like - . - This is something you capture under your key metrics section. - Now I'm not going to tell you what success should look like for you. - It's different for different people. - For some people, - success is building $100 million company. - For others, - it's building a $10 million company for others. - Yet it's something else entirely, - like bringing a change in the world, - making a dent in the universe. - There is no wrong answer. - But whatever your reason, - you should take the time to ask yourself why you want to build this specific business and - what the finished story benefit would be to you. - That is, - how will you recognize success when you see it? - Then you need to set a time box for realizing this finish story benefit. - In other words, - try to focus on your overall why and when. - For this business. - This is a great talk to help with uncovering your why. - I'll have more to say about the golden circle in later videos. - Once you have your why and when written down, - you then want to take a step back and ask whether your current business model can scale at - least on paper, - to meet that success metric. - If not, - rethink your business model. - Now Worse is waiting to see what happens six months or two years from now. - Next, - we all would like to build a company like Facebook that is used by practically everyone on - the planet. - But here's the thing. - When you start by building a product for everyone, - you end up building a product for no one. - Even Facebook didn't start by opening up their network to everyone. - They started with a specific customer segment there, - early adopter who happened to be college students, - and not just any college student but college students at the Harvard campus. - At this point, - it's critical to hone in on your early adopters because they will define and determine your - initial business model. - Now those of you that have read Geoffrey Moore's Crossing The Chasm Book will be quick to - point out that the early adopters behave very differently from mainstream customers and - that there is this chasm between them that can be hard to cross later. - But here's the thing. - Most of you are at the beginning of this curve. - You should be so lucky to have a chasm to cross one day. - Also, - you can cross this chasm by trying to leapfrog early adopters, - but rather by riding the curve and using early adopters to build enough momentum to then - leap over the chasm. - So take one more passenger early adopter definition and make sure it's a specific, - as you can make them while still maintaining a healthy addressable market size. - That said, - there is a real danger of getting too narrow too soon and falling into the local maximum - trap at the earliest stages. - Your job isn't executing, - but finding a plan that works, - we can turn to computer science and search algorithms for some inspiration. - Here in computer science, - there is a mathematical optimization technique called hill climbing that attempts to find - better solutions by incrementally changing a single element off the solution. - The problem with this approach is that while it's good at finding a local optimum, - it doesn't guarantee that you'll be able to find the best possible solution out of all - possible solutions. - A way to see this visually is imagining you're blindfolded and placed halfway up on the - smaller hill in this picture, - and you're given the task to get to the highest point. - You'll probably have no problem stumbling your way eventually up to the top of the small - hill, - where you'll declare your the highest point on Lee to be shocked by the neighboring - mountain. - When you take off your blindfold, - the same thing can happen with your business model. - If you narrow down too quickly and focus all your attention on optimizing it, - you may successfully achieve a local maximum but miss out on a much bigger opportunity. - While there is no way to completely avoid the local Maxima problem, - you can raise your odds of success when you're initially open to exploring and even testing - multiple models in parallel. - After creating your initial canvass, - it's usually a good idea to take a step back and ask yourself if there are other customer - segments Andrew problems that you can explore. - I recommend quickly sketching a few variations and picking a short list no more than three - canvasses for further testing. - If you still just have one, - that's okay, - too. - You will eventually need to convert to just one model as you get further in your testing - anyway. - The more important thing at this stage is to be open to multiple possibilities and cast a - wider net. - Since everything on your canvas is still a guess and open to a lot of uncertainty, - Number seven The secret to getting a customer's attention is nailing their problem. - You can do that by using a general problem statement, - but going the other way. - Revisit your problem statements and using your more specific early adopter definition now - attempt to get even more specific on your problems. - Use the five wife's technique. - I showed you last time and the jobs to be done framework to define specific work flows or - use cases where the problem surfaces. - Number six. - Having no unfair advantage story. - I mentioned before that most startups don't have an unfair advantage on Day one, - and it's OK to leave this section blank. - Especially of the alternative is speaking something that is clearly not an unfair advantage - , - such as having more passion or more features that said theon for Advantage boxes. - Unlike the other boxes, - it's not something you decide to test one day, - but rather if and when you start getting some traction, - your competition and copycats will do it for you. - If you don't get have an unfair advantage by then, - you may be easily displaced, - so you do have to at least take some time to think about this unfair advantage and think - about where it will come from, - maybe even start taking some initial steps towards building it. - Number five. - The biggest initial challenge of a startup is getting noticed at all my customers, - which is the job off your unique value proposition. - It needs to be different, - and it needs to matter if you could do these two things. - You stand to make the competition irrelevant. - Revisit your unique value proposition using the formulas I shared with you last time and - see if you can make them stronger or come up with alternates that you may want to test. - Remember that your unique value proposition typically goes on the landing page, - where it has less than eight seconds to make an impression. - At the same time, - this is something you're going to do a lot of testing around, - so don't stretch too much over this. - But just make sure that this is something that you give enough attention. - Number four. - Not having enough runway running out of resources is the main reason products eventually - fail. - One of your main jobs initially, - should be establishing enough runway until your next significant learning milestone. - I tend to break these milestones into three stages. - The first milestone. - Ask the question. - Do I have a problem worth solving? - You determine this through early conversations with customers, - after which you define your initial product or minimum viable product. - Once your minimum buyable product is defined, - you build it in the second stage and then test. - If it works well enough at small scale. - And then finally, - you turn your attention towards scaling, - so the initial milestones that I like to get through are usually the problem solution. - Fit stages and some off the product market fit stage. - Revisit your cost structure and solution boxes to see if you can reduce cope even further - on your minimum viable product. - So you're short on your validation cycle with customers. - If you're going to be raising funding, - identify how much traction or customer engagement you need to achieve for that conversation - with investors. - If you're bootstrapping, - identify your break even point and put some time constraints around it. - Number three. - No significant path to customers I wrote a post titled The Follis E of Customer Development - , - which you can find on my blog's. - The main thesis in there was that the ability to build a scalable channel ultimately - determines your products. - Fate. - You can sometimes identify a handful of early adopters, - use them to build the right product and even get paid. - But if you can't reach Mawr customers at scale, - nothing else matters. - While it's okay to start with any channel to start the process of learning, - I would encourage you even at this stage, - to identify where scalable channels will come from and start investing in building and - testing them right now from day one. - Number two. - No monetize herbal pain. - The difference between a hobby and a business is that the latter gets you paid. - Your business model needs to be able to tell a conceivable story, - at least on paper, - on who is going to pay you and why. - There are two main questions to answer here. - What do customers pay today to solve this must have problem, - and what will you charge for your solution? - You determine both of these from your list of existing alternatives. - It helps to again think of your product in terms of a job. - Customers hire you to do how much money or effort to do they expand. - Getting this job done is a good way to start this process. - And finally, - the number one pitfall, - which hopefully should not be a surprise at this point, - is falling in love with your solution. - When entrepreneurs get hit by an idea, - they fall in love with solution or again, - what I like to call as awesome sometimes that awesome is truly awesome, - for a lot of people, - but more often than not, - it's not as much as possible. - Differ thinking about your final solution, - at least for now. - Just don't do it. - Instead, - challenge yourself to think in terms of the minimum viable product where the primary - directive is delivering value to customers in the fastest matter possible, - your true minimum viable product will be revealed as you get outside the building and start - having real conversations with customers. - So there you have it. - Work your cannabis through each of these pitfalls and you'll find yourself at a much - stronger starting point until next time. - Take care, - thanks. 9. Systematically Test Your Plan With Experiments (23:55): - Hi, - this is ash would spark 59 is a quick recap. - By now, - you should have documented your initial plan A and identified a handful of top risk items - to tackle. - This brings us to the final and most important medic principle, - using experiments to systematically test your plan. - Running experiments is the key activity in the lean startup, - but running effective experiments takes discipline and is actually quite hard to do in this - video. - I'm going to walk you through some ground rules for doing just that. - But first, - let's start with the definition. - If you already familiar with the lean start up methodology, - you've no doubt seen this picture before. - This is the build measure learned Loop Erik Reece codified about three years ago. - A cycle around this loop is what we call an experiment. - It starts at the very top with a set of ideas or hypotheses. - You then turned these hypotheses into some aspect of a product. - This doesn't have to be the final product, - but some appropriate proxy of it, - which you put in front of customers for the purpose of measuring their reaction, - either through qualitative and or quantitative meats. - The data you collect here leads to learning, - which then fuels the next set of ideas or experiments. - As an example, - I might have a set of hypotheses that my early adopters will be Internet marketers and that - they would pay $100 a month for my product. - I might decide instead of building out the full product, - which would take too long to instead put up a demo or screenshot of my product on a landing - page and then go show it to these Internet marketers. - At the end of the demo, - I would present my $100 a month pricing model and measure how many of them convert to the - next stage. - Based on the reactions to my offer, - I might have to refine my hypotheses and start a new experiment. - Or, - if my hypotheses were validated, - I would move onto testing other high risk hypotheses and follow up experiments when - designing an experiment. - There are three attributes that are critical. - The first speed has measured by the cycle time around this loop. - You remember from earlier that the real challenge in building a successful product is going - from your initial plan A to a plan that works before running out of resources. - To do this, - you have to learn as quickly as possible. - It is important to obsessively reduce the scope of what you have to build without - compromising on the hypothesis you're trying to test and then getting it out in front of - customers as quickly as possible. - Every experiment needs to end and customer learning an experiment is only done after you - have measured your customers reaction and reach some action. - Will learning or decision point and something? - I talk a lot about this focus at any given point in time. - There are dozens of things that could possibly be tested, - but only a handful of them will have that 10 X impact on your progress. - You need to only focus on those key actions or top risks and ignore the rest. - There's a visual way of illustrating what happens when you don't have all three of these - attributes. - If you're going fast and focused but not learning from customers, - the image of a dog chasing its tail comes to mind. - You're probably executing on some plan, - but remember that most initial plans don't work by themselves. - Without the customer feedback loop, - you risk building too much or going astray and building the wrong product. - If your focus on the right things and learning from customers but are going to slow you - stand, - the risk of running out of resource is or being outpaced by a fast follower. - And finally, - if you're going fast and learning but not focus on the right things, - this is one of the more common traps of premature optimization. - This is where, - as a technical founder, - you might obsess over scalability and endlessly to you in your code or servers instead of - launching. - The reality is that you have zero customers today. - It would probably have zero very few customers when you actually launch. - If your customers do end up crashing your servers, - that is actually a great problem to have, - because it shows demand for your product. - You can almost always come back and solve these at first using more hardware and then - falling up with additional tuning and optimization. - Twitter, - YouTube, - Facebook all went through this and did an architect for massive scale from day one. - I don't want to just pick on the technical folks. - If you are a marketer, - you might fall into the trap of endlessly optimizing your landing pages. - At some point, - you reach a point of diminishing returns. - Squeezing an additional half a percent in conversion on a site that only gets 100 visitors - a day might not be the best use of your effort at this stage of your product cycle. - So the key point I want to drive home is that in order to build an optimal learning loop, - you need to design your experiments to maximize on all three things. - Speed learning and focus. - Next, - I'm going to cover some ground rules for running effective experiments. - First, - there's a natural tension on the one hand between keeping her experiment small and fast and - , - on the other hand, - expecting them to uncover big breakthrough insights. - You'll probably never run a single experiment that completely de arrest your entire - business model. - Experiments will be treated a standalone, - monolithic projects, - but should rather be strung together so the learning is additive. - The three stages here help illustrate this additive process. - When you first get hit by an idea, - you start by validating. - If you have a problem worth solving you then move into the solution value testing phase and - then finally into growth or scale. - Each of these stages are additive and builds on learning from the previous stages. - Next, - the expected outcomes of your experiments needs to be declared up front. - This is very important because if you simply plan on seeing what happens, - you will always succeed because something will happen. - It's then very easy to rationalize whatever happens, - good or bad to fit into your mental model or reality distortion field and convince yourself - that you are on the right track. - Simply stating or expected. - Outcome, - however, - is not enough. - You have to state it as a fault if Aibel hypothesis, - which is a concept taken right out of the scientific method of fault. - If Aibel hypothesis is a statement that can be proven falls, - this is a necessary condition when setting up an experiment. - Otherwise, - it's too easy to fall into the inductive ist trap. - And always convince yourself you're on the right track. - Let me illustrate this with an example considered a statement above here. - I believe that because I am called on coat on expert, - I'll be able to drive early adopters to my product. - I might do a number of things to test this belief. - Such as write a block post, - speak or send out a Twitter update announcing my product. - But at what point is this hypothesis validated? - Is it when I get 10 people to sign up 100 people or 1000 people because they don't - explicitly state this, - I can declare success at any point provided I get at least one side up. - Here is the same belief torn into a more specific and testable falsify able hypothesis. - This time I'm going to take a specific action, - which in this case is writing a block post. - And as a result of that action, - I expect to see at least 100 sign ups. - This time. - I clearly know how to both measure and declare success. - Here's a simple formula I use for crafting fault Bible hypothesis. - It starts with a specific repeatable action. - On the left hand side, - they will drive an expected measurable outcome on the right. - As simple as the step sounds, - I often find entrepreneurs reluctant to make such predictions. - They're generally two reasons for this. - First, - they hate to be proven wrong. - This one is inherent in our nature. - We often have personal egos attached to our products I know it's hard to offer an easy - solution here. - All I can say is that running lean is fundamentally about being less wasteful. - The irony is that you can really appreciate waste unless you have been somewhat wasteful - before. - At some point in the entrepreneur life cycle you started, - detach your personal ego from your product and realize that there's a bigger goal that is - outside your product preconceptions. - You start to realize that it's more effective to be empirical and objective than to run on - blind faith alone. - The second reason entrepreneurs are uncomfortable making these kinds of predictions is that - they feel they don't have the right information to make them welcome to the world of - building products under conditions of extreme uncertainty. - Yes, - when you first start out, - your judgment is going to be all off. - You're going to repeatedly make overly optimistic predictions and be completely wrong, - and that's okay. - The good news is that over time you'll begin to understand your business better, - and your judgment will improve. - But what happens when you don't yet have enough data to clearly decide? - Either way, - say, - in my last case with the block post, - what do I do. - If after the first week I get exactly 60 sign ups, - the natural tendency is to want to wait just another week longer. - Pretty soon we started rationalizing, - extending the experiment even longer, - hoping that the data will make a turn for the better. - Pretty soon weeks can turn into months, - and this is a pretty slippery slope. - Remember that in a startup, - time is the scarcest resource. - Other resource is like money and people can fluctuate up and down. - But time only moves in one direction. - To avoid this trap off long running experiments, - you need to clearly time box your experiment alongside the falsify able hypothesis. - If I had put a time box of two weeks on my block post experiment than after two weeks, - I would review the data and clearly declare whether the hypothesis was validated or - invalidated again. - The time books may not be perfect, - and you may actually need to add more time. - That again is okay. - The important thing is that after two weeks, - you pause to reflect on the status of the experiment. - And if you decide that more time is needed, - you make that decision within reason versus wishful thinking. - Which brings us to the last point on experiments, - which is a big one. - When experiments fail, - many entrepreneurs run away from that failure and are quick to change direction, - drastically justifying it as a pivot. - Unfortunately, - the word pivot has become an overly abused, - lean startup term. - A pivot represents a change in strategy, - and it needs to be grounded in learning. - Otherwise, - it's just a disguise to see what sticks strategy, - which is not the most optimal way for finding a plan that works. - There's also a reason that the hockey stick curve is largely flat at the beginning. - It's not because the founders were to dump or not working hard enough. - But before you can find a business model that works, - you have to go through a lot of stuff that doesn't The answer isn't running away from - failed experiments, - but rather digging deeper when an experiment fails, - because either you had an unexpected outcome or hit your time box deadline. - Taking the time to uncover the root cause for this failure is where you'll find your - breakthrough insights. - So that was a high level overview of the running lean process. - Let's put it all together Now you start with your best guess of an initial business model - or your plan A. - You then identify what's risk. - It's on the plan through conversations with your team and external advisers. - Finally, - you craft a set of small, - fast experiments to test those risky assumptions using the principles we outlined today. - After each experiment, - there is a learning feedback loop that helps you update your risks and your business model - . - And then the cycle repeats itself. - Before we leave, - I'd like to share a concrete case study that will help you solidify a number of the - principles and tactics we've covered in this series so far. - I usually speak to a diverse audience of entrepreneurs and can always rely on my high tech - or software hardware case studies. - So I often use a product that is much simpler to understand and doesn't require any prior - context. - To understand it, - I'm going to walk you through a case study on how I wrote my book. - Yes, - I was testing and refining a lot of these principles while I was writing my book and - applied every one of these techniques to the writing process. - Even though you may not have written a book, - you can probably appreciate that writing a book is a big project. - In fact, - you'll see shortly. - It's very similar to building any other type of product, - so let's get right to it. - Going back in time, - I was busy running my previous company wired reach. - Along the way, - I realized that I was averaging about two years between my products, - which was way too long. - I was also constantly getting hit with new ideas to build, - So I started a search for better, - faster ways for vetting these ideas. - In 2009 I ran into the early works of Steve Blank and Erik Reece, - and a lot of what they were saying resonated with me. - And so I decided to test them out in my next product. - But as I started applying these principles, - I ended up with more questions than answers and decided I would turn this product into a - public testbed and openly blogged about it. - Week after week, - I shared my learning and slowly my readership creo. - Then one day I got an email asking if I'd consider turning my block posts into a book. - At first I was flattered but politely refused because I was just too busy running my - company. - I'd never considered writing a book before and didn't have the time anyway. - But after the 12th request or so I decided to explore a little further, - I did this by setting up problem interviews with these readers to understand who they were - . - I assumed they were entrepreneurs, - but I needed to be sure. - More importantly, - I wanted to know why they wanted me to write this book. - There was no shortage of content available online. - I wanted to understand what top problem they were expecting the book to solve for them. - So through these interviews I learned that most of them were not just entrepreneurs, - but we're also technical founders like me. - They, - too, - had been struggling with taking lean principles to practice and found my writing to be an - actionable how to guide. - Armed with this knowledge, - I decided to spend 1/2 day creating a demo for the book, - which I did in the form of a teacher page. - It looked something like this. - You'll notice this is not the most aesthetic page, - but it's not bad for 1/2 day's work. - I quickly picked a placeholder title in a stock image for the book. - I didn't bother get getting these things right at the stage because they weren't what's - riskiest. - While the title in book cover are important, - once the book is in the bookstore, - I had more risk your things to tackle first, - such as the Table of Contents you see down below. - If this book wasn't going to be any good, - the best title or book cover in the world wasn't going to save it. - So I set up another round of solution interviews, - and this time I asked if people would be willing to buy the book if it had this table of - contents. - Most business books are price in the $2030 range, - so I didn't even bother putting that on the page again. - The risk Your thing here was getting people to want to buy the book, - not optimizing for the exact price point. - These conversations were immensely helpful in refining the content off the book, - and after a few updates, - I got all 12 people to say they would buy the book while this was good, - small scale validation. - Selling the book to just 12 people wouldn't justify the time and effort that would go into - writing this book. - And so I turned a teaser page into a much larger smoke test. - I made three changes here. - First, - I changed the title during my problem interviews. - A number of people thought the title getting lean wasn't active enough, - since Lean is about doing. - I suggested running, - lean, - and that stuck. - Second, - I added it coming this summer launch date. - This was back in March of 2000 and 10 so that gave me a 2 to 5 month window, - depending on how far you stretch this summer. - And finally, - I added a formed collect email addresses from people interested in the book had estimated - the book writing process, - taking 2 to 3 months since it was largely a repackaging off my block content. - Given the 20 to $30 price point for the book, - I did a simple back of the envelope calculation and decided that I needed to collect at - least 1000 email addresses before I would take the book products seriously. - So I set up this page announcing on my blawg and Twitter, - a few people like Erik Reece help spread the word, - and then I left the page alone and went back to running my company. - By early summer, - I had reached my 1000 email goal, - and that was when I decided to take the next step. - I tried writing the first chapter, - but I look back at the table of contents. - I realized that a lot of my original thinking had changed by the table of contents was - mostly okay. - I realized that writing this book would no longer be a cut and paste job from my blawg. - It would take too long, - and I needed another way to write this book. - The answer came in the form of a free workshop. - I spent a day taking my table of contents and turning it into a slide deck. - It was much the same content you're seeing right now, - but just not as pretty was mostly tax in a lot of bullet points, - announced a freely in start of workshop in Austin, - Texas, - where I live and got 30 people interested. - The reason I kept this workshop free because I had no idea what people would pay for - something like this. - Also, - a good test for value is trying to give away something for free. - If people don't take it at $0 the shore in hell will not pay for it. - I also decided not to run the workshop with all 30 people at once, - but instead broke them up into three groups of 10. - My thinking here was that if the first workshop was outright terrible, - I'd be able to fix any problems with the other groups instead of burning of my list all in - one go. - This is the lien principal of testing and small batches. - Interestingly enough, - the first workshop went really well. - People like the contents so much, - and many said they would have paid for it. - And so I conducted some impromptu price testing on the spot and ran to other workshops and - a number mawr. - After that, - as paid workshops all the while continued to increase in test pricing. - Getting people to pay for your product is the first form of validation. - I ran these paid workshops all through the summer and kept refining the content not through - writing a manuscript but through refining the slide deck. - By the end of the summer, - I had fully mapped the entire book and was ready to actually start writing it. - But there was a problem. - I'd originally promised my book as a summer launch and somewhere had come and gone. - People were getting antsy and started enquiring about the status of the book. - I wrote back to them and told them that I had grossly underestimated the effort it would - take to write this book. - But now that I was ready to start writing it, - I was going to make them an offer. - I gave them a preview chapter of the book and told him that if they pre ordered the book - right now, - I deliver two chapters of the book to them every two weeks. - I would essentially write the book much like we write software. - This delivery schedule worked for my book because it was a nonfiction book, - and it had lots of explicit, - actionable content, - like exercises and interview scripts that people could put to use in their startups. - So while people were busy testing the content from previous chapters on their own startups - , - I'd be able to stay ahead with the next update. - I went back to the book page and changed the coming this summer to coming soon because I - didn't really have an exact end date. - This time around, - I also added a preorder option and offered a discount. - I have since then changed my position on this. - I went back and asked people who pre ordered after the fact if the $25 discount mattered to - them and they told me that it did it. - The other interesting thing that happened is only about half the people went for this pre - order option. - I asked the others why they didn't, - and they cited packaging as the biggest reason. - Many of them did not want to read the book as a PdF and chose to wait for a print or kindle - version. - My first inclination was that I can find a way to support them. - But then I realized that these people were not really. - My early adopters on early adopter is someone who wants your product so badly that they're - willing to tolerate a less than perfect version and jump through. - A few hoops have needed once again, - creating a Kindle or print version off the book wasn't the riskiest thing, - but testing the content off the book. - I chose not to create the extra work for myself and simply treated the people who didn't - pre order as latter stage customers. - These two week releases were incredibly helpful. - I got great feedback every two weeks that ranged from basic typo fixes to content and flow - suggestions. - I can confidently say that become of this continuous feedback loop with customers, - I was able to write a much better book which required very little final editing because it - was all being done incrementally along the way. - This, - by the way, - is another example of the principle of small batches. - Then an interesting thing happened. - When I was about 2/3 of the way through the book, - I got a random email from a major publisher. - They had read my partial book and had a book deal on the table. - I got on the phone, - and my first question was, - Why do you want to publish this book? - I told in my book. - Wasn't DRM protected? - And there were several copies freely float floating around on the Internet. - In fact, - that even helped in distributing some of those copies myself. - By placing the book in communities like hacker news. - They told me that none of that mattered to them. - What they saw was a book that had been sufficiently dearest from their vantage point - because I had managed to sell over 1000 copies on my own. - They fell that with their distribution platform they would be able to 10 X that number, - and that made this a compelling book for them. - When they put it that way, - it all made sense had demonstrated early traction, - which matters most to external stakeholders, - like investors and in this case, - to a publisher. - And I tried to have this conversation of the beginning of this process. - Back in early 2000 and 10 I would have had no leverage, - and this conversation would have probably gone a very different way, - I told the publisher my commitment was to get the first edition published, - and after that I'd entertained the idea of publishing a print version. - I went ahead and did finish the book in February of 2011. - At that point, - I went back to the book page and revamped it to look a lot more appealing. - As a marketing site, - I got a designer to create a book cover. - I got a number of prominent people like David Skok, - who are early adopters, - also to write me a testimonial. - At this stage, - the book product shifted from value creation to scaling. - I started testing a number of tactics to promote and sell the book and eventually sold over - 15,000 copies of this first edition to complete the story using the software analogy. - Large software is never finished but just released. - I felt the same way about this book. - I felt that I had a lot more to say once the book was published, - and so I kept on writing on my blawg. - I created a newsletter and I kept teaching workshops. - The workshops were only intended as an M V P to the book, - but after writing the book, - demand for these workshops actually went up and I found myself running these paid workshops - all over the world. - It is true these workshops that I started testing more advanced concepts and launched a - couple of additional products. - At this point, - I was still running my old company, - which I decided to sell and start sparked 59 around the mission of using tools, - content and coaching to help entrepreneurs succeed. - And yes, - I did finally go back and published a second edition of the book which looks like this. - Hopefully, - this case study helps solidify the key principles we have covered throughout the series and - sparks you to take that next step with your product. - If you'd like to get more content like this, - consider subscribing to my free running Lean Mastery newsletter. - You can find it on the spark 59 home page until next time. - Take care, - Thanks.