Archive | September 2012

The History of Lean Startup by Steve Blank

lean startup customer development steve blak feedback loop

tl;dr Steve Blank tells the story how lack of startup framework led him to design customer development, and his pupil Eric Ries went on to build Lean Startup. The Lean Launchpad classes offer entrepreneurs an opportunity to learn how to apply customer development and lean startup concepts to testing and building their business ideas.

The History of Lean Startup

Steve Blank is a Silicon Valley-based retired serial entrepreneur who now spends his time teaching entrepreneurship to students. His early writings on customer development (The Four Steps to the Epiphany) have evolved into the Lean Launchpad. The Lean Launchpad provides entrepenuers with an online, interactive envrionment to learn all that is needed to understand and apply the lean startup methodologies.

In Blank’s most recent blog post he reiterates his discovery and journey.

The Journey

Blank tells the story how lack of startup framework led him to design customer development, and his pupil Eric Ries went on to build lean startup. They found that the traditional business tools did not apply to startups.

+ Startups are different – Ten years ago he started thinking about why startups are different from existing companies. He questioned: Are business plans suitable for startups? Is execution all that matters?

+ Business models first, business plans later – Blank thought that startups needed business models before business plans. This lead him to come up with “customer development” – the formal methodology to search for a business model.

+ Business models before execution – He believed that Customer Development needed traditional product management. This process is documented in Blank’s book, Four Steps to the Epiphany.

+ Lean Startup and Eric Ries – In 2003 Blank was approached to teach a class in Customer Development at Haas Business School. He insisted that Eric Ries be in the class. (Blank had an investment in Ries’s IMVU business.) Ries argued that the traditional product management and waterfall development should be replaced by agile development. This approach was named “Lean Startup”.

+ Standardising the Business Model – Until now the structure of the business model remained vague. However Alexander Osterwalder wrote Business Model Generation that allowed entrepreneurs to build an operating plan around their search for a business. The business model canvas simplified the planning process and pressed entrepreneurs for real answers to tough questions.

+ Testing the theory – The startup methodology remained scientific theory until the National Science Foundation approached Blank to teach the concepts to a group of scientists. They wanted to apply the theory to commercialising their basic research. This triggered the rollout of the Lean Launchpad course. Now real entrepreneurs are applying the theory to real startup scenarios.

Conclusion

Blank has turned building a startup into a science. His publications and theories have encouraged many entrepreneurs to think more about their business before leaping into the abyss. While some may argue entrepreneurship is not a science that can be taught, the Lean Launchpad provides an intelligent framework for those looking for some direction and stability in their search for the next big business.

Links:
+ Startup Is Not The Same As A New Start Business
+ Extracts from The Four Steps to the Epiphany (pdf)

Image Credit: The Lean Startup

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You might also enjoy:
+ The Startup Dictionary – Learning the Lingo #3
+ Learning From Other Startups – 6 Real Life Stories
+ Startup Myths – I shall not be fooled again by gurus
+ The Bootstrap Challenge – Walking the Talk

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Starting Up – 9 Business Selection Criteria

Small Business and Startup Selection Criteria For Entrepreneurs

Last week we wrote about Fabrice Grinda, a serial startup entrepreneur. During a podcast interview he spoke about his experiences on building large successful businesses. On his blog he writes about his experiences and shares a wealth of knowledge.

One area of interest is his writings on business ideas and business selection criteria. Below we have summarised his approach to picking a business idea or market to enter. They are not a stringent set of rules but do present some strong points to consider when brainstorming your next startup.

9 Business Selection Criteria

1. At least $1 billion addressable market – May be easier to obtain funding and holds greater upside potential.

2. A valid business model from the beginning – This is having an understanding of how the business will generate money. The stronger the cash flows and balance sheet, the better chance of business longevity. Grinda later removed this criteria however increases the risk of the business idea.

3. Does not require more than $2 million in seed or $15 million in first round VC money – Any more, and the business may be too large for a startup to build.

4. An opportunity to be one of the top players (market or region) – Consider markets where large players do not hold strong positions.

5. A scalable idea – An idea that can be grown.

6. A business with little or no risk of margin compression – Beware of markets where customers and/or suppliers can controls revenues and expenses. These create variables you cannot control.

7. A business in a rapidly growing market – Share the success in fast growing markets.

8. An idea that you can execute or learn to execute – Focus on an area where you have a clear advantage.

9. An idea that you want to do! – Pursue a business you have a genuine interest or passion in.

Note: These criteria are taken from a 2005 blog post and may not suit everyone.

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You might also enjoy:
+ The Top 100 UK Startups (2010)
+ The Startup Dictionary – Learning the Lingo #3
+ Learning From Other Startups – 6 Real Life Stories
+ Samsung’s Pivot From Dried Fish to Smartphones
+ Top Startup Podcasts – Learning From Listening

Welcome new readers! If this is your first time here, you might want to start with a new article or read through our older submissions.

Where to next? Check out a random article.

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Join the conversation: Leave a comment or this post.

Fabrice Grinda – Musings of a Serial Entrepreneur

tl;dr Serial entrepreneur Fabrice Grinda shares his intriguing background with Andrew Warner (Mixergy). Grinda started at a young age selling computers and went on to build and sell larger businesses (auction site Aucland and mobile company Zingy). His approach to big ideas and large scale execution is inspiring to all entrepreneurs.

Musings of a Serial Entrepreneur

We just finished listening to a great startup podcast with Fabrice Grinda. Embarrassingly we hadn’t heard of him before however he is a serial entrepreneur with an impressive track record.

In the early days Grinda started selling computers between the US and Europe, realising a price and time arbitrage opportunity to sell newer spec computers to Europeans. Fabrice later went to work at McKinsey but grew tired of corporate life and left to start Aucland, at the time the European version of eBay.

After the successful exploration of various other ventures, Grinda went on to found Zingy, a mobile ringtones, wallpapers and games company. He later sold this to a Japanese based firm a few years later for $80 million. By then the company had numerous big name mobile companies on their books, including Sprint and Verizon.

He now runs OLX, a free online classifieds and auctions site. He also is heavily involved in the startup scene, investing in several up and coming startups.

The highlight of the interview is hearing Grinda’s approach to product generation and how well he executes. He is not scared to create a business that already exists. He challenged eBay and Amazon and survived. He persevered with Zingy and won. He writes more on his business selection criteria on his blog.

Links

+ Check out the Mixergy podcast with Fabrice Grinda.
+ Visit Fabrice Grinda’s excellent and informative blog – Musings of a Serial Entrepreneur.

Image Credit: The Old Fashioned

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You might also enjoy:
+ The Startup Dictionary – Learning the Lingo #3
+ Learning From Other Startups – 6 Real Life Stories
+ Startup Myths – I shall not be fooled again by gurus
+ Startup Weekend: How to prepare? (Day 0)

Welcome new readers! If this is your first time here, you might want to start with a new article or read through our older submissions.

Where to next? Check out a random article.

Stay in touch: Check us out via RSS Feed, Twitter, Google+ and Facebook.

Join the conversation: Leave a comment or this post.

Lessons Learned From 10,000 Page Views

tl;dr We looked back on our last 10,000 page views. We found: 1) Traffic spikes help, 2) Being unloved hurts, 3) Google search Rocks, 4) Social media sux, 5) Google images draws in questionable traffic, 6) Low click rates hurt, 7) Spam is out of control, 8) More bots than humans visit the site.

Introduction

There is the old adage of the past best is the best predictor of future. Some say we just have to look back in the past to forecast our likely future. With this in mind we decided to look back on our last 10,000 blog views (page views). Hopefully the future is going to be brighter than the past…

We took figures from our standard WordPress Dashboard. The numbers represent the count of “views” and are not unique. In most cases we have only provided a cut of the top figures rather than the full list (due to the very long tail of results).

Lessons Learned

The results are hardly impressive or surprising.

1. Traffic Spikes Help

The odd news spike from news aggregator sites managed to haul in a large amount of short term activity. Activity quickly diminished but spikes did keep post links alive in social media sites (eg Twitter, Facebook) and news readers (eg Google Reader).

2. Being Unloved Hurts

Articles that never had the fortune of gaining large attention remain unloved.

3. Google Search Rocks

While many preach the power of social media, the bulk of referral traffic has come from Google. Yahoo and Bing are well behind.

4. Social Media Sux

Our experience with social media is extremely poor. Hardly any activity turns into visits. A Facebook Like, a Twitter Tweet and Google +1 are meaningless in converting into visits.

5. The Power of (Google) Images

Oddly Google Images yield the bulk of Google traffic (636 of 921 Google Search Engine views). It is questionable the value of this traffic.

6. Low Click Rate

It is rare that a visitor clicks on any/many links. We are not worried about external links however concerned about the low internal click rate. We added a standard footer to all our posts a few months ago that has made some improvement.

7. Spam Is Out of Control

Traffic is on the decline but spam is out of control (increasing from 7 to 777 per month).

8. Too Many Spam Bots

The large amount of spam may well be automated (ie sent by a bot) rather than by a human.

Summary

It feels as web traffic is much like catching waves in the ocean. Catch a good wave and you can ride it into shore. Catch no wave and you’re left floundering with the (spam) sharks.

The numbers are posted below. Get in touch if you have anything to add.

Happy swimming!

The Numbers

Top 10 Posts

The following summarises the top 10 posts by number of post views.

Views / Post
3402 Startup Myths – I shall not be fooled again by gurus
1404 Home page / Archives
1314 How do you get on the Frontpage of Hacker News?
285 Glossary
240 Learning From Other Startups
234 KISS – Ugly Websites That Went Viral
212 The Startup Dictionary – Learning the Lingo #2
205 The Apprentice – Lean Startup Builds MVP?
204 The London Olympics 2012 (In Infographics)
190 How To Get Traction? Or Why Is My Startup Broken?

Comments:
- One Hacker News submission sent 2,958 visitors to our blog in one single day (Described here).

Top 10 Referrers

The following summarises the top 10 referrers by number of post views.

Views / Referrer
2988 Hacker News
921 Search Engines
462 hackful.com
358 Twitter
342 Google Reader
179 StumbleUpon
126 quora.com
101 Facebook
93 bbc.co.uk
63 WordPress Dashboard

(Note: Added 146 to hacker news for HN aggregators)

Comments:
- Community sites have helped draw majority of traffic.
- Popular posts often get captured by Google Reader and Twitter, growing interest for a short term period then quickly dying off.

Top 5 Search Engines

The following summarises the top 5 referrer search engines by number of post views.

Views / Search Engine
921 Google Search
636 Google Image Search
11 Ask.com
7 Bing
4 Yahoo Search

Comments:
- Large amount of traffic from image search. Bulk with Google.
- Using Adwords and Facebook however minimal spend.
- WordPress Dashboard may be self clicks.

Top 10 Countries

The following summarises the top 10 visitor countries by number of post views.

Views / Country
4308 United States
1572 United Kingdom
464 Canada
377 India
299 Germany
254 Australia
163 France
151 Brazil
131 Netherlands
118 Sweden

Comments:
- In total there have been visitors from over 106 countries.

Top Search Terms

The following summarises the top search terms by number of post views.

- startup glossary, startup dictionary, buzzwords, biz buzzwords
- minimum viable product, mvp, pivot
- business guru, business gurus, biz advice, startup advice, how to launch
- new startups, top uk startups, top 100 startups, best startups
- hackers, hacker news
- startup podcasts, startup tools
- startup funding, business finance, crowdfunding

Comments:
- Hundreds of variations however mainly focused on “startups” and “business”.

Top 10 Clicks

The following summarises the top 10 visitor clicks by number of post views.

Clicks / URL
167 quora.com
87 Hacker News
85 kickstarter.com
82 startups.co.uk
70 sparknlaunch.files.wordpress.com
39 techzinglive.com
26 bbc.co.uk
25 Twitter
23 Reddit

Internal:
67 sparknlaunch.files.wordpress.com/ (Images)
3 sparknlaunch.files.wordpress.com/ (Files)

Comments:
- Very low internal click rate.
- Bulk of clicks appear to be on images. May suggest users behaviour or other sites recycling images.
- Poor reflection on the ability of site to retain visitors.

Top Comments

The following summarises the number of comments.

Comments / Category
1590 spam
396 ham
2 missed spam
4 false positives
95 Comments

Comments:
- Spam is the unwanted commercial comments.
- Ham are legitimate comments.
- The high amount of spam comments hints that bulk of visitors to the blog are just spammers or spammer bots.

Comments Per Month

The following summarises the number of spam comments by month.

Comments / Month
7 Feb
36 Mar
101 Apr
172 May
160 Jun
541 Jul
777 Aug

Comments:
- Strangely traffic has gone down but spam comments have gone up.
- February caught 7 comments versus 777 in August!

Image Credit: VistaPrint

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You might also enjoy:
+ The Startup Dictionary – Learning the Lingo #3
+ Learning From Other Startups – 6 Real Life Stories
+ Startup Myths – I shall not be fooled again by gurus
+ Startup Weekend: How to prepare? (Day 0)

Welcome new readers! If this is your first time here, you might want to start with a new article or read through our older submissions.

Where to next? Check out a random article.

Stay in touch: Check us out via RSS Feed, Twitter, Google+ and Facebook.

Join the conversation: Leave a comment or this post.

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