I met a traveller from an antique land Who said: Two vast and trunkless legs of stone Stand in the desert. Near them, on the sand, Half sunk, a shattered visage lies, whose frown, And wrinkled lip, and sneer of cold command, Tell that its sculptor well those passions read Which yet survive, stamped on these lifeless things, The hand that mocked them and the heart that fed: And on the pedestal these words appear: 'My name is Ozymandias, king of kings: Look on my works, ye Mighty, and despair!' Nothing beside remains. Round the decay Of that colossal wreck, boundless and bare The lone and level sands stretch far away.
a few remarks about
STARTUPS Keith McGreggor, PhD
brief bio
s
startups
ta n tla
on ilt M
l e x Pi
IA
A
n
work
s ow ls ity e m r s cu ste adsh aToo oi y e y t n r S S l ro di e x to ck d t N e e e a p e e s e d t fl t e B c ni era An N M de 1e Re n fi r o In It ua 2 C e Be G Th
r he
ut o S
ll e B
e
kh c Lo
ce r ou es
R
ed
le pp
A
ca o C
le
ew r nd
e ich M
life school
1980
BS
A
h
la o C
oo h Ya
G
i rg o e
ec T a
SF N
ah r Sa D Ph
S M
1990
2000
2010
ideas/inventions reviewed/year
500+
ongoing projects
140+
companies created
300+
total of investments
$1.5B+
#5 university-based incubator in the US $1.5B in capital activity
FREE
what is the happiest place on earth?
startup mythology
the startup lifestyle
THIS IS STARTUP!
no
Core Idea or Technology
Core Idea or Technology
Company
Core Idea or Technology
$$$
Company
THIS IS STARTUP!
THIS IS B%][!$#!T!
truth
hard work
truth
long hours
truth
little or no pay
truth
>50% gone in the FIRST year
truth
only 5% ever raise ANY money
truth
only 0.62% ever raise any VC money
truth
75% of all VC-backed startups FAIL
truth
< 10%
truth
it is hard, and the odds are against you ...
... but we know a way to beat the odds
Intro to
Evidence-Based Entrepreneurship
NASDAQ
5000
4000
3000
2000
1000
1996
1998
2000
2002
2004
2006
2008
2010
2012
$1,000,000,000,000
we know something now that we didn’t know before
we know something now that we didn’t know before we know how to build
startups
we know something now that we didn’t know before
engineer we know how to build startups
definition of “company”
A organization which sells a product or service in exchange for revenue and profit
400 years of companies!
1620 - Directors / Stock Certificates
1856 - First Org Chart
1908 MBA
Tools for the 20th Century “Century of the Corporation”
... but what about startups?
Core Idea or Technology
Core Idea or Technology
Company
Startups are a Smaller Version
of a Large Company
Core Idea or Technology
$$$
Company
Startups are a Smaller Version
of a Large Company
Startups lack something
Companies have
Startups are quite risky
Startups Search
Companies Execute
definition of “startup”
a temporary organization designed to search for a repeatable and scalable business model
Startups Companies
Business Model
Product/Service
a big myth about
Strategy
How to create a startup (before 2010) ...
Write A Business Plan
Create Financial Statements
Make a FIVE YEAR Forecast
Step 1. Step 2. Step 3. Step 4.
Business Plan Five-year Forecast ??? PROFIT!
Truth about
Strategy
What we know now (and have known all along)...
Business Plans are
FICTION
No business plan ever survives
first contact with customers
Tyson’s Law
"Everybody has a plan until they get punched in the mouth."
Five year forecast?
Five year forecast?
MAGICAL THINKING
You can't connect the dots looking forward; you can only connect them looking backwards.
The best way to predict the future is to create it.
Business
Model
>
Business
Plan
Core Idea or Technology
Company
Core Idea or Technology
Company
Core Idea or Technology
?
Company
2010
Business Model Generation
KA P
VP KR
C$
CS C
R$
Business Plan Competition 1995-2013
Startups Search
Companies Execute
Startups Companies
Business Model
Product/Service
Core Idea or Technology
$$$
Company
Core Idea or Technology
Company
Core Idea or Technology
Company
Core Idea or Technology
Company
1
Core Idea or Technology
Company
N
Startups are in
SEARCH mode
Startups explore
the UNKNOWN
the biggest UNKNOWN for a startup?
the biggest UNKNOWN for a startup? the CUSTOMER.
Why do Startups fail?
etc. …
Startups don’t fail because they fail to make something...
Startups don’t fail because they fail to make something.
Startups fail because they fail to make something someone wants to buy from them.
You are already an expert in
the TECHNOLOGY
You are already an expert in the TECHNOLOGY
You must now become an expert in
the CUSTOMER
MYTH
Customers want your technology.
TRUTH
Customers don’t care about (your) technology. Customers just want their problem solved.
a modest wager
$1,000,000
Customer Discovery
WHO CARES? WHY will they BUY?
Customer Discovery
key idea Customer POV
Customer Development ?
✓
Customer Discovery
Customer Validation
Startup
Customer Creation
Company Building
Company
Startups are in
SEARCH mode
EVERYONE is on the
SEARCH team
I find out what the world needs. Then I go ahead and try to invent it. - Thomas Edison
Startups are not a smaller version
of a large company
Entrepreneurship is a
CONTACT SPORT
There are
NO FACTS
in the building!
142
You must
GET OUT OF THE BUILDING
Conduct
100s
Interviews
A man who carries a cat by the tail learns something he can learn in no other way.
146
KA P
VP KR
C$
CS C
R$
Ok. Now what?
So c cer Mo ms
Kids
Grandparents
Make guesses about who or what goes into each of the nine boxes
just one tiny problem …
?
?
?
?
?
?
?
?
?
?
?
?
? ?
? ?
both are ?
?
? ? ?
? ?
? ? ? ? ?
? ? ? ?
FICTION
how do we turn fiction... ?
?
?
?
?
?
?
?
?
?
?
?
? ?
? ?
... into facts? ✔
✔
✔
✔
✔
✔ ✔
?
✔ ✔
?
✔
✔
?
?
✔
How?
the scientific method applies to business
the scientific method
create a startup thesis
the scientific method
create a startup thesis who is your customer?
what is your product?
why will they buy?
the scientific method
create a startup thesis generate hypotheses ?
?
?
?
?
?
?
?
?
?
?
?
? ?
? ?
the scientific method
create a startup thesis generate hypotheses make predictions
the scientific method
create a startup thesis generate hypotheses make predictions who can you talk to? what do you expect to hear? what do you expect to observe? what might surprise you?
the scientific method
create a startup thesis generate hypotheses make predictions
n=?
the scientific method
create a startup thesis generate hypotheses make predictions run experiments
the scientific method
create a startup thesis generate hypotheses make predictions do the iteration loop
the iteration loop
?
?
?
?
?
? Choose ? one of ? these ?
? ?
? ? ? ?
?
TESTING VALUE PROPOSTIONS
Testing Overview make hypotheses & predictions
prioritize hypotheses
design tests
+ Test Card
Extract Hypotheses
220
Design
Testing
Prioritize Hypotheses
Design Test
prioritize tests
run tests
reflect & learn
+ Learning Card
!
Prioritize Tests
Run Tests
Capture Learnings
Make Progress
* Working preview content for private review only, do not distribute — © Copyright Osterwalder, Pigneur, Bernarda, Smith, and Papadakos
TESTING VALUE PROPOSTIONS
Testing Overview
the iteration loop +
TESTING VALUE PROPOSTIONS
Testing Overview
Extract Hypotheses
TESTING VALUE PROPOSTIONS
Design
Learning Card
Test Card
+
Prioritize Hypotheses
Testing Overview 220
+
Design Test
+
Prioritize Tests
Run Tests
Learning Card
Test Card
Testing
Make Progress
!
221
* Working preview content for private review only, do not distribute — © Copyright Osterwalder, Pigneur, Bernarda, Smith, and Papadakos
Extract Hypotheses
+
Prioritize Hypotheses
Design Test
+
Prioritize Tests
Run Tests
Design
Capture Learnings
Learning Card
Test Card
220
Capture Learnings
!
Testing
Make Progress
!
221
* Working preview content for private review only, do not distribute — © Copyright Osterwalder, Pigneur, Bernarda, Smith, and Papadakos
-
Extract Hypotheses
220
Design
Testing
Prioritize Hypotheses
Design Test
•••
Prioritize Tests
Run Tests
Capture Learnings
Make Progress
221 * Working preview content for private review only, do not distribute — © Copyright Osterwalder, Pigneur, Bernarda, Smith, and Papadakos
the process TESTING VALUE PROPOSTIONS
Testing Overview
thesis +
+ Test Card
Testing Overview
Learning Card
Design Test
+
Prioritize Tests
Run Tests
Test Card
Capture Learnings
TESTING VALUE PROPOSTIONS
TESTING VALUE PROPOSTIONS
+
Prioritize Hypotheses
Learning Card
Testing Overview
TESTING VALUE PROPOSTIONS
+
Prioritize Tests
Run Tests
Capture Learnings
Learning Card
+
Prioritize Hypotheses
Design Test
+
Prioritize Tests
Run Tests
Test Card
Capture Learnings
Learning Card
TESTING VALUE PROPOSTIONS
Testing
Prioritize Hypotheses
+
Design Test
Prioritize Tests
+
Run Tests
+
Prioritize Hypotheses
Design Test
+
Prioritize Tests
Run Tests
Test Card
Capture Learnings
Learning Card
221
Make Progress
!
Extract Hypotheses
+
Prioritize Hypotheses
Design Test
+
Prioritize Tests
Prioritize Hypotheses
Extract Hypotheses
+
Prioritize Hypotheses
Design Test
Prioritize Tests
Run Tests
Capture Learnings
Extract Hypotheses
Learning Card
+
Prioritize Tests
Run Tests
Make Progress
!
221
Make Progress
!
221
Learning Card
Make Progress
!
Prioritize Hypotheses
221
Design Test
Prioritize Tests
Run Tests
Capture Learnings
Make Progress
* Working preview content for private review only, do not distribute — © Copyright Osterwalder, Pigneur, Bernarda, Smith, and Papadakos
Make Progress
221 * Working preview content for private review only, do not distribute — © Copyright Osterwalder, Pigneur, Bernarda, Smith, and Papadakos
Capture Learnings
basis for company
221
Testing
221
* Working preview content for private review only, do not distribute — © Copyright Osterwalder, Pigneur, Bernarda, Smith, and Papadakos
-
Make Progress
!
* Working preview content for private review only, do not distribute — © Copyright Osterwalder, Pigneur, Bernarda, Smith, and Papadakos
Test Card
Design Test
Capture Learnings
221
!
!
Run Tests
Test Card
Testing Overview
Make Progress
Make Progress
* Working preview content for private review only, do not distribute — © Copyright Osterwalder, Pigneur, Bernarda, Smith, and Papadakos
220 Smith, Design Testing * Working preview content for private review only, do not distribute — © Copyright Osterwalder, Pigneur, Bernarda, and Papadakos
-
Design
Capture Learnings
Learning Card
Testing
Extract Hypotheses
220
Extract Hypotheses
-
Extract Hypotheses
Design
Learning Card
221 220 Smith, Design Testing * Working preview content for private review only, do not distribute — © Copyright Osterwalder, Pigneur, Bernarda, and Papadakos
Test Card
220
!
Capture Learnings
!
* Working preview content for private review only, do not distribute — © Copyright Osterwalder, Pigneur, Bernarda, Smith, and Papadakos
220 Smith, Design Testing * Working preview content for private review only, do not distribute — © Copyright Osterwalder, Pigneur, Bernarda, and Papadakos
Testing Overview Design
Make Progress
Run Tests
Test Card
Testing
many repetitions! Design Test
Test Card
Testing
Extract Hypotheses
220
TESTING VALUE PROPOSTIONS
TESTING VALUE PROPOSTIONS
+
Prioritize Hypotheses
Testing Overview Design
+
Prioritize Tests
220 Smith, Design Testing * Working preview content for private review only, do not distribute — © Copyright Osterwalder, Pigneur, Bernarda, and Papadakos
Extract Hypotheses
220
Design
Design Test
Learning Card
Testing Overview
Testing
TESTING VALUE PROPOSTIONS
Design
220
!
+
Prioritize Hypotheses
Testing Overview 220
Extract Hypotheses
Extract Hypotheses
+ Test Card
Testing Overview TESTING VALUE PROPOSTIONS
TESTING VALUE PROPOSTIONS
Testing Overview
+
221
advice
“Now I’m going to discuss how we would look for a new law. In general, we look for a new law by the following process. First, we guess it … no, don’t laugh, that’s the truth. Then we compute the consequences of the guess, to see what, if this is right, if this law we guess is right, to see what it would imply and then we compare the computation results to nature or we say compare to experiment or experience, compare it directly with observations to see if it works. If it disagrees with experiment, it’s WRONG. In that simple statement is the key to science. It doesn’t make any difference how beautiful your guess is, it doesn’t matter how smart you are who made the guess,… If it disagrees with experiment, it’s wrong. That’s all there is to it.”
remember
it’s a process
the transformation ?
✓
Customer Discovery
Customer Validation
Startup
Customer Creation
Company Building
Company
the transformation ?
✓
Customer Discovery
Customer Validation
Startups Search
Customer Creation
Company Building
Companies Execute
Evidence-based Entrepreneurship
Core Idea or Technology
WHO?
WHY?
?
✓
Customer Discovery
Customer Validation
WHO CARES? WHY will they BUY?
definition of “startup”
a temporary organization designed to search for a repeatable and scalable business model
KA P
VP KR
C$
CS C
R$
What’s next?
Get out of the building!
Don’t be AFRAID
Jump!
Get out of the building!
TEST all
assumptions
Everyone has a plan…
…until he gets punched in the face.” - Mike Tyson
Get out of the building!
Be Open
“The first principle is that you must not fool yourself, and you are the easiest person to fool.” – Richard Feynman
“The first principle is that you must not fool yourself, and you are the easiest person to fool.” – Richard Feynman
Get out of the building!
LISTEN and
THINK FOR YOURSELF
“Everything that needs to be said has already been said.” “But since no one was listening, everything must
“Everything that needs to be said has already been said.” “But since no one was listening, everything must be said again.” – André Paul Guillaume Gide
Get out of the building!
Check your
GUT & HEAD
“I have approximate answers and possible beliefs and different degrees of certainty about different things, but I’m not absolutely sure about anything.”
“I have approximate answers and possible beliefs and different degrees of certainty about different things, but I’m not absolutely sure about anything.” – Richard Feynman
What’s next?
209
Talk to humans
Your search begins
NOW
GOOTB!
218
75 Fifth St NW, Suite 202, Atlanta GA 30308
venturelab.gatech.edu @venturelab / @keithmcgreggor
[email protected]