Lean Startup Conference – Day 1

Posted on December 13, 2013

I had the opportunity to attend the Lean Startup Conference this week in San Francisco and in typical fashion took notes from each of the sessions that I attended.  All of the slides from the conference are available to anyone from their website (via SlideShare).

Steven Hodas – Innovate NYC Schools
-user-centered design is very powerful and helps create better alignment
-success of each example creates a safe space allowing the next set of leaders to have more freedom to be successful

Brian Frezza – Emerald Therapeutics
-Iife sciences has the highest spending on R+D per employee. Fixed costs for labs are very high.
-startup financing in bio-tech is 7 times larger for your first round of funding compared to tech
-how can we re-imagine this painful process
-reduce barriers to entry – share the lab spaces and make it easier for people to get access to them
-as the research gets more and more expensive we become more and more conservative on what experiments we will run
-minimize on-boarding costs by sharing insights and setup across multiple scientists
-innovate on the process itself!

Kimberly Bryant – Black Girls CODE
-great and inspiring story!

Robin Chase – Buzzcar
-Zipcar started with 1 car, 22 members. Make reservation online and walk to her house to grab keys from under glider pillow! Lol
-People entered start and stop odometer on slips
-get in touch with your customers as fast as possible
-design your company to be lean by leveraging excess capacity and leverages others as much as possible
-Zipcar had tons of excess capacity (limited usage)
-relied on users to do tons of work that car rental companies paid people to do
-you can’t solve exponential problems with linear solutions. Love this quote! Banny Bannerjee

Matt Mullenweg – Founder of WordPress
-told the story of how WordPress got off the ground and how it was initially due to their ability to easily import a blog from a competitor
-that sped up when the competitor started charging for their product
-huge fan of open source and the inherent freedom that comes with it
-team size is no more than 5-10 within the company
-they have a unique management philosophy – managers don’t get compensated for that role and can step down as a lead without any repercussions. They end up having a rotating element to their leads.

Kevin Dewalt – Sohelpful
-what does the world look like when the US is no longer the largest market?
-Asian companies are using their local market size and traction to then win markets in USA
-you need to care about Asia because they can crush you. Why not also use the opportunity to enter Asian markets earlier than you thought possible?
-start thinking about Asia as your company starts to achieve product/market fit
-assume nothing about market and cultures!
-suggestion is to use the Lean Startup Meetups in the local countries as the biggest set of people who can help. They want to help!
-specific tactics that work:
-people aren’t as open about their problems
-you need to talk about trends and ideas. What are their competitors doing and then you can gain their trust?
-talk in terms of outcomes rather than using language which encodes the strategies
-elsewhere in the world relationships trump almost all else. Best product or best team doesn’t equal winning.
-give back and become someone worth knowing
-are you going to be scared of the changes coming or are you going to take advantage of them?


Catherine Bracy – Code for America
-decided to build an international program for CoA
-org tries to help governments use design and technology more effectively
-have a fellowship program to place busy professionals in civil service
-created Code for All to help build a network of people who can bring open source, user centric design, lean startup, etc to government
-help them start building better government

Matt Kresse and Vinuth Rai – Toyota
-build measure learn cycle time is 3 years for consumer facing software within automotive
-put up a Craigslist ad for people to chat with Toyota and give feedback. Got over 300 people who were interested! Interviewed 30.
-identified 5 people who were suitable for running the trial in their own car
-key lesson learned was the need to be more creative in validating experiments and learning without having to write code every time

Kent Beck – Facebook
-as soon as you start being successful, you start assuming things that you know
-there is no “right way” to code and build right now when viewed from the angle of maximizing learning. Going to spend more time on this concept later this afternoon.
-consistent cycle – hackers put together cool tech, get customers, it breaks as it scales, bring in “proper engineers” who then lose customers because they lost the ability to learn from customers
-weirdest talk ever – almost like a sales pitch for his afternoon session

Dan Milstein – Hut 8 Labs
-software consulting shop in Boston to help startups
-going through the first principles of lean startup to help you win
1. Opportunity cost
-people are choosing to work on things that aren’t that important without considering the real cost
-there is a tremendous cost to working on the wrong things
-this isn’t all luck either
-the other axiom isn’t that hard work covers off this problem
-what you choose to work on has to be the most important thing. You should be super scared about only working on the right things
-only work on *the* most valuable things

2. Information and Money
-spending a week of research determining what to work on actually makes you money. Real money.
-don’t think of the research as a necessary evil but rather that the information is worth money itself

3. Risk and Information
-startups have chained risks (sequence of things that need to be true)
-for example, can we build it and then will people buy it?
-the degree of surprise is what matters here. Your risk is where the surprise would sit in the business.
-information equals surprise
-Clauda Shannon has a great math theory on this one
-this section is more about the amount of information. The info becomes valuable when you don’t know a lot

4. Information and Time
-rates of change
-Revenue can be measured as dollars per month or money/time
-information is money
-Revenue is really just information/time
-so more quickly gather more valuable information

5. Risk, Information and Time
-this is where it gets fun
If the biggest risk has changed then the information gathered has changed. The entire org has to respond to the changing nature of risks. Only by going after the biggest risks can you make the most money. Organize your company in a way that allows you to have a huge competitive advantage. You need to have the whole team adjust your understanding of risks.

6. Fear
-profoundly important driver of how people behave especially in uncertainty
-that can cause people to work hard on the wrong thing because of their desire to take things seriously
-most dangerous place is when leaders have fear but don’t call it that. They have chains of risks but call them “vision”. CEOs will keep information back from the team so they won’t be demoralized. Don’t work this way! Have the whole team oriented around the real risks!

Reid Hoffman – LinkedIn
-interview with Eric Ries
If you wait until you are not embarrassed by the first version of your product then you have waited too long. (actually a quote by Reid Hoffman)
-many engineers believe that they will be evaluated based on the quality of the product
-the emphasis here is speed. Are you moving fast enough? It doesn’t have to be great when you launch. The key isn’t day 1 but the first year.
-corollary – no matter how long you wait for your product, you will be embarrassed about it.
-really think hard about what minimum would be
-marketplaces are hard because of the need for critical mass. Reid’s suggestion is to focus on the “who else is here” question. They uploaded your address book to help provide this growth feature. Almost all of the strategies are fairly unique for how to get the marketplace or network to its critical mass. There is no clear playbook because of the fact that if it was that easy everyone would do it.
-ecosystem design is a better concept to use rather than product design since it forces you to think about the many pieces and not just the product
-for viral trends, they actually follow epidemiology numbers so worth checking that. But people also get anti-bodies (people don’t upload all of their address books anymore or tell all of their Facebook friends)
-people confuse virality with word of mouth
-virality is both growth features and engagement
-break out growth because a critical mass is necessary for building a viral product.
-engagement is more focused on understanding the value proposition. To be viral, you must be free or have a significant free component. Reid has never seen a viral paid product.
-growth, then engagement and then revenue are Reid’s suggested stages of focus to give you a great monetization engine
-sustainable growth comes when new customers come from actions of old customers
-one nice thing about lean is that it builds cohesiveness in the team
-you should have flexible persistence. Have a vision but constantly question and shift things around
-recruiting is a long game and you should constantly be talking to great people with the long game of recruiting them into the company
-Reid suggested taking a big chunk of his schedule (10 percent) to finding and talking with great people. For great talent it is always a long game to get them
-think about the startup game as a multiple game strategy. In any startup there is a substantial risk that you won’t succeed. Think about how you are playing the long game yourself. Pay attention to the relationships, alliances, etc because when your next startup is coming around you may need help
-you have to both be presuming this will work and planning for your next thing (duality)

Laura Klein (Users Know)
-how to determine if your problem is worth solving
-landing pages only tell you if someone will give you their email address but nothing else
-if you want to validate any other parts you need to try something else
-each of these techniques have pros and cons depending on what you are validating

1. Audience building
-build an audience of people who care about the problem before you build it
-many good examples (mattermark) of building a blog first rather than building the product
-it is good for learning the size of the audience you can attract before committing a ton of money and resources
-so, give away expertise for free on a regular basis
-establish yourself as a trusted expert in the market
-good for products that rely on a community so can help build a marketplace
-needs to be something where people are already looking for content. You need to CONNECT with them

2. Concierge
-good for learning what is actually required for your product. It doesn’t scale but helps you understand by doing it in person
-also helps you understand the tough parts for your customer so you know what to automate
-provide a service manually and then figure out the parts people need the most help with
-particularly good for B2B especially in complicated multi-step products
-the key is to HELP

3. Wizard of Oz
-often mistaken for concierge but not the same
-the difference is that you hide that you are manually providing the service in the back
-allows you to perform just in time automation
-use humans instead of automation until you can’t
-do things that don’t scale
-the goal is to PRETEND

4. Fake Door
-similar to landing page and wizard of Oz to build the initial engagement
-learn whether users are interested in a product before building it
-add a first interaction as an interface
-make sure you provide a good experience even if it isn’t the experience they expect
-the key to a good fake door is to explain what you are doing and you will piss off way fewer people
-you cannot have a house full of fake doors though
-can also be combined with A/B testing to only show them to a subset of users
-the key is MEASURE and set goals to determine the number of people who are going to click through for you to implement it

5. Crowdfunding
-great to see Pebble listed! 🙂
-learning whether users will pay for your product before committing a lot of money and technical resources
-post your idea on Kickstarter and ask for a credit card or pre-payment
-sell ahead of time (LOI or whatever) for the B2B
-selling is a huge part of the entrepreneurial process


Trevor Owens (Lean Startup Machine)
-want to outline the five major biases of making new products
-we are obsessed with the outliers and then think the simple things we can replicate

Hindsight bias
-we see the past as something more predictable than it was
-the easy solution is setting a success criterion for every experiment so we can determine whether we can actually predict what happens

Overconfidence effect
-we believe that we will succeed
-most startups fail because they work on the wrong things
-fail fast, succeed faster!

Confirmation bias
-tendency to seek out information that confirms our existing beliefs
-common in business planning
-putting on blinders!
-fear is the foundation of all confirmation bias
-look for the riskiest assumption and then see if it is the same as they express
-when we are passionate about something it is uncomfortable to get vulnerable feedback

4. Observer effect
-researchers make us change our behavior when people are studying us
-dont say “can I interview you”
-just start asking questions and keep them open ended
-the wizard of Oz is a great way to avoid the observer effect since an individual cannot bias the outcome

5. Experimenter effect
-we can have our own bias change the experiment to get the outcome we want
-the most common example is leading questions
-double blind studies are the best ways to avoid this bias

-make sure you care about the truth. Have a skeptic. Have paired interviews to watch for bias.

Try hard to make people feel comfortable. Used the example of Intuit who perform “follow me homes” to see how people use a product they purchased at the store in their own home.

How do you identify the riskiest assumption? Identify domain experts who know that space.

GE Panel Discussion
-bold statement as the biggest lean startup implementation in the world
-Stephen Ligouri (in charge of innovation at GE)
-four big businesses – energy, transportation, healthcare and financing (GE Capital)
-check out GE Reports press release today on relationship with Lean Startup (Fastworks)
-over 100 projects running lean right now inside GE
-“culture can eat strategy for lunch”. You need support from the upper levels that is unwavering to support these types of changes

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