5

Question 1

Risk at startups

Answer 1

• risk is not black & white
• risk is adjustable
• high risk can be managed
• founders need to de-risk ideas

Question 2

minimum viable product

1-7

Answer 2

• maximize validated learning for least effort
• first complete solution that contains the most basic functionalities
• leaves out additional features and design
• goal: test initial assumptions/hypotheses about the product solution
• reach the market ASAP
• generate feedback, feedback is used to improve product
• sold to early adopters
• multiple MVPs possible

Question 3

Prototype

1-5

Answer 3

• test feasibility and proof of concept (POC)
• demonstrates promised value
• small audiences (stakeholder)
• not for sale

e.g. mock-up, video, presentation

Question 4

Build-Measure-Learn Cycle

Answer 4

0 Idea
Step 1 Build: Hypothesis of Value & Growth
Step 2 Product: Build the MVP (Test hypotheses, target early adopters)
Step 3 Measure: Reliability ≠ vanity metrics
Step 4 Data: Split tests / cohort analyses
Step 5 Learn: Validated learning
Step 6 Idea: pivot or preserve

Question 5

Definition Validated Learning

Answer 5

The process of creating an empirical proof, that value-creating facts for the contemporary and future business model of the company were found.

Question 6

Step 1: Process of Building Experiment for Validated Learning

1-3

Answer 6

1 define Leap of Faith (Hypotheses of Value & growth)

2 answer the questions
- do consumers recognize the problem you are solving?
- if there was a solution, would they buy it?
- would they buy it from you?
- can you create a solution?

3 build and sell MVP, measure success

Question 7

Step 1: Building Experiment, Deriving & testing Hypotheses

Answer 7

Derivation:
- focus on largest uncertainty and how to reduce it
- focus on affordable loss

Testing:
- build MVP
- collect maximum amount of validated learning about customers

Question 8

Fears of early market launch

1-3

Answer 8

1 Legal fears
- discretion regarding ideas to be patented
- set up legal structure of company (GmbH, UG, ..)

2 competition & idea theft
- ideas are rarely unique (Facebook vs StudiVZ)
- ideas usually change
- execution is success driver

3 Loss of marketing & brand value
- startups have nearly zero brand value
- early adopters forgive

Question 9

Vanity Metrics

Answer 9

• absolute numbers
• represent the truth poorly
• e.g. number website visitors per week

Question 10

Cohort analysis

Answer 10

• separating the customers into segments
• looking at numbers that really matter
• what customers add value? does this number increase?
  important KPI: paying users (A, not increasing, B increasing)

-e.g. number of paying customers per week

Question 11

Characteristics of Data for validated learning

Answer 11

• data relevant for growth model
• clear outline of cause and impact
• reports as simple as possible
• access for every involved party
• data has to be trustworthy

Question 12

Placement of MVP & Business Model Canvas into product life cycle

Question 13

Definition Business Model (Osterwalder)

Answer 13

A business model describes the rationale of how an organization creates, delivers and captures value.

Question 14

Business Model Canvas

1-9

Answer 14

1 Customer segments
2 value proposition
3 channels
4 customer relationships
5 revenue streams
6 key resources
7 key activities
8 key partners
9 cost structure

Question 15

Optimization & Pivot

Answer 15

Optimization
- change step by step
- optimize product
- add more features
e.g. change Logo

Pivot
- optimizations show no improvements
- change strategy
e.g. Palm handhelds —> Website

Vision
- stays the same
- even if optimization or pivot vision stays the same
e.g. Paypal: Bank of the future

Question 16

Pivot

1 general

2 definition

3 signals

Answer 16

1
- are we on the right path?
- changing of orientation in start-up
- can be result of adaption of customer demand/feedback
- routine of pivot or preserve meetings

2 definition
- new definition of basic hypotheses
- new start up BML feedback loop

3 signals
- sinking effectiveness of MVP experiments
- feeling of product development should be more effective

Question 17

How can potential pivots be found?

1-7

Answer 17

• sit down on a regular basis and interpret the signals the right way

1 zoom-in
2 zoom-out
3 customer segment
4 customer need
5 platform
6 channel
7 technology

Question 18

Kinds of Pivots

1-7

Answer 18

1 zoom-in (partial feature of old product becomes new product)
2 zoom-out (old product becomes part of a much larger new product “glue that isn’t sticky: post-it”)
3 customer segment (wrong customer segment, focus on new)
4 customer need (related problem being important for customer has been discovered, focus on new customer need “starbucks started as retailer for coffee, then cafe”)
5 platform (youtube as online dating website)
6 channel (delivering same product through another channel)
7 technology (achieved same solution with new technology)

Question 19

Optimization vs. pivot

Answer 19

Optimization
- change step by step
- optimize product
- add more features
e.g. change Logo

Pivot
- optimizations show no improvements
- change strategy
e.g. Palm handhelds —> Website

Vision
- stays the same
- even if optimization or pivot vision stays the same
e.g. Paypal: Bank of the future