COURSE CODE: THE ENTREPRENEURIAL MIND

Module 7

Introduction
This course introduces the students to learn the basic understanding of the steps involved
in building a successful venture exploring technology trends and opportunities in the local
and global context. The student will be introduced to the concept of the Lean Startup, the
minimum viable product (MVP), the Customer Discovery, and the Business Model &
Customer Development. At the end of the course, the student will be able to create a
technology and form a startup team, gain insights on the different sources of financing
available, understand of customer behavior, and create a marketing strategy. As a
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culminating activity, the students will present/pitch their ventures in front of different
investors, government agencies, industries, and other stakeholders in what we call the
Demo Day.

Intended Learning Outcomes

 ILO 1- Determine the doing things that don’t scale

 ILO 2- Will be able to give example of the Value proposition canvas of Uber

Topic 1 DOING THINGS THAT DON’T SCALE

MEANING:
 It is when you have a product that NEEDS to happen, doing things that don’t scale
comes naturally because there will be all these little tasks and asks that you’ll
need to bridge for your users before you have built all the infrastructures for them
to happen on their own.
 EXAMPLE: As startup you will have to do lot things all by yourself, which is not
required in the long run but necessary to kick start like you as founder/CEO just
have to go to people and sell make them use your product

Example:

DoorDash
 is an American on-demand prepared food delivery service founded in 2013 by
Stanford students Tony Xu, Stanley Tang, Andy Fang and Evan Moore, who
departed and is now a partner at Khosla Ventures
 started in a macaroon store when Chloe, the owner of the store brought up her
problems on delivering her products since she had no drivers and ended up
having to personally deliver all the orders she had
 Over the course of the next few weeks, the team talked to around 150 to 200
small business owners, and when they brought up this idea of delivery, they kept
agreeing with them; they would say, "You know, we don't have delivery
infrastructure. But the problem is they didn’t own trucks or delivery
infrastructure. So here are the experiments or hypotheses they had.

Assumption/ hypotheses:
 They put up the landing page (note: IT’S A PAGE, NOT A WEBSITE) and called
it PaloAltoDelivery.com and the delivery idea got phone calls since the phone
number was put or added on the page.
 And then soon they began to gain traction on campus through
PaloAltoDelivery.com although it isn't exactly the most professional-looking site,
yet they kept getting phone calls; they kept getting orders unexpectedly.
 They launched and all about testing the ideas, they were the delivery drivers,
though they were just college kids, they were also the customer supports and got
phone calls even in times of lectures at school
 They spent time promoting the DASHDOOR by distributing flyers in University
Avenue. In charging the customers when got orders, they used the following:
1. Square -an American financial services, merchant services
aggregator, and mobile payment company based in San Francisco,
California. The company markets software and hardware payments
products and has expanded into small business services
 -Square shut them down because they were under suspicion for money
laundering but Tony, their friend and co founder and worked at
Square helped them to solved everything.
2. Google doc- keep track of orders
3. Apple's Find My Friends- to keep track of where all of our drivers were

3 things learned from doing DoorDash:

1. Test your hypothesis- Treat your startup ideas like experiments.
2. Launch fast- Launched in less than an hour with a really simple
landing page.
3. Do things that don’t scale- one of the biggest competitive
advantages when starting out , and help in figuring out once you
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have your demand

Insights from The Lean Startup by Eric Ries

Lean startup-  a method used to found a new company or introduce a

new product on behalf of an existing company
  lean startup method advocates developing products that consumers have
already demonstrated they desire so that a market will already exist as soon as
the product is launched
How can I build an innovative product without wasting a bunch of time and effort?
 In 2004 Eric Ries was the Chief Technology Officer of a Silicon Valley Startup
called IMVU. After wasting six months building a product nobody wanted, Eric
Ries and his team discovered they could avoid wasted effort by building
preliminary (and somewhat embarrassing) products and presenting them to target
customers to measure their behavior. Eric Ries calls this the Lean Startup
method.

NOTE: Silicon Valley

 Was named for the silicon needed to make semiconductor computer chips
  located in the South San Francisco Bay Area of California, is a global center of
technological innovation
  home to dozens of major technology, software, and internet companies such as
 Apple, Facebook, Google, and Netflix. The area also launched Tesla, Twitter,
Yahoo!, and eBay. There are many business support companies such
as Cisco, Oracle, Salesforce.com, Hewlett-Packard, and Intel. Other companies
include Adobe, Intuit, and Zynga
The Lean Startup Method:

1. Create a Vision- simply a framework you can use to explain the value proposition
of your idea to others and discover critical assumptions
2. Identify Critical Assumptions- Look at your vision and ask yourself: “What
value assumptions have I made, which if wrong, would result in a significant
amount of wasted time and effort?” What you consider simple and meaningful is
often complex and meaningless to others.
3. Build Minimum-Viable Products (MVPs) to Test Critical Assumptions
- Here is a guideline you can use to create your MVP:
1. “What component, feature, or process of my ideal product is not
absolutely necessary to test my assumption?
IMVU’s Minimum-Viable Product development strategy: “Instead of spending years
perfecting our technology, we build a minimum viable product that is terrible, full of
bugs and crash-your-computer-yes-really stability problems. Then we ship it to
customers way before it’s ready. And we charge money for it. After securing initial
customers, we change the product constantly—much too fast by traditional
standards—shipping new versions of our product dozens of times every single
day.” - Eric Ries

4. Release MVP & Measure Behavior

If you had an idea for an innovative new board game, you could:
a. Create a Facebook ad and target a small group of avid board game players.
b. Direct people to a webpage with an animated video describing your board
game (the Minimum Viable Product in this case).
 c. Install a “Pre-order: $20” button on the bottom of the webpage with an
estimated release date of the board game.
 Once the MVP is public, you need to evaluate key metrics to validate
your product or service. In this example, you could measure the amount
of clicks your ad gets versus a typical Facebook ad, the average watch
time on your video, or the percentage of pre-orders you receive for every
person who visits your webpage.
5. Pivot OR Persevere
 Make tweaks to your MVP to get the desired customer behavior (clicks,
engagement time, pre-orders, etc.). If you don’t observe the desired
customer behavior after several iterations, it’s time to pivot to a new
product strategy and vision. “The sign of a successful pivot is that these
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engine-tuning activities are more productive after the pivot than before.” –
Eric Ries When doing innovative, creative work always ask yourself:
"Which of my efforts are value-creating and which are wasteful?" Then
seek empirical data from live experiments rather than relying on market
research, focus groups, or pure intuition.
Silicon Valley entrepreneurs:
 Steve Blank
 Eric Ries

THE LEAN STARTUP SUMMARY (BY ERIC RIES)

Top 5 takeaways from The Lean Startup:

1. The Build-Measure-Learn Feedback Loop- “just do it” strategy
 The goal of a startup is to figure out the right thing to build – that
customers want and will pay for - as quickly as possible
2. Everything is a Grand Experiment- To confirm or reject your hypothesis,
experiments must be run to gain validated learning about potential customers. An
MVP usually forms the basis of such experiments.
3. Different Types of Mvps-
a. Video MVP- example: Dropbox( Drew Houston,CEO of the company)
produced a video showing an extremely easy to use file sharing tool, and
published it online in communities with tech savvy members
b. Concierge MVP- focus on single customer and develop according to their
preferences
c. The Wizard of Oz MVP-
4. The Three Engines of Growth
A. The sticky engine-designed to attract customers for the long term and never
let go
 Focus on 2 variables: customer acquisition rate and churn rate
B. Viral engine- focus on spreading like epidemics, the idea is that person
should invite one or more friends as well
- Success depends on something called “VIRAL COEFFICIENT” which is
calculated as the number of customers recruited on average by every
recruited customers
C. The Paid Engine- focus on advertising in some form to reach customers

5. Pivot or Persevere?
- Successful entrepreneurship is about perseverance and flexibility at the same
time.
- Pivoting an idea does not equal failure, in fact, almost every successful startup
has done a major change to its strategy at some point.

Value Proposition Canvas

 Is a tool that allows you to design, test and visualize the value of the
product for customers in a structured way

Assignment
Value proposition canvas explained through the Uber
example
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