Developing a Lean Startup Worksheet
Written by Michael Riley on June 24, 2014
How can we better evaluate startups
and provide a framework for advice?
Over the last year I have been working with dozens of different startups going through the PSL Accelerator, building apps/websites for Simplpost customers and founding Philly Startup Tech. One of the themes that keeps reoccurring throughout has been startups not knowing what they should be doing next. And often the problem is they are getting way ahead of themselves in the process (especially with building tech). It's really hard to evaluate your own startup objectively. And it's also really difficult to advise a startup on their best course of action.
The problem
Lean Startup gives us a basic framework to work in, but it's not granular enough to give us a quick way to evaluate a startup's current status and set specific goals. So how can we rate a startup and generate an actionable "to do" list at the same time?
Something to help
The Lean Startup Worksheet is an idea we've been working on to help us sort through these problems. It makes it easy to separate startups into four distinct levels. And within each level there are three components to complete and validate before advancing.
It's based on the Steve Blank's book The Four Steps to the Epiphany and Eric Ries' The Lean Startup. The additional breakdown of each level into Business Development, Marketing and Technology components allows for specific action items to be assigned to each square.
Since you need to complete and validate each of the three components to advance to the next level, you are forced to focus on the specific tasks at hand that will move you forward. And you can quickly detect problems before wasting time and money on something that's not working, or is beyond your current level. It also gives us an easy way to evaluate and rate a startup.
A new Level 1 startup is born when Sarah and John come up with an idea to entertain and train dogs while their owners are away. They evaluate the market and find there's 80+ million dogs in the US and their owners spend over $10 billion a year on dog products. They interview 25 dog owners and come up with the value proposition of "Make your dog happier and better behaved while you're away at work". They originally think the product should be a robot dog trainer, but feedback collected from their landing page points them towards creating a device that enables dogs to use iPhone apps.
Since you need to complete and validate each of the three components to advance to the next level, you are forced to focus on the specific tasks at hand that will move you forward. And you can quickly detect problems before wasting time and money on something that's not working, or is beyond your current level. It also gives us an easy way to evaluate and rate a startup.
Example Startup Story
A new Level 1 startup is born when Sarah and John come up with an idea to entertain and train dogs while their owners are away. They evaluate the market and find there's 80+ million dogs in the US and their owners spend over $10 billion a year on dog products. They interview 25 dog owners and come up with the value proposition of "Make your dog happier and better behaved while you're away at work". They originally think the product should be a robot dog trainer, but feedback collected from their landing page points them towards creating a device that enables dogs to use iPhone apps.
Level 1
To advance on to the next level their goal is to collect 500 email addresses from a landing page with some mockups. If they fail to get 500 email signups then they will go back to the drawing board.
Level 2
After getting 700 email signups they connect with an angel investor that has a weak spot for dogs and gives them $25K in seed financing. Sarah and John then pay to have a working prototype built. They set a traction goal of 10,000 pre-orders. The product is iDog - the way to fix your dog for less than a trip to the vet. If Traction is not achieved within a couple months they need to Pivot back to Level 1 to have another shot.
Level 3
Having achieved Traction of 30,000 pre-orders Sarah and John are able to build an iDog team, and bring in some professional dog trainers as partners. The engineers manufacture version 1.0, and their sales team starts ramping up to get the product into stores. All they need is some funding to make a better world for dogs.
Level 4
At Level 4 they have secured $20 million in VC funding and have 120 employees. The startup has grown to include a full suite of iDog apps, with the No More Barking app getting over 20 million downloads. They are now focused on expanding to other countries and growth hacking using their new Doggie Play Date app. This is where the "hockey stick" growth happens. And none of it would have been possible if their entire plan was to find a developer to build an app for 5% equity, and then wait for the money to come pouring in. It required a well executed and thoroughly validated strategic plan.
There's a huge range of difference between a Level 1 startup and a Level 4 startup. By focusing only on the checklist of each level it ensures there is little wasted time and resources.
We could use some more startups and advisers to help test out these concepts and iterate this framework. It should be a good opportunity to learn more about Lean Startup and how you can get more involved in the startup community.
Thank you to James Bright, Kert Heinecke, Ian Leibovici, Amrish Macedo, Rick Nucci and Dewet Pretorius for reviewing drafts of this idea.
There's a huge range of difference between a Level 1 startup and a Level 4 startup. By focusing only on the checklist of each level it ensures there is little wasted time and resources.
We could use some more startups and advisers to help test out these concepts and iterate this framework. It should be a good opportunity to learn more about Lean Startup and how you can get more involved in the startup community.
Want to help us develop this idea?
Thank you to James Bright, Kert Heinecke, Ian Leibovici, Amrish Macedo, Rick Nucci and Dewet Pretorius for reviewing drafts of this idea.
