Lecture Notes: Lean Startup by Dr. Adam Jay Bach

Key Elements of the Lean Startup

• Assumptions and Hypotheses

  • Importance of identifying assumptions and hypotheses related to the business concept.
  • The necessity of experimentation to confirm or reject these assumptions.

• Process of Experimentation

  • Testing hypotheses through experiments is essential, especially for novel innovations.
  • Example: Dr. Bach's experience with Neruda's Corporation highlighting the importance of testing in real-life scenarios.
  • Experimentation helps identify incorrect assumptions early in the process.

• Minimum Viable Product (MVP)

  • Core concept in lean startups to test ideas quickly and efficiently.
  • Distinction between MVP and MVBP (Minimum Viable Business Product) in disciplined entrepreneurship.

Challenges in Innovation

• Correcting Assumptions

  • Many startups have incorrect initial assumptions.
  • Even experts can make incorrect assumptions.

• Hypothesis Testing

  • Difficult in fields like biotechnology.
  • Prioritization and resource allocation are critical.
  • Designing effective experiments is essential.

Activity: Experimentation with a Business Idea

• Canvas Activity: Hypothesize and test ideas for a faux noodle restaurant.
  • Identify and test hypotheses regarding the concept.
  • Consider data collection methods to confirm or reject hypotheses.

De-risking Your Business

• Minimizing Risks

  • Aim to reduce risks under your control (e.g., product design meeting customer needs).
  • The importance of relevant and actionable experimentation.

• Business Model Canvas

  • Use as a starting point for identifying hypotheses and assumptions.
  • Example: e-parking model and its associated hypotheses.

Critical Assumptions in Business

• Common Assumptions

  • Cost of product, customer acquisition, marketing costs, competitors, customer segments, etc.
  • Testing these assumptions is crucial for entrepreneurial success.

• Real-World Example: Uber for in-home caregiving app

  • Challenges and hypotheses associated with verifying the business model.

Hierarchy of Tests and Customer Interest

• Hierarchy of Tests

  • Increasing accuracy and cost from assumptions, expert talks, surveys, to MVP reviews and customer payments.

• Hierarchy of Customer Interest

  • Moving customers from conversation to pilot testing and eventual payment.

Next Steps

• Upcoming discussions on experiments and the Minimum Viable Product.