How was the IMVU founded

Lean Startup: Your own business at speed

Everyone who wants to start a company first stands in front of a wall of open questions that threatens to kill them. In the case of part-time founders, this becomes even clearer due to the limited time.

How do you get something off the ground with little time and money? Do customers even want my product? How do I best market it?

These are the questions everyone is asking: It doesn't matter whether you want to bring author services to men or women, develop an app or bring out your own product under your own brand.

It is also independent of whether you “just” want to make a living from your business or want to bring out the next big thing in start-up heaven.

Implementing an idea quickly, customer-oriented and with little capital is an art and THE success factor for your own independence. The Lean Startup method is intended precisely for this: Companies are founded on speed with the customer in focus!

Happy Coffee: Lean startup as a side business

Before I get to the stupid definitions of lean startup, let me start with an example. It's an example that many can identify with and one that clearly describes the mindset behind Lean Startup.

It is about the coffee online shop Happy Coffee from Christian Häfner, who also founded the accounting and accounting software Fastbill.

Happy Coffee was founded by Häfner part-time during his previous employee job.

In order to start as lean as possible, only one type of coffee and one packaging size were offered. Own investment: 2,500 euros.

In order to evaluate the hypothesis that the coffee is accepted (or not), friends and acquaintances were made aware and advertisements were placed.

The coffee was actually bought, the interest was there! But the margin went on for advertising costs and thus the business refinanced itself, but the bottom line was that nothing was left.

Therefore, it was now necessary to experiment with different marketing channels. Several performance marketing channels have now been tried to buy customers.

Panning strategy in marketing

However, it quickly became apparent that customer acquisition via any channel was too expensive.

Thus, Häfner decided to build up a long-term flow of visitors using SEO (search engine optimization) and to give up direct shopping from potential customers.

SEO can work well, but it takes time. Thus, initially only suitable content for the long-term SEO strategy was built up and the sale of coffee was discontinued.

That only changed again when steadily high traffic for search terms such as "organic coffee" was generated via its own online coffee magazine.

In order not to have to buy new coffee straight away, landing pages were created on which the coffee was advertised. The customer was offered a 10% discount on their first order if they entered a list as a prospective buyer.

This made it possible to test customer interest in a very simple way, without having to buy new coffee with luck.

The interest was great enough and so the decision was finally made to order new coffee.

So that the effort for logistics and for the checkout (purchase and payment) remains extremely low, everything has now been processed via Amazon as part of Amazon FBA (Fullfilment-by-Amazon).

In addition, the product positioning was further optimized in accordance with customer feedback and only organic coffee was offered.

Happy Coffee now has its own online shop again as a further sales channel alongside Amazon. But here, too, the checkout was outsourced in order to save unnecessary effort. The purchase is made for the customer via Shopify.

Happy Coffee is a great example of how a project can be started “lean” as a part-time job and led to success through constant learning, optimization and the necessary change of course.

Lean startup: where does the method come from?

The Lean Startup method comes from the American entrepreneur and blogger Eric Ries.

Among other things, Ries founded the company IMVU, a social network with 3D avatars. In the beginning, Ries did not look for large financing for IMVU, but published an MVP in 6 months (more on that later). He also relied on extremely fast development cycles and constant user feedback in order to deliver what the customer wants.

Eric Ries and his method became famous through the book The Lean Startupwhich was released in 2011.

It is considered a forerunner Lean manufacturing, which comes from Toyota and focuses on lean processes, the elimination of unnecessary overhead and very close relationships with suppliers.

The 7 core principles of Lean Startup

Everyone should deal with lean start-ups. Even and especially when your own business is still at the very beginning.

The basic principles are not particularly difficult to understand.

However, you have to check the implementation for yourself again and again. Something quickly goes under and you fall back into inefficient patterns that cause more work than necessary and lose sight of the customer.

# 1 minimal viable product

An MVP is the minimal version of a product that is sufficient to confirm one's own business hypotheses or to determine that something needs to be changed in the concept.

Nick Swinmurn, the founder of Zappos (world's largest online shop for shoes), did the following: He took pictures of shoes in shoe stores and put the pictures online. When a pair of shoes was purchased, he himself bought it at full price in the store and shipped it to the customer. The start of Zappos is a successful example of how you can simply try something (in which examples sell shoes on the Internet).

You can find more insights on testing product ideas in my article on pretotyping.

# 2 Continuous deployment

This point mainly applies to software products. The point here is that new code is continuously released.

# 3 split tests

Split testing is about so-called A / B tests. Which is better received? The "Buy" button on your website at the top right in red or at the bottom in blue? This is also possible in the offline world: Today, your mobile coffee stand sells coffee A and tomorrow coffee B. Which variety is more popular with customers on average?

# 4 meaningful KPIs (key performance indicators)

To evaluate the performance of your own business, you need a lot of numbers. Which of them make sense and which don't is another matter. It depends a lot on the business. A very good suggestion is the Pirate Metrics.

# 5 pivot

A pivot means a strategy swivel in which previous assumptions are replaced by new acceptances. The example of Happy Coffee fits in perfectly. The direct purchase through various marketing channels did not work, which is why a complete swing in marketing was necessary.

# 6 Innovation balance

The innovation balance means the tracking and evaluation of targets. Are milestones being reached? Which priority has which task? What conclusions can be drawn from previous developments?

# 7 Build - Measure - Learn

AfterWhen an MVP is ready, further development continues in the Build - Measure - Learn cycle.

It's about implementing something at short intervals. Then it is measured how successful it was. And the last step is to find out what you have learned and to incorporate the outcomes into the next cycle.

The graphic shows the cycle very well. Of course, the step from build to learn doesn't have to be “code”. It can also be something else.

Lean startup: the megatrend

The Business Model Canvas is perfect for planning your own business ideas. Quickly play through different ideas and get started without first writing a huge business plan.

There is also a slightly modified version of the canvas called Lean Canvas. But more on that in an upcoming article.

Lean startup is a megatrend in terms of your own business!

There are many successful examples of companies that rely on Lean Startups. However, there are even more that have so far passed the trend.

Are you already relying on Lean Startup and has it brought you advantages (or even disadvantages)?

Notice

Hi, I'm Eric and one of the two founders of PRENEUR.DE. With PRENEUR.DE I want to help shape your own founding personality and learn a lot myself in the process. I am currently self-employed as an interim product owner. If you want to find out more, have a look at About Us or at ericsalbert.de.