Startup Science 2017 ⑦

Startup Science ⑦
"Making a successful startup is an Art.
Making a startup that doesn’t fail is a Science.”
Created by
Masa Tadokoro

Product-Market Fit
Deliver the MVP
to the first
customer
Clarify what to
learn with an
MVP
Figure out things to
learn using the
MVP
Chose MVP type
and build
Learn by delivering
to an evangelist customer
Conduct Qualitative analysis by
interviews with customers and
Quantitative analysis by
innovation metrics
Examine the UX
with Hooked model
Improve UX to
Enhance
the customer
engagement
Iterate product to
bring more value
to customers
Iterate product/ launch
it
Conduct Quantitative
& Qualitative Analysis
Build MVP
Repeat the
process until
the PMF has
been achieved
Create
Highly adaptive teamPivot the business model
Pivot the
Business Model
Copyright 2017 Masayuki Tadokoro All rights reserved

Conduct improvement/brushing up
existing features/UX.

Business Model 1 Business Model 2 Business Model 3
Time
MVP Version2 Version4Version3 Version6Version5
Impr
ove
Impr
ove
Impr
ove
Impr
ove
Impr
ove
Impr
ove
Impr
ove
Imp
rov
e
Imp
rov
e
Imp
rov
e
Deploy Deploy Deploy Deploy Deploy Deploy Deploy Deploy Deploy
Conduct deployment of
UX/function improvement
continually.

No
Yes
Add it on Story Kanban board as
story
Launch MVP and conduct
qualitative and quantitative
analysis
Achieved PMF?
Can improve it if continuing to use
the same business model?
Conduct transition of the
organization to scale
Yes
Consider to pivot
No
Yes
No
Flow chart to decide the next step.
Yes
No
Add it on issue Kanban board as
feature
Takes amounts of
features/issues?
Yes
No
Takes an amounts of
features/issues?
Verify UX/function improvement of
existing features
Provide enough values with only
existing features?
Verify product iteration added
features
feature
story
Conduct UX improvement
that customers would love

UX
改善
機能
追加
カスタマーをプロダクトにハマらせるには
機能追加よりもUX改善が重要である
Focus!

Product-market-fit達成前の状態
（カスタマーに刺さっていない状態）
で積極的に、カスタマー獲得をするべきではない
カスタマー獲得を積極的に実施
するべきでない
Activation率 10%
定着率 1%
の状態でカスタマーに
刺さっていない

Putting many resources into customer acquisition
before achieving product-market fit
is like pouring water into a bucket with many holes.

Product-market-fitを達成した後
（カスタマーに刺さっている状態）に
なってからカスタマー獲得を行う
カスタマー獲得を実施
Activation率 50%
定着率 15%
の状態でカスタマーに
刺さっている状態
○

Why you had better focus on retention?
You see how customers
love your product
However hard you try to
acquire customers,
at worst it will leak out
of your bucket with holes
Acquiring new customers
costs 6-7 times
of that of existing customers

Acquisition
Activation/
on-boarding
Retention
Referral
Revenue
Indicators startups should verify,
improve before achieving PMF.
Raise the 2
factors!
# of visitors
Sign up rates
Revisit rates
Continue rates
Viral coefficient

- Paul Graham
Founder of Y−combinator
“Do something not to scale.”

What is activation?
During the activation process,
users should perceive value
in the product.

Activating
acquired users.

The user will judge with
the first impression.
You want to impress the first-visit users -
“Aha, this service is awesome”
Unimpressed first-visit users
will never come back

You’ll need more resources for getting the
customer's attention than making a product.

The Days of Attention Economy
The key is how to get the user’s attention.

Points to Note for Activation
① 5-second rule
② Setting up tutorials
③ Building a magic moment
④ Making sign-up as easy as
possible

① You want to send the message across in 5 seconds.
Place a clear
‘How It Works’
Send out a
message of value
with a one-liner
copy

The clear way to make
products. https://www.docgenerator.net
https://www.docgenerator.net

Make users sign-up
immediately.
Send out a message of
value with a one-liner
copy.

You can insert
service intro movie
in the landing page.

”The service that needs
detailed explanation
is lowbie”
- Akimitsu Sano
CEO/founder of Cookpad

Superior services (UX) do not
need to be verbalized.
No need to explain.

Level of UX
User
Adaption
Low
High
Can the
value suggestion
of product
be raised
to this level?
Explained
without
words
Explained with a
few words
Explained with
a lot of words

② Set up tutorial
Use easy
questions to
answer

② Set up tutorial
Insert tutorials when user starts
using product

You can use a
dialogue style
tutorial
“Pythagorean theorem”

In-line tutorial will display when you
put a cursor over the field

Landing Understanding Decision Action
Understand
wondering
or
Good
Bad
or
Able
Unable
or
If wondering, users
leave soon
Why onboarding is so important?

Complexity
Importance
of features
Important
Difficult
Less
Important
Easy
Implement tutorials for
features which are
Important but difficult to
understand
Feature
Verify the features you need to put in to tutorials
Feature
Feature
Feature
Feature
Feature
Feature
Feature
Feature
Feature
Feature
Feature

Importance of feature Complexity
（1 - Difficult
５- Easy）
Priority
Impact Frequency of use
Feature１ 5 2 3 △
Feature２ 3 3 5 ✖️
Feature３ 4 4 1 ⚪︎
Feature４ 4 1 2 △
Feature５ 2 5 1 ⚪︎
Clarify the features that you need tutorials for
Verify the features you need to put in to tutorials

③ Create “AHA moment” -
where users are completely resonated with the product
The first
match moment
(Tinder)
The first
posting moment
(Instagram)
The first moment
when you
encounter
Poke-mon
(Poke-mon Go)

Verify revisiting-rate
after on-boarding.
If you achieve more than 50%
revisiting-rate,
it can be considered successful.

④ Make the sign up process as easy as possible
Enter email only

sign up to start a free
trial

Onboard users
directly without
an email confirmation.

What is retention?
Retention is the status where users are
engaging with the product - users find
some value in the product. For a start-up,
this is the most important metric - if you
have a high retention rate, you will have
a higher lifetime value

However, if the retention rate is low, you
are wasting resources
You acquire 5x customers by spending
5x on marketing

To measure retention, an introduction to
a the cohort analysis

Activation rates
People who
registered:
More than 90%
Activation rates
People who finished
the sequence: 35%
Retention rates
People who re-logged
in after 3 days: 25%
Revenue
Times of viewing ads and
answering questionnaires:
6 times
Questio
nnaires
Confirm
screen
Questio
nnaires
Confirm
screen
First
Sign up
screen
Menu
screen
Start
watching
ad
Complete
watching
Wifi usage
confirmation
Start
using wifi
Re-log in
screen
Menu
screen
Start
watching
ad
Complete
watching
Retention rates without tutorials : 25%

First
Sign up
screen
Menu
screen
Start
Ad watching
Complete
Ad watching
Start
using
wifi
Welcome
screen
Tutorial
movie
Retention rates
People who re-logged
in after 3 days:52%
Retention rates with tutorials: 50%
Add tutorial
First
Sign up
screen
Menu
screen
Start
watching ad
Complete
watching
Activation rates
People who
registered:
More than 90%
Activation rates
People who finished the
sequence:
70%
Wifi
usage
confirm
Revenue
Times of viewing ads and
answering questionnaires:
6 times

Without tutorial With tutorial
Activation
(registration)
90% 90%
Activation
(complete the
sequence)
30% 75%
Retention
(revisit in 3 days)
25% 52%
Revenue
(Average # of ad views
in a day per user)
4 times 6 times
Compare the one with tutorial and the one without
In a cohort analysis
Compare how different
they are

Without
tutorial(Actual #)
Without tutorial
(rates)
With tutorial
(Actual #)
With tutorial
(rates) Goal
Acquisition
(visitors)
170ppl 100% 171ppl 100% 100%
Activation
(registration) 154ppl 90% 155ppl 90% 95%
Activation
(complete the
sequence)
46ppl 30% 82ppl 55% 80%
Retention
(revisit in 3 days) 12ppl 25% 40ppl 49% 80%
Revenue
(average # of ad views in a
day per user)
4.2 times 4.2 times 4.8 times 4.8 times 10 times
Compare how
different they are
Compare the one with tutorial and the one without
In a cohort analysis

How can you improve
the retention rate of your product ?

Adding features.
Improve
retention.

Build a resonating experience.
Improving customer retention.
Add features
if necessary

Do you have the image of your most
loyal customers?

Engagement/
retention
rates
Time
Low
High
Customer Life Cycle
Less interested
customer
Customer who googled
related words
First-time visit customer
Second-time visit
customer
Fixed customer
Loyal customer
Enthusiastic customerYou want to nurture
the first-time
visit customers
to become addicted
customers.

Definition of Customers
：Customers who are visiting for the first time.
They haven't internalized the product yet.
They are at the riskiest status.
：Customers who revisit the product
They are getting involved with the product
Providing magic moment is the key to activatation
：Customers who use the product frequently
They are involved with the product rather strongly
Use reward and investment initiative to activate more
：Customers using the product very frequently
Without the product, they feel some degree of pain
Provide them value and propose a premium service
：Customers are passionate about the product
If there is no product, they will feel a strong pain.
You want to make them evangelists of the product
Engagement/
Retention
High
Low

Engagement
/retention
rates
Time
Low
High
Less interested
customer
related words
Second-time visit
customer
Fixed customer
Loyal customer
Enthusiastic customer
What is the image of
an enthusiastic
customer
using your product?
Customer Life Cycle

Hook Model
With this framework, you can think of
a way to nurture the first-time visit
customers to become addicted customers.

Trigger Action
RewardInvestment
External Trigger
Internal Trigger
Reduce
burden
Motivation

Five elements to build up addictive product
Motivation
Reducing
the burdens to
use the product
Information
on what to do
next
Energy to
use
the product
Reward
Trigger
Burden Reduction
Providing users
a reward to use
product
continuously
Investment
The user will be hooked
with the product
as they spend their
resources

By using the hook model, you want to set up a
hypothesis to nurture the first-time visit customers to become
addicted customers.

Trigger
Action
RewardInvestment
External Trigger
Internal Trigger
Reduce
burden
Motivation
Meeting the expectation of the
users - provide what you
promised
Providing clear onboarding
process/tutorials
In addition to self-relevant rewards,
you want
to provide hunt rewards, random
rewards
Making users
enter the relevant
information

Trigger
Action
RewardInvestment
External Trigger
Internal Trigger
Reduce
burden
Motivation
Make users revisit with a
self-trigger
Reduce users’ burden
by providing in-line tutorials
Leveraging social/
mastery rewards
Getting feedback on
the initial post or
recommendation.

Trigger
Action
RewardInvestment
External Trigger
Internal Trigger
Reduce
burden
Motivation
Make users re-visit the
product without an external
trigger
Leading users to use
more advanced features
Leverage social,
mastery and
achievement rewards
Enhance user status based
on
the resources users have
invested

Trigger
Action
RewardInvestment
External Trigger
Internal Trigger
Reduce
burden
Motivation
Make users use the
product as one of their
habits
Leveraging more advanced mastery
reward, stronger achievement and
social
reward as evangelist
Making users consider
ranking, # of followers,
and evaluation from
other Users
Leading users to
use more advanced
features

Question
❓
How do you define customers for each
status - first-visit customer, re-visit customer,
retained customers, loyal customers, and
passionate customers?

Trigger Action
RewardInvestment
External Trigger
Internal Trigger
Lighten
burden
Motivation
Set up a trigger for user to use
product

Type of external triggers
Earned trigger
Being aware of
product with
paid ads/campaigns
Exposing to media
or being featured
in ranking, e.g
APP rankings
Referral trigger
Paid trigger
Start using service
triggered by
word-of-mouth/
referrer
Self trigger
Being notified by
e-mail,
push notifications,
etc.

Paid Trigger
Diet Program ads
in Japan

Referral Trigger
Product review
on Youtube

Self Trigger
A reminder email of
a remaining
item in the shopping cart

Make users set up a self trigger
(Notification) while onboarding

Start-ups are often killed by an idea;
as long as you are build good product,
customers will come.
-Gabriel Weinburg
“Traction”著者

That entrepreneurs hesitate investment
while they want to means
that they only focus on creating products
but ignore other factors.
Many entrepreneurs who have created
great products don't have a
proper distribution strategy.
- Marc Andreessen

Acquisition
Activation/
on-boarding
Retention
Referral
Revenue
# of UU visiting the site
Sign up rates
Revisit rates
Continue rates
Viral coefficient
ARPU
KGI
KGIs (Key Goal Indicators) for each stage
Need some customer
acquisition to verify MVP

What is traction?
Traction is quantitative proof indicating customer
demand.
If it is a B2B product, it will be the number of paid
corporate customers. If it is a B2C product, it will
be the number of paid users.

Engagement
/retention
rates
Time
Low
High
Less interested
customer
related words
Second-time visit
customer
Fixed customer
Loyal customer
How do you make
customers from less
interested to fixed?
Customer Life Cycle

User
volume
EngagementLow High
Many
Many
Display Ad
Social display Ad
Contents marketing/eBook
Less
interested
customer
Interested
customer
First visit
customer
Second
visit
customer
SEO/SEM
PR/Earned media
Offline Ad
Mail magazine/DM
Remarketing
Fixed customer
(purchasing
customer)
Exhibition, Pitch events
Viral marketing
Direct sales
Seminar, webinar
Effective marketing/channeling strategy
for each stage
Product info/catalog
Examples of users
Partner sales
Revoke the customers’ incentive
to use the product

Conduct brainstorming for what kind of
external triggers (traction acquisition) will
attract customers

Put washed out strategies in order of
priority
Less possible
strategies
Possible
strategies
1 or 2 highly
possible
strategies

Conduct a low budget test of possible
strategies to put in a higher priority
How much is the unit price per user in this channel strategy?
How many customers will this channel strategy acquire?
How influential to customers is each channel strategy?
How many conversion rates will it acquire?
How long will it take to acquire 1 customer?
What terms does it need to render the test?

At the early stage of Dropbox, a unit price
acquiring a customer by listing ads was $230
while the price was $90.

Marketo got 14000 potential customers on
its weblog and made a list of them while
they developed its product.

mint.com acquired 150 million users through
content marketing on its weblog.

Sympathized
Less sympathized
Less relevant
with its product
Highly relevant
With its product
Less
effective
marketing
content
Content
Attracting
customers
Content
getting attention
of customers
sales
promoting
content
”The most readable contents marketing textbook”
Mint Case Study
Economizing, wisdom for
everyday life
New product
info
Saving
Loan
Investment/mon
etary tech
Voice of users

Sympathized
Less sympathized
Less relevant
with its product
Highly relevant
With its product
Less
effective
marketing
content
Content
Attracting
customers
Content
getting attention
of customers
sales
promoting
content
Mint Case Study
Economizing, wisdom for
everyday life
New product
info
Saving
Loan
Investment/mon
etary tech
Voice of users
Make a line where user acquisition
travels from "content attracting
customers" through to
"content getting the attention of
customers" to
"sales promotion content".

Skillhub got 12,000 high-quality users (with a high LTV)
without paying any ad fees for customer acquisition.

Sympathized
Less sympathized
Less relevant
with its product
Highly relevant
With its product
Less
effective
marketing
content
Content
Attracting
customers
Content
getting attention
of customers
sales
promoting
content
Skillhub Case Study
Free movie on
Youtube
Contents
After sign up
Project base
learning
Premium
service
Posting on Facebook
is less effective
Posting on
Facebook

A lot of users sympathize with Skillhub
through free education content (movies) on
YouTube.

Visiting the website. Providing contents that
users can watch
after signing up.

Assign projects to registered
users.

Convert them to premium courses
( paying members ) on its
web page.

“プロダクトの開発と
カスタマー獲得は並行して
進めましょう”
-Gabriel Weinburg
“Traction”著者

Trigger Action
RewardInvestment
External Trigger
Internal Trigger
Reducing
burden
Motivation
Enhancing motivation and
burden reduction to use
the product.

Enhancing Motivation by
Using the Psychological Effect
Framing Effect
burden reduction to use the
product.
The mind takes
shortcuts informed
by our surroundings
to make quick and
sometimes erroneous
judgements.
Anchoring Effect
Scarcity Effect
People often
anchor to one piece
of information when
making a decision.
Bandwagon Effect
People feel
more comfortable
to use a product when
others have already
been using it.
Endowed Progress Effect
People have increased
motivation when they
believe they are nearing a
goal.
Concord Effect
When people spend
resources upfront,
they tend to continue
to complete the project.

burden reduction to use
the product.
Scarcity Effect

Making middle option
stand out from 3 plans
k
Framing Effect

Emphasizing the discount rate by
showing the original price
.
k
Anchoring Effect

Bandwagon Effect
The more people purchase the
goods, the more value the
consumers will perceive.

4 times have already been stamped
at the beginning.
You can get a free coffee for only 4 more cups. Creates a
perception of being closer to the goal.
You can get a free coffee if you have 4 extra cups - you feel you
are closer to the goal with the left pattern
Endowed-progress Effect

Endowment Effect
Users tend to complete if
you visualize the completion
process.

Making users do tasks, i.e. editing a business card,
before the check-out screen.
Concord Effect

Making users enter
payment info after
the issues.

Reduce the burden/effort on the users
when using the product.
Physical effort
Reducing
time-consuming
effort
Reducing
the physical
effort
Brain power
Time
Reducing
mental/intellectual
effort
Social Deviation
Don’t let users
deviated from
their social norm
Money
Reducing financial
burden for
taking actions
Deviation from regular lives
Don’t let users
deviated from
the daily lives

Reducing Time-consuming Effort
Make the editing process easy by
automatically recognizing the user's
face.

You can use
the server terminal from
the same screen.
k
Reducing Time-consuming Effort

Reducing Physical Effort
You don’t have to pull
your smart phone out.

Reducing Mental Effort
Display recommendation
from view/purchase history

Reduce mental effort
by using a template or in-screen tutorials.
Pop-up tutorial
Pop-up tutorial

Message apps for teenagers,
fulfill a desire for
approval from friends
- they want to be considered cool.

Reducing Financial Burden
Users feel no financial burden since no
cancellation fee will be charged until the day
before the reservation.

Reduce
Burden
Increase
motivatio
n
Focus!
Focus on reducing user burden rather
than increasing motivation.

Trigger Action
RewardInvestment
External Trigger
Internal Trigger

Setting Up Rewards
Hunt reward
Providing a social reward,
i.e. acceptance
and recognition by others,
cooperation, or
competition.
Providing a sense
of hunting , letting users
explore resources
Achievement reward
Social reward
Setting up a reward
for achievement
of user actions
Randomness Reward
Do you provide
some thrilling/uncertainty
factors that cause users
to feel exited?
Providing users a sense
of control
of the situation
Self reward
Users are satisfied
when they are capable
of doing new things
Mastery reward

Social Reward
Approval
of others
Approval of
others

Hunt Reward
Make users
scroll down and
hunt products

k
Mastery reward:
Gain processing skills
as you use the app

Achievement
reward：
Providing
a sense of
achievement by
featuring a
complete
collection.

Self Reward
Users can customize characters.
Users have a sense of control over the product.
Making users set up character

Randomness Reward
Tinder provides random encounter
experiences.

A brain is a predicting machine.
Our brains are always seeking causality.
Our brains will be teased if there is diversity.
The diversity can enhance engagement/focus.
Why canuncertainty(randomness) be
a reward?
A brain is a predictive/pattern
recognizing machine

You can improve user engagement by making users
invest in some resources e.g. time, work, money,
social capital, psychological commitment, personal
data etc.
What is investment?

(Dollars）
0.30
0.00
0.05
0.10
0.15
0.20
0.25
Perceived value of
Origami made by Expert
Perceived value of
Self-made Origami
Perceived value of
Origami made by 3rd party
We value things more when we
put work into them.

User Investment
Level-up
Making users
enter preference
information
Improving
user’s status
based on
invested resources
Follower
Enter a preference
You earn more
followers after
investing
resources
Evaluation
Earn a good
evaluation
from others for
your good conduct
Making users
post contents
Post Content
Making users
enter their relevant
information
Enter Relevant Info

Make Users Enter
Their Relevant Information
Make users enter info with
dialogue style.

Make user enter information
from a selection
Make Users Enter
Their Relevant Information

Users enter their preferred
information very smoothly.

Users can easily follow
their topics of interest.

Users enter their preferred info.

Users can earn status based on
results/performance (Issue of Certificate)
Recognized as
a High Level Contributor

Recognized as Official
Reviewer
Users can earn status based
on results/performance (Issue of Certificate)

Visualizing Skill Levels
Users can earn status based on
result/performance (issue of certificate).

Users earn many followers when
you provide good content.
Follower

Earn a good evaluation from others
for your good conduct.
Be evaluated by other users.
Evaluated by
other users.

The content evaluated by
other customers.
Reviewed Contents
by Other Customers

Earn good reviews from
other users

Building a Resonating
User Experience
Improving customer retention

UX
Improvem
ent
Adding
Feature
It is important to focus more on UX improvement
than adding features to improve retention rate.
Focus!

Trigger Action
RewardInvestment
External Trigger
Internal Trigger
Once users are hooked on the product, you will no longer need
to have so many external triggers. To earn this status, you
need to bring the product to the level where it responds
automatically to the emotional status of its users.

Engagement/
Retention
Time
Low
High
Find the magic number of your product.
By leveraging the magic number, you
can nurture first-visit customers to
become retained customers.

When users conduct specific actions for a certain
number of times, the metrics such as retention rate or
profitability will increase dramatically.
For example, "10+ followers" for twitter,
"1+ file upload" for dropbox,
"14+ friends" for Facebook or
"2000+ message exchange" for Slack
What is the “magic number”?

The magic number to fix customers
for Facebook:
When a customer connects
7+ friends in 10 days

The magic number for Cookpad during the
early stage:
When a customer prints a recipe page.

The magic number for Dropbox:
When a customer uploads a file onto the
website.

The magic number for Twitter -
when users follow 10+ users.

The first UX design
Sign-up
Create profile
See the popular tweets in the main
screen
Make the first tweet
First follower
Feedback to tweet
With this UX,
not so many users follow
10+ users
Follow other user
Follow 10 users

Users enter information very
smoothly

１０人以上While On-boarding, users easily
follow 10+ tweets

Sign-up
Select interested are
Being suggested popular twitter of
interested area
User will follow 10+ users at one time
screen
First follower
Feedback to tweet
Revised UXFirst UX
Sign-up
Create profile
screen
First follower
Feedback to tweet
Follow other user
Follow 10 users
Many sign-up users
reached the magic
number with
the revised UX

Retention
rate
Days
100%
50%
75%
25%
1 2 3 4 5 6 7 8 9
Users who follow 10+ users
in the first visit
Reaching magic number will make a
huge difference in
the retention rate.
Twitter Magic Number
Users who follow less than
9 users in the first visit

Qidiq is a service where you can get
feedback from your surveys.

First UX design
Response rate
was only 10-15%
with this UX
Survey owner add recipient to group
Survey owner asks question
Recipient gets invite
Recipient install mobile app
Recipient creates account
Recipient can edit profile
Recipient reads survey question
Recipient responds to question
Recipient see survey results
http://www.slideshare.net/Leananalytics/slides-from-new-media-manitoba-lean-analytics-workshop-june-2015

First UX
Revised UX
70%
response
rate !

Retention
rate
Days
100%
50%
75%
25%
1 2 3 4 5 6 7 8 9
Users responded to
question on 1st visit
Magic Number of Qidiq
Users did not respond
on1st visit
Reaching magic number will make a
huge difference in
the retention rate.

Trigger Action
RewardInvestment
External Trigger
Internal Trigger
Hooked model should be used to crystallize
essential part of the product, i.e. by
streamlining process and features - not by
adding new features.

Simplicity is somehow essentially
describing the purpose and place
of an object and product.
Jonathan Ive
Apple Inc., Chief Design Officer

Engagement
/retention
rates
Time
Low
High
Life Cycle of the Customer
Less interested
customer
related words
Second-time visit
customer
Fixed customer
Loyal customer
Get direct interviews
with the customers during
these stages.

First Visit Customer
( haven’t visited again )
・What made you not to visit again?
・Were there any gaps between your expectation for <product>
before and after using <product>? (If yes) what was that?
・Did you have unclear points in the value suggestion of the
<product>?
・Did you have unclear points on how to use <product>?
・What value suggestion would you make if you visit again?
・Did you have any unclear points in its sign up process?

Second Visit Customers
( are not fixed in/purchasing the product )
・What made you visit again?
・What made you not continue using it while you were
visiting again?
・What value suggestion or feature would make you
use <product> continually?
・Why do you value the value suggestion and
feature?
・What made you not to purchase the product
(subscription)?

Fixed Customers
( fixed in/purchased products )
・What makes you visit us regularly?
・What factor or feature will make your visit more
frequently?
・What additional feature would you, like to use?
・Would you like to recommend this product to your
family or friends? Why?

No
Yes
story
analysis
Achieved PMF?
Yes
Consider to pivot
No
Yes
No
Flow chart to decide the next step
Yes
No
feature
Takes amounts of
features/issues?
Yes
No
Takes an amounts of
features/issues?
existing features
existing features?
features
feature
story
Allocate them according
to production costs
needed for UX
improvement

Issue Kanban Board
Backlog In Progress Completed Validation
Backlog story Build
Build completed
launch
Quantitative analysis (split
test, cohort analysis)
UX policy
UX policy
UX policy
Add it to the issue
Kanban board if
it has minimal
production costs.

Story Kanban Board
Backlog In Progress Completed Validation
Backlog storyaa
Extract stories that
you want to learn in
the iteration
Build
Build
completed
launch
Quantitative
analysis (split
test, cohort
analysis)
Qualitative
analysis/introspection
by customer interview
Story
Story
Story
Story StoryUX policy
UX policy
UX policy
Add it to the issue Kanban
board if it has minimal
production costs.
（Up to 3）（Up to 3）（Up to 3）（Up to 3）（Up to 3）
Story
Story Story
Story

Without
policy (Actual #)
With policy
(rates)
With policy
(Actual #)
With policy
(rates) Goal
Acquisition
(visitors)
170ppl 100% 171ppl 100% 100%
Activation
(registration) 154ppl 90% 155ppl 90% 95%
Activation
(complete the
sequence)
46ppl 30% 82ppl 55% 80%
Retention
(revisit in 3 days) 12ppl 25% 33ppl 40% 80%
Revenue
(average # of ad views in a
day per user)
4.2 times 4.2 times 4.8 times 4.8 times 10 times
Compare the one with the UX improvement policy and
the one without it in the cohort analysis.
Improved!

Conduct Continual UX Policy
Deployment

Time
Impr
ove
Impr
ove
Impr
ove
Impr
ove
Impr
ove
Impr
ove
Impr
ove
Imp
rov
e
Imp
rov
e
Imp
rov
e
Deploy Deploy Deploy Deploy Deploy Deploy Deploy Deploy Deploy

Product-Market Fit
Deliver the MVP
to the first
customer
Clarify what to
learn with an
MVP
learn using the
MVP
Chose MVP type
and build
Learn by delivering to an
evangelist customer
innovation metrics
Examine the UX
with Hooked model
Improve UX to
Enhance
the customer
engagement
Iterate product to
bring more value
to customers
it
Conduct
Quantitative &
Qualitative Analysis
Build MVP
Repeat the
process until
the PMF has
been achieved
Create
Pivot the
Business Model

Consider a business pivot if the polished
business model isn’t able to achieve PMF.

Product-market-fit
Deliver the MVP
to the first
customer
Clarify what to
learn with an
MVP
learn using the
MVP
Chose MVP type
and build
Learn by delivering to an
evangelist customer
innovation metrics
Examine the UX
with Hooked model
Improve UX to
Enhance
the customer
engagement
Iterate product to
bring more value
to customers
it
Conduct
Quantitative &
Build MVP
Repeat the
process until
the PMF has
been achieved
Create
Pivot the
Business Model
Suppose you can't achieve PMF while
you have conducted product iteration
and UX improvement

MVP Version 2 Version 3 Version 4 Goal
Acquisition 100% 100% 100% 100% 100%
Activation 40% 45% 44% 45% 80%
Retention 18% 20% 19% 22% 55%
Referer 4% 4% 4% 4% 40%
conversion rates to
contribute to
Revenue
1.2% 1.3% 1.3% 1.2% 20%
History of product iteration
Run iteration several times but it is far away
to reach the goal

If it will make the product become a zombie
( not able to achieve PMF ).
Consider Pivoting

No
Yes
story
analysis
Achieved PMF?
Yes
Consider to pivot
No
Yes
No
Flow Chart to Decide the Next Step
Yes
No
feature
Takes amounts of
features/issues?
Yes
No
Takes an amounts of
features/issues?
existing features
existing features?
features
feature
story
Consider
pivoting!

"A pivot is to change
the strategy without
the changing vision"
Eric Ries
“The Lean Startup”

Can’t find a
better model
and time is up
Achieve PMF with
pivoting to find a
better model
before time is up

Find a better product/business model that customers
would love repeating the pivot
.

Time
Improve
Pivot Pivot
Render the pivot if you realize the
business model can achieve PMFImprove Improve Improve Improve Improve Improve

Need to verify the whole business
hypothesis before pivoting

A Decision to
Pivot Needs Courage
There is uncertainty whether the business model is
a failure because the assumed hypothesis is not
very certain.
To get rid of the uncertainties, you might want to use
quantitative analysis like a cohort analysis but there are
still some subjective factors.

An Unconvinced Pivot
by Your Team Member
Will Destroy Your Team
To get your members convinced,
you need to explain the reason for the pivot
or verify if the pivot is durable.

Proceed pivoting with the lean canvas
while convincing your team.
Team
Your lean start up canvas

Standards to decide whether your team is
convinced by the pivot
✔ The product iteration and UX improvement didn't get better
traction (fixing rates).
✔ You see the growing traction won't lead you to the dominating
position in the market.
✔ Think like an investor. Think what you would do to multiply your
earnings 10 times.
✔ Think of leaving the most attractive feature and doing away
with the rest.
✔ Think of cutting out the most attractive customer segment and
only providing the service to them.
*These are only standard points and don't fit into all kinds of businesses.

That is why you need to get your team members
convinced in pivoting.
Remember you can't pivot so many times because it
is possible that this will damage the whole business
and your team.

Types of Pivots
Customer segment pivot:
A pivot where you move to a new
customer segment since you
realize your imagined customers
won't be real customers.
Zoom-in pivot:
A pivot where you make
a part of a
product into a whole
product.
Zoom-out pivot:
a product be a part of a
bigger product.
Channel pivot:
A pivot where you
change sales channel
and distribution
channel.
Platform pivot:
an app be a platform
and make a platform be
an app.
Customer need pivot:
A pivot where you change an issue
to tackle because it is less
important to customers.

Stage
Customer
Problem Fit
Problem
Solution Fit
Product
Market Fit
Scaling
Lean
Canvas
Before
Launching
MVP
After
Launching
MVP
Current
model
Customer
segment
Pivot
Customer needs
Pivot
Zoom-in Pivot
Zoom-out Pivot
Platform Pivot
Channel
Pivot
Stages, where you return, differs depending on the types of pivots.
Business
structure
Pivot

Stage
Customer
Problem Fit
Problem
Solution Fit
Product
Market Fit
Scaling
Lean
Canvas
Before
Launching
MVP
After
Launching
MVP
Current
model
Customer
segment
Pivot
Customer needs
Pivot
Zoom-in Pivot
Zoom-out Pivot
Platform Pivot
Channel
Pivot
Stages, where you return, differs depending on the types of pivots.
Business
structure
Pivot
Largest
influence
Large
Influence
Medium Influence
Small Influence

At first, the service was
named "The Point" that
collected signatures for
lobbying.
They pivoted to Groupon which is a
company earning 1 trillion yen leaving
only one feature that gathers people as
groups to negotiate.
The Groupon Pivot

Before the Pivot: The Lean Canvas of ”The point”
Lobbyist
An individual
wouldn’t have
much influence
Sign together
Web site
Blog
Collect
individuals’
voices as
influential
movement
# of collected
signatures
None
Charge a fee if it
could gather enough
signatures
Website management
The cost of gathering
customers

After the Pivot: The Lean Canvas of ”Groupon”
Consumers
who want to
purchase
discount
coupons
An individual
wouldn’t have
purchase power
so much
Discount for
together
purchasing
Web site
SEO, SEM
Increase
negotiation power
by gathering
individual
purchase power
# of clinched
deals
Scale merit
Commission for
clinched deals
Management of the website
The cost of gathering customers
Sales for retails
Customer
segment
pivot

Achieved success in executing an IPO with a
market capitalization of 1.3 trillion yen.

You need to have second thoughts in pivoting if
there are highly engaged customers whose
customer base is smaller.

Picwing firstly provided a service
where customers could make digital
wifi photo frames and have it sent to
a smartphone or phone.
The Picwing Pivot
They pivoted to a service that
prints photos taken with a
smartphone or portable phone
and sent in the post.

Before the Pivot: The Lean Canvas of ”Picwing”
Senior people
aged at more
than 65 who
have grand
children
There is no way
for elderlies to
see pictures of
grand children or
children in
realtime
Provide photo flame tat
can connect to wifi
It’s connected to Web or
SNS service to see
pictures
Offline Ads
Sales by ad
firms
Can see digital
photos uploaded
by families or
friends in realtime
# of sold photo
flames
Tech developing
HW/SW
Revenue of photo
flames, subscription
Manufacturing cost
(handmade)
Ad cost

They realized senior people live in an
environment isolated from wifi.

Conducted Customer Problem
Pivot

Pivot to a business model that prints photos taken with a
smartphone or a portable phone, that are not shared in
digital photo frames but delivered to customers.

After the Pivot: The Lean Canvas of ”Picwing”
There is no way
to see photos of
grand children
and children
A service delivering
photos taken by
smartphone or portable
phone
can touch
photos taken by
families or
friends
# of delivered
photos
Delivering 15 photos
twice a month by $7
Supply chain
building/management
Ad cost
Don’t know
how to view
digital photos
Customer
problem
pivot
Senior people
aged at more
than 65 who
have grand
children
Offline Ads
Sales by ad
firms
Tech developing
HW/SW

At the beginning of the service,
Instagram was Burbn, which was a
location information service.
*Customers could also share photos.
The Instagram Pivot
Burbn pivoted to
Instagram, which is a
photo sharing service.
*Customers can share
location information.

Before The Pivot: The Lean Canvas of ”Instagram”
Smartphone
users aged at
10s to 20s in
cities
We have no
service to record
acts so memories
aren’t
accumulated
Social check-in
(able to share photos
also)
Listing
Weblog
In checking-in
photos are
uploaded then
action history is
recorded and
shared
# of check-in
Scale merit
Advertisement
Development
Customer acquisition

They realized users used
the app to share photos.

Conducted Zoom-in Pivot

A location info service that can share photos.
↓
Pivoted to a photo sharing service that
has useful location information function.

After the Pivot : The Lean Value Canvas of “Instagram”
A solution where
customers can share
photo on SNS
Influencer
Facebook
Can share taken
photos on SNS
and record
memories
DAU
Scale merit
Zoom in
Pivot
We have no
service to record
acts so memories
aren’t
accumulated
Smartphone
users aged at
10s to 20s in
cities
Advertisement
Development
Customer acquisition

18 months after being founded, bought out
by Facebook for 100 billion yen.
http://jp.techcrunch.com/2012/04/10/20120409facebook-to-acquire-instagram-for-1-billion/

A matching service, named
Tune-in Hook-up where users
could find partners.
Pivot of Youtube
Pivoted to a platform service sharing
movies.

Before The Pivot: The Lean Canvas of ”Youtube”
People looking
for partners
aged at 20s to
30s
Messaging or
texting would
often cause
mismatches
Users upload self-
introduction movies and
find best partners
Word of mouth
Social Ad
Can utilize movies
uploaded by
themselves and
enjoy high quality
matchings
# of successful
matchings
Scale merit
Paying members
Ad cost
System
development/managemen
t

They couldn't collect the fixed
members that they
planned. Many customers were
using the website as a movie
site.

Conducted Platform Pivot
An app transforms into a platform
Or
A platform transforms into an app.

After The Pivot: The Lean Canvas of ”Youtube”
People who
want to upload
their movies
No place to film
movie by
themselves
Users can share their
filmed movies on Youtube
platform
Word of mouth
Social Ad
can have a platform
to express their
creations and gain
ad revenue by it
# of spam
contents
Scale merit
Ad affiliate
Ad cost
System
development/manageme
nt
Platform
pivot

The work of entrepreneurs is
not to create the best solutions
but to optimize the whole business
model through interviewing
customers and pivoting
several times.

Pivoting requires many resources and
expenses.
The runway of a startup
( the time left before it's burned out )
depends on how many times it can pivot.

Find a better product/business model that customers
would love with a repeating pivot.

Even when you have achieved Product-Market Fit,
the process is not over. You have to keep validating
your business down the road.

Don't give up "growing" and "going
forward". The success of a startup
depends on these 2 factors. You have
to maintain them.
Sam Altman
Y Combinator, President

Product-Market Fit
Deliver the MVP
to the first
customer
Clarify what to
learn with an
MVP
learn using the
MVP
Chose MVP type
and build
Learn by delivering
innovation metrics
Examine the UX
with Hooked model
Improve UX to
Enhance
the customer
engagement
Iterate product to
bring more value
to customers
it
Conduct
Quantitative &
Build MVP
Repeat the
process until
the PMF has
been achieved
Create
Pivot the
Business Model

Form a team that has a high
learning ability/adaptation

Viewpoint from
finance
Viewpoint from
customers
Viewpoint from
operation
Viewpoint
from HR
Ideation
Customer/
Problem Fit
Problem/
Solution Fit
Product/
Market Fit
Growth
Ideation/
Brush up the
hypothesis
Side prject to
examine its
profitability
Verbalize
quality issue
・Investigate
issues
（Interview）
・Examine User
Story
Founder
Problem
Fit
・Unit economics
(LTV>CPA)
・Burn rate
Create the
prototype
(MVP)
Build a Co-
founders
team
カスタマーの課題を
解決する
ソリューションの
仮説を作れたか
・AARRR
（Focus on
Retention
Activation）
・Churn-rate
・AARRR
( Add Virality,
Acquisition as well)
・Run the community
・Define royal
customers with
NPS(CS) measurement
・MoM growth
(MRR)
・Break-even-
point
・Runway
・Customer
Development
・Build MVP with
Build-measure-
Learn
・Pivot
・Standarize operation
・Set up the system
where developing royal
customers
・UX improvement
・Growth hack
・Operation
specializing
・Hiring/Retention
・Data-driven/Agile
team
・Training
・Learning driven
team
・Management
team forming
・Burn rate
・Stock divide
Build
hypothesis
of customer
issue
Pre-seed round
Seed round
Series A
Examine if the
solution
hypothesis solves
the customer
issue
Form a team
that has
a high learning
ability/adaptation

専門性特化型
エンジニア
技術志向エンジニア
P/S
Fit
Fixing Co-
founder
members
Experiment/Bu
ild MVP
Pivot
Build products
Analytics
Management
Create
Ideation/
Plan A
C/P
Fit
Filtering
Co-founder
members
Ideation P/M
Fi
t
Team up
(10〜 members）
Growth
Co-founder
members +α
３-10
members
s
Start-up team in each stage
Start as a a
side project
UX
Design
Vision Selling
Pre-seed round
Seed round
Series ACopyright 2017 Masayuki Tadokoro All rights reserved
Growth

A team that can automatically adjust to the
process and performance according to
situational changes.
What is a highly
adaptable team?

A pivot will turn around prerequisites of
the business model.

Prerequisites being turned around, you
need to continue learning when you
rebuild a business model.

Qualitative feedback
from customers
Team
Quantitative data
Accumulate it for
company learning
Learning
accumulation

Summary
In order to create a successful start-up, you have to be an
expert of the customer that feels pain from the issue you are
about to solve with your start-up.
Unique findings/insights on the customers should be described
and shared with the team. These insights should be used for
the next iterations of the product.
You have to have tons of flexibility/versatility. Sometimes you
have to drastically change a business model. Startup founders
who learn the most before burning all the resources will
eventually win.

Idea Verification
Verify
your Idea
Create
Plan A
Build Plan A
with
Lean Canvas
Ideation
Clarify
what issue
is to be solved
Verify the
potential of
your idea
1-1 1-2 1-3 1-4
Know
Start-up
Meta-principles
Know
start-up
un-common
principles
Start as
a side project

Customer-Problem Fit
Examine issues
and assumptions
Build a issue
Hypothesis
Clarify issue of customers
(Leveraging Persona
sheet, Empathy map
Customer journey etc）
Clarify if the
customer truly
has the issues
2-1 2-3
Clarify
Assumptions
Verify
Assumptions
with Javelin board
2-2
Verify the fit between
founders
Founder
Issue
fit

Problem-Solution Fit
Figure out how
customers want to
solve the issue
Product
Interview
Build a
prototype
based on the
blueprint
Conduct interview
with users who have
experienced the
prototype
3-1 3-2 3-3
Build
Prototype
Create UX
Blueprint
Forming
team
Fix core team
members

Product-Market Fit
Deliver the MVP
to the first
customer
Clarify what to
learn with an
MVP
learn using the
MVP
Chose MVP type
and build
Learn by delivering
innovation metrics
Examine the UX
with Hooked model
Improve UX to
Enhance
the customer
engagement
Iterate product to
bring more value
to customers
it
Conduct Quantitative
& Qualitative
Analysis
Build MVP
Repeat the
process until
the PMF has
been achieved
Create
Pivot the
Business Model

“The most precious
resource for startup is time.
Startup teams who
learn the most
before burn all the resources,
will eventually win
- Ash Maurya

“人が欲しがる
ものを作れ ”
-Paul Graham
Y−combinater 創業者

Startup Science 2017 ⑦

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