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10 Lean Startup Strategies & Tools To Kickstart The New Year

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“Big ideas come in small packets”

An expression put to test by Eric Reice when he coined the term “lean start-up”. With the introduction of this idea, business development strategies are coming forth that invariably reduce or eliminate the doubts of failure in the minds of emerging entrepreneurs.

Gone are the days when start-ups required heavy investment and full-fledged product development and an expensive workforce. Lean start-up is an idea that reduces the hassle of complete product development. It allows the entrepreneur to test the efficacy of a product by launching a MVP (Minimum viable product). A lean startup strategy uses a hypothesis driven business model as opposed to the implementation driven business plan in traditional methods. We will share 10 key strategies used by successful lean start-ups. So hold tight, cuz you will be surprised to know the businesses we have in our list. But first things first.

What is a lean start-up?

From the video, you will see that the concept of minimum viable product (MVP) has been introduced.

Know 5 bitter truths about your customer

Well, this involves knowing the psychology of your consumer. Some consumers are intimidated by new idea and would like to experiment while some would remain indifferent until the idea spreads like fire, after which they will seek out the product from word-of-mouth marketing or in case of peer pressure. Getting to know the pulse of your audience is an on-going process and requires constant monitoring, but there are few things carved in stone for your consumer especially if they are online.

  • While conducting surveys, never ask people what they would like to pay for. Usually they lie.
  • Getting a customers to actually pay for something is an achievement. They are unwilling to spend.
  • It’s hard to keep up with the customer’s language but you can do it anyways.
  • You have not done a great job if you could not get the customer to present a problem rather make him agree to a problem you have presented. Consumer is usually unwilling to share information

Now let’s take a look at some startup strategies from business giants that started lean.

VirginAir

Virgin Atlantic Airways is a British airline that was established in 1984 that operates to destinations in North America, Africa, Middle East, the Caribbean and Asia. It the 7th largest UK airline in terms of passenger volume. It was the first airline to offer personal entertainment for all passengers in all classes. The idea was to provide a high quality service and a value for money to all its customers. This is the reason why people who fly with Virgin Atlantic call it an experience of a lifetime. But most surprisingly, this airline was a lean startup that was founded by Richard Branson. Let’s find out how he gave a winning strategy to the brand. [+]

The winning strategy

The irrevocable urge to start is what truly sets Richard apart. He started with minimum resources, with almost no expertise in Airlines, yet he leads one of the best airlines of the world today. The Virgin Air journey started with one Boeing 747 flying between one route, Gatwick and Newark (the MVP for virginAir). Instead of investing on multiple fleet and routes, they started with one and focused on improving the experience. Soon enough, this lean start-up grew in popularity and they expanded their fleet after witnessing the demand. The biggest message from Virgin Airlines is that if you manage to deliver your core value proposition, the business will soar.

Resources

Business Planner: BizPlan Builder, LivePlan
Customer Service: Zendesk, Get Satisfaction

Zappos

This popular online store for shoes and apparel had a humble start. Nick Swinmurn, the man behind the curtain found a gap in the market of online retailers. He simply took the pictures of shoes from the local stores and placed them on his website. This was like a prototype exercise to test and analyze the demand. Whenever, any customer placed an order, he would buy the shoes from the store. At first, Zappos used drop-shipping to deliver goods to the customers. How their USP was not the way they operated but the way they dealt with their customers created a winning strategy. [+]

The winning strategy

The biggest impediment for the success of online business arises from the fact that the customer cannot test or check the product before making the purchase decision. This lean start-up eliminated that glitch. Instead of piling up an inventory, Zappos focused on listening to what the customer really wants. Hence before even designing the product, the online store involved in interaction with the customers in order to negate all assumptions about the product demand in the marketplace.

Zappos is a classic example of a lean start-up that constantly tests the market demand of the product by establishing a profound customer service. Judging from the 75% repeat customers at Zappos, I would say their strategy is a real success. Let’s dig into some resources you will need to set up a business like this one.

Resources for online retail store

Organizer: Notebook, Dayviewer
Ecommerce: Teespring

Yippit

Yipit is a convenience web platform that aggregates and recommends deals on a daily basis according to the subscriber’s predefined location and interest. It is an organization based in New York that updates daily deals sold by companies. The strategy that worked out for Yippit is not known to many. Let’s take a look at their master stroke. [+]

The winning strategy

They have used an old-school method to gather information about the preferences of their subscribers. In the sign up form, the user is led through a series of question regarding their choices. Afterwards, an automated system sends people an email with the deals sorted according to their preference. This obviously required a smart algorithm and hence technical expertise. But there is an interesting catch, when Yipit was first launched, there was no automated system to provide aggregate deals to the subscribers.

Instead, the co-founders used to manually enter the deals into the database. So the minimum viable product here was the convenience for the people who were searching for various deals all jammed in a single email. While the business model remained the same, it has now expanded into a fully automated system that presents aggregate deals sold by different companies.

Resources

Project Management: Central Desktop
Tracking: CrazyEgg , Peek by UserTesting

Spotify

A music streaming site whose supremacy can be challenged by no other music streaming site. Spotify had over 24 million global users in March 2013. 18 million Spotify users stick to its free tier, supported by ads. More than 6 million users pay $9.99 per month to subscribe to Spotify’s premium tier. However, what most people don’t realize is the fact that this music streaming giant started small. What was that strategy that clicked? [+]

The winning strategy

Spotify is one of those lean startups that were planned. It employs a 4-stage iterative product cycle that allows completion of products in small batches. The stages involve: Think it stage in which product decision is made, prototype testing and viability is conducted internally. At the second stage, build it, a real product in the form of MVP is ready for the user to test.

Eventually comes the third stage called ship it when all MVPs are released along with improvements and enhancements. Finally, the most critical stage is tweak it, where the product is improved upon feedback until it is either revamped or shut down. Truth be told, it’s impossible to create a perfect viable product although that is the dream. In this way, Spotify is able to find the right product and then start building it further after getting approval from the users. It helps lowering the cost, and risk but improves the quality of the product.

Resources

Video tools: Viewbix, Wideo
Sceduling: Buffer, Hootsuite

Angellist

Another online start-up that performs the function of an intermediary connecting the start-ups and investors. Before Angellist, there was no substantial platform to connect the two in the marketplace. Now the AngelList syndicates allow the investors to invite other accredited investors to share in the deals. Initially it was an online introduction board for tech startups that needed seed funding. Now it serves as a launch platform for most startups, but what was the idea that was got embraced? [+]

The winning strategy

They started with a minimum viable product that involved making email introductions. To test the feasibility of the idea, the platform was used to create manual intros at first. They connected a start-up looking for funding and an investor looking for potential candidate with a business plan and it clicked. Since AngelList delivered the core value proposition it promised, it is accounted as a reliable platform where tech-start-ups can find relevant investors.

Resources

Email Marketing: Vertical Response, AWeber
Accounting and taxes: inDinero

FourSquare

It is a locator app for mobile devices that gives search results according to the users’ preferences. This app takes into account, your previous information, search results and then recommends places to go around your current location. Foursquare was launch as a lean start-up in 2009 to test the idea that people use mobile devices to interact with their surrounding and would like smart apps to solve their daily problems. FourSquare came up with a smart idea. [+]

The winning strategy

Now this location based social network allows people to check-in to a location and let everyone else know about it. When FourSquare was first launched, this was all that it did. At first, the app was not burdened with too many features but introduced as a single feature MVP to test its popularity. After check-in feasibility came the option of gamification rewards. The idea was to familiarize the masses with the basic functions of the app and then eventually add more solutions like recommendations and city guides.

Resources

Virtual Assistance: Ifttt, Fancy Hands
Promotion: Reddit

Zynga

The not-so-old Zynga is a game studio that creates multiple social games. Their claim to fame was Farmville, whose in-game purchases in 2013 exceeded $1 billion. They aim to connect the world through games. This social gaming powerhouse was off to a meek start and kept it that way while slowly expanding on each game. Zynga is also the proud presenter of games like poker, café world, vampire wars etc. Check out what makes Zynga an ace in the field. [+]

The winning strategy

Before starting to develop the game, the company introduces some landing pages powered by Adwords to test and analyze response on a planned game. The idea is to stir up anticipation for regular gamers and attract their attention and then develop a game just like the audience wants. Starting with a MVP allowed Zynga to prevent wastage of any of its resources on building a game that people don’t like.

Resources

Project Management: Basecamp
Tracking: Google Analytics, Spring Metrics

Airbnb

Air bread and breakfast or airbnb is an online solution for people who wish to find or rent lodging. In a brief span of around 7 year, this lean start-up established its presence in 190 countries and 34,000 cities. Airbnb provides a marketplace for travelers and hosts where both can connect. The biggest catch here is that the company never owned any of the rooms itself. How then did it became such a huge success? Let’s find out the strategy behind this lean startup. [+]

The winning strategy

Do you still believe, you can’t do a start-up? I will invite you to check Airbnb business model. This will change your negative thoughts about start-ups forever. For you see, the pioneers of Airbnb business model started off with nothing. They could not even pay the rent of their apartment but they had the will to start a business. So they landed on a solid idea.

They rented out their space as a cheap accommodation for conference attendees who couldn’t get timely bookings in a hotel. So they took pictures of their apartment and placed them on a simple website and they got 3 paying guests. Well, that was the beginning of their journey and now they are standing at $10 billion worth of a company. The Airbnb model shows that no start-up idea can be demeaning. All you need is a persistent attitude to take it forward.

Resources

Internal communication: Sqwiggle
Promotion: SproutSocial, Ritetag

Buffer

Now this is a friendly application that allows social media users to queue up their posts according to a certain schedule. The need for an app like that was identified just in time when people wanted global reach which obviously meant covering multiple time zones. The MVP in case of buffer was simple and practical which led to its success. Check out the winning strategy that worked for buffer. [+]

The winning strategy

In this case, the winning strategy started with the development of a single landing page that described the core service offered by buffer along with the plans and pricing button. If someone actually wanted a scheduler like buffer, they would click to see prices and plans. This led them to a page that said, “You caught us before we are ready”. The idea was to get a tally of interest people who will leave their contact details so that they can be informed.

Resources

Quality Assurance: Optimizely
Survey builder: TypeForm, SurveyCrest

CarsDirect

As the name suggest, CarsDirect is an online research portal for automobiles and vehicle purchase. This car buying service store is located in California. It is known to be one of the first online websites that tested the idea of selling cars online back in 1998. At that time purchasing through a credit card online was not something people were used to. How then did it become a name in automobile industry? Let’s explore the strategy. [+]

The winning strategy

When CarsDirect was first launched, there was hesitance about credit card payments online. In this case, the whole business model revolved around convenience shopping and online payment so testing the idea was crucial. So they first started with MVP that offered ample car listings instead of an automobile search engine. Plus they didn’t contact any car suppliers. Whenever any order was received, the team would visit the dealership and buy their selected car and drive it to the consumer’s place. Hence building customer relationship was the center of the focus. The services were refined and developed along the way from customer feedback.

Resources

Web Hosting: Amazon Web Services, Synthesis Web Hosting
CRM: Nimble , AddressTwo

In conclusion, I would like the readers to name a few lean start-ups from any industry. For instance Facebook, or Envato are the lean start-ups people don’t know about. Some of them started as projects and later developed into full-fledged business models. While doing so use this infographic that sums up 10 lean startups and their MVPs as a reference.

References

Tech Crunch
Lean Startup


10 lean start-ups with surprising MVPs Infographic

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Mehreen is a social media buff and design blogger, who keeps a keen eye on graphic design trends. She has a passion for experimenting with design ideas, and wouldn’t mind if it means going out of her way to find them in Timbuktu. Follow her on twitter for daily inspirations and findings.

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