on 12 October 2011
If many more European start-up founders had read this book we might have more successful start-ups. That said, as of 2011 we ARE beginning to get a lot of more switched on, more product focused entrepreneurs starting companies. That can only be good.
I would recommend without question, reading this book. Many of the recommendations inside are ones I have learned the hard way; but even having said this, the urge for any engineer remains to build functionality and that is a dangerous route if you don't know what your customer or user wants.
Based upon the premise of "assumptions" that we all make, this book gives a convincing -and in my view correct- case for finding ways to prove your assumptions before you build a real product - by hook or by crook. That might mean a skeleton site, a video, a very basic minimum product.
Whether you are running a start-up in a corporate as a division or a traditional bootstrap in a garage, I challenge you not to find some value in this book if you are an early stage company which has not already burnt it's way through all it's money. Read this book before you do and build the right thing, not the wrong thing, for your users or customers.
I'm a second time entrepreneur, but by Eric Ries' analysis I'm actually a third time entrepreneur, because he counts the time I set something up as a consultant for a large corporation. So he had me at hello, even if it was through flattery.
In fewer than 300 pages it gave me a good 15 flashbacks. Points where I was shouting out loud "exactly!"
Embarrassingly, it also gave me a whole bunch of moments where I said "why did nobody tell me that back then."
It's a MUST if you are starting a business.
It's not without its faults. It's an advertisement for his consultancy, it could do without the references to Toyota (of which there's tons), it really reads like one of those self-help guides obese people read on airplanes; it's far from perfect.
It is regardless AWESOME and it's a very quick read.
Look away now if you don't want me to spoil it for you, here come the main points:
1. Entrepreneurship can happen in funny places.
2. Value = providing benefit to the customer. “Success is not delivering a feature; success is learning how to solve a customer’s problem.”
3. Launch! You’re not going to increase the value of the product without real customer input
4. Launch! You could be perfecting a product of no value
5. Launch! You WILL throw a lot of work away; the earlier you launch the less you’ll throw away
6. For all the above reasons, keep going through short cycles of BUILD, MEASURE, LEARN
7. Plan to learn; don’t say “I learned” as an excuse after a failure if you did not have a lesson planned in there.
8. There is a problem with launching: Once you’ve launched you give up on the “audacity of zero.” In plain English, you start collecting micro amounts. Vis a vis the naysayers, you were better off collecting zero and talking billions. Nobody said it would be easy…
9. Every venture has a value hypothesis and a growth hypothesis
10. Value hypothesis: your guess about why people will want this product
a. Do consumers recognize they have a need you are trying to address?
b. Would they pay money for it?
c. Would they buy it from you?
d. Can you build it?
11. Growth hypothesis: your guess about how you will add customers / sales
12. Design proper experiments to test the two hypotheses. A/B experiments, whatever
13. The Lean Startup recipe is
a. Get a Minimum Viable Product out
b. Go through Build, Measure, Learn loops / experiments to test the two hypotheses and keep improving the product
c. Be happy to reject a few MVPs until you hit upon a good one
14. The MVP won’t be perfect, by definition, but
a. Early adopters won’t mind
b. Let customers decide it’s bad; they might love it (like IMVU’s jumping avatars)
c. You can be creative about showing how it works: e.g. do a video
d. You could do it mechanically, without the tech (concierge) for just a few users
15. Innovation Accounting consists of
a. Establish a baseline: test your riskiest assumption via an MVP or an experiment or even a poll of your customers
b. Tune the Engine: With the baseline secured, make the product better by picking good metrics that are relevant to your value hypothesis and your growth hypothesis and running Build, Measure, Learn loops to get the metrics to improve
c. Pivot or Persevere: Every once in a while, decide if you’re doing well or if you need to Pivot
16. Vanity Metrics won’t get you anywhere. Be careful what you measure. Don’t look at aggregates, look at cohorts or split tests, for example. Use metrics that are relevant to your model. So if the model is viral, measure how many customers every customer brings. Not how your overall number of customers is growing (just because you paid for advertising, for example)
17. The three A’s of Metrics are Actionable, Accessible and Auditable. That’s how you get everybody on board. Don’t bother measuring if others can’t verify your work, if it will be very onerous to measure and if you have not agreed upfront what to do with the numbers. Additionally, “metrics are people too.” If they’re not, make it that way. Make them relevant to the customer.
18. Your engineers need to work as a team. They must work toward testing and delivering product for the customer. Not toward completing projects that get stuck because there is a bottleneck in testing, for example.
19. A startup’s runway is the number of pivots it can make.
Money buys you the opportunity to make a fundamental change (or two) in your business strategy, but saving money without executing a pivot will just mean you die late.
20. Schedule a regular “pivot or persevere” meeting where both product development and business leadership teams attend. Maybe even outside advisors.
21. A catalog of pivots:
a. Zoom-in Pivot
b. Zoom-out Pivot
c. Customer Segment Pivot
d. Customer Need Pivot (e.g. bookings vs. cheap deals)
e. Platform Pivot (e.g. client vs. hosted)
f. Business Architecture Pivot (e.g. B2C to B2B, high-margin to high-volume)
g. Value Capture Pivot
h. Engine of Growth Pivot
i. Channel Pivot
j. Technology Pivot
22. Small Batches are individually more costly, but if you account for everything Large Batches can have very large costs too and you don’t find about them until it’s too late.
23. Small Batches allow the market to pull you in the right direction.
24. New Customers come from old customers in 4 ways
a. Word of mouth
b. As a side effect of product usage (can I Paypal you the money?)
c. Through funded advertising (take proceeds from custy X, buy ads to attract custy y)
d. Through repeat purchase or use (cable TV, not wedding planning)
25. There are three Engines of Growth. Find which one your business depends on and measure how it’s doing. And yes, more than one could be at work, but focus on the more important one.
a. The Sticky Engine of Growth: measure customer acquisition rate + measure churn rate; measure them separately, or you might not see anything!
b. The Viral Engine of Growth: measure if each customer brings > 1 customer through the door. Don’t despair if it’s 0.9, you’re close, experiment your way to pushing it above 1, but if it’s 0.3 you don’t have that growth model.
c. The Paid Engine of Growth: measure what each customer will spend and measure your acquisition costs.
26. A time comes when you run out of early adopters. Don’t wait until then to make the product that the public at large wants. Moving to a higher quality product will slow you down, but you have no choice. And it will in the long term actually speed you up. The earlier you can afford to go high-quality the better.
27. Use the Five Whys as a guide to improving your quality. Get to the bottom of every complaint / problem by behaving like a 4 year old and responding to the answer to your question “why” with another “why” four more times. You will find that in the end you always end up with a person! Not with a process, not with an inanimate object.
28. Have everybody in the meeting when you do the Five Whys. Otherwise those absent will be blamed.
29. When you find the culprit, take the blame yourself for having designed the wrong process. Save your wrath for when the mistake is repeated.
30. Don’t send your baggage through the Five Whys project. Only use them for problems that arose after you instituted the policy.
31. If you are innovating inside a corporation, it is your job to protect the corporation. Otherwise others will make it their job to thwart you.
"Now Moses wrote down the starting points of their journeys at the command of the LORD." - Numbers 33:2 (NKJV)
Having taught entrepreneurs for many years and studied many of the most successful ones, I am always struck by how differences in focus on learning seem to correlate with achieving more or less success. Those who believe that they just need to implement their business plan usually flop. Those, by contrast, who assume they don't know the "right" answer . . .but desperately want to find out . . . seem to do quite well.
My favorite saying about entrepreneurs is that their first business model is their worst one. Fail quickly, often, and inexpensively in seeking a better business model, and you will eventually find a profitable business model and offerings.
While this book covers lean operations as well as business model and offering development, I thought that its main value comes in the example of how a Web-based business should measure its performance and monitor how well potential improvements work out. If you have such a business, the book's contents are directly applicable by you.
If you want to apply the book's lessons to a different kind of business, you'll find the information here to be more difficult to apply.
I believe that this book will be most helpful to those who haven't tried to start a business before and are accustomed to making incremental improvements in existing, successful businesses.
If you already understand the importance of measuring performance in creating trial, turning trial into regular purchases, and regular purchases into loyalty to a product or service, you will probably wonder what all the fuss is about. In that regard, pay attention to Mr. Ries' ideas about how minimal an offering you can put together to test.
The book's biggest drawback is that Mr. Ries doesn't give very many clues about what to test if the current program isn't working. As such, his approach lacks enough depth to totally guide a startup to success.
on 29 December 2015
I have read countless management, business and self-development books and I can honestly say this is the first one that I have truly used like a workbook. What I mean by this is that I have gone back to various chapters to refresh the key learnings and then apply them to my own situation. Surely this is the true test of a book in this category. It's not written like a workbook, but to me, that's exactly what this is.
It is slightly biased towards tech companies, partculalrly the product refinement and testing, but there are some nice non-tech case studies that he works through methodically to demonstrate how the lean principles can be applied to any type of startup.
on 7 October 2011
Eric Ries is an extraordinary entrepreneur. The innovative way in which he has launched The Lean Startup itself is testament to his incredible creativity and energy.
Anyone, whether they are in technology or any other sector, who is involved in product development, should read this book, make sure that everyone in their team has read this book and then argued over a beer about whether it applies to them. Not everyone will agree with everything he says, no doubt some people will think they know better, good luck to them.
Some people will rail against the use of terms like, 'Pivot', that Eric uses to describe the (entirely rational) process of discovering the market for a startup. Pivot runs the risk of being the most misunderstood and overused term in startup land as it has become a euphemisim for all sorts of things including, 'failed', 'given up' or 'lost interest'. It is hardly Eric's fault however that he has created and popularised a concept that powerful.
Having been involved in successful and unsuccessful startups, and unsuccessful projects in large corporations, Eric has invested an obscene amount of his time and effort into working out why there is so much wasted effort in product development. More importantly, he has come up with a very plausible hypothesis for a better way of doing things better. Measurably better.
I do have a big problem with this book and some of the language in it.
To quote Eric Ries, "So here's my definition of a startup. A human institution designed to create something new under conditions of extreme uncertainity. And, of course, the importance of disruptive innovation in creating something that is truly different than what came before."
For my money, that is not the definition of a startup. That is the definition of an inventor, an innovator, a startup, any business unit, product management team or organisation in the world.
Why not apply that definition to another entity?
"So here's my definition of Apple. A human institution designed to create something new under conditions of extreme uncertainity. And, of course, the importance of disruptive innovation in creating something that is truly different than what came before."
Apple is the largest corporation in the world. Doesn't the definition apply equally well?
And that is the essence of my problem with this book. It is keeping some extraordinary insights into how you can make things that people love in the world of startups. Grownups need to read this. They might sneer at the concept of a pivot, it is an overused term. I can't think of a single organisation that wouldn't benefit from the concept of minimum viable product though. The world would be a better place if big corporations understood this. They will waste less money making stuff people don't want.
on 2 September 2013
I can’t remember what prompted me to buy this book, but I’m glad I did. The Lean Startup framework has been built on the solid foundations of lean manufacturing and agile development, and applied to an entrepreneurial environment. But I’m no budding entrepreneur; I have no ambitions of starting my own company. My interest is in how this philosophy of lean entrepreneurship and innovation applies to what the author terms “established companies”. And it does. His suggestions on creating innovation groups, essentially mini-startup companies within an existing organisation are invaluable for anyone interested in product development. And for those wanting to start up their own company – don’t. Not until you’ve read this book.
on 14 June 2016
For once a book that does not linger in the theoretical but which of all of its teachings have been applied successfully elsewhere. This provides you with a comprehensive guide on how to better be prepared for success in any Tech related Startup. In my experience of large organisations, I can say with confidence that all the applications of the book can easily be translated into currently established companies.
I firmly believe that if established companies practiced what this books discusses as well, that it would guarantee longevity, greater ROI, more lean and customer relevant products and a much higher efficiency and effectiveness of the development direction of the product and the utilisation of development resources.
I can only strongly recommend this book to anyone interested in startups or who would be keen to optimise current product development efforts in an established business.