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.
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 29 December 2015
Eric Ries' Lean Startup movement has revolutionised the approach to business for startups and more established companies alike (particularly in the "Silicon Valley" et al tech world). This manual is a step by step description of the Lean Startup principles for creating new innovative and disruptive products in a startup (and in effect any entrepreneurial venture). It advocates a simple, but often missed, idea - build a sustainable business around products people actually want (rather than build products and then try to find out if they are wanted).
Key to the book is Ries' early assertion that "The grim reality is that most startups fail. Most new products are not successful. Most new ventures do not live up to their potential". Although not the most inspirational message, it is a reality check for aspiring entrepreneurs, based on Ries' own hard won startup experience (initially unsuccessful and turning in to a $50 million business). However, the more inspiring message (and core of the book) is that entrepreneurial success can be achieved by rigorous management of product development. This doesn't sound particularly 'sexy', but the narrative makes compelling sense and the real life examples from Ries' experience (as startup CTO and Lean Startup consultant) help bring it down to earth.
Although a practical handbook, the book nevertheless inspires a new, more innovative and more humane way to do business, as Ries concludes (in response to the question of what would a Lean Startup organisation look like): "We would dedicate ourselves to the creation of new institutions with a long-term mission to build sustainable value and change the world for the better. Most of all, we would stop wasting people's time."
"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 5 November 2012
This book gives a truly unique approach to business that is slowly being adopted throughout the world, for its effectiveness and positive outcomes. It explains about what customers really want, whilst testing your own current knowledge and understanding of any organization and business acumen. It tests your visual creativity and innovation, when it comes to thinking about the foundations that a business is built on and new product launches. This book makes you really think and learn, whilst changing ones own perceptions on innovation and entrepreneurship. Loaded with fascinating, interesting stories and practical principals, I would highly recommend this to any business owner or manager, director or executive as it is such a helpful read. If you are interested in innovation, using original and uniquely distinctive ideas that `break the trend' to create a profound effect then please do read this book. One is given a guided tour of the key inventive practices used inside great giants such as Google, Toyota and Facebook that one can apply to their own business or way of thinking (such as for inspirational purposes).
This book written by entrepreneur Eric Ries and highly acclaimed author of the blog startup lessons learned, is a must read for all those interested in consumer, commercial business and capitalism. It delves into the ideals behind product strategies and the process that leads from one single idea to global, business dealings. It is clear that the author understands the success entrepreneurs aim to achieve and so offers his many years of extensive knowledge and experience to aid you in all your endeavors (regardless of the size of the business ect.). If you keep on seeking a better business model then soon enough one will eventually find something profitable and offerings. This book is also great for those with a web-based business, as its contents are directly applicable and also helpful to those who have not started a business before. Great for those new to business and those who are accustomed to make incremental improvements in existing, successesful businesses. This book is in-depth and brimmed full of helpful hints and advice that are not only helpful, but which gives one a different insight and viewpoint on the successful business.