The Lean Start Up – Eric Ries

The Lean Startup provides a scientific approach to creating and managing startups and get a desired product to customers’ hands faster. The Lean Startup method teaches you how to drive a startup-how to steer, when to turn, and when to persevere-and grow a business with maximum acceleration. It is a principled approach to new product development.

The Build – Measure – Learn – Feedback Loop

  • 2 spectrums: Plan for everything or just do it
  • Plan for everything is too rigid and future is too unpredictable to get it right
  • Just do it is too risky because what if you build something that your customer doesn’t want
  • Goal of a startup is to figure out the right thing to build that customer want and will pay for it – as quickly as possible
  • Start by figuring out what you need to learn: do this by formulating hypothesis of what the customer want

Everything is a Grand Experiment

  • Experiments are run with real or potential clients
  • Observe don’t ask during experiments
  • Simple as building a landing page to check demand
  • Or build MVPs (minimum viable products)
  • Waste in process: everything that doesn’t create value for the customer
  • Waste in the lean startup: everything that doesn’t lead to validated learning

Different Types of MVP

  • Video MVP: Video to show value and see the demand
  • Concierge MVP: Focus on a single or few customers and develop to their preferences
  • Wizard of Oz MVP: Pretend you have developed a fancy technical solution while behind the curtains, it’s operated by humans

Three Engines of Growth

  • Should pick 1 and not all 3 and continue through the feedback loop
  • Sticky Engine: Designed to attract customers for the long-term and never let go => focus on customer acquisition rate + churn rate
  • Viral Engine: Focus on spreading like epidemics. For every 1 customer, should invite 1 or more friend => focus on viral coefficient (how often is your product/service shared per customer)
  • Paid Engine: Focus on advertising to reach customer => CPA (cost per acquisition) and LTV (life time value)

Pivot or Persevere?

  • Perseverance and flexibility
  • Pivots are sometimes necessary (change in strategy to achieve overall vision)
  • When to pivot: 1) establish a baseline, 2) attempt to tune towards idea, 3) pivot or persevere
  • Customer segment pivot
  • Value capture pivot: example includes the free model
  • Engine of growth pivot