The document summarizes key concepts from Eric Ries' book Lean Startup. The Lean Startup methodology emphasizes rapid experimentation to validate business hypotheses and learn quickly what customers want through a process of building minimal products and measuring how customers respond in order to iterate quickly. Startups are encouraged to treat their efforts as experiments meant to test which assumptions are correct and deliver value to customers rather than following detailed plans.
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Lean startups Partial Summary
1. Lean Startups by Eric Ries
General Concepts summarized (partial) by
George Howard (@gah650)
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2. Intro
This deck provides a basic and partial
summary of the book Lean Startups
by Eric Ries. You should buy the
book.
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3. It’s the boring stuff that matters
the most
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4. Entrepreneurship is a kind of
management
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5. Lean Startup
• Builds on
– Lean manufacturing
– Design thinking
– Customer development
– Agile development
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6. Lean Startup
• Characterized by
– Extremely fast cycle time
– Focus on what customers want without asking
them)
– Scientific approach to decision making
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7. 5 principles
• Entrepreneurs are everywhere
• Entrepreneurship is management
• Validated Learning
• Build-Measure-Learn
• Innovation Accounting
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9. Established business metrics don’t
apply
• Startups don’t yet know who their customer is
or what their product should be
• Planning and forecasting are only accurate
when based on a long, stable operating
history, and relatively static environment
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10. “Just Do it” is a myth
• An “unmanaged” startup will fail
• Entrepreneurship is management
• Entrepreneurship is a discipline
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11. Part One
Vision
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12. Entrepreneurial management
• Problem – many Entrepreneurs eschew
traditional management theory as too
constraining
• Problem – traditional management not
designed to deal with the chaos of startups
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13. Theory of Entrepreneurship must
encompass
• Vision and concept
• Product development
• Marketing and sales
• Scaling up
• Partnerships and distribution
• Structure and organizational design
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14. Theory of Entrepreneurship must
encompass
• Provide method for measuring progress in the
context of extreme uncertainty
• Give Entrepreneurships clear guidance on how to
make trade-off decisions:
– Whether and when to invest in process
– Formulating, planning, and creating infrastructure
– When to go it alone/when to partner
– When to respond to feedback and when to stick to
vision
– How and when to invest in scaling the business
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15. Theory of Entrepreneurship must
(more than anything else)
• Allow Entrepreneurs to make testable
predictions
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16. Lean Startup
• Ask people to start measuring their
productivity differently
• Startups accidentally build something nobody
wants, it doesn’t matter if they do it on time
and on budget
• The goal of the startup is to figure out the
right thing to build – the thing customers want
and will pay for – as quickly as possible
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17. Lean Startup
• Emphasizes fast iteration and customer insight
a huge vision, and great ambition, all at the
same time
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18. Engine of growth
• Every new version of a product, every new
feature, and every new marketing program is
an attempt to improve the engine of growth
• Directional planning – more rocket ship than
daily commute (i.e. over-adherence to a set-
in-stone direction) - is bad
– Rigorous and faithful achievement of failure
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19. Drive a startup
• LS approach: instead of making complex plans
that are based on a lot of assumptions, you
can make constant adjustments with a
steering wheel called the build-measure-learn
feedback loop.
– Sharp turn = pivot
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20. True North
• Startups have a True North – a destination – in
mind
– LS refers to this as its vision
– To achieve that vision, startups employ a strategy
• Business model
• Product road map
• Pov about partners and competitors
• Ideas about who the customer will be
– The product is the end result of this strategy
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22. Change/constant
• Products change constantly through the
process of optimization (tuning the engine)
• The strategy may have to change (less
frequently) = a pivot
• The overarching vision rarely changes
– Entrepreneurship’s are committed to seeing the
startup through to that destination
– Every setback is an opportunity for learning how
to get where they want to go
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24. “Intrapreneurs”
• Convert raw materials of innovation into real-
world breakthrough successes
• Entrepreneurs who operate inside an
established organization sometimes are called
“Intrapreneurs” because of the special
circumstances that attend building a startup
within a larger company.
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25. Startup definition
• A startup is a human institution designed to
create a new product or service under
conditions of extreme uncertainty
– Nothing to do with:
• Size of the company
• Industry
• Sector
– A startup is greater than the sum of its parts; it an
acutely human enterprise
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26. Innovator’s dilemma
• Established companies are very good at
creating incremental improvements to existing
products and serving customers (sustaining
innovation), but struggle to create
breakthrough new products (disruptive
innovation) than can create new sustainable
sources of growth
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27. Importance of LS in established
companies
• The amount of time a company can count on
holding on to market leadership to exploit its
earlier innovations is shrinking, and this creates
an imperative for even the most entrepreneurial
companies to invest in innovation.
• The only sustainable path to long-term economic
growth is to build an “innovation factory” to
create disruptive innovations on a continuous
basis
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29. Fundamental goal
• Engage in organization building under
conditions of extreme uncertainty
• Most vital function is learning
– Learn the truth bat which elements of our strategy
are working to realize our vision and which are
just crazy
– Learn what customers really want, not what they
say they want or what we think they should want
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30. Validated Learning
• Not after-the-fact rationalization or a good
story designed to hide failure
• Is a rigorous method for demonstrating
progress when one is embedded in the soil of
extreme uncertainty
• Is the process of demonstrating empirically
that a team has discovered valuable truths
about a startup’s present and future business
prospects
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31. Validated Learning
• Is more concrete, more accurate, and faster
than market forecasting or classical business
planning
• Is the principal antidote to the lethal problem
of achieving failure: successfully executing a
plan that leads nowhere
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32. Quantitative Targets
• Create the motivation to engage in qualitative
inquiry and guides questions
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33. Value v waste
• Lean thinking defines value as providing
benefit to the customer; anything else is
waste
– Remember, this is different from asking customers
what they want; most customers don’t know what
they want in advance.
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34. Avoidance of waste
• Shipping faster allows you to see what the
customer values, and thus you can avoid
debating what features the customer
wants, etc.
• Learning is the essential unit of progress for
startups
– Effort that is not absolutely necessary for learning
what customers want can be eliminated
• This is VALIDATED learning – always demonstrated by
positive improvement in the startup’s core metrics.
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35. Key points
Effort that is not absolutely necessary for learning
what customers want can be eliminated
• This is VALIDATED learning – always demonstrated by
positive improvement in the startup’s core metrics.
• Look for synthesis b/w vision and what
customers would accept
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36. The audacity of zero
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37. Zero invites imagination
• At the start – when the number is zero –
people can imagine success
• Once you launch, and the numbers are
small, it pours cold water over the project
– Therefore, people delay launch, delay initiatives
until they are CERTAIN of success.
• However, these delays cause waste, and decrease
feedback, and thus increase risk that a startup builds
something nobody wants
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38. paradox
• Releasing a product – w/o planning – and
hoping for the best is not a good plan either
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39. tension
• Backers, etc want hockey-stick growth
• If you lack the language of validated
learning, people will focus on the wrong
metrics
– Must look beyond small gross numbers to see real
progress (assuming there is real progress being
made)
– Must show that product dev are leading towards
success w/o giving in to the temptation to fall
back on “success theater.” Things you can do to
look successful
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40. Success theater examples
• Marketing gimmicks
• Super bowl ads
• Flamboyant pr
– All meant to juice gross numbers
– = illusion of traction
• Eventually the fundamentals of the biz win out and the
PR bump passes.
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41. Key questions
• Should this product be built?
• Can we build a sustainable biz around this set
of products?
– To answer, we need a method for systematically
breaking down a biz plan into its component parts
and testing each part empirically
– In the LS model every product, feature, marketing
campaign – everything a startup does – is
understood to be an experiment designed to
achieve validated learning.
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42. Ch 4
Experiment
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43. paradox
• If the plan is to see what happens, a team is
guaranteed to succeed – at seeing what
happens – but won’t necessarily gain
validated learning
– If you cannot fail, you cannot learn
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44. LS method
• Reconceives a startup’s efforts as experiments
that test its strategy to see which parts are
brilliant and which are crazy
• Begins witha clear hypothesis that makes
predictions about what is supposed to happen
– Then tests those predictions empirically
– Just as scientific experimentation is informed by
theory, startup exp is guided by the startup’s
vision
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45. goal
• The goal of every startup is to discover how to
build a sustainable biz around that vision
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46. Think big, start small
• Zappos approach
– Small-scale efforts did not prevent a huge vision
from being realized
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47. For long-term change, experiment
immediately
• Have to deal with untested assumptions and a
lot of vision
– Break it down – vision into component parts (TWO
MOST IMPORTANT ASSUMPTIONS
ENTREPRENEURS MAKE):
• Value hypothesis – test whether a product or services
really delivers value to customers once they’re using it
• Growth hypothesis – tests how new customers will
discover a product or service
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48. An experiment is a product
• That is, an experiment must be more than just
a theoretical inquiry; it is also a first product
– Allows managers to get started with the campaign
• Get early adopters
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49. Key questions
• Do customers recognize that they have the
problem you’re trying to solve?
• If there was a solution, would they buy it?
• Would they buy it from you (company)?
• Can we build a solution for that problem?
• Typically, companies go to step 4 prior to
confirming customers have the problem
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50. Success is not delivering a feature
• Success is learning how to solve the
customer’s problem
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51. Key approach
• Treat the new venture as an experiment
• Id the elements of the plans that are
assumptions rather than facts
• Figure out ways to test them
• Using these insights, build a min viable
product and have something up and running
before the official plan was set in motion
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52. remember
• Planning is a tool that only works in the
presence of a long and stable operating
history
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