The Lean Startup: How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses

The Lean Startup completely changed the way I think about entrepreneurship and innovation. Eric Ries breaks down complex business concepts into clear, practical steps that can be applied to startups, small businesses, or even large organizations. What I loved most is how the book focuses on testing ideas quickly, learning from real feedback, and adapting fast instead of wasting time and money on unproven plans. The examples and case studies make the ideas feel real and achievable, not just theory. It’s packed with valuable lessons on product development, decision-making, and efficiency — especially the concept of “build, measure, learn,” which I’ve already started using in my own projects. Whether you’re an aspiring entrepreneur or just want to understand how successful companies innovate, this book is an absolute game-changer. Highly recommend!

"All business books are wrong; but some are useful", to paraphrase GPE Box. Eric Ries' "The Lean Startup" is no exception, with both good and bad aspects to it. "The Lean Startup" has important things to say about entrepreneurial management. Eric Ries may have had difficulty selling these ideas to the established business community, but in my opinion, his methods are sound and practical, and he has done an excellent job of articulating these in the current book. For example, they: 1. address markets with high degrees of customer and technological uncertainty 2. assert that management is required, not optional; even though markets and technology are uncertain, you can't `just build it' 3. redefine accountability around cross-functional teams that are allowed to fail (validated learning) 4. define central roles for customer acceptance and market growth in product and model refinement 5. place learning, experimentation, and failure in a central role; strategy, accountability, and organization are diminished (`build-measure-learn' dynamic) The book is written in an accessible and enjoyable prose, and contains case studies and many practical messages for would-be entrepreneurs. Unfortunately, the strengths of Ries' personal experiences and insight are undermined by the occasional misstatement, on the one hand; and uncritical examples of some companies that are poster boys for bad management practice, on the other. Some of the latter is simply (I believe) gratuitous logrolling - for example HP, recently notorious for a sequence of embarrassing management shuffles. I suppose Ries is interested in being invited into HP for talks and consulting gigs; and I suppose he would not be invited were he to trash them for their improprieties. More concerning is his carelessness in summarizing case study business models - good and bad. For example, he pillories Enron and Lehman Brothers as Ponzi schemes - neither was. Enron failed because it tried to make markets in Internet bandwidth, waste water, energy and a lot of other markets; there were about 400 other B2B markets doing this at the end of the 1990s, but Enron fraudulently hid its losses offshore (not good). Lehman Brothers was as competently managed as other big banks in 2008, but got caught in the political backwash of the Bear Sterns bailout by the Fed of NY. Neither was a Ponzi scheme. In contrast, Groupon, which has been described as a Ponzi scheme by its investors, gets nothing but good words from Ries, in contrast to most reporting on the troubled company. Again, maybe this is just logrolling, but it detracts from the credibility of the book, and I docked it a star because of this. So, in summary, "All business books are wrong; but some are useful", and Ries' book falls into this latter category.

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As an aspiring entrepreneur I found this book very helpful and informative. It Gives entrepreneurs the tools they need to turn ideas into products and avoid common mistakes. It is clear that the author has years of experience creating startups and he provides the reader with the mindset that entrepreneurs and innovators should have. Eric Ries takes the uncertainty associated with creating a startup and turns it into a science. I initially feared that this book would read like a business textbook but I was quickly proven wrong. The book is very well written and easy to read. Eric Ries explains everything in plain english so that it is clear and intuitive. Ries does a good job of using real world examples and anecdotes to explain his concepts. Ries has experience consulting for companies like Intuit and IGN and includes lots of valuable insider information that can't be found in most business textbooks. He also includes alot of real start up success stories as well as many failures and discusses what must be learned from each. Before reading this book, I was discouraged from going forth with my Ideas because I feared my lack of business experience would hold me back. Now I feel like I have the tools to execute my ideas. If I had not read this book, I could easily see myself making some of the common mistakes that lead to startup failures. Instead of creating a minimum viable product to quickly get feedback like Ries recommends, I would spend months or even years developing what I considered to be the perfect prototype, only to find out nobody wanted to use it. All his ideas make perfect sense. Don't make assumptions about what people want, rather find out what your customers want before hand. Everything is about feedback, collecting it then applying it to your product. Don't waste anytime developing something unless you know it creates value. Anyone who is considering creating a startup or new product should read this book. The best thing about this book is that you don't need business experience to understand the core concepts.The principles he talks about can be applied to all types of types of business but are particularly helpful for software and tech products.He answers alot of the questions I had and even question I did not think of but should have been asking.It is only a matter of time before the lean startup method is universally adopted.

Lean Startup is a well-written book with a lot of fresh ideas and thinking about start-ups and entrepreneurship. Eric Ries, author of the book, has had a fair share of start-up experience and in his last start-up (IMVU) experimented with a lot of non-standard ways of managing start-ups influenced by Steve Blank and the Toyota Production System (or lean and hence Lean Startup). The book is divided in 3 parts which roughly map to 'phases' of start-ups: 1) vision, 2) steer, and 3) accelerate. Each of these parts is divided in 4 chapters each simply named with one word such as "Test" or "Measure" (not incredibly descriptive). The first part is called Vision and defines Lean Start-up and its influences. It explains how start-ups are about validated learning and how the optimization of start-ups needs to be about how fast they go through the build-measure-learn cycle. When starting a new product, the first thing you need to get is feedback on the product, so it is important to get a Minimum Viable Product out as quickly as possible as learning about how to use the product is a lot more powerful than research or asking customers. The second part continues with the Minimum Viable Product and the learning. The learning we'll need to get from the product is whether our business assumptions (leap-of-faith assumptions) were in fact correct. Start-ups need to change their accounting system to measure their progress in validated learning. When there is enough learning, they can check their leap-of-faith assumption and make the decision to pivot (change a bit in one direction) or persevere (continue). The last part (accelerate) first covers small batches, one of the basic concepts behind lean start-up and then explores the different "engine of growth" that companies have and stress to focus on one of these. After that it gives Eric's perspective on building lasting companies that continue to improve. The author shared his adaptation of the five why technique. It ends with some general discussion about innovation in larger companies. The epilogue contains a surprisingly positive perspective on the principled of scientific management from Fredrick Taylor. All in all, I enjoyed the book quite a lot, especially the first 2 parts. The way the author has weaved a bunch of concepts together into one holistic framework is quite nice and very concrete. It is not easy to manage your company the way the author suggests as it requires a lot of discipline and introspection (both lacking in many companies). But the Lean Startup moves us away from the black art of startups and creates an interesting structure, or at least perspective, to starting up new ventures. Recommended reading.

If you work for a startup in any sense, or have entrepreneurial visions of grandeur, The Lean Startup by Eric Ries will make an excellent addition to your bookshelf. Eric Ries, a seasoned entrepreneur and co-founder of IMVU (an 3D avatar based chat room), has crafted an excellent introduction to startup best practices. From inception to maturity, any startup, whether a seedling or an The Lean Startupoffshoot from a well established business sequoia, can gain valuable information on how to use lean startup methodologies to help eliminate wasteful activities and instead focus on the projects and techniques to help break through the bonds of linear growth and achieve the exponential. What I found most interesting about these best practices was the initial focus on a minimal viable product to test customer interaction and appreciation of a particular business idea. By building a rough draft of a product or feature, and unleashing it into the wild (even in perhaps an imperfect state), a company can gain valuable insights into whether or not the feature will gain traction with customers. Through the use of real life startup stories, Ries demonstrates how spending many months of careful planning, only to release a product that is ‘not quite’ what the customer is looking for, can cost a great deal of unnecessary time and energy. If instead, products and features are built to be ‘just good enough’, valuable customer data can be gathered, and utilized to either enhance the minimal viable product to make it more production worthy, or pivot onto something else that may be more valuable to the customer. This customer-centric approach permeated the entirety of the book, which, coming from a developer’s standpoint, is not something I feel we generally think about enough. Developers are often extremely code-centric in their thinking. This is certainly important (don’t want to build complete junk, even if it is only the minimal viable product), but we also should not be oblivious to the business needs of our customers. Ries emphasizes that in a startup, all employees and stake-holders, regardless of roles, should be in constant communication with each other to ensure the system being built is indeed for the customer. And while participating in business thought and discussion, developers can gain deeper insight into customer needs, helping them avoid rabbit trails and design the most appropriate system for any particular feature. At Within3, the startup I currently work for, company and product managers, business development, and customer support weekly share goals and practices which I definitely appreciate. It helps me feel more integrated into the company as a whole, and offers the engineering team the opportunity to better understand both the in-house and customer needs for our business. While reading The Lean Startup, I did feel some of the points were hammered home a little to hard, and I found myself zoning out in a few places where the information seemed overly redundant or was presented like a college lecture. But thankfully, Ries would toss a real life startup story my way and re-engage me. I found the stories by far the most interesting and helpful aspect of the book and the most effective tool in validating Ries’ suggestions. All in all, a good read and a valuable looking glass into the moving parts of the startup engine and how to make them churn along as efficiently, and powerfully, as possible.

Eric Ries' "The Lean Startup" is a game-changer for aspiring entrepreneurs and established businesses alike. This book introduces a revolutionary approach to building and scaling businesses, emphasizing the importance of continuous innovation and customer feedback. Key Takeaways: Build-Measure-Learn Feedback Loop: Ries introduces a cyclical process where businesses create a minimum viable product (MVP), measure its success, and learn from customer feedback to iterate and improve. Validated Learning: The book stresses the importance of testing assumptions and validating ideas through real-world experiments, rather than relying on intuition or guesswork. Pivot or Persevere: Ries encourages entrepreneurs to be flexible and adaptable, willing to change direction (pivot) if their initial approach isn't working, or to persevere with adjustments based on data. Innovation Accounting: The author provides a framework for measuring progress and success in a startup environment, focusing on actionable metrics rather than vanity metrics. Overall: "The Lean Startup" is an essential read for anyone involved in starting or growing a business. Its principles have been adopted by countless startups and established companies, and its impact on the entrepreneurial landscape is undeniable. If you're looking for a guide to navigate the uncertainties of the business world, this book is a must-have.

After reading Clayton Christensen, Geoffrey Moore and Steve Blank, I was expecting a lot from The Lean Startup by Eric Ries. I was disappointed. It could be that I did not read it well or too fast, but I was expecting much more. But instead of saying what I did not like, let me begin with the good points. Just like the previous three authors, Ries shows that innovation may be totally counterintuitive: "My cofounders and I are determined to make new mistakes. We do everything wrong. We build a minimum viable product, an early product that is terrible, full of bugs and crash-your-computer-yes-really stability problems. Then we ship it to customers before it's ready. And we charge money for it. After securing initial customers, we change the product constantly. [...] We really had customers, often talked to them and did not do what they said." [page 4] On page 8, Eric Ries explains that the lean startup method helps entrepreneurs "under conditions of extreme uncertainty" with a "new kind of management" by "testing each element of their vision", and "learn whether to pivot or persevere" using a "feedback loop". This is he Build-Measure-Learn process. He goes on by explaining why start-ups fail: 1- The first problem is the allure of a good plan. "Planning and forecasting are only accurate when based on a long, stable operating history and a relatively static environment. Startups have neither." 2- The second problem is the "Just-do-it". "This school believes that chaos is the answer. This does not work either. A startup must be managed". The main and most convincing lesson from Ries is that because start-ups face a lot of uncertainty, they should test, experiment, learn from the right or wrong hypotheses as early and as often as possible. They should use actionable metrics, split-test experiments, innovation accounting. He is also a big fan of Toyota lean manufacturing. I loved his borrowing of Komisar's Analogs and Antilogs. For the iPod, the Sony Walkman was an Analog ("people listen to music in a public place using earphones") and Napster was an Antilog ("although people were willing to download music, they were not willing to pay for it"). [Page 83] Ries further develops the MVP, Minimum Viable Product: "it is not the smallest product imaginable, but the fastest way to get through the Build-Measure-Learn feedback loop." Apple's original iPhone, Google's first search engine, or even Dropbox Video Demo were such MVPs. More on Techcrunch [page 97]. He adds that MVP does not go without risks, including legal issues, competition, branding and morale of the team. He has a good point about intellectual property [page 110]: "In my opinion, [...the] current patent law inhibits innovation and should be remedied as a matter of public policy." So why did I feel some frustration? There is probably the feeling Ries gives that his method is a science. [Page 3]: "Startup success can be engineered by following the right process, which means it can be learned, which means it can be taught." [Page 148]: "Because of the scientific methodology that underlies the Lean Startup, there is often a misconception that it offers a rigid clinical formula for making pivot or persevere decisions. There is no way to remove the human element - vision, intuition, judgment - from the practice of entrepreneurship, nor that would be desirable". I was probably expecting more recipes, as the ones Blnak gives in The Four Steps to the Epiphany. So? Art or science? Ries explains on page 161 that pivot requires courage. "First, Vanity Metrics can allow to form false conclusions. [...] Second, an unclear hypothesis makes it impossible to experience complete failure, [...] Third, many entrepreneurs are afraid. Acknowledging failure can lead to dangerously low morale." A few pages before (page 154), he writes that "failure is a prerequisite to learning". Ries describes a systematic method, I am not sure it is a science, not even a process. Indeed, in his concluding chapter, as if he wanted to mitigate his previous arguments, he tends to agree: "the real goal of innovation: to learn that which is currently unknown" [page 275]. "Throughout our celebration of the Lean Startup movement, a note of caution is essential. We cannot afford to have our success breed a new pseudoscience around pivots, MVPs, and the like" [page 279]. This in no way diminishes the traditional entrepreneurial virtues; the primacy of vision, the willingness to take bold risks, and the courage required in the face of overwhelming odds" [page 278]. Let me mention here a video from Komisar. Together with Moore and Blank, he is among the ones who advise reading Ries' book. I am less convinced than them about the necessity to read this book. I have now more questions than answers, but this may be a good sign! I have been more frustrated than enlightened by the anecdotes he gives or his use of the Toyota strategy. In na interview given to the Stanford Venture Technology program, Komisar talks about how to teach entrepreneurship. Listen to him! To be fair, Eric Ries is helping a lot the entrepreneurship movement. I just discovered a new set of videos he is a part of, thanks to SpinkleLab. Fred Destin had also a great post on his blog about the Lean Startup and you should probably read it too to build your own opinion. Lean is hard and (generally) good for you. Fred summaries Lean this way and he is right: "In the real world, most companies do too much development and spend too much money too early (usually to hit some pre-defined plan that is nothing more than a fantasy and / or is not where they need to go to succeed) and find themselves with an impossible task of raising money at uprounds around Series B. So founders get screwed and everyone ends up with a bad taste in their mouth. That's fundamentally why early stage capital efficiency should matter to you, and why you should at least understand lean concepts." Let me finish with a recent interview given by Steve Blank in Finland: "I have devoted the last decade of my life and my "fourth career" to trying to prove that methods for improving entrepreneurial success can be taught. Entrepreneurship itself is more of a genetic phenomenon. Either you have the passion and drive to start something, or you don't. I believe entrepreneurs are artists, and I'd like to quote George Bernard Shaw to illustrate: "Some men see things as they are and ask why. Others dream things that never were and ask why not." Over the last decade we assumed that once we found repeatable methodologies (Agile and Customer Development, Business Model Design) to build early stage ventures, entrepreneurship would become a "science," and anyone could do it. I'm beginning to suspect this assumption may be wrong. It's not that the tools are wrong. Where I think we have gone wrong is the belief that anyone can use these tools equally well. When page-layout programs came out with the Macintosh in 1984, everyone thought it was going to be the end of graphic artists and designers. "Now everyone can do design," was the mantra. Users quickly learned how hard it was do design well and again hired professionals. The same thing happened with the first bit-mapped word processors. We didn't get more or better authors. Instead we ended up with poorly written documents that looked like ransom notes. Today's equivalent is Apple's "Garageband". Not everyone who uses composition tools can actually write music that anyone wants to listen to. It may be we can increase the number of founders and entrepreneurial employees, with better tools, more money, and greater education. But it's more likely that until we truly understand how to teach creativity, their numbers are limited. Not everyone is an artist, after all."

Il y a tant à dire sur cet opus qui est à l'origine d'un mouvement de fond dans le monde du business actuel. Il n'y a rien de révolutionnaire dans les idées de Ries (une roue de Demming reste une roue) de manière unitaire. Par contre l'hybridation des idées changent tout : l'auteur revisite le processus d'amélioration continue et le lean management pour les idées d'entreprendre, qu'elles soient internes ou externes à l'entreprise. Oui vous avez bien lu : ce livre ne s'arrête pas aux boutonneux de la silicon valley voulant lancer le prochain facebook mais bien TOUT le monde. * Vous avez envie de vous lancez dans une activité de cookies => vérifier que vous avez des clients potentiels, regardez ce qu'ils acheteraient, allez les voir et construisez le plus petit produit viable (un cookie ?) * Dans votre entreprise vous voulez lancer une nouvelle activité => pareil ! Oui, ce livre est vraiment rafraîchissant, vous fait grandir et vous oblige à trouver l'entr(e/a)preneur qui est en vous.

This book is full of excellent ideas that I expect will be critical to running a startup. I feel that I'm much better equipped to take the plunge after reading this book. The fact that Eric's ideas are widely adopted nowadays — minimum viable product, pivot, metrics, and so on. Unfortunately, the book is hard to read, specifically the first half, which could be condensed to half its length, because there's too much repetition. The author leaves you to figure out what a term means from reading an anecdote spread over two pages rather than defining it explicitly and clearly defining it. Some chapter names are meaningless, like "Leap", and give you no indication of what to expect. Some case studies are not obviously connected to the point the author is trying to make — you scratch your head and try to figure out what it means, and what the point must have been, and what the moral of the story must have been. But, stick with it, and you'll be rewarded with a solid, well thought-out, evidence-based method on running a startup with less risk, stress, time, money and effort. Here's a summary of the book: Introduction: The lean startup method has five principles: 1) Entrepreneurs are everywhere. 2) Entrepreneurship is management, albeit a form of management that applies under the conditions of extreme uncertainty in a startup. If you think management is not cool and reject it, you'll have chaos and failure. 3) Validated Learning. Startups exist not to just make things, serve customers, or make money. They exist to learn how to build a sustainable business. 4) Build - measure - learn: Startups should go through this loop, as fast as possible. 5) Innovation Accounting is needed to measure a startup's progress, set up milestones, prioritise work, and for the people in it to hold themselves accountable. Chapter 1: - The lean startup draws from related fields like lean manufacturing and design thinking. - If a company commits itself to the wrong plan and executes that plan excellently at a big scale, it may not be able to pivot in time, because it has committed all its resources and time to the wrong vision. It will achieve failure. Chapter 2: - Startups can exist as islands of independence within big companies. Chapter 3: Learn: - Which actions are value-creating and which are wasteful? This question is at the heart of lean manufacturing as well. - Validate your assumptions more cheaply than building the entire product. - But not by asking people what they want — most of the time, they don't know in advance. - People who fail often give the excuse that they learnt a lot. - It's easier to raise money when you have zero revenue and users. Zero invites imagination. A small number invites questions about whether big numbers will ever materialise. - So, it's tempting to postpone getting any idea until you are sure of the success. But don't do that. - Early in a startup's life, revenue growth happens slowly. But the real progress is in validated learning. - Don't fall prey to vanity metrics, which are numbers that look good but are not the best indicators of your company's health. For example, if you have a web site that encourages people to download an app, page views on the web site is a vanity metric, because there are better metrics, like downloads of the app, signups, active users, etc. - Don't waste money on PR and buying media attention and getting written up in magazines. Focus on learning. Chapter 4: Experiment - The founder of Zappos first tested his e-store for shoes by fulfilling orders manually — going to a nearby physical shop, buying the shoes, and shipping them. After a month, a thousand orders were placed, validating his idea. - He observed real customer behaviour, interacted with them, and learnt about their needs, not asked hypothetical questions. - Customers react in unexpected ways, revealing information you might not have known to ask about, like returning shoes. - Startups have a value hypothesis and a growth hypothesis. - The value hypothesis is that customers derive value from the product or service once they start using it. - The growth hypothesis is about how new customers will discover a product or service. - Give your first few users wonderful attention, as if you're a concierge. - An experiment is actually a startup's first product, not just a theoretical enquiry. Chapter 5: - Startups have a build - measure - learn feedback loop. - The learning is how to build a sustainable business. - This learning is more important than revenue. - Minimise the time it takes for you iterate through this loop. - People are often trained and specialised in one aspect of this loop, like engineers trained to build. What matter is not one part, but how fast you can iterate through the entire loop. - Startups should use a scientific method. - To do so, they should know what hypotheses to test. - The two most important hypotheses are the value hypothesis and the growth hypothesis. - Every startup is based on assumptions, often not recognised as such by founders. - Some assumptions are validated by the existence of other products. For example, when Apple built the iPod, one assumption was that people want to listen to music in public places using earphones. But the popularity of the walkman validated that assumption. - "Leap of faith" assumptions are trickier, like saying that people want to pay $399 for a portable music player. - You want to validate them ASAP. - The riskiest ones first. - You do so by building one or more MVPs. An MVP lacks features that are needed later, but its purpose is to validate assumptions with as little time and effort as possible. - You should identify and list assumptions before, not after, building the MVP. Ideally give quantitative estimates like 20% of people will be interested in our service, and 5% will be willing to pay. That way, you can't claim later on that you succeeded, by defining the goal as what you actually achieved. - You actually run the build - measure - learn loop in reverse: start with what you want to learn (assumptions to validate), then think about what to measure to validate those assumptions, and then build that MVP. - Don't act as if your assumptions are true. Validate them. Otherwise your startup will fail. - You can look for analogs and antilogs. - An analog is a similar situation that validates your assumption, as with people listening to music in public using earphones. - An antilog is something that goes against your assumption. For example, an assumption behind the iTunes Music Store was that people are willing to pay for music, but Napster was an antilog. - Get out of the building and talk to users. Don't theorise. Chapter 6: Test - Start with a quick, crappy implementation. - Groupon began as a themed Wordpress blog with the coupons being PDFs mailed by Apple's Mail app to 500 people. - An MVP is not necessarily the smallest product to build, but the quickest to build. - It's hard for entrepreneurs to launch an MVP, because the vision they have of themselves is launching high-quality, polished products, not crappy ones. Overcome that hesitation. - If you don't know who the customer is, you don't know what quality is. - Users may be fine with what you think is low-quality stuff, and may actually find it better, disagreeing with your opinion as to what constitutes high or low quality. - Low quality is a problem only if it slows down the build - measure - learn feedback loop. - An MVP can also be a marketing pitch accompanied by a sign up page to gauge interest. - Or a video, in Dropbox's case. - You can have humans substitute for an algorithm. - Don't worry that an established company will copy your idea. Try pitching it to the managers there. They will do nothing, partly because they're already overwhelmed with good ideas. - MVPs often result in bad news. Or, rather, they bring it out. You're better off facing reality. Chapter 7: Measure - If you're making changes to your product resulting in more users, that's not good enough. It's storytelling. How do you know that your changes are causing the results? How do you know that you're drawing the right lessons from your changes? - You need innovation accounting. - Innovation accounting works in three steps: 1) Use an MVP to establish real data on where you are. Without a clear-eyed picture of your current status — no matter how far from the goal you may be — you cannot begin to track your progress. 2) Tune the engine to move towards the ideal. 3) Decide whether to continue on your current course or pivot. - An MVP gets you real baseline data — conversion rates, sign-up rates, trial rates, customer life-time value, and so on. - Don't optimise something (like making your app easier for new users to use) until you know that it's a driver of growth and is less than what you'd like. - Putting all these together, start with a baseline metric, then form a hypothesis as to what will improve that metric, and then perform a set of experiments designed to test that hypothesis. - Metrics about the customer acquisition funnel are important. - Running Adwords ads, even on a low budget is important, because it gives you critical data. - Cohort analysis is important. Here, you define a cohort, such as people who signed up during a given week, or those who used a certain feature. Then you track the performance of your app for that group of users. - Cohort analysis lets you prove or disprove theories like, if your number of users is declining, that people who signed up recently are abandoning the app while old users continue to use it. - Cohort analysis can point out problems when other metrics are all up and to the right (hockey sticks). - When you get poor quantitative results, they force you to declare failure and create the motivation, context and space for more qualitative research. - If you pivot, and the experiments you run afterward are more productive than the ones before, that's the sign of a successful pivot. - Don't focus on optimising, whether the conversion rate or the performance of your app, because you may be building the wrong thing, in which case no amount of optimisation will help. - A startup has to measure progress against a high bar: evidence that a sustainable business can be built. This is possible only if you've made clear, verifiable predictions ahead of time. - Sometimes, when you make changes and launch them, it's hard to look for cause-and-effect relationships after the fact. In that case, do an A/B test. - A/B testing can also tell you things like whether the social features you've added to a product matter. - Hypothesis testing can require you to build new infrastructure. For example, if you're testing delayed sign-up, you'll need to support a state where users have their data in the system but haven't yet signed up. - Industry norms like delayed sign-up helping may not be true in your case. - That may, in turn, reveal an insight, such as: customers were not basing their decision on whether to use your product on your demo. Maybe on positioning and marketing. - Good metrics must follow the three As: Actionable, Accessible, and Auditable. - Go by actionable metrics, not vanity metrics. Vanity metrics are those where the cause and effect relationship isn't clear. You don't know what change you made that led to an increase (or decrease) in this metric, like page views. Or maybe it has nothing to do with you, like a mention in a popular blog. An actionable metric is the number of customers. If it decreases by 50K, you know something is wrong. You can work on it and hopefully fix it. That's actionable. - Accessible means that you can understand what it means, like a "customer" as opposed to a "hit on your web site". - Auditable means that if a question arises as to the validity of the metrics, you should be able to verify it. The best way is to talk to customers, who will also tell you why something is happening, not just that it is. In addition, the mechanism that generates the results must not be too complex for the metric to be auditable. Chapter 8: Pivot - Companies that can't pivot may be stuck in the land of the living dead, neither growing quickly enough nor dying, consuming the time and money of the people involved. - Launching early and iterating means that if you pivot, you waste less time, energy and money. If you drag it on, you won't want to pivot because of sunk costs. - Go by actionable metrics, rather than vanity metrics that can give a feeling of false success. - A startup's runway is conventionally defined as the number of months, but it should be defined as the number of pivots it can make. - Don't cut costs by slowing down the build - measure - learn loop. Then you're just going out of business slowly. - Two telltale signs that you need to pivot are the decreasing effectiveness of product experiments and the general feeling that product development should be more productive. - Not having PR and media attention on you is good, because you can pivot without drama. - Some types of pivots are: + Zoom-in pivot (where you focus on a subset of your original product) + Zoom-out pivot + Customer segment pivot (where you realise that you're more successful with different customers from the ones you expected) + Customer need pivot (where you discover that the customer has more important needs than the ones you thought they had) + Platform pivot (where an app becomes a platform or vice-versa) + Value capture pivot (commonly called monetisation, but monetisation is more like a feature while value capture is more central to the product) + Engine of Growth pivot (moving between viral, sticky and paid engines of growth) + Channel pivot (moving between sales channels) + Technology pivot + A pivot is a hypothesis; we don't know ahead of time whether it will succeed. Chapter 9: Small Batch Sizes: - Optimise the entire system, not a piece of it. - Have a small batch size: deliver work in smaller units. - Launch each feature independently. - Continuous deployment. Launch many times a a day. - Have lots of automated tests. - Have your designer sit with the engineer and have them design and implement each screen together. As opposed to your designer working by herself for weeks and then delivering the entire result at once. - Smaller batch sizes are actually more efficient, despite our intuition. - Quality problems can be identified much sooner. If you make something no one wants, you'll learn sooner. - Large-batch systems tend to malfunction, and when they do, people blame themselves. - Large batches lead to multiple rounds of rework. - ... and to still larger batches, which becomes a death spiral. - And to interruptions, people being blocked on others, communication gaps, scheduling problems, and so on. - The longer a project takes, the more bugs, problems and conflicts it has. - Have minimum work in progress. - Pull, don't push. Start from the hypothesis that needs to be validated or the experiment that needs to be run, and pull work from product development in the smallest batch size to validate that hypothesis. - Small batches will also let you work with less capital. - Companies can stay lean as they grow. They don't need to become bureaucratic. Chapter 10: Engines of Growth: - New customers come from the actions of past customers. This happens in four ways: 1) Word of mouth. 2) As a side effect of product usage 3) Through advertising 4) Through repeat purchases (sticky) - Each of these engines has a feedback loop that leads to success. - One of the most expensive forms of potential waste for a startup is spending time arguing about prioritisation of new features. - The engines of growth help you prioritise better. - There are always a zillion new ideas about how to make the product better floating around, but most make a difference only at the margins. They are merely optimisations. - If you're using the sticky engine of growth, you will grow if the rate of new customer acquisition exceeds the churn rate. Track both. - The metric to focus on is the compound growth rate. If it's high, you're doing well. - Activation rate and revenue per customer have little impact on growth. (They're better suited to testing the value hypothesis) - If the churn rate and customer acquisition rate are the same, then the standard intuition to invest in sales and marketing doesn't work, because you will lose your new customers as well. - This is an example of vanity metrics misleading you. - The viral engine of growth depends primarily on people sharing it with friends, as a central feature of the app, not an afterthought. - The metric to focus on is the viral coefficient, which determines how quickly your app spreads. If it's 0.1, it means one of ten people using the app are referring a friend. - If the coefficient is less than one, the cycle of growth fizzles: if you start with 100 users, they refer 10 more, who refer one more, at which point the loop ends. - Exactly 1 gives you linear growth: if you gain 10 new users this week, you will gain 10 the week after that, 10 the third week, and so on. That's not good enough. - The coefficient needs to be > 1 for exponential growth. - Tiny changes in this number cause dramatic changes. If it's 1.01 per week, you end the year with twice as many users as you began. - If it's 1.1, you end the year with 140 times as many users as you began. - These are often free and ad-supported because being asked to pay comes in the way of viral growth. - The paid engine of growth relies on more paid sales. It's different from the sticky engine, which relies on repeat sales to the same customers. - If one company earns a revenue of ₹10 per user, and another earns ₹100, and they both reinvest their profit in acquiring new users, which one grows faster? A: It depends on the Cost Per Acquisition (CPA). If they are proportional, like ₹2 and ₹20, both grow at the same rate. - For faster growth, you need to reduce CAC or increase revenue. - The lifetime value (LTV) of a customer is the total revenue they generate over their lifetime, minus variable costs. - If LTV > CPA, the company will grow. - If < it won't, despite one-time tricks like using invested capital or publicity stunts. - Don't pursue multiple engines of growth, since it's complex to model all these effects simultaneously. Startups usually focus on one. - Product-market fit is the moment when a startup finally finds a widespread set of customers that resonate with its product. - A great market — a market with lots of potential customers — pulls product out of the startup. In a terrible market, the best product and best team are going to fail. - When you achieve product-market fit, it's exhilarating. - If you have to ask, you're not there yet. - Depending on which engine you're using, look at the appropriate metric, like viral coefficient for a viral engine. If it's 0.9 or more, you're on the verge of success. - The number doesn't matter as much as the direction and degree of progress. - Every engine eventually runs out of fuel. - Moving from early adopters to mainstream users is not automatic. The engine may stop and may require tremendous additional effort. - Be careful to not confuse growth coming from an engine already working efficiently for growth from product development. It's possible your work has no effect, in which case you can have a sudden stop. - To prevent this, focus on actionable metrics rather than vanity metrics, and use innovation accounting rather than traditional accounting. In other words, are you making progress on your actionable metrics? Are you running experiments and building MVPs to improve them? Are you verifying that, if you ran an experiment to reduce the churn rate, for example, that it has actually reduced the churn rate, rather than assuming that it did from increased revenue?

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Eric Ries gebührt der Respekt, mit seinem Buch dazu beigetragen zu haben, dass Begriffe wie “minimal viable product” oder der Entwicklungszyklus “build-measure-learn” zum Standardrepertoire agiler Prozesse gehören. Manchmal ertappe ich mich jedoch bei dem Gedanken, dass mit den Begriffen nur zu gerne auch angegeben wird, ohne wirklich zu wissen, was originär damit gemeint war oder gar die Unternehmensprozesse tatsächlich danach ausgerichtet werden. Deshalb: es lohnt - wie in den allermeisten Fällen - sich mit der Originalliteratur auseinanderzusetzen, um Zusammenhänge zu durchdringen anstatt sie nur an der Oberfläche zu tangieren. Auch wenn das Werk inzwischen 9 Jahre alt ist - eine Ewigkeit in unserer schnelllebigen Welt - hat es nichts an Aktualität eingebüsst. Der Autor entfaltet für Startups mit seinem Vorgehen „VISION (Start - Define - Learn - Experiment) - STEER (Leap - Test - Measure - Pivot or Persevere) - ACCELERATE (Batch - Grow - Adapt - Innovate)“ einen fundierten Weg, um auch heute noch erfolgreich Produkte bzw. Services am Markt platzieren zu können. Sympathisch ist der Gedanke, dass Unternehmertum und Startup-Mentalität nicht der Garage vorbehalten sind, sondern überall stattfinden können. Ries setzt sich für den Begriff des Entrepreneurs statt des Managers ein, um dies deutlich zu machen. Darüberhinaus macht er eindrücklich klar, weshalb „validated learning“ ein MUSS für Neugründungen ist, die sich am Markt auch langfristig durchsetzen wollen. Auch seine vier zentralen Fragen (S. 64) würden auch heute noch so manche Produktentwicklung, die völlig am Markt vorbeigeht, vermeiden. Man sollte diese als Poster neben die gängigen Scrum- und Kanban-Boards hängen, um täglich daran erinnert zu werden und sich danach auszurichten. Wie eingangs beschrieben ist der „Feedback Loop: build-measure-learn“ in zahlreichen Produktentwicklungsteams heute EIGENTLICH Standard, wird aber im Ries‘schen Sinne nicht konsequent gelebt. Ries zeigt auf, welche Daten sich zu messen lohnen, wie man eigene Hypothesen widerlegen kann und sollte, gerade wenn man ihnen zu gerne Glauben schenken mag. Trotz zahlreicher eindrücklicher Beispiele, die über die typischen Apples und Facebooks hinausgehen, wäre eine Art Matrix, mit welcher man das eigene Geschäftsmodell noch besser messen und Erfolge suchen bzw. Misserfolge schnell vermeiden kann, hilfreich. So bleibt zwar das Verständnis des theoretischen Rahmens, aber einen praktikablen Bezug, was die Ergebnisse der gemessenen Fakten bedeuten, bleibt offen. Das ist aufgrund der unterschiedlichen Geschäftsmodelle nachvollziehbar, als Startup-Unternehnmer*in oder Investor*in entstehen natürlich genau an dieser Stelle die entscheidenden Fragen. Dennoch: Auch nach vielen Jahren noch immer ein fundamentales Werk, das den Zeitinvest lohnt, um die daraus entstandene Entwicklung zu verstehen und vor allem, maßgebliche Hinweise für erfolgreiches “Entrepreneurship” abzuleiten.