One of the most popular books on startups that truly lives up to its reputationOne of the most popular books on startups that truly lives up to its reputation
This book was on my TBR for a while now, and I’m so glad that I finally got to it! The Lean Startup by Eric Ries is my third book on entrepreneurship and startups. This follows Zero to One by Peter Thiel with Blake Masters, and The Art of the Start 2.0 by Guy Kawasaki. They were all great books on this topic, and I really enjoyed all of them.
An essential read to learn about startup frameworks
Personally, I felt that this book reads very much like Zero to One, where the authors described their respective frameworks in setting up their startups. In contrast, The Art of the Start 2.0 was put together like a compendium of dos and don’ts distilled from the author’s personal experiences.
There were lots of great takeaways from these books, but I enjoyed this one the most. I’ve always been a sucker for frameworks, so I really got a kick out of this book. Moreover, folks who are new to the startup scene might find this book to be the most digestible and applicable. The other two books covered what I thought were more advanced topics. Hence, they might be more useful for those who are already in the midst of running their own startups.
With that summary out of the way, let’s go a little deeper into my top takeaways from The Lean Startup!
1. Startups should use validated learnings as a measure of progress 2. Use MVPs to validate the core assumptions quickly 3. The number of pivots a startup can still make determines its runway
Takeaway #1 – Startups should use validated learnings as a measure of progress
“If you cannot fail, you cannot learn”Eric Ries
At the core of The Lean Startup method is what Ries calls “validated learning”. According to Ries, startups operate in an environment of extreme uncertainty; they often have to make many assumptions about their business models and conduct experiments to see what sticks. To facilitate this process, Ries came up with his “Build-Measure-Learn” (BML) feedback loop, which is described below:
To understand the BML feedback loop, let’s begin from a startup’s idea – this is where they formulate the hypotheses that they want to test. From this, they “build” an early version of the “product” called the Minimum Viable Product (MVP) to validate the hypotheses. Next, we identify and define actionable metrics from the data collected to “measure” success and derive learnings.
When done right, these learnings give founders insights into their underlying assumptions. Beyond that, startups should also aim to reduce the amount of time going through the loop after every iteration. Eventually, this will help them make decisions to persist with their current model, or make pivots.
Personally, I felt that this framework can also be applied to work beyond the entrepreneurial world. I work on many strat-ops projects in my day job, each one aiming to solve a problem with many underlying assumptions. Using a structured framework such as Ries’ BML model has made it easier for me to get to the root of the problems and come up with creative solutions to experiment with at work.
Takeaway #2 – Use the MVP to validate the core assumptions quickly
“The only way to win is to learn faster than anyone else”Eric Ries
Almost every startup will have to go through this feedback loop multiple times over during the course of their entrepreneurial journey. To that end, Ries advocates for building the Minimum Viable Product (MVP) to cycle through the loop quickly and efficiently.
An MVP is a stripped-down version of the product that startups produce to serve their target audience. MVPs help to validate the fundamental assumptions of the startup’s business model, and thus should only contain the core features only. Features that are not crucial to validating the core assumptions will not be included.
Conventional Lean/Six Sigma-based wisdom suggests that businesses know exactly what their customers perceive as worthwhile. While this may be true of larger and more established companies, it does not always hold true for startups. This is in part due to the extreme ambiguity that they operate in. Therefore, while MVPs might be of low quality, they provide valuable opportunities for startups to learn what their customers really care about.
Takeaway #3 – The number of pivots a startup can still make determines its runway
“A pivot is better understood as a new strategic hypothesis that will require new MVPs to test.”Eric Ries
After iterating their MVP multiple times over, startups may find themselves at a fork in their path – to persist or to pivot. The eventual success of the startup often depends on making the best decision here.
Notice that I said the best decision, not the right one? The truth is that it is challenging for the startup to know exactly what is the right decision to make at such times. Recall that startups operate in an environment of extreme uncertainty. Therefore, they can only rely on what they’ve learnt from their experiments to guide their decisions.
Ideally, they should persist if product experiments are still yielding effective and productive insights. Otherwise, pivots may be imminent if there are new “strategic” hypotheses that might be worth some validation.
If a startup had measured their progress with the right actionable metrics and charted it against learning milestones, making these decisions will be relatively easier. By minimizing the time it takes to complete each cycle of the BML feedback loop, startups will be able to arrive these decision points as early as possible.
Noteworthy quotes from The Lean Startup
- “Before new products can be sold successfully to the mass market, they have to be sold to early adopters.”
- “… any additional work beyond what was required to start learning is waste, no matter how important it might have seemed at the time.”
- “If we do not know who the customer is, we do not know what quality is.”
- “Customers don’t care how much time something takes to build. They care only if it serves their needs.”
- “If you’re building the wrong thing, optimizing the product or its marketing will not yield significant results.”
- “… there is no bigger destroyer of creative potential than the misguided decision to persevere.”
- “It is not necessary to throw out everything that came before and start over. Instead, [pivoting’s] about repurposing what has been built and whats has been learned to find a more positive direction.”
- “… it is not the customer, but rather our hypothesis about the customer, that pulls work from product development and other functions.”
- “At the root of every seemingly technical problem is a human problem.”
- “… people defend themselves when they feel threatened, and no innovation can flourish if defensiveness is given free reign.”
- “We have all the capacity to build almost anything we can imagine. The big question of our time is not can it be built? but should it be built?”
- “For all of our vaunted efficient in the making of things, our economy is still incredibly wasteful. This comes not from the inefficient organization of work but rather from working on wrong things – and on an industrial scale.”
- “By focusing on functional efficiency, we lose sight of the real goal of innovation: to learn that which is currently unknown.
If this book was a symphony orchestra concert, the end of this book would have warranted a standing ovation. This book is great for newbies to the entrepreneurial world, and also for seasoned entrepreneurs alike! I do envision myself returning to these pages frequently in the future when I launch my own startup(s). Until then, this summary shall be my quick reference point, and I hope it’ll be yours too!
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