Eric Ries is the author of the popular blog Startup Lessons Learned and the creator of the Lean
Startup methodology. He is an
entrepreneur in residence at Harvard Business School and a frequent speaker at business events. In his talk on “The Lean Start-up” at google he explained how most of the new start-up fails and the methodology that should be followed for a new start-up to be successful. Here I explained his talk at google in my words.
3. • Eric Ries is the author of the
popular blog Startup Lessons
Learned and the creator of the
Lean
Startup methodology. He is an
entrepreneur in residence at
Harvard Business School and a
frequent speaker at business
events. In his talk on “The Lean
Start-up” at google he explained
how most of the new start-up fails
and the methodology that should
be followed for a new start-up to
be successful. Here I explained his
talk at google in my words:-
4. • Start-up is a human institution designed to create
something new under conditions of extreme uncertainty. The
Lean Startup is about learning what your customers really
want — and learning it quickly. It’s about continuously testing
what you think your customers might want and adapting
based on the results — and doing this before you run out of
money. Most new businesses fail. But most of those failures
would have been preventable if the Lean Startup
methodology had been followed. We might think that startups
progress steadily towards success over time, but this isn’t the
case.
Take a look at this diagram.
5. • Most new startup founders believe that progress will follow the
diagram on the last page. They think they will release their
prototype and move forward from there.
• The reality is very different and more like the diagram on the
right. Founders must get used to failure and starting again
from zero. But this is nothing to get depressed about, for
whoever fails and learns the fastest will win.
• Ries has organized The Lean Startup into three sections:
•
• Vision: lays the foundations for you to understand Lean
Startup. It explains what an entrepreneur is and how
startups experiment to learn.
• Steer: covers the meat of the Lean Startup process, including
the Build-
Measure-Learn Feedback Loop.
• Accelerate: covers how to progress through the Build-
Measure-Learn
Loop faster, even as you scale.
6.
7.
8. • Customers often perceive early iterations of products as
"cheap" or, at best, inadequate. In reality, the first iteration
of a product -- the minimum viable product -- is a practical
way to test an innovation with the consumer before fine-
tuning the process.
• Measuring and learning early in the development
process ultimately saves startups time and resources.
With my own organization’s venture companies, for
example, we define an
MVP (minimum viable product) as the smallest amount
of design and code necessary to conduct the first
product or market experiment while maintaining a
positive user experience.
9. • Lean startup methodology still confuses some venture
capitalists. Those VCs reserve their funding for
companies that can return 10 times their capital
investment within seven to 10 years or for firms with an
exit potential of at least nine figures. Ries said there has
been pushback from a few VC leaders against the lean
approach because they believe it eliminates the need for
funding to grow a business. He insisted that this isn’t the
case, as scaling still requires capital. Just look at
Airbnb’s funding rounds, even though the company’s
MVP was a simple landing page.
10. • Some consider a lean startup as a license to fail. But it’s
not
about embracing a culture of failure; it’s about
understanding that you might stumble and a fall in a
race, even as you get back up and make up for lost
time.
• “I hate the idea of ‘fail fast,’” Ries said. “It’s like I’m trying
to
run a sprint, and you’re like, ‘OK. Breathe fast.’ The
breathing is not the purpose; the sprint is the purpose.”
11. • The leaders of established companies often have a
faulty perception of lean startup techniques; they
assume the approach becomes pointless once a
company is mature and established.
• “They think startups are all about kids eating ramen
noodles and wearing a black turtleneck,” Ries said.
These executives
think the methodology no longer applies to them
because their employees have gained health insurance,
and “Everyone wears a suit to work.”
14. • Fred Taylor, invented something called "The Task and
Bonus
System", which we just call "tasks".
• The idea was if you want to do a large project, the best
thing to do is decompose that project into a series of
individual tasks, assign those tasks to functional
specialists. And everyone just does their part knowing
that if everybody does their part well and everybody else
does their part, the whole will actually work out like the
manager said.
15.
16. • Fundamentally, startups exist to learn how to build a
sustainable business. We call it "validated learning"
'cause we have to back up that learning quantitatively.
Any old idiot can tell a good story.
17. • In the lean manufacturing revolution, the first question they had
to teach people to ask was "what is the difference between
value and waste"? And in a factory, this is actually relatively
straightforward. Value is the stuff that we make. The customers
want. And waste is everything else.
• But if our unit of progress is gonna be learning, then our unit of
value has become intangible and now we have an issue. Which
is -- OK, we can eliminate all the stuff that we do that doesn't
contribute to learning.
• So, we have this concept in Lean Startup called "minimum
viable product", which is, what really needs to be in that first
version? And now we have a good answer.
18. • Accounting was invented for a very different reason.
It was invented to drive accountability across
departments.
• Because if we wanna have a large company with many
different divisions, we have to be able to hold the
managers of those divisions accountable to some things
so that we know that they did a good job.
• General Motors, which invented most of our modern
management paraphernalia, had this concept.
19. • The issue is that we all know that most projections for new
products are complete BS.
• If we do innovation accounting and we make very specific
per customer behavior predictions -- like one thing we'll
often have people do is sell the magic version of their
product on a landing page somewhere.
20. • The issue is that we all know that most projections for new products are
complete BS. You have to tell the CFO, or whoever, that you're gonna
have a zillion trillion customers in year five. Otherwise you won't get the
money to do your project.
• But we know that we just made those projections up. So when they don't
prove to be correct, we're like, "Well, that doesn't prove that our vision is
wrong. It just proves that it took longer than we expected." So, yeah, the
hockey stick is still gonna happen, but it's taking longer.
• If we do innovation accounting and we make very specific per customer
behavior predictions -- like one thing we'll often have people do is sell
the magic version of their product on a landing page somewhere