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Lean Startup

The lean Startup

I recently completed reading the book (lean startup by Eric ries). Many of my friends haven’t read it so I thought that a post may persuade them to do so.I will try to present a crux of few very important points mentioned in the book.Lets start with the question, What is lean startup?. According to Eric ries “An organization designed to create new products and services under conditions of extreme uncertainty”. Just like alibaba had to tackle 40 thieves to get to the teasure, enterpreneus on thier treasure hunt have to keep in mind these fourty points which are as under:

###40 points

  • Scott Cook co-founder of intuit who believes that at the core of lean methedology are the tests, without tests you build up a society of politicians and salespeople with tests you create entrepreneurs who run and learn and can retest and relearn as opposed to a society of politicians.

  • Delay prevents many startups from getting the feedback they need ,customers wont talk , you listen to their action or inaction and eliminate waste.

  • Most important question which one should ask before building anything “Should this product be built?” and “Can we build a sustainable business around this set of products and services?

  • If you cannot fail,you cannot learn.

  • Think Big, Start Small

  • Nick Swinmurn of Zappos, says that qualitative learning is a necessary companion to quantitative testing.

  • The point is not to find the average customer but to find early adopters: the customers who feel the need for the product most acutely. Those customers tend to be more forgiving of mistakes and are especially eager to give feedback.

  • concierge minimum viable product

  • Mark Cook is Kodak Gallery’s vice president of products suggests to ask these qustion to your employees
    1. Do consumers recognize that they have the problem you are trying to solve?
    2. If there was a solution, would they buy it?
    3. Would they buy it from us?
    4. Can we build a solution for that problem?”

  • Success is not delivering a feature; success is learning how to solve the customer’s problem.

  • David Forrest, the CFPB’s cto believes that “Markets change all the time and our job is to change with them”.

  • Planning is a tool that only works in the presence of a long and stable operating history.

  • Most important loop of all the loops; Build-Measure-Learn feedback loop,

  • Innovation accounting is a quantitative approach that allows us to see whether our engine-tuning efforts are bearing fruit.

  • There are many number of famous entrepreneurs who made millions because they seemed to be in the right place at the right time. However, for every successful entrepreneur who was in the right place in the right time, there are many more who were there, too, in that right place at the right time but still managed to fail.

  • A startup’s earliest strategic plans are likely to be hunch- or intuition-guided, and that is a good thing. To translate those instincts into data, entrepreneurs must, in Steve Blank’s famous phrase, “get out of the building” and start learning.

  • GENCHI GEMBUTSU-The importance of basing strategic decisions on firsthand understanding of customers, in other words Go and see for yourself.This is also known as Jeffrey Liker’s Toyota Way -“it is unacceptable to take anything for granted or to rely on the reports of others”.Get a tatoo of GENCHI GEMBUTSU, thats how important this phrase is.

  • Yuji Yokoya, Sienna -The goal of early contact with customers is not to gain definitive answers. Instead, it is to clarify at a basic, coarse level that we understand our potential customer and what problems they have with that understanding, we can craft a customer archetype

  • Lean User Experience (Lean UX)-Recognize that the customer archetype is a hypothesis, not a fact. The customer profile should be considered provisional until the strategy has shown via validated learning that we can serve this type of customer in a sustainable way

  • Customers don’t really know what they want

  • Early adopters. These people are a special breed of customer. They accept—in fact prefer—an 80 percent solution; you don’t need a perfect solution to capture their interest. Google’s original search engine could answer queries about specialized topics such as Stanford University and the Linux operating system, but it would be years before it could “organize the world’s information.” However, this did not stop early adopters from singing its praises.

  • MVP feels a little dangerous—in a good way—since many of us have always been perfectionists.

  • When in doubt, simplify

  • Don’t forget W. Edwards Deming’s famous dictum that the customer is the most important part of the production process

  • Six Sigma, lean manufacturing, design thinking, extreme programming, and the software craftsmanship movement is in fashion

  • If we do not know who the customer is, we do not know what quality is take IMVU “teleportation” as an example. I won’t spoil this point for you so read the book.

  • Stealth mode is not needed most of the time- Take one of your ideas (one of your lesser insights, perhaps), and the name of the relevant product manager at an established company who has responsibility for that area, and try to get that company to steal your idea. Call them up, write them a memo, send them a press release—go ahead, try it. The truth is that most managers in most companies are already overwhelmed with good ideas.

  • You have to commit to a locked-in agreement—ahead of time—that no matter what comes of testing the MVP, you will not give up hope

  • A Disciplined, systematic approach is need for guring out if we’re making progress and discovering if we’re actually achieving validated learning. Eric calls this system innovation accounting, an alternative to traditional accounting designed specifically for startups.

  • Traditional numbers used to judge startups “vanity metrics,” and innovation accounting requires us to avoid the temptation to use them.

  • Cohorts, Split-tests(A/B testing) and customer segment pivot is at the heart of startups success.

  • Startup lifetime to pivot can be calculated by this formula- Remaining cash in the bank divided by the monthly burn rate, or net drain on that account balance

  • product development should be more productive. Whenever you hear this, consider a pivot.

  • Small batches- The one envelope at a time approach is called “single-piece flow” in lean manufacturing. It works because of the surprising power of small batches . Lean startup infacet takes its name from lean manufacturing which Taiichi Ohno and Shigeo Shingo are credited with developing at Toyota.

  • Shawn Carolan , “Startups don’t starve; they drown.”

  • viral coeficient > 1 (one person should bring more than one person with him/her) will give you a hockey stick graph of growth.

  • Margin between the LTV(life time valus) and the CPA(cost per accquisition) determines how fast the paid engine of growth will turn (this is called the marginal profit).

  • Actionable metrics, continuous deployment, and the overall Build- Measure-Learn feedback are your friends.

  • There is surely nothing quite so useless as doing with great efficiency what should not be done at all.

Some other very important names mentioned in the book you must know are : Akshay Mehra, Mark Zuckerberg, Dustin Moskovitz, Chris Hughes, Randy Komisar, Andrew Mason, Drew Houston, Manuel Rosso, Steve Sanderson, Max Ventilla and Damon Horowitz, Alfred Sloan, David Binetti, Dave Morin, Dustin Mierau, Shawn Fanning,Robin Dunbar,Kleiner Perkins Caufield & Byers,Dan Carroll, Andy Rachle,Geo-rey Moore,Clayton Christensen,James Womack ,Daniel Jones, Boise Idaho, Sabeer Bhatia and Jack Smith, Frederick Winslow, and Rich Collins.