Lean Startup

The Lean Startup
Resumen del libro de Eric Ries

When to use
● Problem known / solution known
Waterfall

● Problem known / solution unknown
Agile

● Problem unknown / solution unknown
Lean

Pillars of the lean startup

1. Entrepreneurs are everywhere
2. Entrepreneurship is management
3. Validated learning
4. Build-measure-learn loop
5. Innovation accounting

Define
A startup is a company designed to grow
fast. Being newly founded does not in itself
make a company a startup. Nor is it necessary
for a startup to work on technology, or take
venture funding, or have some sort of "exit."
The only essential thing is growth. Everything
else we associate with startups follows from
growth.

Paul Graham

Define
A startup is a human institution designed to
create a new product or service under
conditions of extreme uncertainty.

Entrepreneurship is management.

Learn
If the fundamental goal of entrepreneurship is
to engage in organization building under
conditions of extreme uncertainty, its most vital
function is learning.

Unfortunately, “learning” is the oldest excuse in
the book for a failure of execution.

Learn
Adopt the view that your job is to find a
synthesis between your vision and what
customers would accept; it isn’t to capitulate to
what customers think they want or to tell
customers what they ought to want.

Learn
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.

Learn
It is often easier to raise money or acquire
other resources when you have zero revenue,
zero customers, and zero traction than when
you have a small amount.

This phenomenon creates a brutal incentive:
postpone getting any data until you are certain
of success.

Learn
Can we build a sustainable business around
this set of products and services?

Experiment
Think big, start small. Build a minimum viable
product to test your hypothesis relying on the
scientific method.

Experiment
Break down the grand vision into its component
parts. The two most important assumptions
entrepreneurs make are the value hypothesis
and the growth hypothesis.

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

Leap
Your goal is to validate your value and growth
hypothesis.

Leap
Genchi Gembutsu: "go and see for yourself"

You cannot be sure you really understand any
part of any business problem unless you go
and see for yourself firsthand.

"If you don't go, you don't know"

Leap
Lean UX recognizes 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.

Leap
Avoid the dangers of the two extremes: just do
it vs analysis paralysis.

Test
The fastest way to get through the Build-
Measure-Learn feedback loop with the
minimum amount of effort is via a MVP.

The goal of the MVP is to begin the process of
learning, not end it.

Test
Before new products can be sold successfully
to the mass market, they have to be sold to
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.

Test
The lesson of the MVP is that any additional
work beyond what was required to start
learning is waste, no matter how important it
might have seemed at the time.

Test
Examples of MVPs

● Video
● Landing page
● Concierge
● Wizard of Oz.

Test
If we do not know who the customer is, we do
not know what quality is.

Measure
Innovation accounting enables startups to
prove objectively that they are learning how to
grow a sustainable business.

Measure: Innovation accounting
1. Establish the baseline
a. Build an MVP
b. Measure how customers behave right now

2. Tune the engine
a. Experiment to see if we can improve metrics from
the baseline towards the ideal

3. Pivot or persevere
a. When experiments reach diminishing returns, it is
time to pivot

Measure
Metrics must be:
● Actionable
● Accessible
● Auditable

Measure
This is the pattern: poor quantitative results
force us to declare failure and create the
motivation, context, and space for more
qualitative research.

Measure: Using kanban
Stories could be cataloged as being in one of
four states of development: in the product
backlog, actively being built, done (feature
complete from a technical point of view), or in
the process of being validated.

Validated was defined as “knowing whether the
story was a good idea to have been done in the
first place.”

Pivot
Pivot is to change direction while keeping a
foot on sure ground.

A pivot is better understood as a new strategic
hypothesis that will require a new MVP to test.

A startup's runway is the number of pivots it
can still make.

Pivot
The more money, time, and creative energy
that has been sunk into an idea, the harder it is
to pivot.

Remember, if we're building something that
nobody wants, it doesn't much matter if we're
doing it on time and on budget.

Pivot: Kinds
● Zoom in
● Zoom out
● Customer segment
● Customer need
● Bussiness architecture
● Value capture
● Engine of growth
● Channel
● Technology

Batch
Working in small batches ensures that a startup
can minimize the expenditure of time, money,
and effort that ultimately turns out to have been
wasted.

Batch
By reducing batch size, we can get through
the Build-Measure-Learn feedback loop
more quickly than our competitors can.

The ability to learn faster from customers is the
essential competitive advantage that startups
must possess.

Batch
● Andon cord
● Continuous deployment
● Automated tests

Batch
Large-batch death spiral: the larger the batch,
the higher the pressure to deliver a high-quality
version of the product.

In light of how long the product has been in
development, why not fix one more bug or add
one more feature? Who really wants to be the
manager who risked the success of this huge
release by failing to address a potentially
critical flaw?

Batch
Pull, don't push: avoid stockpiled Work In
Progress. Experiments should pull the
development.

Build-Measure-Learn => Learn-Measure-Build

Grow
Sustainable growth: New customers come
from the actions of past customers.

● Word of mouth
● Side effect of product usage
● Funded advertising
● Repeat purchase or use

Grow: Engines of growth
Sticky

● Relies on high customer retention rate.
● Key is for new customer acquisition exceed
churn rate.

Viral

Many viral product do not charge customers
directly but rely on indirect sources of revenue
such as advertising.

Customers are not intentionally acting as
evangelists, growth happens automatically as a
side effect of customers using the product.

Paid

● Marginal profit, the margin between LTV
(customer lifetime value) and CPA (cost per
acquisition)
● Relies on paid advertising

Adapt
Build a company that can adapt and change as
fast as possible.

Adapt: The five whys
The core idea of Five Whys is to tie
investments directly to the prevention of the
most problematic symptoms.

Adopt these simple rules:
1- Be tolerant of all mistakes the first time
2- Never allow the same mistake to be made
twice

Innovate
As the company grows, keep innovating. Build
small teams of entrepreneurs within the
company to have a diverse portfolio and keep
innovating.

Create a sandbox for innovation that will
contain the impact of the new innovation but
not constrain the methods of the startup team.

Innovate
Startup teams require three structural
attributes:
● scarce but secure resources,
● independent authority to develop their
business,
● and a personal stake in the outcome.

Innovate
The innovation team should be cross-functional
and have a clear team leader.

It should be empowered to build, market, and
deploy products or features in the sandbox
without prior approval.

It should be required to report on the success
or failure of those efforts by using standard
actionable metrics and innovation accounting.

Innovate
Entrepreneur Is a Job Title

Epilogue
For all of our vaunted efficiency in the making
of things, our economy is still incredibly
wasteful.
This waste comes not from the inefficient
organization of work but rather from working on
the wrong things - and on an industrial scale.
As Peter Drucker said, “There is surely nothing
quite so useless as doing with great efficiency
what should not be done at all.”

Epilogue
By focusing on functional efficiency, we lose
sight of the real goal of innovation: to learn that
which is currently unknown.

Extractos de "What User-Centered Design is Good For"
de Dan Saffer

User-centered design
No matter how many users you talk to, no
matter how much data you collect, at the end of
the day, a human has to decide.

No amount of data analysis can make up for a
lack of talent.

User-centered design
Users and their data should be there to inform
designers, not to substitute for them.

Great ideas can't be tested. Only mediocre
ideas can be tested.

Lean Startup

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