The Lean Startup

There’s a problem with inventions, not to mention the inventors. Some things are invented, other developed, other develop somewhere in the process. When it comes to the lean startup method, there is no telling which one is the case. In what sense was this method invented, in what sense was it developed? Was it developed/invented at all? And if it was, then who should we credit for its development? These are all the questions that trouble us people interested in startups. What can be said for sure, though, is that if it were not for Eric Ries, this debate wouldn’t happen.

The Author

It is no coincidence that Eric Ries is so often credited as the lean startup method’s inventor. It’s his groundbreaking 2008 bestseller, The Lean Startup, that has set the basic framework for all the further debate, all the research, publications, and inquiries, not to mention the actual lean startup method-based business endeavors. But who is he: this inventor? And where did he come from?

Eric Ries was born in 1978. He’s a successful entrepreneur, blogger, and author. He’s the current CEO at Long-Term Stock Exchange, an SU lecturer, and Lean Series’ chief editor. His past experiences include working on the development of the IMVU platform and venture-advising for Kleiner Perkins Caufield & Byers. In 2012 he was offered an entrepreneur-in-residence position at Harvard Business School. He is also an IDEO Fellow (since September 2011) and a General Partner to New Context (since March 2012)…

His LinkedIn Profile lists even more business-related professional achievements.

It wasn’t always like this. His first business failed due to the burst of the dot-com bubble in the late 90s/early 2000s and Ries’ own lack of experience. The second one he contributed to – There, Inc. – did ultimately share it’s predecessor’s fate in 2004, when its product, There.com, a web-based three-dimensional virtual world that Ries has worked on as a senior software engineer, failed to attract the attention it needed. As a result, There, Inc. had to undergo some serious restructuring: the one that led to its eventual branching into Forterra Systems and Makena Technologies and their subsequent demise some time later, in 2010.

Though not surprising in retrospective, these failures were hard for Ries to take. “It’s as if the world were falling out from under you,” he describes. “You realize you’ve been duped. The stories in the magazines are lies: hard work and perseverance don’t lead to success.” Still: it’s also these failures that taught him the most important lesson. “Startup success is not a consequence of good genes or being in the right place at the right time. Startup success can be engineered by following the right process, which means it can be learned, which means it can be taught.”

This is true. Both Eric Ries and his bestseller owe a lot to these unfortunate failures. According to Ries’ own words: these are the two most important business experiences that led him to develop his lean startup method and its semi-philosophical background later in 2008. Not the success – but the failure. Not the upsides – but the downsides.

Now that’s where the things are getting real interesting.

The Read

All these things like actionable metrics, build-measure-learn loop, business model canvas, lean canvas, MVPs, pivots, split testing, validated learning. All these new entries in business glossaries. All these business definitions:

This is the source.

What is it – The Lean Startup, The-Sole-Book-That-Changed-It-All – then? Some new kind of startup bible? Some new universal kind of lockpick to all the business’ doors shut tight?

It’s a bestseller. This much is obvious. It has sold in hundreds of thousands of copies in tens of countries worldwide (and it keeps and keeps best-selling.) It’s also Ries’ sole book to date. Since it’s publication in 2008 he’s written numerous blog entries and articles, he gave speeches and interviews, he’s become a public person. Still – as far as I know – he does not intend to write another book. (Who can tell, though? Who can be sure?)

Apart from that – I believe – it’s quite a lot of different things to quite a lot of different people. “A Bible of Business” to some. A misconception to others. An ultimate point of all-things-startups’ reference to some, a misinterpretation of Taiichi Ohno’s lean manufacturing’s philosophical background to others. Some kind of inspirational/motivational to some, a failed experiment at coaching to others. The list goes on and on and on. The fact is that it’s all these things. The fact is also that even now – almost a decade from its initial release – it still causes a commotion, heated debate, kind of a stir. But what’s the reason, what did it do, The Lean Startup? What is this it does to readers?

What it does is it takes all we assumed we knew about business – all these things we took for granted – then it turns them upside-down: a Copernican Revolution of sorts, but in the matter of startups. But no: it’s even more than this. It does even more. It challenges the traditional definition of success: what it is and how to achieve it (and how not to – that’s important!) It’s main point is that the traditional means of succeeding in business were – in fact – also increasing the risk of its failure. Thus, the change in thinking: we should no longer build our businesses up from the bottom, but – rather – down from the top, the bottom being, in this case, the tech needed to come up with a product, the top – the consumers’ needs. It’s not a book on marketing, though, nor on market research, no: instead, it proposes something entirely different. A formula to success.

Sounds a little over-the-top? Well: that’s what it is. That’s The Lean Startup.

What does it mean – “upside down” – though? Does it mean that there’s some kind of perspective shift to happen once someone has read it all through? Does it mean that there’s some kind of “conversion” to be had, to undergo, reading? What does it mean?

Well. I wouldn’t call it a “conversion.” There’s a perspective shift, however. And quite a big one. The Lean Startup is all about minimizing the risk of failing. According to Ries’, there is no such thing as the final success: there’s rather a sequence of successes, one to come after another, given taking proper actions. That being said, even after achieving a number of successes, you’re still at risk of a failure. The fortunate thing is that in such a case the failure is not the final failure, either – it’s also a step. Whether it’s a step forward or backward is another thing: it can depend on the take.

The Method

So. How do we minimize the risk of failure building our business from top to the bottom? Well: we have to probe the market. All the while, it’s not, as I’ve said, about the classic market research. After all, there are examples – numerous examples – of companies that failed despite their research. The golden mean is to research the market with the product. To “probe” it, indeed. To release the unfinished, but minimum viable product – that’s the famous MVP – then to listen to the feedback and tweak it, tweak it, tweak it, tweak it. Then tweak it again.

The reason behind doing it is that releasing the final, finished product takes time, not to mention the resources. No entrepreneur can be sure his product will be successful. Then, there are examples of situations where some product is successful at first, but fails to live past its initial reception. To minimize such a risk, Ries advice us to release minimum viable products and then to change them, remove the bugs, to streamline them, to experiment with them according to feedback and informed predictions, and, as a result, to make it better with each new iteration.

This process is called build to measure to learn loop.

According to Ries’, most startups can’t afford to have their entire investment depend on the success of the single initial product launch. If such a launch is not successful, the entire business is almost sure to fail. Thus, it’s important to release minimum viable products to begin the learning process as soon as possible. Then, you can begin to experiment – but, once again, based on the information gathered. You can, for example, split test your product. Split testing means that you are releasing two – or more – versions of your product at the same time to determine which one is better, which one attracts more attention, and what is the reason behind it. To determine it, however, you’ll need to observe the impact the changes in the product have on an actionable metric (or numerous metrics,) which, in turn, means you’ll have to find which metrics are actionable – and which are not – for your product.

An actionable metric is the metric that, as opposed to so-called “vanity metrics,” do matter in terms of the success of your product. For example, while the number of views can be an actionable metric for an online source of information, it won’t be one for a government site. Though it would sure appeal to its admin’s vanity – thus, the name, “vanity metric” – it won’t be an indicator of his website’s success. The sooner you find out what are the actionable metrics for your product, the better. The mean to find it out – no other but experimentation. The more you experiment with Your product, the surer you can be that the metric you use is the actionable one. Still, it happens sometimes that something you took for one reveals itself to be almost completely irrelevant when the product reaches later phases of development. At this point, though, it’s not that important: if it’s been there this long – the product at hand – to reach this phase, it’s a safe bet it’s not going to fail.

Also. Based on the gathered info, you can design a pivot. A pivot is, in simple words, a course correction, a strategic change of approach. You set a pivot to test new course of action. If it helps, that’s good. If not, that’s not a problem either. You set a new one, commence new tests, gather new results, change your product. As Steve Blank once said, it’s always better to fire the plan instead of firing the exec. If none other, this is the reason to experiment with pivots: to keep the staff intact, while still advancing your product.

All of the terms mentioned above – actionable metrics, build-measure-learn loop, minimum viable product, pivot, split test – are specific to the lean startup method. The method itself, then, is not a “development” method. It’s not a “research” method either. It is something in-between, something that connects the development with the research, one to enforce the other.

The Read… Again

While I know it all can sound a little technical – a little too technical at times – Eric Ries’ The Lean Startup is, all in all, a surprisingly easy read. Well, “easy” may not be the perfect word, but, let’s say, it’s accessible. It’s not too long, it’s straight-to-the-point, full of stories, jokes, reliefs. It’s also well written – and, again, surprisingly so – a quality Ries’ credits his editor for. The book is also full of wit and intelligent references, something I came to value reading such literature.

All in all, it’s good writing. It is good. There’s something amiss here and there in terms of the book being “well written,” of course, but then, it’s not its purpose to enter the canon. The book is written good enough to make Alan Weiss’ – the self-crowned “rock star of marketing” – wish he had a better ghostwriter. And that’s – I believe – enough, this is it.

The Philosophy

As I’ve mentioned earlier, the lean startup method takes – or is believed to take – a lot from Ohno’s lean manufacturing. Whether or not this is true is still a matter of debate. That being said, there’s what’s called “the lean philosophy” – a kind of philosophical background to enforce the method, to add some depth to it.

The basic premise is that it’s crucial to cut the costs during the initial product development stage. The reduction of redundant costs – and cost-effectiveness in general – is not the sole purpose of using the method, though. The second – but no less important one – is to make the customers’ a part of the development process, bonding them with the product, making them emotionally attached. This way, they will perceive it as “theirs,” as opposed to something they’ve simply bought or received. And maintaining a core base of customers, fans, and subscribers can be essential when it comes to beating the competition.

This philosophical background has received both praise and criticism, the main point of criticism being that it’s based on a false assumption that “running lean” will allow you to be more cost-efficient. There’s also a debate on whether it’s a good thing or not to release the minimum viable products, using your customers as a research group. There’s also an argument on whether the method is valid at all, some people claiming that it’s – in fact – not important if you “employ” it, the success depending on a number of other, much more important factors.

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

The Conclusion

No matter the take, one thing remains sure: there is a shift in the perspective here. There is a revolution. From the traditional definition of success to this modern one – that success is never final, that it’s not something one achieves once and for all, but, quite the opposite, has to keep maintaining – it resets the framework we used to refer to when talking about business. One can agree or disagree, but there’s no passing it by. It’s not possible.

It’s also a recommended read for those who wish to learn some more on what is going on in business, especially the Silicon Valley business (as I’ve mentioned, Ries is a Silicon Valley entrepreneur himself.) There’s quite a lot going on there, actually, and the book is full of little details, stories, anecdotes.

Summing up, a read to read.