The Lean Startup

The Lean Startup

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How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Business

Eric Ries

1. New business enterprises. 2. Consumers' preferences. 3. Organizational effectiveness.

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Book Details
 328 p
 File Size 
 26,398 KB
 File Type
 PDF format
 2011 by EricRies

About the Author
Eric Ries defines a startup as an organization
dedicated to creating something new under condi
tions of extreme uncertainty. This is just as true
for one person in a garage as it is in a group of
seasoned professionals in a Fortune 500 board
room. What they all have in common is a mission
to penetrate the fog of uncertainty to discover a
successful path to a sustainable business.
The Lean Startup approach fosters.com
panies that are more capital efficient and that
leverage human creativity more effectively.
Inspired by lessons from lean manufacturing,
it relies on "validated learning," rapid scientific
experimentation, as well as a number of coun
terintuitive practices that shorten product
development cycles, measure actual progress
without resorting to vanity metrics, and help
us learn what customers really want. It enables
a company to shift directions with agility, alter
ing plans inch by inch, minute by minute.
Rather than wasting time creating elaborate
business plans, TheLeanStartup offers entrepre
neurs—in companies of all sizes—a way to test
their vision continuously, to adapt and adjust
before it's too late. Ries provides a scientific
approach to creating and managing success
ful startups in an age when companies need to
innovate more than ever.

Stop me if you've heard this one before. Brilliant college kids sit
ting in a dorm are inventing the future. Heedless of bound
aries, possessed of new technology and youthful enthusiasm,
they build a newcompany from scratch. Their early success al
lows them to raise money andbring anamazing new product to
market. They hire their friends, assemble a superstar team, and
dare the world to stop them.
Ten years and several startups ago, that was me, building my
first company. I particularly remember a moment from back
then: the moment I realized my company was going to fail. My
cofounder and I were at our wits' end. The dot-com bubble had
burst, andwe had spent all our money. We tried desperately to
raise more capital, and wecould not. It was like abreakup scene
from a Hollywood movie: it was raining, and we were arguing
in the street. We couldn't even agree on where to walknext, and
sowe parted in anger, heading in opposite directions. As ameta
phor for ourcompany's failure, this image of the two of us, lost
in the rain and drifting apart, is perfect.
It remains a painful memory. The company limped along for
months afterward, but our situation was hopeless. At the time,
it had seemed we were doing everything right: we had a great
product, a brilliant team, amazing technology, and the right
idea at the right time. And we really were on to something. We
were building a way for college kids to create online profiles for
the purpose of sharing.. . with employers. Oops. But despite
a promising idea, we were nonetheless doomed from day one,
because we did not know the process we would need to use to
turn our product insights into a great company.
If you've never experienced a failure like this, it ishard to de
scribe the feeling. It's as ifthe world were falling outfrom under
you. You realize you've been duped. The stories in the magazines
are lies: hardwork and perseverance don't lead to success. Even
worse, the many, many, many promises you've made to employ
ees, friends, and family are not going to come true. Everyone
who thought you were foolish for stepping outonyour own will
be proven right.
It wasn't supposed to turn out that way. In magazines and
newspapers, in blockbuster movies, and on coundess blogs, we
hear the mantra of the successful entrepreneurs: through de
termination, brilliance, great timing, and—above all—a great
product, you too can achieve fame and fortune.
There is a mythmaking industry hard at work to sell us that
story, but I have come to believe thatthestory is false, theprod
uct of selection bias and after-the-fact rationalization. In fact,
having worked with hundreds of entrepreneurs, I have seen
firsthand how often a promising start leads to failure. The grim
reality is that most startups fail. Most new products are not suc
cessful. Most new ventures do not live up to their potential.
Yet the story of perseverance, creative genius, andhard work
persists. Why is it so popular? I think there is something deeply
appealing about this modern-day rags-to-riches story. It makes
success seem inevitable if you just have the right stuff. It means
that the mundane details, the boring stuff, the small individual
choices don't matter. If we build it, they will come. When we
fail, as somany ofus do, we have a ready-made excuse: we didn't
have the right stuff. We weren't visionary enough or weren't in
the right place at the right time.
After morethan ten years asan entrepreneur, I came to reject
that line ofthinking. I have learned from bothmyown successes
and failures and those of many others that it's the boring stuff
that matters the most. 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.

Entrepreneurship is a kind of management. No, you didn't
read that wrong. We have wildly divergent associations with these
two words, entrepreneurship and management. Lately, it seems
that one is cool, innovative, and exciting and the other is dull,
serious, and bland. It is time to look past these preconceptions.
Let metell you a second startup story. It's 2004, anda group
of founders have just started a new company. Their previous
company had failed very publicly. Their credibility is at an
all-time low. They have a huge vision: to change theway people
communicate byusing a new technology called avatars (remem
ber, this was before James Cameron's blockbuster movie). They
are following avisionary named Will Harvey, who paints a com
pelling picture: people connecting with their friends, hanging
out online, using avatars to give them a combination ofintimate
connection and safe anonymity. Even better, instead of having
to build all the clothing, furniture, and accessories these ava
tars would need to accessorize their digital lives, the customers
would be enlisted to build those things and sell them to one another.
The engineering challenge before them is immense: creat
ingvirtual worlds, user-generated content, an online commerce
engine, micropayments, and—last but not least—the threedimensional
avatar technology that can run on anyone's PC.

I'm in this second story, too. I'm a cofounder and chieftech
nology officer of this company, which is called IMVU. At this
point in our careers, my cofounders and I are determined to
make new mistakes. We do everything wrong: instead ofspend
ing years perfecting our technology, we build a minimum vi
able product, an early product that is terrible, full of bugs and
crash-your-computer-yes-really stability problems. Then we
ship it to customers way before it's ready. And we charge money
for it. After securing initial customers, we change the product
constantly—much too fast by traditional standards—shipping
new versions ofour product dozens oftimes every single day.
We really did have customers in those early days—true vi
sionary earlyadopters—and we often talked to them and asked
for their feedback. But we emphatically did not do what they
said. We viewed their input as only one source of information
about our product and overall vision. In fact, we were much
morelikely to run experiments on our customers than wewere
to cater to their whims.

Traditional business thinking says that this approach
shouldn't work, butit does, and you don't have to take my word
for it. As you'll see throughout this book, the approach we pi
oneered at IMVU has become the basis for a new movement
of entrepreneurs around the world. It builds on many previous
management and product development ideas, including lean
manufacturing, design thinking, customer development, and
agile development. It represents anew approach tocreating continupus
innovation. It's called the Lean Startup.
Despite thevolumes written on business strategy, thekey at
tributes of business leaders, and ways to identify the next big
thing, innovators still struggle to bring their ideas to life. This
was the frustration that led us to try a radical new approach
at IMVU, one characterized by an extremely fast cycle time, a
focus on whatcustomers want (without asking them), and a sci
entific approach to making decisions.

Table of Contents

ntroduction 1
1. Start 15
2. Define 25
3. Learn 37
4. Experiment 56
Part Two STEER
5. Leap 79
6. Test 92
7. Measure 114
8. Pivot (or Persevere) 149
9. Batch 184
10. Grow 206
11. Adapt 224
12. Innovate 253
13. Epilogue: Waste Not 272
14. Join the Movement 285
Endnotes 291
Disclosures 301
Acknowledgments 303
Index 309


Asasociety, wehave aproven set oftechniques for managing big
companies and we know the best practices for building physical
products. Butwhen it comes to startups and innovation, weare
still shooting in the dark. We are relying on vision, chasing the
"great men" who can make magic happen, or trying to analyze
our new products to death. These are new problems, born of the
success of management in the twentieth century.

This book attempts to put entrepreneurship andinnovation
on arigorous footing. We are atthedawn of management's sec
ond century. It is our challenge to do something great with the
opportunity we have been given. The Lean Startup movement
seeks to ensure that those of us who long to build the next big
thing will have the tools weneed to change theworld.