Eric Ries Lean Startup Presentation For Web 2.0 Expo April 1 2009 A... Eric Ries - The Lean Startup - RailsConf 2011. The lean startup. A month is fifteen weekends. Lean Startup Machine is the brainchild of Trevor Owens, Josh Horn, and Ben Fisher, a hackathon-style competition where teams come together on a Friday evening and build a brand new startup – by Sunday. It’s an impossibly short amount of time. To make it more difficult, unlike your standard issue hackathon, the judging on Sunday is not just about who can make a cool-looking prototype. Teams launch real products to real customers. The judging criteria is all about validated learning. Teams are expected to talk to customers, build minimum viable products, and even pivot as necessary. Lean Startup Machine came to San Francisco a few weeks ago, after successful debut runs in New York and Chicago.
When I first heard about Lean Startup Machine, I’ll admit I was skeptical. But the results were amazing. Think about that for a second. And that brings me to the fuzzy math that forms the title of this post: a month is fifteen weekends. It wasn’t just that the winning teams were so productive. Minimum Viable Product: a guide. One of the most important lean startup techniques is called the minimum viable product. Its power is matched only by the amount of confusion that it causes, because it's actually quite hard to do. It certainly took me many years to make sense of it. I was delighted to be asked to give a brief talk about the MVP at the inaugural meetup of the lean startup circle here in San Francisco.
Below you'll find the video of my remarks as well as the full slides embedded below. First, a definition: the minimum viable product is that version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort. Some caveats right off the bat. Second, the definition's use of the words maximum and minimum means it is decidedly not formulaic. Without further ado, the video: Slides are below: Validated learning about customers. Would you rather have $30,000 or $1 million in revenues for your startup?
Sounds like a no-brainer, but I’d like to try and convince you that it’s not. All things being equal, of course, you’d rather have more revenue rather than less. But all things are never equal. In an early-stage startup especially, revenue is not an important goal in and of itself. This may sound crazy, coming as it does from an advocate of charging customers for your product from day one. I have counseled innumerable entrepreneurs to change their focus to revenue, and many companies who refuse this advice get themselves into trouble by running out of iterations.
Let’s start with a simple question: why do early-stage startups want revenue? Consider this company (as always, a fictionalized composite): they have a million dollars of revenue, and are showing growth quarter after quarter. In my consulting practice, I sometimes have the opportunity to work with companies like this. A hockey stick shaped growth curve.
The Toyota Way. The Toyota Way is a set of principles and behaviors that underlie the Toyota Motor Corporation's managerial approach and production system. Toyota first summed up its philosophy, values and manufacturing ideals in 2001, calling it "The Toyota Way 2001". It consists of principles in two key areas: continuous improvement, and respect for people.[1][2][3] Overview of the principles[edit] The two focal points of the principles are continuous improvement and respect for people. The principles for a continuous improvement include establishing a long-term vision, working on challenges, continual innovation, and going to the source of the issue or problem. The principles relating to respect for people include ways of building respect and teamwork. Research findings[edit] In 2004, Dr.
Long-term philosophy[edit] The first principle involves managing with a long-view rather than for short-term gain. Right process will produce right results[edit] Value to organization by developing people[edit] The three drivers of growth for your business model. Choose one. Master of 500 Hats: Startup Metrics for Pirates (SeedCamp 2008, London) This presentation should be required reading for anyone creating a startup with an online service component. The AARRR model (hence pirates, get it?) Is an elegant way to model any service-oriented business: AcquisitionActivationRetentionReferralRevenueWe used a very similar scheme at IMVU, although we weren't lucky enough to have started with this framework, and so had to derive a lot of it ourselves via trial and error. Dave's done a great job of articulating the key metrics you want to look at in each of these five areas, and I won't bother repeating them here (go read the presentation already). He also has a discussion of how your choice of business model determines which of these metric areas you want to focus on.
That's where I'd like to pick up the discussion. I think the salient question to ask about any business model is: what is the primary driver of growth? One last thought.