Corentin Derbré

Books:

The Lean Startup – Eric Ries

ISBN: 9780307887894

Date read: 2019-03-12

How strongly I recommend it: 8/10

(See my list of books, for more.)

Go to the Amazon page for details and reviews.

Could have been written in half the book but provides essential thinking and operating framework to make startups work. It's mostly scientific thinking applied to startups. I'm glad I read it.

my notes

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 what customers want (without asking them), and a scientific approach to making decisions.

Total manufacturing output in the United States is increasing (by 15 percent in the last decade) even as jobs continue to be lost (see the charts below).

All the functions of an early-stage venture: vision and concept, product development, marketing and sales, scaling up, partnerships and distribution, and structure and organizational design.

Allow entrepreneurs to make testable predictions.

The goal of a startup is to figure out the right thing to build—the thing customers want and will pay for—as quickly as possible.

Unfortunately, too many startup business plans look more like they are planning to launch a rocket ship than drive a car.

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

We must learn what customers really want, not what they say they want or what we think they should want.

Lean thinking defines value as providing benefit to the customer; anything else is waste.

The effort that is not absolutely necessary for learning what customers want can be eliminated.

Validated learning is backed up by empirical data collected from real customers.

This is true startup productivity: systematically figuring out the right things to build.

A true experiment follows the scientific method. It begins with a clear hypothesis that makes predictions about what is supposed to happen. It then tests those predictions empirically.

The two most important assumptions entrepreneurs make are what I call the value hypothesis and the growth hypothesis.

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.

Identify the elements of the plan that are assumptions rather than facts, and figure out ways to test them.

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

At its heart, a startup is a catalyst that transforms ideas into products.

Minimizing the total time through this feedback loop.

However, in some ways, creating a MVP requires extra work: we must be able to measure its impact.

When we enter the Measure phase, the biggest challenge will be determining whether the product development efforts are leading to real progress.

For startups, the role of strategy is to help figure out the right questions to ask.

What differentiates the success stories from the failures is that the successful entrepreneurs had the foresight, the ability, and the tools to discover which parts of their plans were working brilliantly and which were misguided, and adapt their strategies accordingly.

The customer is the most important part of the production process. This means that we must focus our energies exclusively on producing outcomes that the customer perceives as valuable.

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

MVPs require the courage to put one’s assumptions to the test.

The Lean Startup method is not opposed to building high-quality products, but only in service of the goal of winning over customers.

As you consider building your own minimum viable product, let this simple rule suffice: remove any feature, process, or effort that does not contribute directly to the learning you seek.

The only way to win is to learn faster than anyone else.

A startup’s job is to (1) rigorously measure where it is right now, confronting the hard truths that assessment reveals, and then (2) devise experiments to learn how to move the real numbers closer to the ideal reflected in the business plan.

How do we know that the changes we’ve made are related to the results we’re seeing?

For this kind of startup, the important thing to measure is that the network effects are working, as evidenced by the high retention rate of new buyers and sellers.

Without a clear-eyed picture of your current status—no matter how far from the goal you may be—you cannot begin to track your progress.

conversion rates, sign-up and trial rates, customer lifetime value, and so on

Compare two startups. The first company sets out with a clear baseline metric, a hypothesis about what will improve that metric, and a set of experiments designed to test that hypothesis. The second team sits around debating what would improve the product, implements several of those changes at once, and celebrates if there is any positive increase in any of the numbers. Which startup is more likely to be doing effective work and achieving lasting results?

Behaviors that were critical to our engine of growth: customer registration, the download of our application, trial, repeat usage, and purchase.

Day in and day out we were performing random trials. Each day was a new experiment. Each day’s customers were independent of those of the day before.

A startup has to measure progress against a high bar: evidence that a sustainable business can be built around its products or services.

Unlike many visionaries, who cling to their original vision no matter what, Farb was willing to put his vision to the test.

That which optimizes one part of the system necessarily undermines the system as a whole.

Many features that make the product better in the eyes of engineers and designers have no impact on customer behavior.

Kanban (No bucket can contain more than three projects at a time.)

A solid process lays the foundation for a healthy culture, one where ideas are evaluated by merit and not by job title.

when the numbers go up, people think the improvement was caused by their actions, by whatever they were working on at the time.

Accessibility also refers to widespread access to the reports.

Startup productivity is not about cranking out more widgets or features. It is about aligning our efforts with a business and product that are working to create value and drive growth.

Remember that the rationale for building low-quality MVPs is that developing any features beyond what early adopters require is a form of waste. However, the logic of this takes you only so far. Once you have found success with early adopters, you want to sell to mainstream customers. Mainstream customers have different requirements and are much more demanding.

Under the surface, it should have been clear that our efforts at tuning the engine were reaching diminishing returns, the classic sign of the need to pivot.

Pivots are a permanent fact of life for any growing business.

The critical first question for any lean transformation is: which activities create value and which are a form of waste?

Recall from Chapter 3 that value in a startup is not the creation of stuff, but rather validated learning about how to build a sustainable business. What products do customers really want? How will our business grow? Who is our customer? Which customers should we listen to and which should we ignore? These are the questions that need answering as quickly as possible to maximize a startup’s chances of success. That is what creates value for a startup.

Lean Startups practice just-in-time scalability, conducting product experiments without making massive up-front investments in planning and design.

Chapter 10 will explore the metrics startups should use to understand their growth as they add new customers and discover new markets.

IMVU makes about fifty changes to its product (on average) every single day.

Our hypothesis about the customer, that pulls work from product development and other functions. Any other work is waste.

New customers come from the actions of past customers.

Startups don’t starve; they drown.

A startup can evaluate whether it is getting closer to product/market fit as it tunes its engine by evaluating each trip through the Build-Measure-Learn feedback loop using innovation accounting.

Every new engineer would be assigned a mentor, who would help the new employee work through a curriculum of systems, concepts, and techniques he or she would need to become productive at IMVU. The performance of the mentor and mentee were linked, so the mentors took this education seriously.

Consistently make a proportional investment at each of the five levels of the hierarchy. (about the 5 whys)

entrepreneurs need a personal stake in the outcome of their creations. In stand-alone new ventures, this usually is achieved through stock options or other forms of equity ownership.

Task-plus-bonus system of compensation.

Work can be studied and improved through conscious effort.

Management is human systems engineering.

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

Our current problems are caused by trying too hard—at the wrong things.