lean startups from lei

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The Lean Startup #leanstartup Eric Ries (@ericries) Eric Ries (@ericries) http://StartupLessonsLearned.com

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Page 1: Lean Startups  from LEI

The Lean Startupp#leanstartup

Eric Ries (@ericries)Eric Ries (@ericries)http://StartupLessonsLearned.com

Page 2: Lean Startups  from LEI

Housekeeping

• To enlarge slides, use the magnifying glass icon justTo enlarge slides, use the magnifying glass icon just beneath the slides and to the right on your display console

• To adjust the sound, use the volume control on the console or on your computerT k ti t it i t th b t th b tt• To ask a question, type it into the box at the bottom of the console and hit “submit”

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Page 3: Lean Startups  from LEI

About the Speaker

E i Ri• Eric Ries– Entrepreneur

Co founder and CTO of IMVU– Co-founder and CTO of IMVU– StartupLessonsLearned.com– Co-author of several booksCo author of several books– Featured in the NY Times

4/25/10 (“The Rise of the Fl t F t d St t U ”)Fleet-Footed Start-Up”)

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Page 4: Lean Startups  from LEI

Myth #1

MythMythLean means cheap. Lean startups try to

spend as little money as possiblespend as little money as possible.

Truth The Lean Startup method is not about cost,

it is about speedit is about speed.

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Page 5: Lean Startups  from LEI

Myth #2

MythMythThe Lean Startup is only for

Web 2 0/internet/consumer software companiesWeb 2.0/internet/consumer software companies.

Truth Th L St t li t ll i th tThe Lean Startup applies to all companies that

face uncertainty about what customers will wantwant.

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Page 6: Lean Startups  from LEI

Myth #3

MythMythLean Startups are small bootstrapped startups.

T thTruth Lean Startups are ambitious and are ableto deploy large amounts of capital.

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Page 7: Lean Startups  from LEI

Myth #4

MythMythLean Startups replace vision with data

or customer feedbackor customer feedback.

Truth L St t d i b lli i iLean Startups are driven by a compelling vision,

and are rigorous about testing each element of this visionthis vision.

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Page 8: Lean Startups  from LEI

What is a Startup?

A startup is a human institution designed toA startup is a human institution designed to deliver a new product or service under conditions of extreme uncertaintyconditions of extreme uncertainty.

Nothing to do with size of company, sector of the economy, or industry.

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Page 9: Lean Startups  from LEI

Most Startups Fail

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Page 10: Lean Startups  from LEI

Most Startups Fail

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Page 11: Lean Startups  from LEI

Most Startups Fail

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Page 12: Lean Startups  from LEI

Most Startups Fail

• But it doesn’t have to be that way• But it doesn t have to be that way • We can do better• This talk is about how

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Page 13: Lean Startups  from LEI

Entrepreneurship is Management

• Our goal is to create an institution, not just a g j

product

• Traditional management practices fail

• “general management” as taught to MBAsg g g

• Need practices and principles geared to the

startup context of extreme uncertainty

• Not just for “two guys in a garage”• Not just for two guys in a garage

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Page 14: Lean Startups  from LEI

The Pivot

• What do successful startups have in common?– They started out as digital cash for PDAs, but evolved into online

payments for eBay– They started building BASIC interpreters, but evolved into the y g p ,

world's largest operating systems monopoly– They were shocked to discover their online games company was

actually a photo-sharing sitey p g

• They were shocked to discover their online games company was actually a photo-sharing site

h d b d d h• Pivot: change directions but stay grounded in what we’ve learned

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Page 15: Lean Startups  from LEI

Speed Wins

If we can reduce the time between majorIf we can reduce the time between major iterations

We can increase our odds of success

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Page 16: Lean Startups  from LEI

A Tale of Two Startups

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Page 17: Lean Startups  from LEI

Startup 1

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Page 18: Lean Startups  from LEI

Stealth Startup Circa 2001

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Page 19: Lean Startups  from LEI

All About the Team

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Page 20: Lean Startups  from LEI

A Good Plan?

• Start a company with a compelling long-term vision

• Raise plenty of capital

• Hire the absolute best and the brightest• Hire the absolute best and the brightest

• Hire an experienced management team with tons of t t istartup experience

• Focus on quality

• Build a world-class technology platform

• Build buzz in the press and blogosphere

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Page 21: Lean Startups  from LEI

In Memoriam

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Page 22: Lean Startups  from LEI

Achieving Failure

• Product launch failedProduct launch failed

- $40MM and five years of pain

• … but the plan was executed well

C i l d b “ h d b li f ” th t d t d th• Crippled by “shadow beliefs” that destroyed the effort of all those smart people

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Page 23: Lean Startups  from LEI

Shadow Belief #1

We know what customers wantWe know what customers want.

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Page 24: Lean Startups  from LEI

Shadow Belief #2

We can accurately predict the futureWe can accurately predict the future.

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Page 25: Lean Startups  from LEI

Shadow Belief #3

Advancing the plan is progressAdvancing the plan is progress.

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Page 26: Lean Startups  from LEI

A Good Plan?

• Start a company with a compelling long-term visionp y p g g

• Raise plenty of capital

Hi th b l t b t d th b i ht t• Hire the absolute best and the brightest

• Hire an experienced management team with tons of t t istartup experience

• Focus on quality

• Build a world-class technology platform

• Build buzz in the press and blogosphereBuild buzz in the press and blogosphere

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Page 27: Lean Startups  from LEI

Startup 2Startup 2

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Page 28: Lean Startups  from LEI

IMVU

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Page 29: Lean Startups  from LEI

IMVU

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Page 30: Lean Startups  from LEI

New Plan

• Shipped in six months – a horribly buggy betaShipped in six months a horribly buggy beta product

• Charged from day one• Charged from day one

• Shipped multiple times a day (b 2008 50 ti d )(by 2008, on average 50 times a day)

• No PR, no launch

• Results 2009: profitable, revenue > $20MM

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Page 31: Lean Startups  from LEI

Making Progress

• In a lean transformation, question #1 is – which , qactivities are value-creating and which are waste?

• In traditional business, value is created by delivering , y gproducts or services to customers

• In a startup, the product and customer are unknownsp, p

• We need a new definition of value for startups

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Page 32: Lean Startups  from LEI

Traditional Product DevelopmentUnit of Progress: Advance to Next StageUnit of Progress: Advance to Next Stage

Requirements

Waterfall

Requirements

Specifications

Problem: knownDesign

Solution: knownImplementation

Verification

32Maintenance

Page 33: Lean Startups  from LEI

Agile Product DevelopmentUnit of Progress: A line of Working CodeUnit of Progress: A line of Working Code

“Product Owner” or in-house customer

Problem: known

Solution: knownSolution: known

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Page 34: Lean Startups  from LEI

Product Development at Lean StartupUnit of Progress: Validated Learning About Customers ($$$)Unit of Progress: Validated Learning About Customers ($$$)

Problem: knownHypotheses, Experiments,Insights

Solution: known Data, Feedback,Insights

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Page 35: Lean Startups  from LEI

Minimize TOTAL time through the loop

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Page 36: Lean Startups  from LEI

There’s much more…

Learn Faster Build Faster

Split Tests

Customer Interviews

Customer Development

Unit Tests

Usability Tests

Continuous IntegrationDevelopment

Five Whys Root Cause

Analysis

Customer Advisory Board

Incremental Deployment

Free & Open-Source

ComponentsBoard

Falsifiable Hypotheses

Product Owner

AccountabilityMeasure Faster

Cloud Computing

Cluster Immune System

Just-in-time Scalability

RefactoringMeasure FasterCustomer Archetypes

Cross-functional Teams

Semi-autonomous T

Measure FasterSplit Tests

Clear Product Owner

Continuous Deployment

Usability Tests

Refactoring

Developer Sandbox

Minimum Viable Product

Measure FasterFunnel Analysis

Cohort Analysis

Net Promoter Score

Se h Engine M keting

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Teams

Smoke Tests

Usability Tests

Real-time Monitoring

Customer Liaison

Search Engine Marketing

Real-Time Alerting

Predictive Monitoring

Page 37: Lean Startups  from LEI

Thanks!

• Startup Lessons Learned Blog

– http://StartupLessonsLearned.com

– In print: http://bit.ly/SLLbookbeta

• Getting in touch (#leanstartup)

– http://twitter.com/ericriesp

[email protected]

• Lean Startup Intensive at Web 2 0 Expo• Lean Startup Intensive at Web 2.0 Expo

May 3, 2010 in San Francisco

– http://web2expo.com/webexsf2010/public/schedule/detail/13260

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