LEADERSHIP LIBRARY

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The Lean Startup

Eric Ries

 

IN BRIEF

The Lean Startup is a go-to book for new companies and those looking to innovate. The core of the concept is to start with the most important “leap-of-faith” assumptions about how the business will create value and will grow, and test them rigorously. This “validated learning” can help a company make tangible progress while minimizing the investment required to learn whether or not a concept is viable.

Key Concepts

 

Build-Measure-Learn

“Instead of making complex plans that are based on a lot of assumptions, you can make constant adjustments with a steering wheel called the Build-Measure-Learn feedback loop.” (p. 22)

Validated learning

“Validated learning is not after-the-fact rationalization or a good story designed to hide failure. It is a rigorous method for demonstrating progress when one is embedded in the soil of extreme uncertainty in which startups grow.” (p. 38)

The most important hypotheses are about value and growth

“The value hypothesis tests whether a product of service really delivers value to customers once they are using it.” (p. 61)

The growth hypothesis “tests how new customers will discover a product or service…” (p. 61)

Focus on leap-of-faith assumptions

“To apply the scientific method to a startup, we need to identify which hypotheses to test. I call the riskiest elements of a startup’s plan, the parts on which everything depends, leap-of-faith assumptions.” (p. 76)

Use innovation accounting rather than vanity metrics to drive the business

“Innovation accounting enables startups to prove objectively that they are learning how to grow a sustainable business. Innovation accounting begins by turning the leap-of-faith assumptions discussed in Chapter 5 into a quantitative financial model.” (p. 116)

Quotables

 

“Unfortunately, ‘learning’ is the oldest excuse in the book for a failure of execution.” (p. 37)

“The question is not ‘Can this product be built?’ ...The most pertinent questions are ‘Should the product be built?’ and ‘Can we build a sustainable business around this set of products and services?’” (p. 55) 

“To apply the scientific method to a startup, we need to identify which hypotheses to test. I call the riskiest elements of a startup’s plan, the parts on which everything depends, leap-of-faith assumptions.” (p. 76)

“Contrary to traditional product development, which usually involves a long, thoughtful incubation period and strives for product perfection, the goal of the MVP is to begin the process of learning, not end it.” (p. 93)

“Customers don’t care how much time something takes to build. They care only if it serves their needs.” (p. 109)

“If a competitor can outexecute a startup once the idea is known, the startup if doomed anyway.” (p. 111)

“If you are building the wrong thing, optimizing the product or its marketing will not yield significant results.” (p. 126)

“Sustainable growth is characterized by one simple rule: New customers come from the actions of past customers.” (p. 207)

“...switching to validated learning feels worse before it feels better. That’s the case because the problems caused by the old system tend to be intangible, whereas the problems of the new system are all too tangible.” (p. 271)