The Lean Startup. Book Summary.
The Lean Startup helps startups and tech companies develop sustainable business models. It advocates continuous rapid prototyping and focuses on customer-feedback data.
This book teaches entrepreneurs to navigate extreme uncertainties by testing scientific hypotheses with a minimal viable product (MVP). Instead of creating elaborate business plans, The Lean Startup offers a framework for startups to test, learn, and adjust their strategy through a cycle of continuous improvement.
In this book, you will learn:
- There is a process to entrepreneurship that founders can learn.
- 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.
- Customers do not tell us what they want. Instead, they reveal the truth through their action or inaction.
- Test and validate your value and growth hypothesis.
- Use MVPs to cycle through the Build-Measure-Learn feedback loop as fast as possible.
The only goal for startups is to find a sustainable business model that works today and can work in the future. In practice, this means finding out which products your potential customers want and how to turn their desires into constant revenues.
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Start
Learning milestones feel less productive because learning is intangible. But learning is what a startup needs to focus on the most. To find a sustainable business model, startups need to establish a constant learning process: ideally validated learning, meaning learning through a scientific approach.
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.
Instead of making a complex plan and then implementing it, get into the Build-Measure-Learn feedback loop as quickly (and cheaply) as possible.
It starts with a vision — your true north. The change you want to see in the world.
Strategy is what you use to achieve the vision. The strategy includes the business model, product road map, opinions about the competition, and assumptions about who the customer will be.
The product is the result of the strategy. Therefore, products constantly change through the process of optimization.
Define
A startup is a human institution designed to create a new product or service under conditions of extreme uncertainty.
Innovation is a bottoms-up, decentralized, and unpredictable thing, but that doesn’t mean founders cannot manage it.
Leadership requires creating conditions that enable employees to do the kinds of experimentation that entrepreneurship requires.
Learn
Customers do not tell us what they want. Instead, they reveal the truth through their action or inaction.
Any action that does not contribute to learning about what creates value for customers is a form of waste.
Can you validate your hypothesis without building anything? Run an experiment and measure customer behavior.
The question is not, “Can we build this product?” Almost anything is possible. The better questions are, “Should we build this product?” and “Can we build a sustainable business around this set of products and services?”
Experiment
Don’t follow the “Just do it” line of thinking. You will not gain validated learning from this way. If you cannot fail, you cannot learn.
Test a small idea to answer a big question.
Do not find the average customer, but find early adopters: the customers who feel the need for the product most acutely. Those customers tend to be more forgiving of mistakes and are especially eager to give feedback.
An experiment is more than just a theoretical inquiry; it is also the first product.
Success is not delivering features; success is learning how to solve the customer’s problem.
Planning is a tool that only works in the presence of a long and stable operating history.
Steer
The products a startup builds are experiments; learning about building a sustainable business is the outcome.
Focus our energy on minimizing the total time through the Build-Measure-Learn feedback loop.
Test the most critical assumptions (value and growth hypothesis) first with a minimum viable product (MVP).
The MVP is the product version that enables a complete turn of the Build-Measure-Learn loop with the least time and effort.
If we’re building something that nobody wants, it doesn’t much matter if we’re doing it on time and budget.
Leap
For startups, the role of strategy is to help figure out the right questions to ask.
The goal of a startup’s early efforts should be to test its assumptions as quickly as possible.
Many entrepreneurs were in the “right place at the right time” but still failed. What differentiates the successful stores 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 adapted their strategies accordingly.
The customer archetype describes the target customer. It guides product development and aligns the team you aim to appeal to.
Test
A minimal viable product (MVP) helps entrepreneurs start learning as quickly as possible.
The first iteration of new products is not meant to be perfect. Early adopters are suspicious of something too polished.
Additional features beyond what early adopters demand are wasted resources and time.
The complexity of an MVP depends on the idea and industry. It could be as simple as an ad or a complex working prototype. It just depends on what assumption you need to test.
If we do not know who the customer is, we do not see what quality is.
Always ask: what if they don’t care about the design the same way we do?
We must be willing to set aside our traditional professional standards to start the process of validated learning as soon as possible.
As you build an MVP, 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.
Measure
Are you making your product better? How do you know?
A good design changes customer behavior for the better.
You need a clear baseline metric, a hypothesis about what will improve that metric, and a set of experiments designed to test that hypothesis.
A startup must measure progress against a high bar: evidence that they can build a sustainable business around its products or services.
Use split-test experiments where different product versions are offered to customers simultaneously.
Split-tests help you quickly identify what features matter to customers and which do not.
Measure your productivity according to validated learning, not in producing new features.
Pivot (Or Persevere)
The accurate measure of a runway is how many pivots a startup has left: the number of opportunities it has to make a fundamental change to its business strategy.
When an entrepreneur has an unclear hypothesis, it’s almost impossible to experience complete failure. But, without that failure, there is usually no impetus to embark on the radical change a pivot requires.
Start now! E.g., if Wealthfront had not launched its first product, the team never would have learned what it needed to know to pivot.
Low-quality MVPs only work for early adopters. Mainstream customers have a different set of requirements and are much more demanding.
Optimizing, tuning, and iterating all serve one purpose: Testing a clear hypothesis in the service of the company’s vision.
A pivot is best understood as a new strategic hypothesis that will require a new minimum viable product to test.
Accelerate
Startups need organizational structures that combat extreme uncertainty.
The value in a startup is not creating stuff but rather validating learning about how to build a sustainable business.
What products do customers want?
How will our business grow?
Who is our customer?
Which customers should we listen to, and which should we ignore?
Grow
The growth engine is the mechanism that startups use to achieve sustainable growth.
Sustainable growth = when new customers come from the actions of past customers.
A startup can evaluate whether it is getting closer to product/market fit by measuring the direction and degree of progress.
Adapt
Training is critical to focus on with incremental improvements.
Use the “Five Whys” to work through any failure.
Flawed systems, not bad people, cause most mistakes.
Whenever something goes wrong, ask yourself: How could I prevent myself from being in this situation ever again?
Innovate
You want teams to work cross-functionally to achieve validated learning.
The Lean Startup is a framework, not a blueprint of steps to follow.
Startups Need 3 Structural Attributes:
- Scarce but secure resources
- Independent authority to develop their business
- A personal stake in the outcome
Epilogue
Waste comes not from the inefficient work organization but rather from working on the wrong things.
“There is surely nothing quite so useless as doing with great efficiency what should not be done at all.” — Peter Drucker.
We must avoid the caricature that science means formula or a lack of humanity in work.
