The Lean Startup

Sagar Gulabani
Jul 27, 2017 · 2 min read

There are millions of startups today that start and fail. The main reason of failure of startups is failing of assumptions made by the founders at the start. When they realise that their assumptions are wrong it is too late to make any changes. They have already wasted their resources building something that the customers don’t want. They do not have the money to fix their mistakes or to pivot.

So what is the solution to this problem? One methodology that aims to solve this problem is the lean startup methodology. This methodology aims to remove investment uncertainties by testing hypotheses in the real world and getting feedback from real customers and make changes accordingly. Since this process happens early in the lifecycle of a product, any reasons that might cause the product to fail are eliminated at the minimum viable product stage without much investment leaving the company with resources to improve their product.

The lean startup methodology involves three main components-

1) Build

2) Measure

3) Learn

The company builds the product. Then it measures various metrics and after that it learns about the product’s viability and can make changes accordingly. Such type of learning is called validated learning.

Two of the most important things that need to be tested are the value hypotheses and the growth hypotheses of he company. By value hypotheses, It is meant as the ability of the company to generate profits. If the company is able to generate it profits, it means that the company is able to create value for the users and the startup. This is true since people are willing to pay for the service and the startup is able to sustain itself. However there are companies that are profitable in the short term but are eventually a waste for e.g. ponzi schemes. Another hypotheses that needs to be tested is the growth hypotheses. This hypotheses tells us whether the company is growing or not. Again such numbers may be faked by companies that raise a lot of money from investors and put out a lot of paid advertising without creating a product that gives value.

This methodology can be applied to large companies and small companies alike the main condition bring experimentation of ideas.

Some companies applying the lean startup are-

1) Intuit

2) Amazon

3) GE Digital

4) Dropbox

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