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Looking at ICOs through the lens of “The Lean Startup”

How a book from 2011 is shaping the development of 3 major blockchain projects.

“Having a vision for what you want is not enough. Vision without execution is hallucination.”

— Thomas A. Edison

Although people invest in the idea at first, in the majority of cases it is highly probable that there’s no need for the product in question.

After 2 years of watching ICOs follow this recipe, we’ve now learned at least two important things:

  • Business plans rarely survive first contact with the public. As Mike Tyson famously said about his opponents’ prefight strategies: “Everybody has a plan until they get punched in the mouth”.
  • No one besides venture capitalists and the late Soviet Union requires five-year plans to forecast complete unknowns. These plans are generally inflated in order to secure capital from the investors.

Entering the Lean Startup Method

The lean startup method is the de facto framework that startups today use to test and grow their startup businesses.

Keynotes from the book:

  • The only way an idea can improve and gain traction is to achieve what is called “validated learning” (learning what’s true because we tested it).
  • The most effective approach is to build MVP iterations that we push out in a reasonable amount of time to see how our customers react.
  • When running an MVP experiment, the result usually gravitates between one of the 2 extremes: Your idea matches the users’ expectations or it falls short.

The lean startup movement hasn’t gone totally mainstream, however, with the level of uncertainty present in the blockchain industry, it can be a valuable approach for ICOs.

As a point of analysis, we’ll reference 3 blockchain startups that have successfully applied aspects of the lean method.

The use-case of their product has generated interest for the Brazil Ministry of Planning as well as for Crypto Valley (Zug, Switzerland) when they ran a pilot to register government-verified citizen IDs on the Ethereum blockchain.

In their case, the product included cognitive — as well as social — variables which made it harder to assess the success rate during the initial stages. Therefore, their team chose to spend all resources on creating the Colony environment.

Customer Reaction + Faster Development = ❤️

Eric Ries describes an MVP as follows:

“An MVP is the version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort.”

Most startups rely on the feedback of the community they have built over time. At this point, its members can vary from hundreds to tens of thousands, which constitutes a generous sample.

The lean method, if applied to the ICO market, can have a dramatic effect of boosting the success rate for startups and set a new standard for proper execution.

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