What’s an Entrepreneur? Eric Ries’ Answer Will Surprise You.
“The concept of entrepreneurship includes anyone who works within my definition of a startup: a human institution designed to create new products and services under conditions of extreme uncertainty… I believe ‘entrepreneur’ should be considered a job title within all modern companies…”
— Eric Ries, The Lean Startup
Entrepreneurship as Management
Ries defines entrepreneurship as an approach to building self-sustaining institutions in the face of uncertainty. To Ries, a lone developer starting a website is an entrepreneur, but so is a manager within a large, established company who’s charged with developing a new product, or a non-profit executive responsible for leading a new initiative.
They face similar challenges, namely learning as much as possible as quickly as possible, and should thus rely on the same methodology.
An Expensive Way to Learn
Early in the book, Ries describes his first experience in the startup world. When he started his first company, his background was as a software engineer at an established company. His operating assumption was that if he wrote good code, he was doing his job and creating value.
His startup had a clearly defined strategy that had been crafted at the outset and sounded solid. However, after months of developing the product and collecting feedback from early adopters, he discovered that his company’s seemingly clever strategy rested on a flawed assumption and was in fact deeply misguided.
As a result, he had to build the revised product from scratch, losing months of time and effort. Ries explains that he found the obvious consolation, that he had “learned something,” unsatisfying, as surely there had been an easier way to learn that he was building a product that no one wanted.
Validated Learning
“I’ve come to believe that learning is the essential unit of progress for startups”
Ries argues that, by focusing principally on designing and conducting experiments to test your startup’s assumption, you learn more quickly and without having to rely on the sort of crushing failure he suffered.
The method Ries describes is basically as follows:
- State your assumptions clearly and frame them as hypotheses.
- Use them to make predictions. (i.e. If this were true, we could expect to see this.)
- Work on tactical level tweaks and optimizations (better landing pages, smoother sales funnels, etc.) and watch to see how much impact these changes have.
- If growth ensues in accordance with your predictions, you’re probably on the right track. Otherwise, you should eventually consider changing your broader strategy.
