The Lean Enterprise — Trevor Owens
Trevor Owens is an author and entrepreneur. He’s the CEO & Founder of Javelin, creators of the global Lean Startup Machine workshop series that has trained tens of thousands of startup founders and innovators from Google, GE, News Corp, Intuit, and others, start new businesses around the world.
In his bestselling book, The Lean Enterprise (published by Wiley), Owens details new approaches for corporations to structure innovation teams and bring new products to market. Owens’s work has been featured in national media outlets including Forbes, Bloomberg, Fast Company, Business Insider, Mashable, and others. Trevor will give a short intro and then we’ll get right into the Q+A
Ready. Thanks for having me
Q. Trevor, can you give some backstory behind Javelin — Erik Torenberg
Well, I fell into the Lean Startup community a bit by accident. I tried to start several businesses and was in business school. I was looking for a technical co-founder and so I started organizing lot’s of events in the NY Tech community, this was in 2010, actually, more like 2009. I hosted the largest hackathon in NYC at the time and I found that hackathons were very bad at helping people get an idea off the ground mainly because 90% of the projects didn’t have the customer in mind. Dave McClure introduced me to Eric Ries, this was a year before the book. Basically, I hosted the first LSM for fun, and it ended up blowing my mind at how much faster and better it was for going from idea to startup than either hackathons or business plan competitions. In 2012 I decided to do it full time but my goal was never to build a consulting company
So in theory you could have written the lean startup!
Ha no
As in you were thinking about this before it came cult lore
Definitely not. Actually I learned a lot from Eric Ries and others in the community.
So Javelin is a software company as one person mentioned. We went through Techstars NYC in 2013, have raised $2M to date from Mark Suster of Upfront Ventures, Dave McClure, and a bunch of other great people. Our main product today is QuickMVP: quickmvp.com which we’re about to release some big improvements to. So it’s going to change a lot but we also built a project management software and had to pivot away from that.
I can talk a lot about entrepreneurship as much as I can about how to do entrepreneurship in a large company. We were the first people to do serious work with corporations at bringing Lean methods inside the org and helping employees be more entrepreneurial it was fascinating to me how different the perspective is in the corporate world and how the reference point is way different than what we know being in the startup community and the whole idea behind The Lean Enterprise is that process is not enough that you need to rethink strategy, compensation, and legal structures.
For example, the typical way innovation happens in a large org. First of all, it’s a very incremental focus — Corporations don’t realize that startups grow so quickly because they make products that are 10x better and they rethink the industries paradigm. Most executives think their brilliant by coming up with a new product that is 10% better than what their company already does and in fact that’s the pressure inside a large organization. Second, most corporations try to innovate by preventing failure by any means neccessary ie. hiring 100 people and investing $30M in a single app like News Corp did in 2010 with The Daily. The Lean Enterprise advocates for a much more bottoms-up approach where you fund lots of employee projects as experiments through a structure we call an Innovation Colony and spin-out promising projects to protect them from corporate anti-bodies. In addition, this approach allows you to compensate employees like entrepreneurs with real equity and they can bring in outside investors who bring connections, expertise, and help value the companies, this is what Hulu did. It was a spin-out of NBC and partnered with NewsCorp they also sold 10% of the equity to outside investors. The venture investors helped make sure things were run like a startup, that it had the right talent and that talent was compensated like a startup. I think that’s it for the first question.
Q. How does the lean startup methodology fit within traditional big businesses? —Jeff Needles
At a high level there are two types of innovation: sustaining and disruptive innovation. Sustaining focuses on incremental product improvements and cutting costs through process improvements. LS can help with that but most companies do it well enough. It’s not too different from what they teach in business school. Almost no companies can successfully do disruptive innovation and be at the front of the next major wave of technology and societal changes. IMO LS helps the most there because LS is a process for managing uncertainty.
Q. In reference to the lean process and innovation what is more important speed or thoroughness — Jim Payne
I wouldn’t say one is more important than the other, but it depends how you define thoroughness. Obviously you need a certain amount of both, I’d give a slight edge to speed. You only need enough thoroughness to convince yourself something won’t work — it’s hard. Logical thinking and the scientific method help with this a lot. For most people, they could probably be 10x less thorough and have the evidence to prove something won’t work
For example, I once started a scooter company and I spent 6 months and $10k working on this company and I didn’t think I was thorough enough. I thought, “Wow I am a bad sales person and my partners are slackers” lol. But when I took the LS approach I targeted the riskiest assumption of the business and I said “If people don’t work this way, this business could not be successful”, and by framing it that way, in 1 day I was able to prove the business wouldn’t work — which is what we do at LSM workshops to help entrepreneurs frame their thinking so that they can logically conclude a business won’t work. Human beings have infinite capacity to rationalize and entrepreneurship is an art in insignificant data
Makes sense I guess that is what quickmvp helps with
Yeah, quickmvp is one part of the puzzle ☺
I’ve seen the scooter company story somewhere else, and noticed it on your quickmvp sales page. Can’t remember which book it was in though.
Yeah it’s here: validationboard.com. Our new tool is here though: javelin.com/experiment-board.html — X board is easier to use than the V Board but we keep the website up incase you prefer it.
Q. What was your experience going through Tech Stars? Do you think it played a critical role in your success? — Eric Willis
So with Techstars — it’s an amazing program. I highly recommend accelerators if you are trying to raise money, makes your life a lot easier. The challenge with raising money is always that few investors tell you what they really think about your business, they just lead you on forever because you are basically an option call for them and fundraising is all about convincing investors you have a good business, in the earliest stages most people are raising off of an idea. Very few people have viral growth like PH did ☺
So Techstars helps you get the right feedback to improve your pitch, and Demo Day is a forcing function to get people to invest. So TS is really awesome. It’s different from YC in that; #1 it’s in NYC which was important to us at the time and #2 it’s a small cohort, 10 companies vs 50.
Erik, how many were in your cohort at YC?
90, or 85, or 95. somewhere in there lol. The next class was over 100
Q. Have you ever had an experience where a slowly rolled out business model trumped someone trying to do something similar, sloppier and faster?? — Jeff Umbro
IDK… honestly I can’t think of THAT many situations where two startups actually competed w each other in a meaningful way. Most startups never make it to product market fit. I can’t imagine being slow or sloppy is a good thing in either case
I’m thinking of situations (and I know these are exceptional) like SpaceX vs. Boeing
Ah, you mean corp vs startup?
Sure
I think there are very few corp innovation success stories that would impress anyone in the startup world. I’ve never seen a slowly rolled out business model succeed let alone beat a startup. I think the reason is because the most valuable commodity in disruptive innovation is a community of early adopters. If you’re sloppy but fast and can earn the loyalty of the early adopters in a new market. There’s no go-to-market path for a slow and steady team instead of competing with nothing you’re forcing people to have to decide to switch.
So being fast to market allows you to also iterate and pivot to the right answer first. The most fascinating counter-example may be Slack bc there was already Hip Chat, Flowdock, etc. Part of it could be that team communication is such a large market that it didn’t matter, there’s also myspace and facebook etc. but I’m not sure it’s a corollary to a slow corp approach vs. fast sloppy startup approach.
Maybe slow was the wrong ask. I meant more companies that are moving slower to make sure they get it right but your answer encompassed that
IMO you only get it right by experimentation if you’re doing something innovative that is
Q. How do you define a successful MVP? Especially when I imagine corporations must expect a lot — Maxime Pico
A successful MVP is one that gets you the most learning with the least effort. I don’t define it as a product but as an experiment. So, a good MVP helps you learn something that changes the game for your business / startup with as little effort as possible, so it depends on your context but you’re trying to change your own thinking ie. if you’re doing an A/B test and you’re testing the headline copy, try writing an alternative that you think should not work, under any circumstances because if it does work, or if there’s no change then you’ve invalidated yourself in a way
Here’s the best video I’ve found on it:
An MVP should test your riskiest assumption ie. do people really need this? or, do they need this more than something else?
Q. How many products have validated through QuickMVP? — Jon Archer
I don’t have the exact number but a few hundred. we’re almost at 5,000 startup ideas tested on the platform since the fall.
Q. How many ventures have you been involved in and how many “fails” aka learning opportunities versus revenue positive ventures? — V Barnett
I tried to start probably half a dozen companies over 5 years before starting LSM, doing things the non-lean way. LSM is my first successful revenue generating business and does almost $2M a year. QuickMVP we just launched and does over $250k a year
Q. What are some of the most challenging issues you ran into trying to teach enterprises about innovating using lean tactics? — Eric Willis
There are more than I can count. I think the biggest is just how dramatically different the incentives are. and by different I mean bad. entrepreneurs do what they do because of the incentives and because of what they value. ie. having equity, changing the world, having autonomy, etc
Q. One challenge I have seen with Lean Startup methods, especially “quick” ones is — is how do you reach actual, potential customers sufficient to test a key hypothesis (and related, how do you identify them well enough to know who they are/how to reach them) — Shannon Clark
It’s definitely hard. In my experience I’ve found the best way is your personal network. I never try to think idea → customers, I always think who am I → who’s around me → ideas → problems → solutions. It’s a more pragmatic approach but my point is that founder / market fit is more important than product /market fit, you can never conclusively invalidate an idea. You can only invalidate it in one way, namely, for yourself and for the set of customers you though were most likely to use it. For this reason it’s an art as much as it is a disciplined science some hacks you can use though are networking in a community that’s growing ie. like I did with Lean Startup and the tech community so you latch on to a growing thing. Other than that — google, facebook, and twitter are the best channels they are high volume and repeatable also cheap if you know what you’re doing but cheap is not a positive. Most of the time you get what you pay for, so an expensive keyword on google means people are making money from it, an inexpensive keyword on google means they are not because you know without a doubt what results your money is getting you when it comes to these channels. The caveat is that it may be inexpensive because you’re idea is so original there is no competition yet but everything is context specific. 99% of people at LSM find their first customers on the streets of a busy city or in a starbucks or from a referral because those methods take 10 minutes rather than days or weeks. Also, you’ll never get statistically significant in lean it’s also not the point bc you’re trying to predict the future if you actually got statistically significant data it would say DON’T DO THIS
You can identify early adopters in one specific way. Early adopters look like this:
http://d.ibtimes.co.uk/en/full/1372597/cookie-monster.jpg
When they hear you’re idea they get emotionally excited so it’s never about what people say it’s about what they do.
Q. What gave you the idea to write books? — Jim Payne
A couple reasons, firstly because I was always frustrated when working with large companies even after several days of coaching I couldn’t teach them everything they needed to know to be successful so I thought the only way was to write a book so in my coaching I could tell them, “Read this before we talk”. The other reason which I didn’t realize until later is because I’m probably the youngest person who does this and I felt I had to prove myself to show that I knew what I was talking about and let people evaluate me based on my ideas and my research.
Great. Well thanks everyone for the thoughtful questions.
THANKS for taking the time today. This is one of my favorite AMA’s i’ve seen and way to set the tone for the book club one ☺
“Presents a framework for companies to create an environment that empowers the greatest entrepreneurial talent to thrive inside the organization, retaining the greatest innovative minds and reaping the benefits of their greatest inventions.”
Brad Smith, Intuit President & CEO“Corporations who miss this book have their days numbered.”
Dave McClure, 500 Startups“Provides savvy insights on the organizational structures, systems, and processes that will maximize success odds with corporate entrepreneurship.”
Professor Thomas Eisenmann, Harvard Business School“New businesses aren’t willed into existence by executives with brilliant ideas and big budgets. Incentives are everything in innovation and The Lean Enterprise sets the record straight.”
David Cohen, CEO Techstars
Available on Amazon
#1 Best Seller in Lean Management
The first and most comprehensive book on bringing the startup mindset into large organizations. Forget vague notions of creating an “innovative culture.” This book reveals the methodologies, tools, and incentive structures guiding the world’s largest organizations to reclaim their innovation prowess.
Even in a tough economic climate, small startups have found ways to create innovative products in shockingly short timeframes. So why should larger, more established companies take notice? Because they have everything to gain when they examine and adopt the process, strategies, and mentality of high-growth startups. The guidelines in this book will help companies shake the lethargy, bureaucracy, and power struggles that plague large organizations.
Respected thought leaders in lean startup methodologies, Owens and Fernandez cover successful enterprise product development, establishment of innovation labs, and acquisition and integration of startups.
Essential reading for product managers, directors, senior executives, and even board members of Fortune 2000 companies
Presents the tools and methodologies large businesses need to compete with a new generation of highly-empowered startups
Identifies the forces that stunt growth in large enterprises
Offers a comprehensive approach for developing exciting products and opening vast new markets
Don’t be mystified by the success of startups. Master the methods of this new era and compete on a level playing field.
