Simplified startup notes #1 : Eric Ries at LSE on “lean startup”
By Aashish Loknath Panigrahi
(https://aashishium.glitch.me / https://twitter.com/aashishium )
Hello , Welcome to the first article in the “Simplified startup notes” series. This note is based upon the talk of “Eric Ries on Lean startups at London School of economics ”& I have to say this : It was just mindblowing 🤯 , because it will introduce you to the idea of “Lean startups” & how startups are different from larger entreprises. In this note , I have tried to breakdown the entire 70 minutes long talk (along with Q&A) , into important points , which will help you out . If you haven’t still signed up for SSN , then you do it through this form : https://goo.gl/forms/RIo3GzRwuYvdnT7v2 & if you have any issues then you can mail me at aashishloknath@protonmail.ch .So let’s start :
NOTE :- I am sorry if there are any typos or grammatical errors.
Some information about Eric Ries : Eric Ries is an American entrepreneur who created the pioneering “Lean startup method” & he hard earlier co-founded a popular 3-D avatar startup , IMVU. And he’s a pretty amazing & funny person to listen to.
Notes :-
1. Some basic principles about entrepreneurs and entrepreneurship (there will be a point to point elaboration on each of these principles):-
- Entrepreneurs are everywhere.
- Entrepreneurship is basically management.
- Unit of entrepreneurship is called as “validated learning” , which is formed out of a build-measure-learn feedback loop.
- Hold entrepreneurs responsible using “innovation accounting”.
2. Unlike what they show in movies , building startups is a lot tougher , sometimes excruciating and also boring .
3. Principle #1 : Entrepreneurs are everywhere :-
- (DEF) A startup can be defined as a human institution designed to create something new under the conditions of extreme uncertainty.
- Basically startups are trying to build a sustainable business , when they have no idea.
- Running a startup is very much different than running a traditional institution , because the context is different.
- As startups are institutions which are trying to build something under extreme uncertainty , this means that entrepreneurs are also present in many environments from business to even bureaucratic governments , even though many of them don’t fit into our description of entrepreneurs.
- (DEF) Startups can also be thought of experiments , which asks “should this be built ?” rather than asking “can this be built ?”.
4. Principle #2 : Entrepreneurship is management , but not of that kind , which is taught to MBAs.
- Fred Taylor was the creator of “Scientific management” or just management in the 19th century. The problem with Fred Taylor’s version of management created in the 19th century is that , it was created at a time when there weren’t many products in the market & the question of “can it be built ?” was relevant & valid , but now when we are flooded with products to choose from , the question of “can it be built ?” is no longer valid & entrepreneurs should ask the other question : “should it be built ?”.
- A new form of management is required , which is called as “entrepreneurial management”, which should be built for dealing the excessive uncertainty in which startups thrive.
- Good entrepreneurs don’t have better/good ideas than bad entrepreneurs. It’s just that good entrepreneurs are able to pivot their business properly.
- (DEF) Pivoting is a way to keep one foot in what you have learned in the business while changing some aspects of the business.
OR
- (DEF) Pivoting is changing the strategy while changing the vision.
- One could also think about runaway (or the amount of money to keep running your startup under a certain amount of cash) , not as how much time is left before the startup burns the cash & dies , but rather how many opportunities it has before it has to shut the shop.
- Pivoting sooner can help companies to keep startups running their businesses , without raising any additional funds. It makes startups capital efficient.
5. Principle #3 : Validated learning
- We have to change the way , how we define “progress” , otherwise we won’t be able to make it happen.
- One way to look at a startup would be through the eyes of the customer , about whether something would be useful or not & eliminate the waste. But , what if we don’t know , who our customer will be ? In that condition , learning is often made an excuse for failure .
- (IMPQ) : This is an eye-popping question : This question is & will be relevant to you , If you have poured or you are trying to pour 4–6 months of your life into building a project , but no one buys or downloads it : Would someone even , visit your product’s landing page , & click on the next link to buy your product after looking at your product to find out that you haven’t built an actual project ? .
- Rather than asking about how one could achieve a product with minimum specs , the more important question in a startup , should be how to achieve maximum learning (about what works & what doesn’t) with minimum effort.
- Building and shipping , a product with the entire specs is a recipe for disaster , instead startups should focus build an MVP or Minimum Viable Product & try to test out your idea with a small number of customers & then scale it up by a build-measure-learn feedback loop.
6. Principle #4 : Innovation accountability
- Startups & founders have to make themselves accountable through innovation accountability & this should be the bedrock or the foundation of the entrepreneurial management.
- Every 8 weeks , the startup’s team members have to come together & decide , whether it’s time to pivot. This allows entrepreneurs to get an idea about what would be needed , if they actually had to pivot after the next 8 weeks.
SOME ADDITIONAL POINTS :-
7. For an e-commerce startup , building a large inventory in advance is always a mistake. So maybe you can start out with an inventory for only 10 customers & scale what you have learned from selling products to 10 people to 100 or 1000 or even 1000000 people.
8. DO NOT WORK ON LARGE BATCHES : Eric shared a very interesting story that , if you have to send 100 newsletters , then what would be the best way to do it ? A normal response would be folding 100 envelopes , getting the printed newsletter in the 100 envelopes , sealing off 100 envelopes & sending the 100 newsletters , right ? Nope , the reality is polar opposite . It has been tested that it’s more faster if you individually deal with each of the newsletter. So yeah don’t work on large batches.
9. There’s no penalty for shipping your MVP too early.
Time taken to complete video : 1 hour 10 minutes
Time for reading this simplified note : 7 minutes (Approx)
Time you can save : 1 hour 3 minutes
Thank you soo much for reading it & once again , if there’s an issue then you can mail to me , without any hesitation at aashishloknath@protonmail.ch or reach me via Facebook or Twitter or https://aashishium.glitch.me
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.
