The Lean Startup
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This slide originally contained Leverate’s grand vision for 2013.
We’re very excited about it, but unfortunately we can’t show it to everyone
The main point is: this vision, like any vision, is a startup. It looks compelling and exciting,
but it’s based on many assumptions. Could those assumptions be wrong? Should we
really invest a huge amount of capital and resources into building this thing?
People have all kinds of crazy ideas for their startups:
Revolutionary digital wallet
that allows people to
transfer money between
their Palm Pilot devices
The world’s smartest
service to fuel music lovers
The world’s leading
What kills startups
• Wait… what is a startup?
• The course of a startup: funding, runway and 2+ possible outcomes
• Failure rate is high (varies between sources, commonly 60% to 99.5%)
• The problem: startups invest too much in bad vision
• List of things that won’t save you
• Being smart
• Dream up more vision and ideas ”startups don’t starve, they drown”
• Change market risk there’s not much you can do
• Add many features
• Have great technology
• Do agile R&D
• Deliver milestones under deadlines many companies “achieve failure”
• Achieve seemingly high numbers
• Developed by Eric Reis (blog: startup lessons learned)
• The Lean Startup is a toolbox that aims to increase your chance to succeed:
• Put your vision to test and fail fast
• Build exactly what people want, not what you think they want
• Strive to learn, not release new features
• Do it over and over again
• Definition of startup is surprising:“A startup is a human institution designed to
deliver a new product or service under conditions of extreme uncertainty.”
• Geeks in garage? Software? Not only! Applied in US Government & Pentagon,
P&G, nonprofits and other areas.
• Unknowns: problem, solution, audience, business model
The Lean Startup
The Lean Startup Loop
Tool #1: Minimum Viable Product (MVP)
• Identify your assumptions and create a small set of features to validate them
• With little or no engineering at all!
• Algorithm: whatever you think it is, it’s probably way smaller
• Example: (acquired for $1.2B)
• The problem
• The solution:
Find and launch the smallest
possible product that proves that
your vision works in reality (and not only in your brain)
Examples of MVP
doesn’t exist yet
(now $3.2B) open a
WordPress blog and
offer coupons for
Pizzeria down the lobby-
20 people take it
makes a fake video
before product is
ready, 75K people
sign up overnight
MVP, costs $1,206
wanted to be
eToro, had 450K
users but zero
website on a single
page only for API
Tool #2: Actionable Metrics
• The problem
• The solution: identify your most important metrics and focus on improving only them
• The rest is vanity metrics! A great way to fall to the land of the living dead startups
• To find a local maximum, use A/B testing, landing pages, Continuous Deployment
• If things don’t look good: pivot
# active users CAC
conversion % retention /
# new users activation %
Did it right
Age 3 months:
MVP for social
Age 8 months:
rely on facebook
+ twitter, verify
B2B after LOI
Tool #3: The 5 Why’s
• The problem
• A new release broke a key feature for customers. Why?
Because a particular server failed.
• Why did the server fail?
Because an obscure subsystem was used in the wrong way.
• Why was it used in the wrong way?
The engineer who used it didn't know how to use it properly.
• Why didn't he know?
Because he was never trained.
• Why wasn't he trained?
Because his manager doesn't believe in training new engineers, because they
are "too busy.“
• Now invest proportionally in fixing the problems
• Thought tool #1: identify the hidden assumptions in what startups are building
• Thought tool #2: identify when too much work is done according to gut feeling
• Tool #1: Launch an MVP with minimal effort
• Tool #2: Rely on actionable metrics, not vanity metrics
• Tool #3: Improve your process by using the 5 why’s
• And it’s not an option because everything is changing:
• Risk- from technology risk to business risk “if you can dream it, you can build it”
• Technology- open source, cloud, hardware- competition is getting wild
• Investors & funding - be efficient and profitable
• The speed of your competitors