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The
Lean
Startup

           #leanstartup

           Eric
Ries
(@ericries)

h7p://startuplessonslearned.blogspot.com

Thank
You!

•  Scholarship
Donors
   •  Customer
Advisory

                            Board

  –  KISSmetrics

          ...
Most
Startups
Fail

•  But
it
doesn’t
have
to
be
that
way.
We
can
do

   be7er.
This
talk
is
about
how.

The
Lean
Startup
and
You

•  Thinking
of
starXng
a
new
company,
but

   haven’t
taken
the
first
step

•  In
a
startup
now
a...
A
Tale
of
Two
Startups

Startup
#1

A
good
plan?

•  Start
a
company
with
a
compelling
long‐term

   vision.


•  Raise
plenty
of
capital.

•  Hire
the
absolu...
Achieving
Failure

•  Company
failed
u7erly,
$40MM
and
five
years

   of
pain.

•  Crippled
by
“shadow
beliefs”
that
destro...
Shadow
Belief
#1

•  We
know
what
customers
want.


Shadow
Belief
#2

•  We
can
accurately
predict
the
future.


Shadow
Belief
#3

•  Advancing
the
plan
is
progress.


A
good
plan?

•  Start
a
company
with
a
compelling
long‐term

   vision.


•  Raise
plenty
of
capital.

•  Hire
the
absolu...
Startup
#2

IMVU
New
plan

•  Shipped
in
six
months
–
a
horribly
buggy
beta

   product

•  Charged
from
day
one

•  Shipped
mulXple
Xmes
a...
Lean
Startups
Go
Faster

•  Commodity
technology
stack,
highly
leveraged

   (free/open
source,
user‐generated
content,

 ...
Commodity
technology
stack

•  Leverage
=
for
each
ounce
of
effort
you
invest

   in
your
product,
you
take
advantage
of
th...
Customer
Development

                           ConXnuous
cycle
of
customer

                       

                  ...
A
tale
of
two
startups,
revisited

•  Mirrors
the
changes
in
development

   methodologies
over
the
past
few
years.

•  Le...
TradiXonal
Product
Development

                 Unit
of
progress:
Advance
to
Next
Stage


                               ...
Agile

             Unit
of
progress:
a
line
of
working
code



“Product Owner” or
in-house customer




    Problem: Know...
Product
Development
at
Lean
Startup

Unit
of
progress:
validated
learning
about
customers
($$$)





     Problem: Unknown...
Minimize
TOTAL
Xme
through
the
loop


                  IDEAS




 LEARN
                              BUILD





        ...
How
to
build
a
Lean
Startup

•  Let’s
talk
about
some
specifics.
These
are
not

   everything
you
need,
but
they
will
get
y...
ConXnuous
Deployment


                                            IDEAS



Learn
Faster
                                 ...
Continuous Deployment
•  Deploy new software quickly
   •    At IMVU time from check-in to production = 20 minutes


•  Te...
Cluster Immune System
What it looks like to ship one piece of code to production:
 •  Run tests locally (SimpleTest, Selen...
Rapid
Split
Tests


                                            IDEAS



Learn
Faster
                                    ...
Split‐tesXng
all
the
Xme

•  A/B
tesXng
is
key
to
validaXng
your

   hypotheses

•  Has
to
be
simple
enough
for
everyone
t...
The
AAA’s
of
Metrics

•  AcXonable

•  Accessible

•  Auditable

Measure
the
Macro

•  Always
look
at
cohort‐based
metrics
over
Xme

•  Split‐test
the
small,
measure
the
large

          ...
Five
Whys


                                               IDEAS



Learn
Faster
                                         ...
Five
Whys
Root
Cause
Analysis

•  A
technique
for
conXnuous
improvement
of

   company
process.

•  Ask
“why”
five
Xmes
whe...
There’s
much
more…


                                                     IDEAS



Learn
Faster
                          ...
The
Lean
Startup

•  You
are
ready
to
do
this,
whether
you
are:

  –  Thinking
of
starXng
a
new
company,
but
haven’t

    ...
Thanks!


•  Startup
Lessons
Learned
Blog

   –  h7p://startuplessonslearned.blogspot.com/


•  Webcast:
“How
to
Build
a
L...
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The Lean Startup at Web 2.0 Expo

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Transcript of "The Lean Startup at Web 2.0 Expo"

  1. 1. The
Lean
Startup
 #leanstartup
 Eric
Ries
(@ericries)
 h7p://startuplessonslearned.blogspot.com

  2. 2. Thank
You!
 •  Scholarship
Donors
 •  Customer
Advisory
 Board
 –  KISSmetrics
 –  Hiten
Shah
 –  Bill
Braasch
 (@billmelater)
 –  Jared
Goralnick
 –  Bob
Aniello
 –  Siqi
Chen
 (@CornOnTheBob)
 –  Andrew
Meyer

 –  Simon
Newstead
 –  Jeffrey
Barman
 –  Sean
Heywood

  3. 3. Most
Startups
Fail
 •  But
it
doesn’t
have
to
be
that
way.
We
can
do
 be7er.
This
talk
is
about
how.

  4. 4. The
Lean
Startup
and
You
 •  Thinking
of
starXng
a
new
company,
but
 haven’t
taken
the
first
step
 •  In
a
startup
now
and
want
to
iterate
faster
 •  Want
to
create
the
condiXons
for
lean
 innovaXon
inside
a
big
company

  5. 5. A
Tale
of
Two
Startups

  6. 6. Startup
#1

  7. 7. A
good
plan?
 •  Start
a
company
with
a
compelling
long‐term
 vision.

 •  Raise
plenty
of
capital.
 •  Hire
the
absolute
best
and
the
brightest.
 •  Hire
an
experienced
management
team
with
tons
 of
startup
experience.
 •  Focus
on
quality.

 •  Build
a
world‐class
technology
pla_orm.
 •  Build
buzz
in
the
press
and
blogosphere.

  8. 8. Achieving
Failure
 •  Company
failed
u7erly,
$40MM
and
five
years
 of
pain.
 •  Crippled
by
“shadow
beliefs”
that
destroyed
 the
effort
of
all
those
smart
people.

  9. 9. Shadow
Belief
#1
 •  We
know
what
customers
want.


  10. 10. Shadow
Belief
#2
 •  We
can
accurately
predict
the
future.


  11. 11. Shadow
Belief
#3
 •  Advancing
the
plan
is
progress.


  12. 12. A
good
plan?
 •  Start
a
company
with
a
compelling
long‐term
 vision.

 •  Raise
plenty
of
capital.
 •  Hire
the
absolute
best
and
the
brightest.
 •  Hire
an
experienced
management
team
with
tons
 of
startup
experience.
 •  Focus
on
quality.

 •  Build
a
world‐class
technology
pla_orm.
 •  Build
buzz
in
the
press
and
blogosphere.

  13. 13. Startup
#2

  14. 14. IMVU
  15. 15. New
plan
 •  Shipped
in
six
months
–
a
horribly
buggy
beta
 product
 •  Charged
from
day
one
 •  Shipped
mulXple
Xmes
a
day
(by
2008,
on
 average
50
Xmes
a
day)
 •  No
PR,
no
launch
 •  Results:
2007
revenues
of
$10MM

  16. 16. Lean
Startups
Go
Faster
 •  Commodity
technology
stack,
highly
leveraged
 (free/open
source,
user‐generated
content,
 SEM).
 •  Customer
development
–
find
out
what
 customers
want
before
you
build
it.

 •  Agile
somware
development
–
but
tuned
to
 the
startup
condiXon.

  17. 17. Commodity
technology
stack
 •  Leverage
=
for
each
ounce
of
effort
you
invest
 in
your
product,
you
take
advantage
of
the
 efforts
of
thousands
or
millions
of
others.
 •  It’s
easy
to
see
how
high‐leverage
technology
 is
driving
costs
down.
 •  More
important
is
its
impact
on
speed.
 •  Time
to
bring
a
new
product
to
market
is
 falling
rapidly.


  18. 18. Customer
Development
 ConXnuous
cycle
of
customer
   interacXon
 Rapid
hypothesis
   tesXng
about
market,
 pricing,
customers,
…
   Extreme
low
cost,
low
 burn,
Xght
focus
   Measurable
gates
for
 investors
 h7p://bit.ly/tpTtE

  19. 19. A
tale
of
two
startups,
revisited
 •  Mirrors
the
changes
in
development
 methodologies
over
the
past
few
years.
 •  Let’s
look
at
those
changes
schemaXcally.
 •  These
examples
are
drawn
from
somware
 startups,
but
increasingly:
 –  All
products
require
somware

 –  All
companies
are
operaXng
in
a
startup‐like
 environment

  20. 20. TradiXonal
Product
Development
 Unit
of
progress:
Advance
to
Next
Stage
 Waterfall Requirements
 Design
 Problem: known Solution: known Implementa2on
 Verifica2on
 Maintenance

  21. 21. Agile
 Unit
of
progress:
a
line
of
working
code
 “Product Owner” or in-house customer Problem: Known Solution: Unknown
  22. 22. Product
Development
at
Lean
Startup
 Unit
of
progress:
validated
learning
about
customers
($$$)
 Problem: Unknown Solution: Unknown
  23. 23. Minimize
TOTAL
Xme
through
the
loop
 IDEAS
 LEARN
 BUILD
 DATA
 CODE
 MEASURE

  24. 24. How
to
build
a
Lean
Startup
 •  Let’s
talk
about
some
specifics.
These
are
not
 everything
you
need,
but
they
will
get
you
 started
 •  ConXnuous
deployment
 •  Split‐test
(A/B)
experimentaXon
 •  Five
why’s


  25. 25. ConXnuous
Deployment
 IDEAS
 Learn
Faster
 Code
Faster
 LEARN
 BUILD
 Five
Whys
Root
 ConXnuous
 Cause
Analysis
 Deployment
 DATA
 CODE
 Measure
Faster
 MEASURE
 Rapid
Split
Tests

  26. 26. Continuous Deployment •  Deploy new software quickly •  At IMVU time from check-in to production = 20 minutes •  Tell a good change from a bad change (quickly) •  Revert a bad change quickly •  Work in small batches •  At IMVU, a large batch = 3 days worth of work •  Break large projects down into small batches
  27. 27. Cluster Immune System What it looks like to ship one piece of code to production: •  Run tests locally (SimpleTest, Selenium) Everyone has a complete sandbox o  •  Continuous Integration Server (BuildBot) o  All tests must pass or “shut down the line” Automatic feedback if the team is going too fast o  •  Incremental deploy
 Monitor cluster and business metrics in real-time
 o  Reject changes that move metrics out-of-bounds o  •  Alerting & Predictive monitoring (Nagios)
 Monitor all metrics that stakeholders care about
 o  If any metric goes out-of-bounds, wake somebody up
 o  Use historical trends to predict acceptable bounds o  When
customers
see
a
failure:
 Fix the problem for customers o  Improve your defenses at each level
 o 
  28. 28. Rapid
Split
Tests
 IDEAS
 Learn
Faster
 Code
Faster
 LEARN
 BUILD
 Five
Whys
Root
 ConXnuous
 Cause
Analysis
 Deployment
 DATA
 CODE
 Measure
Faster
 MEASURE
 Rapid
Split
Tests

  29. 29. Split‐tesXng
all
the
Xme
 •  A/B
tesXng
is
key
to
validaXng
your
 hypotheses
 •  Has
to
be
simple
enough
for
everyone
to
use
 and
understand
it
 •  Make
creaXng
a
split‐test
no
more
than
one
 line
of
code:
 if(
setup_experiment(...)
==
quot;controlquot;
)
{
 



//
do
it
the
old
way
 }
else
{
 


//
do
it
the
new
way
 }

  30. 30. The
AAA’s
of
Metrics
 •  AcXonable
 •  Accessible
 •  Auditable

  31. 31. Measure
the
Macro
 •  Always
look
at
cohort‐based
metrics
over
Xme
 •  Split‐test
the
small,
measure
the
large
 Control
Group
(A)
 Experiment
(B)
 #
Registered
 1025
 1099
 Downloads
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(73%)
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(67%)
 AcXve
days
0‐1
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(59%)
 AcXve
days
1‐3
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(49%)
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(30%)
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10‐30
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 Total
Revenue
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 RPU
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 $3.14

  32. 32. Five
Whys
 IDEAS
 Learn
Faster
 Code
Faster
 LEARN
 BUILD
 Five
Whys
Root
 ConXnuous
 Cause
Analysis
 Deployment
 DATA
 CODE
 Measure
Faster
 MEASURE
 Rapid
Split
Tests

  33. 33. Five
Whys
Root
Cause
Analysis
 •  A
technique
for
conXnuous
improvement
of
 company
process.
 •  Ask
“why”
five
Xmes
when
something
 unexpected
happens.
 •  Make
proporEonal
investments
in
prevenXon
 at
all
five
levels
of
the
hierarchy.
 •  Behind
every
supposed
technical
problem
is
 usually
a
human
problem.
Fix
the
cause,
not
 just
the
symptom.

  34. 34. There’s
much
more…
 IDEAS
 Learn
Faster
 Code
Faster
 LEARN
 BUILD
 Split
Tests
 Unit
Tests
 Customer
Interviews
 Usability
Tests
 Customer
Development
 ConXnuous
IntegraXon
 Five
Whys
Root
Cause
Analysis
 Incremental
Deployment
 Customer
Advisory
Board
 Free
&
Open‐Source
Components
 Falsifiable
Hypotheses
 Cloud
CompuXng
 Product
Owner
Accountability
 Cluster
Immune
System
 DATA
 CODE
 Customer
Archetypes
 Just‐in‐Xme
Scalability
 Cross‐funcXonal
Teams
 Refactoring
 Semi‐autonomous
Teams
 Developer
Sandbox
 Smoke
Tests
 Measure
Faster
 MEASURE
 Split
Tests
 Funnel
Analysis
 Clear
Product
Owner
 Cohort
Analysis
 ConXnuous
Deployment
 Net
Promoter
Score
 Usability
Tests
 Search
Engine
MarkeXng
 Real‐Xme
Monitoring
 Real‐Time
AlerXng
 Customer
Liaison
 PredicXve
Monitoring

  35. 35. The
Lean
Startup
 •  You
are
ready
to
do
this,
whether
you
are:
 –  Thinking
of
starXng
a
new
company,
but
haven’t
 taken
the
first
step
 –  Are
in
a
startup
now
that
could
iterate
faster
 –  Want
to
create
the
condiXons
for
lean
innovaXon
 inside
a
big
company
 •  Get
started,
now,
today.

  36. 36. Thanks!
 •  Startup
Lessons
Learned
Blog
 –  h7p://startuplessonslearned.blogspot.com/
 •  Webcast:
“How
to
Build
a
Lean
Startup,
step‐by‐step”
 –  May
1,
2009
at
10am
PST
 –  h7p://www.oreillynet.com/pub/e/1294 

 •  The
Lean
Startup
Workshop 

 –  An
all‐day
event
for
a
select
audience
 –  May
29,
2009
in
San
Francisco
 –  Sign
up
at:
h7p://bit.ly/a5uw8


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