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The Lean Startup#leanstartup Eric Ries (@ericries) http://StartupLessonsLearned.com
Most Startups Fail
Most Startups Fail
Most Startups Fail
Most Startups Fail But it doesn’t have to be that way.  We can do better.  This talk is about how.
What is a startup? A startup is a human institution designed to deliver a new product or service under conditions of extreme uncertainty.  Nothing to do with size of company, sector of the economy, or industry
The Pivot What do successful startups have in common? They started out as digital cash for PDAs, but evolved into online payments for eBay.  They started building BASIC interpreters, but evolved into the world's largest operating systems monopoly.  They were shocked to discover their online games company was actually a photo-sharing site. Pivot: change directions but stay grounded in what we’ve learned.  http://startuplessonslearned.blogspot.com/2009/06/pivot-dont-jump-to-new-vision.html
Speed Wins if we can reduce the time between major iterations we can increase our odds of success
A Tale of Two Startups
Startup #1
Stealth Startup Circa 2001
All about the team
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 platform. Build buzz in the press and blogosphere.
Achieving Failure Company failed utterly, $40MM and five years of pain. Crippled by “shadow beliefs” that destroyed the effort of all those smart people.
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 absolute best and the brightest. Hire an experienced management team with tons of startup experience. Focus on quality.  Build a world-class technology platform. Build buzz in the press and blogosphere.
Startup #2
IMVU  
IMVU  
New plan Shipped in six months – a horribly buggy beta product Charged from day one Shipped multiple times a day (by 2008, on average 50 times a day) No PR, no launch Results: 2007 revenues of $10MM
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 (lean) product development – but tuned to the startup condition.
Customer Development ,[object Object]
Rapid hypothesis testing about market, pricing, customers, …
Extreme low cost, low burn, tight focus
Measurable gates for investorshttp://bit.ly/FourSteps
Agile Product Development(A tale of two startups, revisited) ,[object Object]
These examples are drawn from software startups, but increasingly:
All products require software
All companies are operating in a startup-like environment of extreme uncertainty,[object Object]
Agile Product Development Unit of Progress: A line of Working Code “Product Owner” or in-house customer Problem: known Solution: unknown
Product Development at Lean Startup Unit of Progress: Validated Learning About Customers ($$$) Customer Development Hypotheses, Experiments, Insights Problem: unknown Data, Feedback, Insights Solution: unknown
Minimize TOTAL time through the loop IDEAS LEARN BUILD DATA CODE MEASURE
How to build a Lean Startup Let’s talk about some specifics.  Continuous deployment Minimum Viable Product Five why’s
Continuous Deployment IDEAS LEARN BUILD Learn Faster Customer Development Five Whys Build Faster Continuous Deployment Small Batches Continuous Integration Refactoring DATA CODE MEASURE Measure Faster Split Testing Actionable Metrics Net Promoter Score SEM
Continuous Deployment ,[object Object]
At IMVU time from check-in to production = 20 minutes
Tell a good change from a bad change (quickly)
Revert a bad change quickly
And “shut down the line”
Work in small batches
At IMVU, a large batch = 3 days worth of work
Break large projects down into small batches,[object Object]
Everyone has a complete sandbox
Continuous Integration Server (BuildBot)
All tests must pass or “shut down the line”
Automatic feedback if the team is going too fast

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2009 09 29 The Lean Startup At Stanford Entrepreneurial Thought Leader Seminar

  • 1. The Lean Startup#leanstartup Eric Ries (@ericries) http://StartupLessonsLearned.com
  • 5. Most Startups Fail But it doesn’t have to be that way. We can do better. This talk is about how.
  • 6. What is a startup? A startup is a human institution designed to deliver a new product or service under conditions of extreme uncertainty. Nothing to do with size of company, sector of the economy, or industry
  • 7. The Pivot What do successful startups have in common? They started out as digital cash for PDAs, but evolved into online payments for eBay. They started building BASIC interpreters, but evolved into the world's largest operating systems monopoly. They were shocked to discover their online games company was actually a photo-sharing site. Pivot: change directions but stay grounded in what we’ve learned. http://startuplessonslearned.blogspot.com/2009/06/pivot-dont-jump-to-new-vision.html
  • 8. Speed Wins if we can reduce the time between major iterations we can increase our odds of success
  • 9. A Tale of Two Startups
  • 13. 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 platform. Build buzz in the press and blogosphere.
  • 14. Achieving Failure Company failed utterly, $40MM and five years of pain. Crippled by “shadow beliefs” that destroyed the effort of all those smart people.
  • 15. Shadow Belief #1 We know what customers want.
  • 16. Shadow Belief #2 We can accurately predict the future.
  • 17. Shadow Belief #3 Advancing the plan is progress.
  • 18. 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 platform. Build buzz in the press and blogosphere.
  • 22. New plan Shipped in six months – a horribly buggy beta product Charged from day one Shipped multiple times a day (by 2008, on average 50 times a day) No PR, no launch Results: 2007 revenues of $10MM
  • 23. 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 (lean) product development – but tuned to the startup condition.
  • 24.
  • 25. Rapid hypothesis testing about market, pricing, customers, …
  • 26. Extreme low cost, low burn, tight focus
  • 27. Measurable gates for investorshttp://bit.ly/FourSteps
  • 28.
  • 29. These examples are drawn from software startups, but increasingly:
  • 31.
  • 32. Agile Product Development Unit of Progress: A line of Working Code “Product Owner” or in-house customer Problem: known Solution: unknown
  • 33. Product Development at Lean Startup Unit of Progress: Validated Learning About Customers ($$$) Customer Development Hypotheses, Experiments, Insights Problem: unknown Data, Feedback, Insights Solution: unknown
  • 34. Minimize TOTAL time through the loop IDEAS LEARN BUILD DATA CODE MEASURE
  • 35. How to build a Lean Startup Let’s talk about some specifics. Continuous deployment Minimum Viable Product Five why’s
  • 36. Continuous Deployment IDEAS LEARN BUILD Learn Faster Customer Development Five Whys Build Faster Continuous Deployment Small Batches Continuous Integration Refactoring DATA CODE MEASURE Measure Faster Split Testing Actionable Metrics Net Promoter Score SEM
  • 37.
  • 38. At IMVU time from check-in to production = 20 minutes
  • 39. Tell a good change from a bad change (quickly)
  • 40. Revert a bad change quickly
  • 41. And “shut down the line”
  • 42. Work in small batches
  • 43. At IMVU, a large batch = 3 days worth of work
  • 44.
  • 45. Everyone has a complete sandbox
  • 47. All tests must pass or “shut down the line”
  • 48. Automatic feedback if the team is going too fast
  • 50. Monitor cluster and business metrics in real-time
  • 51. Reject changes that move metrics out-of-bounds
  • 52. Alerting & Predictive monitoring (Nagios)
  • 53. Monitor all metrics that stakeholders care about
  • 54. If any metric goes out-of-bounds, wake somebody up
  • 55.
  • 56.
  • 57. Possible Approaches “Maximize chances of success” Build a great product with many features that increase the odds that customers will want it Problem: no feedback until the end, might be too late to adjust “Release early, release often” Get as much feedback as possible, as soon as possible Problem: run around in circles, chasing what customers think they want
  • 58. Minimum Viable Product The minimum set of features needed to learn from earlyvangelists – visionary early adopters Avoid building products that nobody wants Maximize the learning per dollar spent Get the facts before it’s too late Probably much more minimum than you think!
  • 59. Minimum Viable Product Visionary customers can “fill in the gaps” on missing features, if the product solves a real problem Allows us to achieve a big vision in small increments without going in circles Requires a commitment to iteration
  • 60. Fears False negative: “customers would have liked the full product, but the MVP sucks, so we abandoned the vision” Visionary complex: “but customers don’t know what they want!” Too busy to learn: “it would be faster to just build it right, all this measuring distracts from delighting customers”
  • 61. Five Whys IDEAS Code Faster Learn Faster BUILD LEARN Continuous Deployment Five Whys Root Cause Analysis CODE DATA Measure Faster MEASURE Rapid Split Tests
  • 62.
  • 63. Ask “why” five times when something unexpected happens.
  • 64. Make proportional investments in prevention at all five levels of the hierarchy.
  • 65.
  • 66. Get Started Today You are ready to do this, no matter who you are what job you have what stage of company you’re in Get started now, today.
  • 67.
  • 69. Getting in touch (#leanstartup)
  • 73. Web 2.0 Expo New York Nov 16-19
  • 75.
  • 76. Rapid Split Tests IDEAS Code Faster Learn Faster BUILD LEARN Continuous Deployment Five Whys Root Cause Analysis CODE DATA Measure Faster MEASURE Rapid Split Tests
  • 77. Split-testing all the time A/B testing is key to validating your hypotheses Has to be simple enough for everyone to use and understand it Make creating a split-test no more than one line of code: if( setup_experiment(...) == "control" ) { // do it the old way } else { // do it the new way }
  • 78. The AAA’s of Metrics Actionable Accessible Auditable
  • 79. Measure the Macro Always look at cohort-based metrics over time Split-test the small, measure the large

Editor's Notes

  1. The premise of the lean startup is simple: if we can reduce the time between these major iterations, we can increase the odds of success.
  2. Even though some aspects of the product were eventually vindicated as good ones, the underlying architecture suffered from hard-to-change assumptions. After years of engineering effort, changing these assumptions was incredibly hard. Without conscious process design, product development teams turn lines of code written into momentum in a certain direction. Even a great architecture becomes inflexible. This is why agility is such a prized quality in product development.
  3. Do our actions live up to our ideals?
  4. After our crushing failure, the founders of my next company decided to question every single assumption for how a startup should be built. Failure gave us the courage to try some radical things.
  5. After our crushing failure, the founders of my next company decided to question every single assumption for how a startup should be built. Failure gave us the courage to try some radical things.
  6. Based on that experience, and the experience of the other startups I have worked for, I now strongly believe there is a better way to create startups. I’ve called this vision the Lean Startup. It combines three key trends.
  7. Let’s look at those changes schematically.
  8. Run tests locally:-- Sandbox includes as much of production as humanly possible (db, memcached, Solr, Apache).-- Write tests in every language. We use 8 different test frameworks for different environs. Otherwise you get fear and brittle.-- Example kind of problem is that AJAX updater for site header. Seemingly innocuous change would break shopping experience.CIT/BuildBot:-- Simply don’t push with red tests. Even if the site is in trouble. Example Christmas site outage with memcache sampling.-- Give an idea of the scale. 20 machine cluster, runs 10000 tests and 100,000’s of thousand of assertions on every change.Incremental deploy:-- Catch performance bugs and gaps in test coverageSlow query in free tags. This started to drive database load higher on one MySQL instance due to contention and data size. Detected and rolled back before it affected users and before the database was hosed due to high load.Changed transaction commit logic in foundation of the system. This passed all tests but caused registrations to fail in production due to subtle difference between sandbox and production. System detected drop in business metric in 1 minute and reverted the changeAlerting and Predictive MonitoringExample: Second tier ISP to block our outbound emailExample: Rooms list performance time bombExample: Registration quality, second tier payment methods, invite mail success rates by serviceStory: Anything that can go wrong will, so just catch it then fast.
  9. Webcast: May 1Workshop: May 29Fliers up frontDiscussion in web2open