The document discusses the Lean Startup methodology for validating business ideas through quick experimentation and iteration. It advocates for building a Minimum Viable Product (MVP) to test assumptions with minimal resources before fully investing. Companies should focus on actionable metrics like active users and conversion rates rather than vanity metrics. The 5 Whys tool helps identify root causes of problems to improve processes. Overall, the Lean Startup approach helps reduce risk and failure rates for startups by getting customer feedback and pivoting ideas quickly rather than fully committing to untested visions.

1. The Lean Startup
January 2013
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2. Vision
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
with recommendations
The world’s leading
professional network
But also…

4. The problem

5. 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

6. • 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
• ACCELERATE
• 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

7. The Lean Startup Loop

8. 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)

9. Examples of MVP
promotes a
product that
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
Launches first
MVP, costs $1,206
wanted to be
eToro, had 450K
users but zero
revenues
launches cheap
website on a single
server, landing
page only for API

10. 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 /
churn %
LTV
# new users activation %
viral coefficient
Revenue

11. Did it right
Age 3 months:
MVP for social
activism+
doncations,
cost $1,206
:months6Age
Optimized with
A/B
Age 8 months:
rely on facebook
+ twitter, verify
voters, @2gov
Age 12
months: go
B2B after LOI
Raised
investment after
18 months,
~$120K
(exponential)
15 months:
Platform pivot-
AdWords like
(pay per
success)
PIVOT! PIVOT!PIVOT!

12. Tool #3: The 5 Why’s
• The problem
• Example:
• 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

13. Summary
• 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

14. Questions?
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