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2009 05 01 How To Build A Lean Startup Step By Step

  1. How
to
Build
a
Lean
Startup,
 step‐by‐step
#leanstartup
 Eric
Ries
(@ericries)
 h?p://StartupLessonsLearned.blogspot.com

  2. Agenda
 What
is
a
startup?
 •  Why
do
startups
fail?
 •  IntroducJon
to
the
Lean
Startup
 •  Product
Development
in
a
Lean
Startup
 •  Specific
techniques
 •  –  ConJnuous
Deployment
 –  Rapid
Split‐tesJng
 –  Five
Why’s

  3. What
is
a
startup?
 •  A
startup
is
a
human
ins)tu)on
designed
to
 deliver
a
new
product
or
service
under
 condiJons
of
extreme
uncertainty.

 •  Nothing
to
do
with
size
of
company,
sector
of
 the
economy,
or
industry

  4. Why
do
startups
fail?
 •  Rarely
fail
because
the
product
doesn’t
work
 •  Usually
fail
because
there
are
no
customers
 •  Quality
of
the
iniJal
idea
is
not
correlated
with
 success
 •  Startups
that
succeed
are
those
that
manage
 to
iterate
enough
Jmes
before
they
run
out
of
 resources
 •  Time
between
these
iteraJons
is
fundamental

  5. The
Lean
Startup
 •  Anything
we
can
do
to
shrink
the
Jme
 between
major
iteraJons
will
increase
the
 likelihood
of
success.
 •  Speed
is
the
startup
compeJJve
advantage.

  6. 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
so]ware
development
–
but
tuned
to
 the
startup
condiJon.

  7. 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.


  8. Customer
Development
 ConJnuous
cycle
of
customer
   interacJon
 Rapid
hypothesis
   tesJng
about
market,
 pricing,
customers,
…
   Extreme
low
cost,
low
 burn,
Jght
focus
   Measurable
gates
for
 investors
 h?p://bit.ly/tpTtE

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

 –  All
companies
are
operaJng
in
a
startup‐like
 environment

  10. TradiJonal
Product
Development
 Unit
of
progress:
Advance
to
Next
Stage
 Waterfall Requirements
 Design
 Implementa2on
 Verifica2on
 Maintenance
 Problem: Known Solution: Known
  11. Agile
 Unit
of
progress:
a
line
of
working
code
 “Product Owner” or in-house customer Problem: Known Solution: Unknown
  12. Product
Development
at
Lean
Startup
 Unit
of
progress:
validated
learning
about
customers
($$$)
 Problem: Unknown Solution: Unknown
  13. Minimize
TOTAL
Jme
through
the
loop
 IDEAS
 LEARN
 BUILD
 DATA
 CODE
 MEASURE

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


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

  16. 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
  17. 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 
  18. Rapid
Split
Tests
 IDEAS
 Learn
Faster
 Code
Faster
 LEARN
 BUILD
 Five
Whys
Root
 ConJnuous
 Cause
Analysis
 Deployment
 DATA
 CODE
 Measure
Faster
 MEASURE
 Rapid
Split
Tests

  19. Split‐tesJng
all
the
Jme
 •  A/B
tesJng
is
key
to
validaJng
your
 hypotheses
 •  Has
to
be
simple
enough
for
everyone
to
use
 and
understand
it
 •  Make
creaJng
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
 }

  20. The
AAA’s
of
Metrics
 •  AcJonable
 •  Accessible
 •  Auditable

  21. Measure
the
Macro
 •  Always
look
at
cohort‐based
metrics
over
Jme
 •  Split‐test
the
small,
measure
the
large
 Control
Group
(A)
 Experiment
(B)
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  22. Five
Whys
 IDEAS
 Learn
Faster
 Code
Faster
 LEARN
 BUILD
 Five
Whys
Root
 ConJnuous
 Cause
Analysis
 Deployment
 DATA
 CODE
 Measure
Faster
 MEASURE
 Rapid
Split
Tests

  23. Five
Whys
Root
Cause
Analysis
 •  A
technique
for
conJnuous
improvement
of
 company
process.
 •  Ask
“why”
five
Jmes
when
something
 unexpected
happens.
 •  Make
propor)onal
investments
in
prevenJon
 at
all
five
levels
of
the
hierarchy.
 •  Behind
every
supposed
technical
problem
is
 usually
a
human
problem.
Fix
the
cause,
not
 just
the
symptom.

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

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

  26. Thanks!
 •  Startup
Lessons
Learned
Blog
 –  h?p://startuplessonslearned.blogspot.com/
 •  The
Lean
Startup
Workshop

 –  An
all‐day
event
for
a
select
audience
 –  May
29
and
June
18,
2009
in
San
Francisco
 –  h?p://training.oreilly.com/theleanstartup/
 •  Other
upcoming
events
 –  h?p://bit.ly/b9w1y

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