Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

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


Published on

Published in: Technology, Business

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

  1. The Lean Startup#leanstartup<br />Eric Ries (@ericries)<br /><br />
  2. Most Startups Fail<br />
  3. Most Startups Fail<br />
  4. Most Startups Fail<br />
  5. Most Startups Fail<br />But it doesn’t have to be that way. <br />We can do better. <br />This talk is about how.<br />
  6. What is a startup?<br />A startup is a human institution designed to deliver a new product or service under conditions of extreme uncertainty. <br />Nothing to do with size of company, sector of the economy, or industry<br />
  7. The Pivot<br />What do successful startups have in common?<br />They started out as digital cash for PDAs, but evolved into online payments for eBay. <br />They started building BASIC interpreters, but evolved into the world&apos;s largest operating systems monopoly. <br />They were shocked to discover their online games company was actually a photo-sharing site.<br />Pivot: change directions but stay grounded in what we’ve learned. <br /><br />
  8. Speed Wins<br />if we can reduce the time between major iterations<br />we can increase our odds of success<br />
  9. A Tale of Two Startups<br />
  10. Startup #1<br />
  11. Stealth Startup Circa 2001<br />
  12. All about the team<br />
  13. A good plan?<br />Start a company with a compelling long-term vision. <br />Raise plenty of capital.<br />Hire the absolute best and the brightest.<br />Hire an experienced management team with tons of startup experience.<br />Focus on quality. <br />Build a world-class technology platform.<br />Build buzz in the press and blogosphere.<br />
  14. Achieving Failure<br />Company failed utterly, $40MM and five years of pain.<br />Crippled by “shadow beliefs” that destroyed the effort of all those smart people.<br />
  15. Shadow Belief #1<br />We know what customers want. <br />
  16. Shadow Belief #2<br />We can accurately predict the future. <br />
  17. Shadow Belief #3<br />Advancing the plan is progress. <br />
  18. A good plan?<br />Start a company with a compelling long-term vision. <br />Raise plenty of capital.<br />Hire the absolute best and the brightest.<br />Hire an experienced management team with tons of startup experience.<br />Focus on quality. <br />Build a world-class technology platform.<br />Build buzz in the press and blogosphere.<br />
  19. Startup #2<br />
  20. IMVU<br /> <br />
  21. IMVU<br /> <br />
  22. New plan<br />Shipped in six months – a horribly buggy beta product<br />Charged from day one<br />Shipped multiple times a day (by 2008, on average 50 times a day)<br />No PR, no launch<br />Results: 2007 revenues of $10MM<br />
  23. Lean Startups Go Faster<br />Commodity technology stack, highly leveraged (free/open source, user-generated content, SEM).<br />Customer development – find out what customers want before you build it. <br />Agile (lean) product development – but tuned to the startup condition. <br />
  24. Customer Development<br /><ul><li>Continuous cycle of customer interaction
  25. Rapid hypothesis testing about market, pricing, customers, …
  26. Extreme low cost, low burn, tight focus
  27. Measurable gates for investors</li></ul><br />
  28. Agile Product Development(A tale of two startups, revisited)<br /><ul><li>Principles drawn from Lean Manufacturing and Toyota Production System
  29. These examples are drawn from software startups, but increasingly:
  30. All products require software
  31. All companies are operating in a startup-like environment of extreme uncertainty</li></li></ul><li>Traditional Product Development<br />Unit of Progress: Advance to Next Stage<br />Waterfall<br />Requirements<br />Specification<br />Design<br />Problem: known<br />Solution: known<br />Implementation<br />Verification<br />Maintenance<br />
  32. Agile Product Development<br />Unit of Progress: A line of Working Code<br />“Product Owner” or in-house customer<br />Problem: known<br />Solution: unknown<br />
  33. Product Development at Lean Startup<br />Unit of Progress: Validated Learning About Customers ($$$)<br />Customer Development<br />Hypotheses,<br />Experiments,<br />Insights<br />Problem: unknown<br />Data,<br />Feedback,<br />Insights<br />Solution: unknown<br />
  34. Minimize TOTAL time through the loop<br />IDEAS<br />LEARN<br />BUILD<br />DATA<br />CODE<br />MEASURE<br />
  35. How to build a Lean Startup<br />Let’s talk about some specifics. <br />Continuous deployment<br />Minimum Viable Product<br />Five why’s <br />
  36. Continuous Deployment<br />IDEAS<br />LEARN<br />BUILD<br />Learn Faster<br />Customer Development<br />Five Whys<br />Build Faster<br />Continuous Deployment<br />Small Batches<br />Continuous Integration<br />Refactoring<br />DATA<br />CODE<br />MEASURE<br />Measure Faster<br />Split Testing<br />Actionable Metrics<br />Net Promoter Score<br />SEM <br />
  37. Continuous Deployment<br /><ul><li>Deploy new software quickly
  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. Break large projects down into small batches</li></li></ul><li>Cluster Immune System<br />What it looks like to ship one piece of code to production:<br /><ul><li>Run tests locally (SimpleTest, Selenium)
  45. Everyone has a complete sandbox
  46. Continuous Integration Server (BuildBot)
  47. All tests must pass or “shut down the line”
  48. Automatic feedback if the team is going too fast
  49. Incremental deploy
  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. Use historical trends to predict acceptable bounds</li></ul>When customers see a failure:<br /><ul><li>Fix the problem for customers
  56. Improve your defenses at each level</li></li></ul><li>Minimum Viable Product<br />IDEAS<br />Code Faster<br />Learn Faster<br />BUILD<br />LEARN<br />Continuous<br />Deployment<br />Minimum Viable <br />Product<br />CODE<br />DATA<br />Measure Faster<br />MEASURE<br />Rapid Split Tests<br />
  57. Possible Approaches<br />“Maximize chances of success”<br />Build a great product with many features that increase the odds that customers will want it<br />Problem: no feedback until the end, might be too late to adjust<br /> “Release early, release often”<br />Get as much feedback as possible, as soon as possible<br />Problem: run around in circles, chasing what customers think they want<br />
  58. Minimum Viable Product<br />The minimum set of features needed to learn from earlyvangelists – visionary early adopters<br />Avoid building products that nobody wants<br />Maximize the learning per dollar spent<br />Get the facts before it’s too late<br />Probably much more minimum than you think!<br />
  59. Minimum Viable Product<br />Visionary customers can “fill in the gaps” on missing features, if the product solves a real problem<br />Allows us to achieve a big vision in small increments without going in circles<br />Requires a commitment to iteration<br />
  60. Fears<br />False negative: “customers would have liked the full product, but the MVP sucks, so we abandoned the vision”<br />Visionary complex: “but customers don’t know what they want!”<br />Too busy to learn: “it would be faster to just build it right, all this measuring distracts from delighting customers”<br />
  61. Five Whys<br />IDEAS<br />Code Faster<br />Learn Faster<br />BUILD<br />LEARN<br />Continuous<br />Deployment<br />Five Whys Root<br />Cause Analysis<br />CODE<br />DATA<br />Measure Faster<br />MEASURE<br />Rapid Split Tests<br />
  62. Five Whys Root Cause Analysis<br /><ul><li>A technique for continuous improvement of company process.
  63. Ask “why” five times when something unexpected happens.
  64. Make proportional investments in prevention at all five levels of the hierarchy.
  65. Behind every supposed technical problem is usually a human problem. Fix the cause, not just the symptom.</li></li></ul><li>There’s much more…<br />IDEAS<br />Code Faster<br />Learn Faster<br />BUILD<br />LEARN<br />Unit Tests<br />Usability Tests<br />Continuous Integration<br />Incremental Deployment<br />Free & Open-Source Components<br />Cloud Computing<br />Cluster Immune System<br />Just-in-time Scalability<br />Refactoring<br />Developer Sandbox<br />Minimum Viable Product<br />Split Tests<br />Customer Interviews<br />Customer Development<br />Five Whys Root Cause Analysis<br />Customer Advisory Board<br />Falsifiable Hypotheses<br />Product Owner Accountability<br />Customer Archetypes<br />Cross-functional Teams<br />Semi-autonomous Teams<br />Smoke Tests<br />CODE<br />DATA<br />Measure Faster<br />MEASURE<br />Split Tests<br />Clear Product Owner<br />Continuous Deployment<br />Usability Tests<br />Real-time Monitoring<br />Customer Liaison<br />Funnel Analysis<br />Cohort Analysis<br />Net Promoter Score<br />Search Engine Marketing<br />Real-Time Alerting<br />Predictive Monitoring<br />
  66. Get Started Today<br />You are ready to do this, no matter <br />who you are<br />what job you have<br />what stage of company you’re in<br />Get started now, today. <br />
  67. Thanks!<br /><ul><li>Startup Lessons Learned Blog
  69. Getting in touch (#leanstartup)
  72. Upcoming events
  73. Web 2.0 Expo New York Nov 16-19
  74. MIT Enterprise Forum Nov 19
  75. More at</li></li></ul><li>Backup<br />
  76. Rapid Split Tests<br />IDEAS<br />Code Faster<br />Learn Faster<br />BUILD<br />LEARN<br />Continuous<br />Deployment<br />Five Whys Root<br />Cause Analysis<br />CODE<br />DATA<br />Measure Faster<br />MEASURE<br />Rapid Split Tests<br />
  77. Split-testing all the time<br />A/B testing is key to validating your hypotheses<br />Has to be simple enough for everyone to use and understand it<br />Make creating a split-test no more than one line of code:<br />if( setup_experiment(...) == &quot;control&quot; ) {<br /> // do it the old way<br />} else {<br /> // do it the new way<br />}<br />
  78. The AAA’s of Metrics<br />Actionable<br />Accessible<br />Auditable<br />
  79. Measure the Macro<br />Always look at cohort-based metrics over time<br />Split-test the small, measure the large<br />