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2010 01 27 The Lean Startup Twiistup


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Presentation Jan 28, 2010 for Twiistup in LA

Published in: Technology, Business

2010 01 27 The Lean Startup Twiistup

  1. The Lean Startup#leanstartupTwiistup Edition<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. Entrepreneurship is management<br />Our goal is to create an institution, not just a product<br />Traditional management practices fail<br /> “general management” as taught to MBAs<br />Need practices and principles geared to the startup context of extreme uncertainty<br />Not just for “two guys in a garage”<br />
  8. 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 />
  9. Speed Wins<br />if we can reduce the time between major iterations<br />we can increase our odds of success<br />
  10. A Tale of Two Startups<br />
  11. Startup #1<br />
  12. Stealth Startup Circa 2001<br />
  13. All about the team<br />
  14. 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 />
  15. 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 />
  16. Shadow Belief #1<br />We know what customers want. <br />
  17. Shadow Belief #2<br />We can accurately predict the future. <br />
  18. Shadow Belief #3<br />Advancing the plan is progress. <br />
  19. 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 />
  20. Startup #2<br />
  21. IMVU<br /> <br />
  22. IMVU<br /> <br />
  23. 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 2009: profitable, revenue &gt; $20MM<br />
  24. Making Progress<br />In a lean transformation, question #1 is – which activities are value-creating and which are waste?<br />In traditional business, value is created by delivering products or services to customers<br />In a startup, the product and customer are unknowns<br />We need a new definition of value for startups<br />
  25. 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 />
  26. 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 />
  27. 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 />
  28. Minimize TOTAL time through the loop<br />IDEAS<br />LEARN<br />BUILD<br />DATA<br />CODE<br />MEASURE<br />
  29. How to build a Lean Startup<br />Let’s talk about some specifics. <br />Continuous deployment<br />Rapid Split-tests<br />Five why’s <br />
  30. 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 />
  31. Continuous Deployment<br /><ul><li>Deploy new software quickly
  32. At IMVU time from check-in to production = 20 minutes
  33. Tell a good change from a bad change (quickly)
  34. Revert a bad change quickly
  35. And “shut down the line”
  36. Work in small batches
  37. At IMVU, a large batch = 3 days worth of work
  38. 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)
  39. Everyone has a complete sandbox
  40. Continuous Integration Server (BuildBot)
  41. All tests must pass or “shut down the line”
  42. Automatic feedback if the team is going too fast
  43. Incremental deploy
  44. Monitor cluster and business metrics in real-time
  45. Reject changes that move metrics out-of-bounds
  46. Alerting & Predictive monitoring (Nagios)
  47. Monitor all metrics that stakeholders care about
  48. If any metric goes out-of-bounds, wake somebody up
  49. Use historical trends to predict acceptable bounds</li></ul>When customers see a failure:<br /><ul><li>Fix the problem for customers
  50. Improve your defenses at each level</li></li></ul><li>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 />
  51. 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 />
  52. The AAA’s of Metrics<br />Actionable<br />Accessible<br />Auditable<br />
  53. Measure the Macro<br />Always look at cohort-based metrics over time<br />Split-test the small, measure the large<br />
  54. 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 />
  55. Five Whys Root Cause Analysis<br /><ul><li>A technique for continuous improvement of company process.
  56. Ask “why” five times when something unexpected happens.
  57. Make proportional investments in prevention at all five levels of the hierarchy.
  58. 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 />
  59. 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 />
  60. Thanks!<br /><ul><li>Startup Lessons Learned Blog
  62. In print:
  63. Getting in touch (#leanstartup)
  66. Other Lean Startup Resources
  67. Lean Startup Circle
  68. Lean Startup Wiki</li>