The Lean Startup by Eric Riesstringinfo.com/.../uploads/2014/02/The-lean-startup-Eric-Ries2.pdf ·...
Transcript of The Lean Startup by Eric Riesstringinfo.com/.../uploads/2014/02/The-lean-startup-Eric-Ries2.pdf ·...
The Lean Startupby Eric Ries
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Certified 8(a) and MBE
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What’s a startup
Our definition: A “startup” is a human institution designed to create a new
product or service under conditions of extreme uncertainty
Includes both
• Garage startup: the stereotypical view of a startup
AND
An established company’s attempts to create a new product or service
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Problems faced by startups
Startups don’t know who customer is or what product should be
Two approaches
1) Detailed business plan = Market research + forecasting + planning +
whiteboard strategizing
OR
2) Just do it! Wing it and hope for the best
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Traditional business planning
Traditional strategic planning is useless because
In a startup (as we’ve defined it), you DON’T KNOW: o Who is the customer?
o What is the product or service that is in demand?
It takes months to complete by which time the marketplace could have
changed
End-result: You’re left spinning your wheels via market research studies/
focus groups/ whiteboard strategizing analysis-paralysis
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Why not “just do it”?
If you “just do it”, you are guaranteed to succeed – at seeing what happens!
You may get 5 customers and 5 different opinions – what’s next?!
If you have unclear hypothesis, the next step is unclear; and subsequent
steps even more so
A handful of the “just do it” camp will succeed via luck – and they’ll write
books about how they succeeded because they stuck to their original vision,
and be feted for their foresight. The sad truth is that their stories are all ex-
post-rationalization (“survivor bias”)
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Lean startup idea
Helps you address extreme uncertainty that is single biggest challenge of a
startup
Can begin immediately
Instead of complex full-blown plan, you start with
• Initial hypothesis
• Assumptions behind the hypothesis
• A Minimum Viable Product or Service Offering (MVP) to test this
hypothesis
• Testable experiments instead of market research/ focus groups/
whiteboard strategizing/ just “doing it”
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Build-Measure-Learn model
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Ideas
Build
Product
Measure
Data
Learn
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Build-Measure-Learn (BML) model
Step 1: Build a Minimum Viable Product (MVP) per initial hypothesis (BUILD)
Step 2: Run experiments in market to measure performance vs ex-ante
projections (MEASURE)
Step 3: Based on data, you validate or refute your hypothesis and original
assumptions (LEARN)
Step 4: Decide whether you want to stick with original idea (PERSEVERE),
refine (PIVOT) or shut down
Ultimate goal: to minimize total time through the BML feedback loop
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Build
Start with an initial hypothesis
Convert this idea into a product Minimum Viable Product (MVP)
• Don’t worry about quality beyond what is minimum required to test the
hypothesis, because if you don’t know who the customer is, you don’t
know what quality is!
• All you’re looking for is something that enables you to do a full turn of
the Build-Measure-Learn loop i.e, to test fundamental business
hypothesis
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Measure
Four steps
1) Use MVP to establish real data on where company is right now
2) Tune engine from baseline towards ideal
3) Measure progress and then determine whether to
4) Pivot or persevere
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Learn
Critical: the goal of a startup is not
• How much is being built OR
• How much is being “learnt” (“I learnt a lot” is oldest excuse in book for
failure of execution!)
True goal of a startup = “Validated learning”!
Validated learning:
• Not ex-post rationalization or a good story designed to hide failure
• Should help refute or validate hypothesis STRONGLY!
• More concrete, more accurate & faster than market forecasting or
classical business planning
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Learn
Fundamental duty of startup is to
1) Turn ideas into products
2) Measure how customers respond i.e, find out what they really want,
NOT what they “say” they want, or what “we think” they should want.
Most of the time customers don’t know what they want in advance
3) Then decide whether to pivot or persevere
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Decision time: Pivot or persevere
MVPs often result in failure• Don’t give up immediately
Option could be to
• Persevere if aspects of hypothesis still hold promise
OR
• Pivot i.e, keep one foot rooted in what we’ve learned so far, while
refining strategy.
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About String-A decade of experience in Title & Mortgage
2004String starts
operations in US
2007
1 of 500 fastest growing
companies in US
2008Smart CEO Future 50
Award
2009
Successfully weathered
mother of all storms
2011Certified under ISO
27001:2005
2013
A TRUSTED name
in Title Insurance
Highlights
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3 global delivery centres
Strong local presence
Over 350 processes for 75
customers
Serving the Top-4 Underwriters
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