I recently read “The Lean Startup” by Eric Ries. The book draws on many of the cases covered during my still-ongoing Stern MBA program. In particular, Ries draws significant inspiration from the Toyota production method and approach to quality management.
The book has some interesting nuggets and was a quick read. Ries uses several examples, some personal, to explain his concepts and drive the points home. In so doing, he also defines new concepts such as innovation accounting and the idea of build-measure-learn; however, I think the book could be boiled down to a few simple entrepreneurial guidelines…
- Build a Minimum Viable Product, the smallest scoped, least feature packed product you can get away with. Then, get customers to try it out. The final product will not look like what you think it will look like as of day one. “Identify the elements of the plan that are assumptions rather than facts, and figure out ways to test them.” Don’t waste your time building something that will be wasted on your customers.
- Collect measurable feedback. Conduct experiments (such as A/B split tests) that provide actionable results, and then act on those results.
- Innovation doesn’t stop with creating a product. Building a business requires innovation as well, and thus demands an equivalent amount of creative thought.
- Pivot, or change directions, if “experiments reach diminishing returns.”
On Competition
A few months ago, I heard Chris Dixon speak at NYU. He noted that ideas should be shared – that there are likely 4 people in the world who will steal your idea and be able to execute on it; there’s no reason to fear those people are stalking you. Talk to people about your ideas, get feedback, learn. Eric Hippeau echoed this sentiment from a different perspective: someone else is already working on your idea, so there’s no reason to fear inadvertantly giving it away by talking to friends about it. To Eric’s point, Fred Wilson’s pointed out on his blog that Union Square Ventures regularly encounters companies operating in the same space as a portfolio firm.
Ries adds that if “a competitor can outexecute a startup once the idea is known, the startup is doomed anyway.” It doesn’t matter what the competition knows, as successful startups will face competition at one point or another. Working in stealth mode might provide a slight head start, but the “only way to win is to learn faster than anyone else.”
