About a month ago I wrote a blog post about Niall Murphy, successful founder of The Cloud, and his experiences and learnings from creating (and selling) a successful startup. I then attended the UK launch of “The Lean Startup” by Eric Ries. Eric Ries is a young American developer who has founded and been involved in a number of startups. In a jam packed London auditorium, Ries explained the key principles that underpin his book:
- Entrepreneurs are everywhere – Ries defined the startup and highlighted key elements of his definition: “a human institution, delivering a new product or service under conditions of extreme uncertainty.”
- Validated learning – The quintessence of Eric Ries’ approach to product development in startups is to create learning experiments, where teams follow a continuous cycle of ‘build-measure-learn’.
- Innovation accounting – If such experiments ‘fail’ it isn’ the end of the world (Ries’ world that is) since entrepreneurs will at least have discovered early on that their strategy doesn’t work. Ries’ spiel is all about creating meaningful, achievable milestones to which entrepreneurs can be held accountable.
- Real metrics – Rather than learning for the sake of it, Ries makes a strong case for building experiments around ‘real’ metrics. We often get blinded by ‘vanity’ metrics such as customer growth or the number of features added, but such numbers tend to be fairly meaningless and lack context. In contrast, a metric like the increase in customer revenue as a result of a new feature can provide a young startup with valuable customer insight.
- Pivot or persevere? Ries has introduced the “pivot” into strategy speak. When a business decides to ‘pivot’ it means that it changes directions without totally abandoning previous learning or its product vision. In an ideal world a company becomes very good at reducing time between pivots, which means that it decides early in a product lifecycle to continue, iterate or drop the product or feature altogether.
- Continuous testing and iterating – In the session, Ries explained about the value of techniques such as A/B testing, continuous deployment and real-time monitoring. It’s not so much about the specific techniques one uses, the key is about doing real-time user testing, finding out what the customer really wants and making business decisions following user feedback. It reminded me of the book by “Undercover UX” by Cennydd Bowles and James Box.
- Growth engines – This was the bit in Ries’ presentation that resonated the least with me. Terms such as ‘paid engine of growth’ (reinvesting revenue into acquiring new customers) or ‘sticky engine of growth’ (customer retention) seem to be part and parcel of most marketing strategies of established companies and startups alike. I do agree, however, with Ries’ point about concentrating on a single growth engine instead of a scattergun approach.
Main learning point: I guess it’s not fair to compare Niall Murphy’s presentation with the talk by Eric Ries. One is a successful entrepreneur who sold his business and now invests in new ventures. The other is a young ex-developer who has been involved with a number of startups and now spends his time spreading his lessons learnt. I liked Murphy’s story for all the things he has achieved, whereas Ries’ presentation got me thinking about how I could best apply a ‘lean’ mindset to my day job. What I liked most about both their stories is that were based on continuous learning and improving.