Startup Lessons Learned

All Seasons: Every Post from the Startup Lessons Learned Blog

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About the Book

What do PayPal, Flickr, Blogger and Twitter have in common, other than being successful and on the web?

They all started as something else first, something which was a failure.

The founders of these companies found ways to pivot from what they were doing to what they needed to do to succeed. Plus, they managed to do this before running out of money!

One of the few people who deeply understand this process is Eric Ries, the former CTO of IMVUand former Venture Advisor at Kleiner Perkins Caufield & Byers. Eric coined the term “Lean Startup” to describe startups that can successfully apply principles from agile software development and Steve Blank’s Customer Development process to the process of building a startup which is both low-burn and ferociously customer-focused.

This isn’t just theory for Eric: this is what IMVU did — the process has been described as “How IMVU learned its way to $10M a year.”

If you want to understand how to iteratively build a lean startup, you need to understand what Eric understands. This includes:

  • how to increase your runway without getting more cash
  • how to properly do split testing
  • how to collect real metrics, not vanity metrics
  • how and why to do continuous deployment (IMVU managed to deploy an average of 50 times per day!)

This knowledge, when presented in workshop form, costs $2000 for one day—and it’s worth every penny.

However, for under $30 today, you can download and read a PDF book of Eric’s wisdom about Lean Startups. The PDF is over 700 pages and is a pleasure to read. No, it’s not the same as a one day workshop—but at less than 2% of the cost, it’s a steal.

Eric Ries’s Startup Lessons Learned is in many senses the spiritual successor of Paul Graham’s Hackers and Painters:

  • Both Paul Graham and Eric Ries are technologists, successful entrepreneurs and compelling writers.
  • Both books are collections of essays which were first published on the authors’ respective blogs, and which are still freely available on their blog archives.
  • Both collections of essays have been extensively read on the internet and have influenced many startup founders.

If you are doing a startup today you absolutely need to read Eric’s book.

As Eric says,

A startup is a human institution designed to deliver a new product or service under conditions of extreme uncertainty. (Lean Startup webcast postgame – p. 361)

If you are building any new product or service in these uncertain times, you can learn a great deal from the wisdom contained in this book—whether you are at a startup or a big company.

(If you’re not doing this, but you know someone who is, you can buy the PDF for them as a gift.)

Continue below for some of what you’ll learn, or click the buy button on the right of this page to buy the PDF of Startup Lessons Learned now.

Customer Development vs. Stealth Mode

Startups operate in stealth mode, right? According to Eric Ries, however, there are rare times when stealth is a good strategy, but it amplifies risks without necessarily improving rewards.

Stealth is a customer-free zone. (p. 435)

Validated Learning About Customers

If you’re a startup founder you’re probably pretty good at keeping people busy—but are you sure you’re making progress? Getting clear about what constitutes progress is probably the biggest shift in mindset required to build a lean startup.

What’s the difference between a vision and a delusion? The vision is grounded in reality.

Three types of people have reality distortion fields: good startup founders, bad startup founders, and crazy people. (Lean Startup fbFund wrap-up – p. 438)

Is your startup based on a delusion or vision? They often get blurred by entrepreneurs!

OK, let’s talk about the vision thing. It’s so important, and also so dangerous. Being able to convince other people around you (those within the “reality distortion field”) is necessary to sustain the passion and energy that a startup needs. But it can also be used for evil – to convince people to abandon their senses and work on something that nobody will ever want. How can we tell the difference? I saw a lot of people stealing glances at someone else in the room while I was talking about this. I’ve been there: is it me or my cofounder that’s crazy? What if it’s both of you? Use some customer development to find out. (p. 438)

Split (A/B) Testing

One specific way to differentiate between vision and delusion is to use Split Testing, a.k.a. A/B Testing.

The power of A/B testing is so under-exploited in product development, that I’m trying new ways to explain its benefits. Remember that we can use split-testing for both the problem team and solution team, and that causes a lot of confusion. Split-testing is great for linear optimization; making our landing pages, conversion rates, and retention metrics incrementally better day-in day-out. But it’s also amazing for testing big hypotheses, like what our customers really want to get out of our product. If you’re not doing both, you’re missing out. (p. 439)

Continuous Deployment

Although there is cost and overhead associated with continuous deployment, the benefits are immense. One such benefit is that, when combined with A/B testing, you can try out small features in less than the amount of time it takes to argue or prioritize them. Nothing is more demoralizing to an engineering team. Prioritizing in a vacuum is a leading source of waste.

Of all the tactics I have advocated as part of the lean startup, none has provoked as many extreme reactions as continuous deployment, a process that allows companies to release software in minutes instead of days, weeks, or months. My previous startup, IMVU, has used this process to deploy new code as often as an average of fifty times a day. This has stirred up some controversy, with some claiming that this rapid release process contributes to low-quality software or prevents the company from innovating. If we accept the verdict of customers instead of pundits, I think these claims are easy to dismiss. Far more common, and far more difficult, is the range of questions from people who simply wonder if it’s possible to apply continuous deployment to their business, industry, or team.

The goal of continuous deployment is to help development teams drive waste out of their process by simultaneously reducing the batch size and increasing the tempo of their work. This makes it possible for teams to get – and stay – in a condition of flow for sustained periods. This condition makes it much easier for teams to innovate, experiment, and achieve sustained productivity. And it nicely compliments other continuous improvement systems, such as Five Whys. (p. 410)

Five Whys

Whenever something unexpected happens, ask “why” five times: behind every technology problem is a human one. This kind of Five Whys root cause analysis is essential to improvement.

I have come to believe that this technique should be used for all kinds of defects, not just site outages. Each time, we use the defect as an opportunity to find out what’s wrong with our process, and make a small adjustment. By continuously adjusting, we eventually build up a robust series of defenses that prevent problems from happening. This approach is a the heart of breaking down the “time/quality/cost pick two” paradox, because these small investments cause the team to go faster over time. (p. 145)

Once this type of process takes root in your company, an amazing improvement feedback loop can set in.

Over time, here’s my experience with what happens. People get used to the rhythm of five whys, and it becomes completely normal to make incremental investments. Most of the time, you invest in things that otherwise would have taken tons of meetings to decide to do. And you’ll start to see people from all over the company chime in with interesting suggestions for how you could make things better. Now, everyone is learning together – about your product, process, and team. Each five whys email is a teaching document. (p. 145)

Lean Startup

But what does it mean to build a Lean Startup?

In a typical lean company, waste is defined as “every activity that does not create value for the customer.” And this is 100% correct. By driving this kind of waste out of your company, you actually boost creativity by eliminating bureaucracy, busy work, unnecessary hierarchy, and, of course, excess inventory. … But startups require a special kind of creativity: disruptive innovation. … By the standard of “customer value,” most innovation-seeking experiments are waste. Lean startups operate by a different standard. I suggest they define waste as “every activity that does not contribute to learning about customers.” (aka “how you get to product/market fit.”) (p. 105)

What happens as your company grows?

You don’t get a memo that tells you that things have changed. If you did, it would read something like this: “Dear Eric, thank you for your service to this company. Unfortunately, the job you have been doing is no longer available, and the company you used to work for no longer exists. However, we are pleased to offer you a new job at an entirely new company, that happens to contain all the same people as before. This new job began months ago, and you are already failing at it. Luckily, all the strategies you’ve developed that made you successful at the old company are entirely obsolete. Best of luck!” (p. 136)

Pivot, Don’t Jump, to a New Vision

What if you’re going in the wrong direction? Or how do you know if you are?

Increasing iterations is a good thing – unless we’re going in a circle. The hardest part of entrepreneurship is to develop the judgment to know when it’s time to change direction and when it’s time to stay the course. That’s why so many lean startup practices are focused on learning to tell the difference between progress and wasted effort. One such practice is to pivot from one vision to the next. (p. 418)

Cash is Not King

In a startup, cash is oxygen, right?

Cash on hand is just one important variable in a startup’s life, but it’s not necessarily the most important. What matters most is the number of iterations the company has left. While some cost-cutting measures reduce that number, others increase it. In lean times, it’s most important to focus on cutting costs in ways that speed you up, not slow you down. Otherwise, cutting costs just leads to going out of business a little slower.

The full formula works like this:

runway = cash on hand / burn rate

# iterations = runway / speed of each iteration

(p. 328)

To read more, click the buy button on the right of this page to buy the PDF of Startup Lessons Learned now.

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Table of Contents

  1. August 2008
  2. Paul Graham on fundraising
  3. Refactoring for TDD and interaction design
  4. September 2008
  5. Test-Driven Development as andon cord
  6. Just-In-Time Scalability
  7. On deployment
  8. Not crossing the chasm
  9. Ideas. Code. Data. Implement. Measure. Learn
  10. Great open source scalability tools from Danga
  11. Greasemonkey compiler
  12. Customer Development Engineering
  13. The lean startup
  14. Waves of technology platforms
  15. Seth Godin: How often should you publish?
  16. Smarticus — 10 things you could be doing to your code right now
  17. A new version of the Joel Test (draft)
  18. Marc Prensky’s Weblog: Cell Phones in Class
  19. Andrew Chen: Growing renewable audiences
  20. SEM on five dollars a day
  21. How to listen to customers, and not just the loud people
  22. The one line split-test, or how to A/B all the time
  23. How to Usability Test your Site for Free
  24. How to get distribution advantage on the iPhone
  25. Lo, my 5 subscribers, who are you?
  26. Thoughts on scientific product development
  27. The three drivers of growth for your business model. Choose one.
  28. You don’t need as many tools as you think
  29. The lean startup comes to Stanford
  30. Q&A with an actual reader
  31. October 2008
  32. What does a startup CTO actually do?
  33. About the author
  34. The product manager’s lament
  35. When NOT to listen to your users; when NOT to rely on split-tests
  36. The App Store after the gold rush
  37. Three decisions to make on virtual goods
  38. The engineering manager’s lament
  39. Lean startups vs lean companies
  40. Chuck’s Code & Learning: Learning to write tests that matter
  41. A hierarchy of pitches
  42. John Doerr’s 10 lean startup tips
  43. November 2008
  44. Principles of Lean Startups, presentation for Maples Investments
  45. Getting educated about advertising, agencies, and media buyers
  46. Learning from Obama: maneuver warfare on the campaign trail
  47. Stevey’s Blog Rants: Good Agile, Bad Agile
  48. Using AdWords to assess demand for your new online service, step-by-step
  49. What is customer development?
  50. Where did Silicon Valley come from?
  51. Five Whys
  52. The four kinds of work, and how to get them done: part one
  53. The four kinds of work, and how to get them done: part two
  54. ScienceDaily: Corporate culture is most important factor in driving innovation
  55. Lo, my 1032 subscribers, who are you?
  56. Net Promoter Score: an operational tool to measure customer satisfaction
  57. The ABCDEF’s of conducting a technical interview
  58. December 2008
  59. The four kinds of work, and how to get them done: part three
  60. Getting started with split-testing
  61. The hacker’s lament
  62. January 2009
  63. Continuous integration step-by-step
  64. Engagement loops: beyond viral
  65. Assessing fit with the Wisdom of Crowds
  66. Happy new year
  67. Lessons Learned on Mashable today
  68. Sharding for startups
  69. Lessons Learned office hours
  70. CPI > CPC
  71. February 2009
  72. Why PHP won
  73. Lean hiring tips
  74. Three freemium strategies
  75. Refactoring yourself out of business
  76. Achieving a failure
  77. The lean startup @ Web 2.0 Expo (and a call for help)
  78. Continuous deployment and continuous learning
  79. The free software hiring advantage
  80. You buy virtual goods
  81. What is a market? (a guide for hackers)
  82. Continuous deployment with downloads
  83. Work in small batches
  84. Please teach kids programming, Mr. President
  85. The lean startup at UC Berkeley Haas School of Business
  86. March 2009
  87. Throwing away working code
  88. Employees should be masters of their own time
  89. Lo, my 2295 subscribers, who are you?
  90. Don’t launch
  91. Combining agile development with customer development
  92. Join the Lean Startup discussion at Web 2.0 Expo for free
  93. How to build companies that matter (the lean startup on O’Reilly Radar)
  94. Venture Hacks interview: “What is the minimum viable product?”
  95. The metrics and levers of engagement, presentation on Engagement Loops for Facebook Developer Garage SF
  96. The Lean Startup at Agile Vancouver April 21st
  97. Cash is not king
  98. The Lean Startup workshop coming soon
  99. April 2009
  100. Web 2.0 Expo session followup
  101. Built to learn
  102. Validated learning about customers
  103. Product development leverage
  104. Speaking with Steve Blank at startup2startup; webcast on May 1; other upcoming events
  105. May 2009
  106. Lean Startup webcast post-game
  107. Videos galore
  108. More video “what to do if customers don’t like your (initial) product” plus full webcast
  109. Fear is the mind-killer
  110. The Lean Startup Workshop - now an O’Reilly Master Class
  111. June 2009
  112. Last chance to register for The Lean Startup at HP on May 21
  113. The Lean Startup at SIPA follow-up
  114. Austin: the Lean Startup tour continues
  115. It’s a startup, not a spreadsheet
  116. Datablindness
  117. The Lean Startup Tokyo edition
  118. Lean Startup Workshop scholarship program
  119. Why Continuous Deployment?
  120. Pivot, don’t jump to a new vision
  121. July 2009
  122. Join the lean startup discussion at Facebook on Thursday
  123. How to conduct a Five Whys root cause analysis
  124. Lean Startup fbFund wrap-up
  125. Lean Startup fbFund slides and video
  126. 10 years of entrepreneurship
  127. The Principles of Product Development Flow
  128. Embrace technical debt
  129. Techstars brings The Lean Startup to Boulder
  130. A new way to recruit for (and find) startup jobs
  131. August 2009
  132. The Steve Jobs method
  133. Minimum Viable Product: a guide
  134. Revisiting the Software Design Manifesto (and what’s changed since then)
  135. Introducing the Lean Startup Cohort subscription program
  136. Fall speaking tour starts tomorrow
  137. The Promise of the Lean Startup
  138. Marching through quicksand
  139. Building a new startup hub
  140. September 2009
  141. Don’t be the Ice Cream Glove
  142. What would you want to tell Washington DC about startups?
  143. Happy blogiversary (my present: a brand new URL)
  144. The cardinal sin of community management
  145. International tour about to begin
  146. Gov 2.0 Summit wrap-up
  147. Testing the new Disqus comment system
  148. Support the Startup Founders Visa with a tweet
  149. Entrepreneurial Thought Leaders (and a request for help)
  150. October 2009
  151. The curse of prevention
  152. A large batch of videos, slides, and audio
  153. Innovation inside the box
  154. Inc Magazine on Minimum Viable Product (and a response)
  155. Myth: Entrepreneurship Will Make You Rich
  156. Case Study: Using an LOI to get customer feedback on a minimum viable product
  157. A real Customer Advisory Board
  158. November 2009
  159. New York: three straight days of Lean Startup (two of which are free)
  160. December 2009
  161. Business ecology and the four customer currencies
  162. What is Lean about the Lean Startup?
  163. Why vanity metrics are dangerous
  164. Continuous deployment for mission-critical applications
  165. January 2010
  166. Towards a new entrepreneurship
  167. Is Entrepreneurship a Management Science? (for Harvard Business Review)
  168. Amazing lean startup resources
  169. Two Ways to Hold Entrepreneurs Accountable (for Harvard Business Review)
  170. Case Study: Continuous deployment makes releases non-events
  171. Lo, my 18891 subscribers, who are you?
  172. February 2010
  173. Speaking 2010: Webstock, GDC, Web 2.0, and more
  174. Tell your Startup Visa story
  175. Beware of Vanity Metrics (for Harvard Business Review)
  176. Why diversity matters (the meritocracy business)
  177. Kiwi lean startup + Australia next
  178. March 2010
  179. Startup Visa update
  180. Startup Lessons Learned - the Conference (April 23, 2010 in SF)
  181. For Startups, How Much Process Is Too Much? (for Harvard Business Review)
  182. The new startup arms race (for Huffington Post)
  183. Speed up or slow down? (for Harvard Business Review)
  184. Two new scholarship programs for lean startups
  185. New conference website, speakers, agenda
  186. April 2010
  187. Interviews
  188. Six streaming locations
  189. Kent Beck keynote, “To Agility, and Beyond”
  190. Learning is better than optimization (the local maximum problem)
  191. Conference streaming, sponsors, discounted tickets
  192. The Lean Startup Intensive at Web 2.0 Expo SF (May 3, 2010)
  193. Sneak preview, Grockit
  194. Sneak preview, KISSmetrics (and more)
  195. Four myths about the Lean Startup
  196. Lean Enterprise Institute webinar, April 28
  197. Video update on the Startup Visa Act
  198. May 2010
  199. The Lean Startup Intensive is tomorrow at Web 2.0 Expo
  200. Philosophy Helps Start-Ups Move Faster (WSJ on the Lean Startup)
  201. Thank you
  202. June 2010
  203. The Five Whys for Startups (for Harvard Business Review)
  204. No departments
  205. What is a startup?
  206. July 2010
  207. The Entrepreneur’s Guide to Customer Development
  208. Founder personalities and the “first-class man” theory of management
  209. Some IPO speculation
  210. Case Study: kaChing, Anatomy of a Pivot
  211. Case Study: SlideShare goes freemium
  212. August 2010
  213. SXSW
  214. The Lean Startup: innovation through experimentation
  215. Lo, my 57692 subscribers, who are you?
  216. The Superbowl ad test
  217. The visionary’s lament
  218. Good enough never is (or is it?)
  219. September 2010
  220. Stop lying on stage
  221. The Lean Startup Bundle
  222. Case Study: Rapid iteration with hardware
  223. November 2010
  224. Why do we do this?
  225. January 2011
  226. 2011
  227. Why we need to teach MBA’s about modern entrepreneurship (and what Harvard Business School is doing about it)
  228. Case Study: UX, Design, and Food on the Table
  229. Lean Startup junkies
  230. February 2011
  231. A month is fifteen weekends
  232. March 2011
  233. The Lean Startup SXSW + bundle + tournament
  234. SXSW updates
  235. New York Lean Startup Week
  236. April 2011
  237. The real entrepreneurs of New York City
  238. Beyond the garage
  239. May 2011
  240. New speakers + Ignite + streaming locations
  241. Get the very first copy of the Lean Startup Book
  242. Case Study: Lean UX at work
  243. June 2011
  244. Appsumo Action Video
  245. Open Innovation in DC
  246. July 2011
  247. The Lean Startup Book is here
  248. Venture Deals
  249. August 2011
  250. Winter is coming
  251. The ink is on the dead trees
  252. September 2011
  253. The Last Lean Startup Bundle: claim $3,000,000 in prizes
  254. The power of small batches
  255. The Lean Startup Book Tour
  256. Updates from the road
  257. Best. Birthday. Ever.
  258. October 2011
  259. Case Study: The Nordstrom Innovation Lab
  260. November 2011
  261. That old-time startup religion
  262. STARTUP IS VISION
  263. January 2012
  264. London Calling
  265. February 2012
  266. The Hacker Way
  267. March 2012
  268. The Lean Startup at SXSW 2012
  269. SXSW Update
  270. Doing > Talking
  271. April 2012
  272. Founder’s Dilemmas: Equity Splits
  273. May 2012
  274. A new field guide for entrepreneurs of all stripes

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