The sign of a good book for me is one that I wish I had read years ago. So it was for Pam Slim's book, Escape from Cubicle Nation and more recently, with Jonathan Fields' book, Uncertainty: Turning Fear and Doubt into Fuel for Brilliance. Those books covered familiar territory and their insights resonated deeply, often because I had come to similar conclusions through experience. It was their articulation and further enhancement of what were wisps of wisdom in my head that made those books so enjoyable.
Unlike those books, The Lean Startup by Eric Ries, didn't so much support what I knew from experience, as much as it pointed me in a new direction. What I know from experience is that the old way of doing a startup wasn't working for me. But the new way was no where to be found. The Lean Startup gave me a clear roadmap and methodology to move forward. (Hat tip to Jonathan Fields for pointing me to The Lean Startup, in his book, Uncertainty.) Photo by betsyweber
Let's set some context. Whether you are a social entrepreneur or a for-profit entrepreneur, your goal is to create something from nothing and grow it, to something big. And keep it going, long past the time you are kicking around. The myth that I want to believe is that if you work hard, and have passion, things will work out. I know now, that's not true.
Successful entrepreneurs have figured out for how to create something valuable in the marketplace and grow it. It may have taken several tries, but they did it. They know what to measure and they focus on that.
I once heard an acquaintance talk about a friend, "Mark", who is well-regarded in the local startup community. Mark has started half a dozen companies, with a great batting average. This acquaintance said of Mark, "He measures everything." Now obviously, you can't measure everything. But what this person was saying is that Mark knew that measuring what you do is important. Starting a company (or a movement, for that matter) is one experiment after another and if you don't understand the outcome of an experiment, you can't create better experiments going forward. Photo by wwarby.
The trick is knowing what to measure and deciding what you are testing with each experiment. Without a focus on those, all the passion and hard work in the world won't be enough to build a sustainable business. (I think this also applies to social entrepreneurs. It's just that social entrepreneurs seem to have more tolerance for dragging out the process of growing big.) With limited resources, what you DON'T spend time on is just as important as what you do spend time on. (Trust me on this one. I have the scars to prove it.)
As a former engineer, this makes sense. And yet the romantic in me is a bit disappointed. I'll get over it.
Now to the juicy stuff. In the Lean Startup, the following are key concepts that have greatly influenced how I spend my time.
- Leap of faith assumptions. The success of your venture rests on these assumptions. If they are true, tremendous opportunity awaits. If they are false, the startup risks total failure, because there's no work around. No amount of tweaking product, process, or people can make up for a condition that you believed was true and in reality, is false. A leap of faith assumption for me related to my newest iteration of My Alumni Link:
Busy professionals will buy career development tools that are delivered completely online.
Ries points out that it takes courage to state these assumptions and many entrepreneurs don't do it. He goes on to say, "Every business plan begins with a set of assumptions. It lays out a strategy that takes those assumptions as a given and proceeds to show how to achieve the company's vision. Because the assumptions haven't been proved to be true and in fact are often erroneous, the goal of a startup's early efforts should be to test them as quickly as possible." Photo by leafbug.
- Two leaps of faith assumptions stand out above all others:
- Value creation hypothesis. What you create is valued by the marketplace. You solve a problem that people care about and therefore, your solution has value.
- Growth hypothesis. The means for growing your venture conforms to how the world works. (Ponzi schemes work for awhile, but not in the long run.)
- Minimum Viable Product (MVP). This one goes against how I think as a former engineer. I grew up working for monopolies (electric utilities, phone company), where time to market was however long the funding lasted. And for many projects, that was years. So it was natural to get things just right before releasing them. An incomplete product was like a billboard saying that it was developed by a group of incompetent engineers.
Ries turns this ingrained habit on its head. The startup should focus not on perfection, but finding the fastest way to get through the Build-Measure-Learn feedback loop (what happens with each experiment), with the minimum amount of effort. You do this with a Minimum Viable Product, which is intended to start the process of learning. He goes on to say,
"Any additional work beyond what was required to start learning is a waste."
This statement alone has already saved me countless hours of working on stuff that I thought needed to be done, but really didn't. Photo by jedibfa
- Successful companies have several MVPs before getting it right. Ries tells the story of a bootstrapped start-up that released inexpensive MVPs, ones that took no more than 2-4 weeks of effort. They recruited friends to give feedback on each prototype. It wasn't until they got to the sixth MVP that they had promising results. In the words of the co-founders, "The results were unambiguously negative until [the sixth MVP]"
This is wonderfully reassuring. It means that iteration is the norm. It means that the runway is typically lengthy, not in time, but in iterations. It means that I don't have everything riding on that big launch next week.
MVPs are shaped by questions like, "What would be required to get customers to engage with the product and tell their friends about it?" They are not driven by the founder's ego or an internal standard of quality. Which brings me to this wonderful quote from the book about quality:
"If we do not know who the customer is, we do not know what quality it."
In my next post, I'll talk about what I learned around metrics and pivots from reading the book.