The Lean Startup Summary


RE-INNOVATING  STARTUP / THE LEAN STARTUP

“Lean Startup: the application of lean thinking to the process of innovation.”


This is where Eric Ries‘s The Lean Startup: comes in. The underlying message of this books is clear: failures can be prevented!

If you want to find out how you’ll have to read the book. The Lean Startup was written for all kinds of entrepreneurs and offers meaningful clues about how you should constantly improve and test your vision. It also offers meaningful ways to adapt and adjust yourself to changes before it’s too late.

Until you start reading the book, you should check out some of our favorite nuggets from it below. These first visual steps will definitely help you understand more about Eric Ries’ approach.

How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses

The Importance of Vision

Every startup has a true north, a direction where it would like to go, which is directly associated with its vision.

You need to have a clear strategy that involves a business model, product plan, and a clear market understanding, including partners, competitors, and customers. The product sold by a startup is the end-result of this strategy and can – and should – always change to achieve the predetermined vision.

Eric refers to the great strategic turns of a startup as pivots. The vision almost never changes, but most companies fail because they are unable to execute and put this vision into practice. A startup is a human organization designed to create a new product or service in an environment of extreme uncertainty. Therefore it is necessary to experiment and learn quickly.

“The Lean Startup Summary”

The Importance of Validated Learning

It is natural for people to say they learned a lot during a project, or while starting something new, but for Eric, it takes more than just learning. It is necessary to constantly validate the learnings and check if it still remains true.

Your true goal is not the learning itself, but the validation of it. Validation comes through simplifying and proving that you are solving a problem that people have. You need to focus on what customers really need and eliminate everything else.

In IMVU, his startup, Eric worked developing a 3D virtual world and plugins for chat tools in 2004. During the company’s initial testing phase, in conversations with users and observing their behaviors, he found that consumers did not want – nor did they know – how to install the plugins in their chat software.

On the other hand, he also learned that people did not mind having to install new chat software, or even use more than one software. This learning was validated by consumers, and he realized that he had wasted a lot of time and resources creating something that people did not want or knew how to use.

After this realization, Eric and his team realized that the important thing was to launch experiments quickly, learn from them and understand what works and what doesn’t.

Validation came from the numbers and analysis of users’ behaviors. If a change occurred and brought good results, it was validated and maintained. Otherwise, it was removed.

The Lean Startup Summary

The Importance of Early Monetization

In the life of a startup, one of its goals is to find a business model, and this comes through revenue generation. If people pay for something, that is minimally validated.

Eric’s startup started charging its customers early, unlike many startups, and that also helped his team. It is better to have some income as soon as possible, even if it is low, than to spend a lot of time trying to figure out something that people will pay for one day.

Many entrepreneurs get caught up in product development for a long time without charging their potential customers and dreaming of the day when people will simply want to pay for their products and services.

The great truth is that most of the time postponing invoicing leads to the development of products for which people do not want to pay. Starting to charge early is important and will help you to really understand how much value you are generating for users with your product or service.

To discover a business model, you need to interact with potential customers and capture value. Therefore, you need to start with a prototype, albeit incomplete and constantly validate it with your potential customers. Create revenue targets, although low, but grow steadily from the start.

The Importance of Experimentation

The founders of Zappos had a vision in which he believed that people would want to buy shoes online.

But how do you test if this really works, without having to buy thousands of pairs of shoes, building a website and build a stock? Rather than starting with a large structure, they did an experiment to validate if there was enough demand to achieve the vision of selling shoes online.

They started by taking pictures of shoes in various physical stores and advertising them on the internet. If a customer placed an order, they would go to the store, buy the shoe, and send it to the customer. This minimal product allowed them to test many critical factors for business success.

With this experiment, they validated that there was demand, they learned the optimal pricing for their products, became aware of complaints and the logistical challenges of the business with a minimum of expenses. This validation allowed them to really start the company and it was such a success that it was eventually acquired by the giant Amazon for more than one billion dollars.

Eric Ries

Build, Mesure, Learn

To experiment in the right way and to generate validated learning, you must follow the scientific method. Just as in science, in the business world, every experiment must begin with a hypothesis.

A price hypothesis, for example, tests whether the product generates value to users. A marketing hypothesis, on the other hand, tests whether the company can reach out to consumers at a cost to generate profit. To test the value of your product to the customer, find potential customers to run the experiment. To conduct an effective test, you need to follow 3 main steps:

  • Build;
  • Measure;
  • Learn;

In a startup, this cycle must be running all the time. Find people who would be the ideal customers for that imaginable product and build a minimum viable product (MVP), having you as a concierge. Yes, the product will not be mature enough, but for the initial users, if the problem you solve is large enough to generate value for them, they will forgive you for its shortcomings and bugs.

Participate actively in product validation with customers and monitor all experimental results. Track new revenue, adoption of features, the frequency of use, etc. Always analyze whether the measurement corroborates your initial hypothesis.

For example, if a customer asks for a feature that does not yet exist but you plan to do one day, that means you’re on the right track. On the other hand, if there are features in the product plan that are not ordered by customers, remove them from the plan to avoid waste. These close interactions with customers will help you to constantly validate your hypotheses.

The build-measure-learn model is the main pillar of the lean startup, and once an MVP is built, its purpose is to quickly learn and iterate through it, always starting from new assumptions and user feedbacks.

The Leap of Faith

Every startup also needs to have their own beliefs about its product and its ability to truly cater to the cravings of customers. Steve Jobs, for example, when launching the iPod, had 2 primordial beliefs, which were considered true. The first of these is that users wanted to listen to music anywhere, on their headphones.

The second is that they were willing to pay for music on the internet, unlike how they formerly consumed music, through digital piracy. The first had already been validated by Sony, with the Walkman, but the second was much more uncertain and risky. You need to be able to choose the risks you are going to take and reduce them to the maximum through validation.

The Lean Startup PDF

Intuit is a company that was founded on the belief that someday companies would use computers to pay bills and to track their expenses and their financial and accounting status. To test the concept, the founders phoned random people to understand how this vision applied in practice.

Toyota, which is one of the forerunners of the lean movement, had a validation method called “See for yourself,” whose premise encouraged employees to experience situations in which it was necessary to learn before creating new products. Its director of the SUV segment, to learn more about the potential customer, traveled through the United States in an SUV understanding how the minivan worked in practice.

He quickly discovered that on long trips, families with children (the target audience of the SUV) comfort matters a lot and is a differential for the whole family. When the vehicle was launched, it had full focus on comfort and a cozy internal space for long family trips. This made the vehicle a great success.

One of the biggest challenges to avoid is getting paralyzed to analyze market information. A startup is only able to learn by talking comprehensively and putting themselves in the shoes of the consumers. Many strategy mistakes can be avoided by just talking to the customer all the time.

How to Test Your Product

When it began, Andrew Mason’s vision, founder of Groupon, was to create a platform for digital activism, where people related to their causes. That was the leap of faith, and it failed for Groupon.

To overcome this defeat, the Groupon team began experimenting with different ideas, through a blog and a mailing list, to which it sent discount coupons. At first, it was all manual, and there was no proprietary software to validate that idea. Only the company team interacting with customers.

Very quickly, they felt that the idea was well accepted by the users and they began an effort to automate it and build the software that would run Groupon months later. It is important to show the product, albeit immature to customers, as soon as possible to use certainty and not just faith to validate a market.

This may sound counterintuitive for entrepreneurs who always want to get the best possible product, but the best possible product is an uncertain future, and you are only able to reach it if you are effectively testing ideas and validating them.

Another story of a product that benefited from the early launch and learn approach was Dropbox. The cloud storage solution was looking for investments, and all investors said that it was a saturated market. No one wanted to invest.

Drew Houston, CEO of Dropbox had a different vision. He thought the market was bad because cloud storage products were bad and difficult to use, so he moved quickly to validate his idea. He created a video demonstrating the vision of what the software would look like and drew people’s attention to a new approach to file storage. This allowed him to validate that there was demand for the product he wanted to build and then actually build the software.

Many entrepreneurs are afraid to launch an MVP, out of fear of competition from larger companies. However, this perception is flawed, since product managers at large companies are often bogged down with projects at all times, having great ideas but no speed. They know that if they want to copy something, they can copy something later, so you shouldn’t worry about it to delay your MVP tests.

In experimentation, it is very important to understand that what users perceive as product quality is quite different from what the company perceives. Users care if the product works for them and not if it has been invested a lot of time to create it. In some cases, you can accidentally create things that users love and have not been designed for, so you need to test new things and monitor them all the time.

How to Measure Your MVP

Once you build your MVP and have the first users, test the riskiest assumptions first, so you maximize your chances of getting hit and also reduce the risks of testing something too bold that will alienate your customers later on.

Define the fundamental metric you want to affect (revenue, adoption, acquisition) and create a set of experiments to attack it. If the results are positive, continue in that direction and if they are negative, consider changing the direction. It is important to be careful not to follow vanity metrics, metrics that are expressive in volume, but do not capture the real value of your product to the customer.

Forget metrics as registered users and focus on using your product, ability to acquire new customers and grow your revenue. For Eric Ries, the good metrics are:

  • Actionable: You know what to do to change it;
  • Accessible: It is easy to follow;
  • Auditable:  It is trustworthy;

Create a template to prioritize your assumptions with 3 parts: saved tests, in-progress tests, and validated tests. Prioritize your experiments in these columns and after evaluating the metrics, keep the successful experiments and discard those that failed.

Continue or Pivot?

How much money your company has in the bank and how much you spend each month tells you how much you can try. Track this closely, to always know if it’s time to continue in the current direction or take a turn in your business. If things are going well and your product keeps growing, with great prospects, you’ve probably found your fit or the Product Market Fit, a term created by Eric.

When your company can’t make progress with the assumptions and the existing MVP, and the numbers do not keep improving, it may be time to pivot. A pivot is a new product direction, with new validations and potentially new customer profiles.

Many entrepreneurs regret not having “pivoted” earlier, or made it too late and the company did not survive. Several companies go through pivots and it is extremely common to have these turns. Wealthfront, for example, pivoted from an equity management service for investors to an investment management company for consumers on the internet.

Know the Different Types of Pivots

If it’s time to change direction, you need to understand that there are many different types of paths that your company can follow.

  • Internal Pivot: Occurs when an MVP functionality becomes the new product and it focuses on improving only the part of the system that already works;
  • External pivot: When the current MVP becomes a feature of a new product;
  • Customer Segment Pivot: Occurs when the product is the same, but marketed to other customers;
  • Customer need pivot: When the customer is the same, but the value proposition for it changes;
  • Platform Pivot: When the product ceases to be a single product and becomes a platform for other products;
  • Business Architecture Pivot: When the company dramatically changes its business model in pursuit of capturing more value;
  • Value pivot: When the way the company charges for its services changes;
  • Growth Pivot: Occurs when the way the company acquires new customers changes.
  • Channel Pivot: When the distribution channels change;
  • Technology Pivot: When the technology used to build the product changes;

You need to consider all kinds of pivots before making a change. Ask yourself what would have the most impact:

  • Change my target client?
  • Change the billing model?
  • Change your distribution channels?
  • Change the way you acquire customers?

Document these possible directions and create experiments before you make the pivot itself.

The Market Fit

If your company has market fit, it’s important to know that new customers come to it based on the success of previous customers, as they are constantly talking about your product to other companies, using it and recommending it.

If you are in doubt whether your company has hit the market fit, it probably has not yet. But if you already know that the demand for your product only grows, there is no more doubt, and it is time to step on the accelerator.

The important thing is that as the company grows, it is able to adapt to its customer profile, which has also evolved over time. You need to be able to adapt, find new channels of acquisition and constantly improve the product.

Do Not Get Stagnated

Large companies may be able to innovate but to achieve this goal they need to be able to form small, independent teams with the resources they need. At Toyota, every time a new product comes on the market, a small team is created, and the team is free to experiment.

These teams need to be politically shielded from the other groups of the organization. According to Eric, creating secret teams ends up generating more internal policies, which is detrimental to the project. The team must be the owner of the project and have the autonomy to put it into practice.

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“The Lean Startup” Quotes

The only way to win is to learn faster than anyone else.; Click To Tweet Reading is good, action is better. Click To Tweet We must learn what customers really want, not what they say they want or what we think they should want. Click To Tweet As you consider building your own minimum viable product, let this simple rule suffice: remove any feature, process, or effort that does not contribute directly to the learning you seek. Click To Tweet Innovation is a bottoms-up, decentralized, and unpredictable thing, but that doesn’t mean it cannot be managed. Click To Tweet

Final Notes:

Startups should take a scientific approach to test their main assumptions and then build a sustainable business model from a validated hypothesis. They should develop product prototypes quickly and then continually refine them by collecting consumer feedback and BML(Build, Measure, Learn) cycles.

Every startup must define its core metrics and analyze them appropriately.

12min tip: Did you like Lean Startup? Read the work that most influenced Eric Ries, “The Four Steps to Epiphany”, by Professor Steve Blank.


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Wikinomics Summary

Wikinomics Summary

How Mass Collaboration Changes Everything

We live in a world which transforms rapidly. The digital age creates many new circumstances for all of us. It poses new opportunities, new constraints. So what has changed? And how do those changes affect you and the age of Wikinomics? Our “Wikinomics Summary” explores these questions and many more.

Now, let’s dive right into it.

Who Should Read “Wikinomics”? and Why?

It is relatively challenging to specify a group of readers to whom this book would be intended. Magnificent piece of work written for HR Managers, Scientists, Futurologists, and Experts who wish to expand their views and get a broader perspective of where this digital age is going.

Students known for their thirst for new knowledge would find Don Tapscott and Anthony D. Williams’s work as one of the most extraordinary and exceptional business guides they have ever read. Known for its first-person examples and high-quality tips “Wikinomics” is no wonder an all-around book that can answer any business related question.

Next, before we thoroughly examine the book’s content, we’ll cover the authors’ bio and their expertise.

About Don Tapscott and Anthony Williams

Don Tapscott

Don Tapscott was born on July 1, 1947, in Toronto, Canada. He is an author, consultant, business innovator and executive that is focusing on combining different business strategies that would generate an organizational transformation in the society. As a founder of New Paradigm, that is currently owned by NGenera,  and as a CEO of the Tapscott Grouping,  Don Tapscott encourages companies to overcome organizational boundaries by associating with the latest technologies.

Anthony Williams

Anthony D. Williams is a Canadian Born author, a senior fellow at the Lisbon Council, founder of the Anthony Williams Consulting in Toronto and a strategic adviser to different governments, global institutions, and other Fortune companies. He was born in 1974 in Toronto, Canada. Anthony Williams and Don Tapscott as co-authors of Wikinomics are repeatedly dismissing any criticisms based on their book without answering any of the critics.

Okay, now that we covered the basics, let’s continue with the detailed summary.

“Wikinomics Summary”

Don Tapscott and Anthony D. Williams through their Wikinomics book try to intrigue readers in numerous ways. The book examines all possibilities of massive data sharing and participating in open-source software that is available to all business participants, consultants, and experts.

Back in the old days, sharing and delivering an information required a lot of effort, now all you need is a computer with unlimited access to all sorts of free encyclopedia sites. So to speak every user is familiar with the fact that the digital era contributes to a new highly educated population.

Now, what can you expect while reading the book?

Well, some of the examples that you may run into while reading Wikinomics would probably sound familiar, while others may seem a little surprising and maybe even shocking. These authors are so intently a part of the new era that makes them feel obsessed with knowledge -seekers – for instance,  sometimes specific actions or changes that are done by few enthusiasts seem like some internet transformation procedure.

However, for the majority of times, these enthusiasts fail to provide the precise definition or supporting and digital data.

Wikinomics wants to inspire readers to adjust their way of thinking to the new dynamic and digital age, by becoming critical decision makers, educated and proficient in the business sphere in almost any industry.

Here’s the thing:

The end reader would feel like he is reading some business guidebook, changing its point of view from time to time and for the majority of times, it would sound like a proclamation of ideas and concepts, valuable to the business community.

The world would continue to change and evolve. Therefore mass collaboration process would represent a vital factor in those changes. The new era would be built on openness, globalization and business integration. Organizing data would become much easier as finding data and sharing it would be a relatively easy process to conduct that can lead to minimizing organization boundaries that we’ve faced earlier.

A few broad key lessons can be extracted from the book’s content. Which are they?

Read on!

Key Lessons from “Wikinomics”

  1.      Understand Wikinomics
  2.      Four Basic Principles of Wikinomics
  3.      Ideagoras and their meaning

Understand Wikinomics

“Wikinomics” is the single letter word combined with two terms: “wiki” (that represents something being done quickly and fast) and “economics,” as such Wikinomics represent a term of quick interaction. These interactions are made possible by the digital opportunities that we’re able to take advantage of in today’s society. “Old-fashioned ” traditional businesses still maintain and keep unnecessary and evident boundaries.

These organizational barriers are backed up with a tightly controlled economic captivity of limited information that flows in and out. If you as a company implement Anthony Williams and Don Tapscott’s principles and norms, all shareholders will notice an instant “freedom” change, that would indicate long-term success.

Four Basic Principles of Wikinomics

The four primary principles that forge Wikinomics are: “Open communication, peering, sharing of information and globalization.” Openness or Open Communication refers to inciting open-society mentality with freedom of speech in a transparent, clear and concise way in favor of eliminating any organization boundaries that may occur among the shareholders.

Sharing of Information as the names tell us indicates an easy, fast and limitless way of accessing all sorts of data. “Peering” is an integral part of open society. It illustrates business and organizational interactions among the employees to be held collaboratively, not hierarchically.

Globalization makes us aware of the fact that overseas competition and partnerships are going to occur as soon as any company decides to infiltrate its product to the global market.

Ideagoras and their meaning

In ancient times, people used to meet in places called agoras (today’s marketplace), where philosophers gathered and taught the people on different subjects. Today’s online world shares the same idea as Ideagoras back then, Modern Ideagora represents something similar to a virtual “marketplace of ideas, financial solutions and concepts.

The Modern Ideagora concept is still in the process of development, yet solid and visible examples are present in every corner. As an example we would take the case where: Approximately 100,000 Scientists from 175 countries are assembled in one InnoCentive Service where they can share ideas, information, data and ask questions.

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“Wikinomics” Quotes

“Peering succeeds because it leverages self-organization—a style of production that works more effectively than hierarchical management for certain tasks.” Click To Tweet Increasingly, we are all wittingly and unwittingly co-conspirators in building one massively sophisticated computer. Click To Tweet All one needs is a computer, a network connection, and a bright spark of initiative and creativity to join the economy. Click To Tweet The new web is about verbs not nouns Click To Tweet

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Our Critical Review

In “Wikinomics” the authors try to illustrate their narrative by presenting examples of companies and projects that have succeeded by using group collaboration. Although various examples are cited, which are credible and serve their purpose, the authors use an authoritative tone to present them, which may put some readers off.

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Antifragile Summary | Download PDF

Antifragile Summary

MicroSummary: Having made a name with the highly influential “Black Swan”, in “Antifragility”, Nassim Taleb proposes a new philosophical concept, which goes against practical wisdom. Antifragility, as he explains in his book, is the property of a system to thrive and improve when exposed to shocks, randomness, and failures.

AntifragileNassim Nicholas Taleb 

Things that Gain from Disorder

What does Antifragile mean? Try to connect this concept with an immunity on predicting errors and with the strongest pattern for living our lives.

The “Antifragile Summary” contains all the elements you need to understand the terminology.


THRIVING ON SHOCKS / ANTIFRAGILE

'Antifragility is beyond resilience or robustness' @nntaleb Click To Tweet

Constantly preoccupied with problems of uncertainty, probability, and knowledge, the bestselling author Nassim Nicholas Taleb reveals wise ways how to thrive in an uncertain world.

Check the nuggets below (visual quotes from books) to have a quite great visual and textual preview of what Antifragile means from Nassim Nicholas Taleb ‘s perspective. Continue Reading…

The Brain Audit: Summary of Sean D’Souza’s book

The Brain Audit: Why Customers Buy (And Why They Don’t) by Sean D’Souza – book summary

In The Brain Audit, Sean D’Souza delves into the mind of the customer to bring us a whole new overview of the sale and why it sometimes falls through. It’s packed with information on how to attract customers and what they’re looking for in your product, shop, website, or ad.

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The Gifts of Imperfection: Summary of Brené Brown’s book

gifts of imperfection cover

The Gifts of Imperfection: Let Go of Who You Think You’re Supposed to Be and Embrace Who You Are by Brené Brown – Book Summary

To be or not to be imperfect, that is the question! From time to time we should all indulge in some moments of introspection. Moments when we can confront our own ego and ask questions meant to unchain us from society’s barriers. Brené Brown shows us how to do just that in The Gifts of Imperfection. GetNugget – Book Summary

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When Things Fall Apart Summary

when things fall apart

When Things Fall Apart: Heart Advice for Difficult Times by Pema Chödrön – Book Summary

WISDOM is born from PAIN.

SUFFERING is the main prerequisite for COURAGE.

EMOTIONs experienced on a multilevel scale can, in time, provide us HAPPINESS as a well-practiced HABIT.

Most of the people will agree that we are entangled in difficult times. We have become slaves to our ego. The sense of compassion decreases as we get older as a consequence of the everlasting need for more. GetNugget advises its reader to take a good look at Pema Chödrön‘s book. Her past gives her credibility to teach us how Buddhism (beyond the religious perspective) is able to deal with the severe wounds of the today’s modern life.

This book summary reflects the center of the Buddhist teaching with all of its mindful tips on how to avoid falling into despair. Initially, people need to see the true nature of meditation. “Peaceful Sitting” is not an activity like any other; it is the only path to self-discovery. Chodron straightforwardly talks with the readers by giving them guides to cope with the modern traumas and painful experiences from the past. The effectiveness of an actual Buddhist life is demonstrated by anyone who stood beside her. It is not about discipline, nor order – meditation reveals the sacred door of happiness. It is about time to seek it within us because it is not an external thing. “When Things Fall Apart” is a life-altering book, don’t be afraid to taste its remedy.

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The $100 Startup Summary – Chris Guillebeau

The $100 Startup

Reinvent the Way You Make a Living, Do What You Love, and Create a New Future by Chris Guillebeau

$100. What can you do with this amount of money? Probably not that much.

No way! It may sound like a fairytale, but Chris Guillebeau’s The $100 Startup tells you how to do exactly that.

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The Dip Summary

The Dip: The Extraordinary Benefits of Knowing When to Quit (and When to Stick) by Seth Godin

If you think that winners never quit, think again. In The Dip: The Extraordinary Benefits of Knowing When to Quit (and When to Stick), Seth Godin puts up a compelling argument of why quitting is a great strategy for becoming successful.

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BEST Leaders Eat Last Summary – Simon Sinek

Leaders Eat Last: Why Some Teams Pull Together and Others Don’t by Simon Sinek

When it comes to creating a successful business, everyone has a part to play. Are you an employee? What’s your level of engagement? Do you believe in the company’s mission? Are you leading a team or even an organization? What are you? A leader or a boss? Simon Sinek’s Leaders Eat Last explains why the values of a company’s leader can make or break it.

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Daring Greatly : book Summary

Daring Greatly: How the Courage to Be Vulnerable Transforms the Way We Live, Love, Parent, and Lead by Brené Brown

Can we really afford to be vulnerable?

According to Brené Brown, the author of the #1 New York Times Bestseller – Daring Greatly – the answer is ‘YES’.

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