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The Lean Startup

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ByungHyun Jung

on 18 July 2014

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Transcript of The Lean Startup

Entrepreneurs are everywhere.
What is a startup?
→ A
human

institution
designed to
create new products and services
under conditions of
extreme uncertainty
→ Any size company, any sector or industry
Entrepreneurship is management.
About 'managing an institution', not just 'making a product'
Build-Measure-Learn.

Build

a MVP, Minimum Viable Product
.

leap-of-faith
assumptions

'get out of the building'
Early adopters use their imagination to fill in what a product is missing.

Measure
how customers respond.

Learn
whether to
pivot or persevere
.


Accelerate
the loop.
Validated learning.
Not just to make stuff, make money, or serve customers
→ to
learn
how to build
a sustainable business

(engine of growth)

"creating an entity that has value apart from you"
, ‹The Small Business Spectrum: Jobbie, Job or Business?›, Carol Roth

validated
by
positive improvements in core metrics


Validate your vision
with frequent
(scientific) experiments
More of
"'Should'"
than
"'Can' this be built?"
The Lean Startup
Eric Ries
Experienced failure before IMVU
A cofounder and formal CTO of IMVU

http://www.startuplessonslearned.com/
Customer Development (Steve Blank)
Lean Manufacturing (Toyota)
Innovation accounting.

Establish the baseline
real data collected with a MVP
(learning milestone)

Tuning the engine
What will improve the driver metric?

Pivot or persevere
About Learning...
not as after-the-fact rationalization
not as a story designed to hide failure

as a
empirical
process discovering
valuable truths
about
present/future business prospects
Instant Messaging with high revenue per customer of 3D virtual world
→ an IM add-on that interoperates with the existing networks
→ Nothing happened.
→ Teenagers don't know what an IM add-on is, and want to try it out by themselves.
→ ChatNow
→ Now they want a buddy list, and they don't care how many IMs they're using.
→ IMVU

They didn't want an IM add-on.
They didn't think learning a new IM program as a barrier.
They were not afraid of taking their friends to a new IM network.
They didn't want to use avatar-based IM primarily with their existing friends.
Nick thought, 'Customers were willing to buy shoes online.'
→ Asked local shoe stores if he could take pictures of their shoes, in exchange of coming back and buying the shoes at full price if they got sold online.
→ Zappos

Hewlett-Packard's employee volunteer program
→ Most employees don't know the policy.

Value hypothesis
: How many sign up to volunteer again?
Growth hypothesis
: Would the early participants actively spread the word?
→ Caroline found employees who felt the greatest sense of disconnect between their daily routine and the company's expressed values. (
the early adopters
; if it fails on these people, we should doubt the value of it seriously.)

Mark at Kodak asked,
Do consumers recognize that they have the problem?
If there was a solution, would they buy it?
Would they buy it from us?
Can we build such a solution?

In India, most people don't have a washing machine.
→ hand wash or pay a Dhobi
→ Akshay Mehra joined the Village Laundry Services.
→ They mounted a washing machine on the back of a pickup truck parked on a street corner in Bangalore, to prove people would hand over the laundry and pay for it. (The machine wasn't even for the washing.)
→ People were afraid of their clothes stolen.
→ They changed the truck to something like kiosk.
→ They experimented on the place of parking, people's need, the price, etc.

The case of CFPB of the USA government
Scott's vision when he founded Intuit: Someday consumers would use PCs to pay bills and keep track of expenses.
→ He phone calls people at random, to find out 'do people find it frustrating to pay bills by hand?'
Andrew intended his company to become a 'collective activism platform' called The Point.
→ After its failure, the company made a blog called Groupon, and posted something like this everyday.
"This T-shirt will come in the color red, size large. If you want a different color or size, e-mail that to us."
→ They made coupons using FileMaker and sent the PDFs via e-mail.

Drew founded Dropbox, thinking that file synchronization was a problem most people didn't know they had.
→ Even investors couldn't imagine the value.
→ During the development, he made a 3 minute banal video targeted at a techy community.

Manuel founded Food on the Table, which creates weekly meal plans and grocery lists for you, then finds the best deals on the ingredients at your local stores.
→ Databases of almost every grocery store in the country with information about what's on sale every week, professional chefs devising recipes based on that, an algorithm matching the recipes to each family's preferences...
→ Manuel and Steve, the VP of product, went to local supermarkets and mom's groups in his hometown, to find their first customer.
→ They interviewed the person, and after that, described the benefits, named a weekly subscription fee, and invited to sign up.
→ They then started from that person's preferred store, with Manuel visiting the customer every week.
(concierge MVP)
→ After a few weeks, another customer came, and bringing more was easy because they could focus on the same store learning about its customers.
→ Only at the point where the founders were too busy, the team started to invest in automation.
→ Each iteration of automation enabled them to serve a few more customers.

At IMVU, users wanted to move around their avatars.
→ It takes significant efforts to implement.
→ We implemented teleportation and it turns out users liked that more.
→ If we do not know who the customer is, we do not know what quality is.

The case of Aardvark
Speed Bumps
in Building an MVP
patent protection

'The only way to win is to learn faster than anyone else.'
You can use a different brand name.
morale impact
Full transcript