During my short stint in community college, I took an Introduction to business class. On the first day of class, the Professor got up in front of the class and proudly proclaimed, “I am a two time failed business owner.” Immediately I was turned off. I knew that everything that came out of this man's mouth was tainted with his failures as a businessman. It wasn’t until my first business failed that I realized how naive I really was. It is said that one in every 10 businesses succeeds and flourishes. So in the words of Ross Iannarelli, “Let’s just start 10 businesses!” Wise words for a young, patient entrepreneur but there has to be a better way! Eric Ries has a pretty damn good argument for his method. “The Lean Startup” is a method of business development that could change the success rate of startups forever. As someone who personally experienced the rollercoaster ride that is the tech start up, I truly wish I took the time to read this book before launching my first business. “The Lean Startup” by Eric Ries is dense to say the least. Lessons to be learned at every turn in this 300 some odd page book. Riddled with stories of triumph, best practices and mindset coaching for any aspiring successful startup founder, this method is the bible for entrepreneurs with little resources or businesses looking to spend every dollar wisely.
As mentioned, this book is dense so let's break it down on a granular level. Let’s first start with Eric Ries’s why. What drove him to share his insights from his massive success creating startups in Silicon Valley? Why would he want to give away his secrets for everyone to steal? It’s simple. 90% of tech startups fail, and I can assure you that figure is too low. Startups usually do not fail because the product is subpart. The day to day struggle of managing a business is what normally gets in the way. Eric Ries has created The Lean Startup movement to inspire generations of founders to embrace failure, use logical and scientific thinking to cater the best possible product, and to support healthy start up business practices that will lead to the increase of startup success. Eric explains that the allure of a good plan can get in the way of a startups efficacy because startups are meant to disrupt industries. To create new pathways for improved interaction, transaction or engagement within communities. When venturing into uncharted territory, sometimes you have to work on the fly! Long term plans are great for business ventures that have proven track records but when it comes to the evolution of a startup, founders must steer the car instead of preplan a rocket ship launch. Think about it! When launching a rocket ship, teams plan for months in preparation for a launch. They do so to ensure that all of the variables are accounted for. This ensures the safety of the rockets passage out of the atmosphere into the vast galaxy. Startups are more like jungle journeys on four-wheelers. You could never expect what's behind the foliage. The variables can not be accounted for. In order to continue on the journey to see what is behind the foliage, you must constantly provide input and steer the vehicle to ensure your safe passage. This book is divided into three separate parts. Vision, Steer, and Accelerate. Let's talk vision.
Without a north star, a guiding light, a vision of impact, your business is dead in the water. Determining that north star can be a difficult task. Not to worry, Eric takes us back to grade school for a science class reminder that will finally get some good use outside of a chemistry lab. The Scientific Method is a powerful tool for any entrepreneur to use. This tool is so valuable that you will continue to use it throughout your life when you understand its value.
The Scientific Method has 5 components:
These 5 components can be used as a feedback loop for creating new ideas, planning new ventures and understanding the problem of your consumer on a cellular level. In order to deliver our community or our customers the most valuable possible product, we must first understand what they want. Not what we think they want. What they actually want. The only way to do this is through validated learning. A unit of progress that describes learning generated by trying out an initial idea and then measuring it against potential customers to validate the effect. Use the Scientific Method to Create a “Leap of Faith Hypothesis.” This is the question you are looking to answer about a community of people that you are looking to impact. Repeat the feedback loop until something of great value emerges and then dive into finding the most simple solution to that problem.
Once you have found the perfect experiment it is time to build. The next feedback loop to consider when building a startup is the “Build, Measure, Learn” feedback loop. What might you build? How about an MVP, or Minimal Viable Product, as described in “The Lean Startup.” An MVP is your experiment. The most basic possible solution for the problem you are looking to solve. Once you build an MVP based on your hypothesis, measure its effectiveness with actionable, accessible, and audit-able metrics. This is called Innovative Accounting. Innovative accounting is defined as a way of evaluating progress when all the metrics typically used in an established company (revenue, customers, ROI, market share) are effectively zero. Once the data is available and analyzed, LEARN FROM IT! Synthesize the feedback, strategize a new course of action, and execute. One more thing to add about this feedback loop. DO NOT WASTE TIME BETWEEN DATA SETS! This feedback loop should really read, “ Build, Measure, Learn, Repeat.” In order to increase your ability to learn at speed, continue to tune and tinker until you find the optimal data set to move forward with.
This book is so chock full of knowledge, I highly recommend this book to anyone interested in leveling up their Business IQ. As much as I would like to write 10 more pages on the plethora of lessons I have taken away from this book, I won't. Instead, check out The 52 Podcast Episode 03 for more insight into “The Lean Startup.” 55 minutes of engaging content created to stimulate your business brain and support your growth in all of your future ventures. Just to get my point across, here is a list of topics from the book that this blog post didn’t get to cover. Hell, some of the topics didn't even make it into the podcast. That is how incredibly dense with knowledge this book really is.
The topics we didn't cover!
Engines of Growth
The 5 Whys
Small Batch Theory
And Many More
For more information check us out @the52podcast on Instagram. The 52 Podcast Episode 03 available NOW on Spotify, Anchor, and Youtube! Our link is in the bio as well as on KeylightLA.com. Make sure to subscribe for weekly podcast releases every Monday! Let us know how we can bring more value to your world. Follow along with us this week as we read, “Extreme Ownership” by Jocko Willink. Podcast coming Monday September 16th.