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The Lean Startup [Entrepreneurship
Posted on April 21, 2015 @ 08:00:00 PM by Paul Meagher

I'm about halfway through Eric Reis book The Lean Startup (2011). This book helped kick off the Learn Startup movement. It is definitely a book worth reading. Well written and well organized with lots of useful case studies to explain and justify the lean startup ideas he advocates.

I was a bit surprised that the book appears to be primarily about how scientific methods can be used to create successful startups. For example, he advocates formulating hypothesis on an ongoing basis about which product features appeal to users and how growth will occur and testing these hypothesis using minimum viable products, split testing, cohort analysis, core metrics and other techniques. Eric encourages us to formalize our "big idea" in more detail so that we can test and measure the validity of our underlying product and growth assumptions. It is hard to argue against using scientific methods which makes it hard to argue against many of the techniques he advocates because they arguably lead to "validated learning" better than most other approaches we might use. According to Eric, "validated learning" is the main objective that startups should be seeking. The more validated learning you can do in a short amount of time the greater your chances of success. Adopting his suggestions will not guarantee startup success but it certainly can't hurt to be aware of scientific techniques you might apply to starting and growing a business.

Many of the techniques he proposes are not easily transportable to all industries. Startups in the IT industry are the best fit because it is relatively easy to run numerous online experiments to test ideas and analyze results with a large enough sample size to be statistically meaningful. Eric does not get into the nitty-gritty details of things like qualitative methods, power analysis, effect sizes, significance testing, or Bayesian analysis but issues like this potentially lurk in the background if you decide to run lots of experiments to figure out what works and what doesn't work for your startup. There are lots of books out there that discuss these technical details.

If the book is primarily about applying scientific methods to creating successful startups why did Eric call it the "lean" startup. This is partly historical because the inspiration comes from techniques used in lean manufacturing that Eric is, in part, adapting to managing startups. "Lean" also refers to the objective of making fewer and better mistakes on route to creating a successful startup. If you make fewer mistakes, and mistakes that are revealing about whether you should persevere or pivot, then presumably you don't need as much capital to become successful. Eric also offers up many ideas for how startups can test product/service ideas cheaply without investing alot of money into development which is another way startups can be lean. I was hoping to discuss some of these cheap ways to test startup ideas but that will have to wait until my next blog.




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