Today’s high-tech entrepreneurs have at their command more than just the ability to invent new technologies — they have mastered the discipline and the methodology required to harness those technologies in order to serve customers. Such a combination of new technology and new understanding is unlocking new opportunities. In order to maximize such opportunities, this generation of entrepreneurs combines extremely low costs with faster cycle times to produce what I call lean startups.
The Soul of the Lean Startup
Total startup costs are plummeting — it costs less than $10,000 to launch a new, web-based product. Using the latest technology, a lean startup can create product prototypes in weeks and months, not years, and use customer feedback to evolve them in near-real time. Releases are measured in minutes and hours, not days and weeks -– in some cases, lean startups are releasing new code to production 50 times a day.
In parallel to this work by the “solution team” (engineering, ops and QA) there is a new kind of “problem team” (what we used to call business development, marketing, and sales) that is asking the bigger questions, such as: Who will our customers be? What problem does our product solve for them? How many of them are there? And how will we reach them?
And the problem team is not merely engaged in a series of whiteboard exercises. Rather, they are working to validate or refute their hypotheses, and to then share their findings with the rest of the company so they can be used to reduce uncertainty and further chart the firm’s destiny. Each iteration leads to a “pivot” in which the company systematically changes some part of the vision to adapt to reality.
The Vision of the Lean Startup
The ultimate goal of a lean startup is to identify where its vision intersects with what reality can accommodate. It is neither a capitulation to “what customers think they want” nor a willful ignorance of conditions on the ground. It is a company built to learn.
As a consequence, this new startup is relentlessly metrics-driven. It tries out new ideas with a fraction of customers in order to prioritize using facts, not opinions. Its unit of progress is that of validated learning about its customers. Because this radical notion of progress is located firmly in the heads of its employees, and not in any artifacts they produce, the lean startup is employee-centric and knowledge-obsessed. It is a truly fun place to work.
The lean startup gets faster and more agile over time, even as it scales. Instead of seeing process as a synonym for bureaucracy, it sees it as a synonym for discipline. Focusing all of its energy on only those activities that matter, it frees up time and energy for true productivity. It represents, in other words, a transformation every bit as significant as the advent of lean manufacturing.
The Promise of the Lean Startup
Just-in-time inventory control, an end to “time-quality-money, pick two” thinking, and true continuous improvement are at the heart of the supply chains that feed, clothe and sustain the developed world. They were made possible by a combination of new technologies and new thinking. The lean startup heralds a similar promise: that the practice of entrepreneurship can be put on solid, rigorous, footing.
Considering the incredible amount of human energy, passion, and creativity that we currently invest in creating new products and services, it’s a terrible waste that so many of them fail. The promise of the lean startup is that instead of building our companies according to myths, we can guide them with facts and the knowledge required to use those facts well. Or put another way, that we won’t waste our time building products or services that nobody wants.
Eric Ries is a serial entrepreneur and author of the blog Startup Lessons Learned.
This article also appeared on BusinessWeek.com.