28 Comments

Summary:

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 […]

eric ries headshotToday’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.

You’re subscribed! If you like, you can update your settings

  1. Great article, I like it! In fact we at http://www.binfire.com are doing exactly what Eric is talking about in this article. For now our marketing effort is just talking to our customers and learning from them what works and what does not. We employ rapid development and refine as we go.

  2. Jeremy Goodrich Tuesday, August 11, 2009

    I agree with the concept of ‘lean startup’…I disagree it’s a revolution. Why? We’ve been around for more than six years…we hit 6.9 million visitors…I interviewed with Om on the phone 2.5+ years ago, no love :(

    It’s basically fighting, tooth and nail, to get press…which you’re not describing here. No funding? No VC, or Angels involved…and, no stealth mode cr@p? Good luck.

    The phrasing above makes it sound like the team has a dozen people involved…in truth, due to recent unforseen issues, we’re moving as fast as ever, with only 2 full time employees and 2 part time – however, we are hiring 2 more FTE’s on a contract basis shortly, if things work out.

    Now…does *anybody* want to write that article? Nope, unless they aren’t a main stream blog like this one…the big guys that did give us brief air time (WSJ, NYT) gave us backhanded compliments at best, and insulted us at worst. I’m not complaining – it was an honor to be quoted in the Wall Street Journal…however, it’d be nice if you guys who form the tech media industry would put your publishing where your mouth is…rather than trumpeting something that, in practice you ignore.

    1. I disagree that one must fight tooth and nail to get press. Sure, Twitter and other products du jour take up much of the mind space available in tech blogs and the traditional print media. But if you build a product that is fresh and that customers love, the press will follow. (With a little cold calling.)

      Take Twitterjobsearch.com. They’re 5 or 6 folks in London, not Silicon Valley or New York. And the number of press hits keep multiplying. Sure, they’re a Twitter derivative, but their product is fresh, tractable, and adoptable by anyone, power Twitter user or not.

      If you have a product that speaks for itself, you won’t have to fight tooth and nail to get noticed.

      1. Dude…
        1) What??? http://www.quantcast.com/twitterjobsearch.com numbers multiplying my behind…

        2) Never – EVER – start a company that leverages somebody else’s brand in the domain name. ‘Nuff said.

      2. You missed my point entirely. “The number of press hits keep multiplying” was my quote. I mentioned nothing about TJS’s numbers.

        However, since we’re on the subject, TJS is in the press all of the time IN SPITE OF their somewhat flat user acquisition. Tractable product = great press. ‘Nuff said, as you would say.

        Who else thinks Mr. Jeremy has a serious chip on his shoulder?

  3. I’ve found that many are launching start-ups to combat the layoffs occuring in this economy. Thanks for sharing your insight Eric.

  4. Richard Tibbetts Tuesday, August 11, 2009

    Lean startups are a good idea. For addressing niche markets, for bootstrapping, and for creating strong small businesses, this is the right way to be thinking. I agree it is frustrating when billions of dollars are wasted on chasing new trends and failed technology. It would be nice if all companies were run in a lean way.

    Unfortunately additional capital and scale does increase the chance of success. Microsoft can make a product like the Zune, and by continuing to apply dollars eventually make it a credible player in the marketplace. IBM can create inferior products and be successful through application of money and brand. As long as these counterexamples persist, investors are going to be willing to commit large amounts of capital to non-lean organizations in the hopes of capturing outsized returns.

    A lean startup is definitely efficient. But is it more likely to succeed than a fat startup, or a fat incumbent? Maybe sometimes. Maybe especially in a recession.

  5. Hi Eric – Thanks for the article, but I still wonder if the lean startup you speak of is more mythology than fact. It all sounds lovely, to be sure, but are the people at this $10K startup getting paid? Probably not. It is very true that the hard costs of most web 2.0 startups haven fallen to zero, but as for the labor costs – this is far from true. I realize that many of the first employees at these startups are founders, and take little or no salary, but that is not sustainable and not really free. From my perspective, a super-lean web 2.0 startup with 3 smart founders would find is really challenging to burn less than $20K/mo. Otherwise, someone somewhere is losing money.

  6. I found this article to be a short reworking of all of Eric Ries’ stuff. If you hadn’t heard of the lean startup, that would be great, maybe (this article is shallow regarding WHY these practices are in place). But if you already know general concepts and WHY they are practiced, this article has little value to offer. I’m in the latter camp, clearly.

    I think a better article would’ve been the authors experience using the lean startup methodology. I think that’s what the #startup community needs.

    1. Denny

      It is an article by Eric Ries and start of a series of articles he is going to be doing for us.

      1. I have realized this and @replied Eric on twitter. My mistake. Hope the future articles are more in depth. This is a good introduction.

  7. Shankar Saikia Tuesday, August 11, 2009

    SWEEPING STATEMENTS & LACK OF EXAMPLES

    I do agree that startups today can be and therefore are leaner with fewer employees, cheaper technologies and faster cycle times. However, this article is replete with incorrect statements and broad generalizations without any concrete examples. The comment “..they have mastered the discipline and the methodology required to harness those technologies in order to serve customers” is one of the most sweeping overstatements – maybe *some* entrepreneurs have figured it out, but to say the most have “mastered” the art of harnessing technologies to serve customers is inane. It would have been great if Eric provided at least *one* example of a company that has mastered this process or done any of the things that Eric mentions.

    This is one of the worst newsblog posts I have read on Gigaom.

    1. Apolinaras “Apollo” Sinkevicius | LeanStartups.com Shankar Saikia Tuesday, August 11, 2009

      I think that before we go criticizing left and right, adding some value to the conversation is in order. I see lean technology and services startups every day. Instead of focusing chasing VC, they are focusing on finding more customers. Interesting fact is that they do get approached by VC, once the customer revenue starts rolling in. Except that the tables are turned by than. Yes, it may take them a year extra time to get rolling, but at least, if the product or service is really taking care of customer pain point, they end up in a better competitive position anyway.

  8. eric – love to talk to you some more about more granular details within the theme. the lean startup is the only startup really. geolocation leveraged lean-ness is also a key part depending on the technology/products/markets involved. and after getting to a level where lean can get more mean muscle, additional dollars can certainly play a role as well – the discipline (it its ingrained in the DNA by that time) will serve them well when they are funded.

    1. Dack bs generator = fail.

      Exactly WHAT did you just say? I can’t follow it…is there a BS to English translator button next to the social cr@p to post on this site?

  9. Not a bad summary but one has to ask: As opposed to what ? Some of this stuff is main stream.

    “50 releases a day” presupposes a certain product model ( software as a service), so perhaps you should discuss where this model can be made to work. You couldn’t try to get even 2 release out on any of the app stores in a day if you tried, let alone enterprise software.

    Although I agree that companies can be launched where out of pocket expenses can be kept low, given the way one buys infrastructure has changed – I find the $10K number a bit tiresome. First, that number has a lot of “survivor bias”, and second, it ignores any salaries. It should be rephrased to “can be launched for less than $10K of out of pocket expenses plus the cost of founders labor”. To your credit, you do say can be “launched” and not run for $10K.

    I dont know what to make of your throwaway comment: “it’s a terrible waste that so many of them fail”.

    Isnt that the point ? – The cost to try something and to bring it to a point where you can have your customers provide feedback is now low ( say less than $10K), so now we have the luxury of experimenting with many of these ideas to find the few sticky ones.

    Finally, validated customer learning is hardly a “lean” concept – just plain common sense. It can also cost millions of dollars just as well and still be lean. See how Nokia designs a new phone feature or how P&G gets a new detergent to market to create multi-billion dollar products.

    For web software companies it is true that we can, and should, get products into a shape where customers can help kill them off sooner, and with lowered costs have been set free to “rinse and repeat”

    Ernest Nova

  10. A new release every 30 minutes? Sounds like a robust product offering. Where do I send my money?

Comments have been disabled for this post