Week 2 BUS 477
Lean Start Up Model Intro
- Doomed from day 1 because they didn’t know how to turn their product into a great
- Startup success is based on following the right process.
- “Entrepreneurship is a kind of management”
- Early on they sent out prototypes and not fully equipped versions of their products and
experimented on their customers rather than trying to cater to their needs and
surprisingly it worked
Origins of The Lean Startup
- Steve Blank expressed that Business and Marketing functions should be seen just as
important as the product development and engineering side of a business. Steve Blank
coined this “Customer Development”
- Lean Startup was made to help eliminate startups from building products that nobody
wants and having their products and companies eventually fade away
The Lean Startup Method
1. Entrepreneurs are everywhere: Any individual who is working within a startup.
a. Start Up is defined as: a human institution designed to create new products
and services under conditions of extreme uncertainty.
2. Entrepreneurship is management: As a startup is an institution it requires
3. Validated Learning: Startups exists to learn how to build sustainable companies.
Through running frequent experiments startups are able to validate their visions
4. Build Measure Learn: The main activity of a startup is to build a product, measure
how the customers respond, and learn from that to help determine whether a pivot
needs to be made.
5. Innovation Accounting: To improve entrepreneurial outcomes we must be able to
measure and take account for methods on how to set up milestones, prioritize work,
and how to manage.
Why Startups Fail
- Most startups fail because they’re caught up in an initial good plan, solid strategy, and
thorough market research , however this doesn’t work for startups because they begin
with too much uncertainty.
Chapter 1: Start
- Startups are an institution and just like any institution they require management. This is
often ignored by Entrepreneurs - We’re going through an era of more entrepreneurs than ever, but we lack efficient
The Roots of The Lean Startup
- Lean startup takes its name from Taiichi Ohono and Shigeo Shingo from Toyota
- The lean start up uses “Validated Learning” to measure progress. With this we are
eliminating sources of waste that plague entrepreneurship.
- A good theory of Entrepreneurship should address all the functions of an early stage
venture such as:
o Product Development
o Marketing & Sales
o Scaling Up
o Partnerships & Distribution
- The goal of a startup is to figure out the right thing to build, what customers are
willing to pay for as quickly as possible.
- The Feedback Loop that startups have is labeled the “Engine on Growth”
- Startups also have a true north, Startups employ a strategy which include:
o Business Model
o Product Road Map
o Point of View About Partners & Competitors
o Ideas about who the customer will be
- Products change constantly through the process of optimization
- Strategy often changes which is called the “Pivot”
- Vision rarely changes and every set back is an opportunity of learning.
- Within a startup there are simultaneous activities occurring.
Chapter 2: Define
Who Exactly Is An Entrepreneur?
- A great quality for success is one’s ability to direct the company’s corporate policies,
personnel, and processes to get things done. - Entrepreneurs who work inside an established organization are called “Intrapreneurs”
because of the special circumstances that attend building a startup within a larger
- An Entrepreneur is anyone who is creating a new product or business under conditions
of extreme uncertainty.
- Startups are designed to confront extreme situations of uncertainty.
The Snaptax Story
- Snaptax became successful by having a management team from within Intuit (an already
- The key to this management team is that, these were people that supported, nurtured,
and heald them accountable.
A 7 Thousand Person Lean Startup
- Try to test as much as possible.
- People love to get their ideas/opinions out
- Intuit was able to make the same revenue off new products in 5 years in 1 year after
testing thousands of products and receiving feedback and altering accordingly
Chapter 3: Learn
- We should measure if we are building things that people want. If you’re building things
on time and on budget, it doesn’t matter if nobody wants it.
- Don’t use learning as an excuse to justify failure
- However, use learning from your failures as a way to figure out what customers really
- We should use the term “Validate Learning” which is a process where a team has
discovered valuable truths about a startups present and future business prospects.
Validated Learning At IMVU
- An early on mistake that the author had is trying to ask questions like
o What should we build and for whom?
o What market could we enter and dominate?
o How could we build durable value that would not be subject to erosion by
- Metcalfe’s Law is: the value of a network as a whole is proportional to the square of the
# of participants. The bigger the audience the more valuable it is.
6 Months to Launch
- They set a deadline for a product to be launched in 180 Days
- When they launched, nobody came . - They tried to make adjustments but despite that only a small number of people
purchased the product.
- It wasn’t until they brought customers in that they realized customers couldn’t tell them
what they want, but they could show them through their actions.
Talking to Customers
- They learned that customers will not invite friends or tell their friends about something
if it is not “cool” or makes them look “cool”
- It wasn’t until the ChatNow feature which allowed the person to connect with an
anonymous person to interact with, that people would agree to interacting with another
- Through this analysis they learned that IM users didn’t mind switching to new networks,
and that they would not mind using avatars to meet new people over inviting their
Throwing My Work Away
- Often times when you fail , and throw your work away it can give insight to something
that will create a breakthrough.
- The lesson learned is that you should spend more time on customer insights rather than
spending too much time