The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses by Eric Ries
My rating: 4 of 5 stars
The one simple thing which everyone should take away from this book is – you have a bussiness plan, in it there are assumptions – run experiments to test each of the assumptions. With this you can then see if you should pivot the strategy for your vision if people don’t react as you were expecting, however first you must launch early and learn. Then you can optimise your product using experiments to refine.
A startup should be properly understood as “a human institution designed to create a new product or service under extreme uncertainty”
To see if things are going the right way don’t just use number of people vs time – these up and to the right graphs are misleading/vanity metrics. Instead use cohort analysis where you see of the 100% of people who visited your site, the percentage that signed up, the percentage that signed up and used the product etc – if you are making changes and these percentages stay the same then things are not improving. To do this needs small batches and speedy feedback loops.
Experiments must be : Actionable, demonstrating clear cause and effect, accessible, aka understandable, and auditable, to be able to go and actually validate the accuracy of the numbers so we have trust in them.
There are two engines for a bussiness : growth, acquiring customers, and revenue, earning money from customers.
If things are not improving and the current state is inevitable then a pivot is needed, there are various types of pivots:
- Zoom in – focusing on a sub part of the product
- Zoom out – where the current product becomes a feature of a bigger product
- Customer segment – where your customers turn out to be not the ones you expected
- Customer need – by getting to know our customer we find a greater need for them
- Platform – turning from a product to a platform
- Business architecture – e.g. from B2B to B2C
- Value capture – a change in monetisation or revenue models
- Engine of growth – viral (word of mouth), sticky (returning) or paid (adverts)
- Channel – how the content is delivered e.g. DVD or internet
- Technology – using a different technical solution to solve the same problem
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