An Intro to Lean Startup
Before running out of money, getting squashed by competition, living in the wrong location, the number one reasons startups fail is no market need! That means, a startup built a product that no one wanted or needed. That's a little backwards, most startups are founded because someone had a new idea to fix a problem in the world. Founders get fixated on the idea and their solution and totally skip over understanding the problem!
Fall in love with the problem, not the solution -Uri Levine: Waze Cofounder
Luckily, a smart guy named Eric Ries adapted his knowledge of lean management to the high-tech startup companies. When Ries wrote The Lean Startup in 2011, this created a new movement on building lean & agile businesses. Ries proposed several new practices, focused on reducing the chance of founders wasting a lot of time and money building an product no one wanted. Similarly, a new wave of principles arose around failing fast to save time and money. The most popular of these include:
- Minimum viable product
- AB Testing
- Customer Discovery
- Build Measure Learn
- Get Keep Grow Funnel
- Business Model / Lean Canvas
- Actionable Metrics
Perhaps the sole reason the The Lean Startup was founded was to prove that the famous motto "If you build it, they will come is complete BS. History has shown that you can build a beautiful and intricate product but still fail to acquire customers to use it! As I said, the number one reasons startups fail is No Market Need.
When starting a new business, all you have are a bunch of ideas on how your company will run, the problems it's going to solve, and the product it's going to build. These ideas are considered untested hypotheses. That is, you really don't know anything you're thinking is true! The only way to validate (or invalidate) a hypothesis is to get out of your building and speak with your target customer. By constantly speaking with your customers, you build a product around your customers feedback ensuing it solves their problems.
I like to think of The Lean Startup as similar to the scientific method, you know... the one you learned in middle school. Your startup is the lab, and you have to run a lot of experiments on hypotheses to see if you are right or wrong about your assumptions. At first you might hypothesize if you mix two parts oxygen with one part hydrogen, you get H2O (water)- but it actually takes a spark and a release of energy (explosion) to get the water you were expecting! Theres no way to have known that, unless you ran the experiment and discovered it on your own.
The Business Model Canvas is a tool to keep track of all these hypotheses in one place. Founded by Alexander Osterwalder, the canvas is comprised of nine sections. The two most important sections for a young startup is Value Proposition and the Customer Segment. Once a value proposition is found and matched to the right customer segment, this is called Product Market Fit (the product and market fits together).
Because of it's success the Lean Startup principles have been subsequently applied to other areas of business including software, hardware, management, and UX design.
So are you building an awesome product no one wants? This post just touched the surface of Lean Startup. I'll be writing further posts diving into more detail. Stay tuned for more info! :D