The Lean Startup: How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses

by Eric Ries

The lesson of the MVP is that any additional work beyond what was required to start learning is waste, no matter how important it might have seemed at the time.

THE VIDEO MINIMUM VIABLE PRODUCT

Dropbox needed to test its leap-of-faith question: if we can provide a superior customer experience, will people give our product a try? They believed—rightly, as it turned out—that file synchronization was a problem that most people didn’t know they had. Once you experience the solution, you can’t imagine how you ever lived without it. This is not the kind of entrepreneurial question you can ask or expect an answer to in a focus group. Customers often don’t know what they want,

To avoid the risk of waking up after years of development with a product nobody wanted, Drew did something unexpectedly easy: he made a video.

Drew narrates the video personally, and as he’s narrating, the viewer is watching his screen.

“It drove hundreds of thousands of people to the website. Our beta waiting list went from 5,000 people to 75,000 people literally overnight.

THE CONCIERGE MINIMUM VIABLE PRODUCT

After you sign up for the site, you walk through a little setup in which you identify your main grocery store and check off the foods your family likes.

Next, you’re presented with a list of items that are based on your preferences and asked: “What are you in the mood for this week?” Make your choices, select the number of meals you’re ready to plan, and choose what you care about most in terms of time, money, health, or variety. At this point, the site searches through recipes that match your needs, prices out the cost of the meal for you, and lets you print out your shopping list.

Clearly, this is an elaborate service.

That one early adopter got the concierge treatment. Instead of interacting with the FotT product via impersonal software, she got a personal visit each week from the CEO of the company. He and the VP of product would review what was on sale at her preferred grocery store and carefully select recipes on the basis of her preferences,

Each week they would hand her—in person—a prepared packet containing a shopping list and relevant recipes, solicit her feedback, and make changes as necessary. Most important, each week they would collect a check for $9.95.

Measured according to traditional criteria, this is a terrible system, entirely nonscalable a...

Instead of marketing themselves to millions, they sold themselves to one.

However, viewed through the lens of the Lean Startup, they were making monumental progress.

After a few weeks they were ready for another customer. Each customer they brought on made it easier to get the next one, because FotT could focus on the same grocery store, getting to know its products and the kinds of people who shopped there

Only at the point where the founders were too busy to bring on additional customers did Manuel and his team start to invest in automation in the form of product development.

Each iteration of their minimum viable product allowed them to save a little more time and serve a few more customers: delivering the recipes and shopping list via e-mail instead of via an in-home visit, starting to parse lists of what was on sale automatically via software instead of by hand,

Before long, they had built a substantial service offering, first in the Austin area and eventually nationwide.

In a concierge MVP, this personalized service is not the product but a learning activity designed to test the leap-of-faith assumptions in the company’s growth model.

a common outcome of a concierge MVP is to invalidate the company’s proposed growth model, making it clear that a different approach is needed. This can happen even if the initial MVP is profitable for the company.

PAY NO ATTENTION TO THE EIGHT PEOPLE BEHIND THE CURTAIN

a vision to build a new type of search software designed to answer the kinds of questions that befuddle state-of-the-art companies such as Google.

for more subjective questions, Google struggles. Ask, “What’s a good place to go out for a drink after the ball game in my city?”

they built a series of functioning products, each designed to test a way of solving this problem for their customers. Each product was then offered to beta testers, whose behavior was used to validate or refute each specific hypothesis

the early Aardvark experiments tried many variations on this theme, building a series of prototypes for ways customers could interact with the virtual assistant and get their questions answered. All the early prototypes failed to engage the customers.

What became Aardvark was the sixth prototype. Each prototype was a two- to four-week effort.

“Once we chose Aardvark,” Ventilla says, “we continued to run with humans replicating pieces of the backend for nine months.

The Aardvark product they settled on worked via instant messaging (IM). Customers could send Aardvark a question via IM, and Aardvark would get them an answer that was drawn from the customer’s social network: the system would seek out the customer’s friends and friends of friends and pose the question to them. Once it got a suitable answer, it would report back to the initial customer.

Of course, a product like that requires a very important algorithm: given a question about a certain topic, who is the best person in the customer’s social network to answer that question?

Each time, they emphatically refused to solve them at that early stage. Instead, they used Wizard of Oz testing to fake it. In a Wizard of Oz test, customers believe they are interacting with the actual product, but behind the scenes human beings are doing the work.

At that scale, it allowed Max and Damon to answer these all-important questions: If we can solve the tough technical problems behind this artificial intelligence product, will people use it?

When they were ready to start scaling, they had a ready-made road map of what to build. The result: Aardvark was acquired for a reported $50 million—by Google.

THE ROLE OF QUALITY AND DESIGN IN AN MVP

discussions of quality presuppose that the company already knows what attributes of the product the customer will perceive as worthwhile. In a startup, this is a risky assumption to make. Often we are not even sure who the customer is. Thus, for startups, I believe in the following quality principle: If we do not know who the customer is, we do not know what quality is.

Feedback from the customers was very consistent: they wanted the ability to move their avatars around the environment.

We changed the product so that customers could click where they wanted their avatar to go, and the avatar would teleport there instantly. No walking, no obstacle avoidance. The avatar disappeared and then reappeared an instant later in the new place.

This inexpensive compromise outperformed many features of the product we were most proud of, features that had taken much more time and money to produce. Customers don’t care how much time something takes to build. They care only if it serves their needs.

MVPs require the courage to put one’s assumptions to the test.

we must always ask: what if they don’t care about design in the same way we do?

the Lean Startup method is not opposed to building high-quality products, but only in service of the goal of winning over customers.

this does not mean operating in a sloppy or undisciplined way.

As you consider building your own minimum viable product, let this simple rule suffice: remove any feature, process, or effort that does not contribute directly to the learning you seek.

SPEED BUMPS IN BUILDING AN MVP

The most common speed bumps are legal issues, fears about competitors, branding risks, and the impact on morale.

For startups that rely on patent protection, there are special challenges with releasing an early product. In some jurisdictions, the window for filing a patent begins when the product is released to the general public, and depending on the way the MVP is structured, releasing it may start this clock.

In all cases, entrepreneurs should seek legal counsel to ensure that they understand the risks fully.

the most common objection I have heard over the years to building an MVP is fear of competitors—especially large established companies—stealing a startup’s ideas.

Part of the special challenge of being a startup is the near impossibility of having your idea, company, or product be noticed by anyone, let alone a competitor.

the following assignment: take one of your ideas (one of your lesser insights, perhaps), find the name of the relevant product manager at an established company who has responsibility for that area, and try to get that company to steal your idea. Call the...