The Lean Startup: The Million Copy Bestseller Driving Entrepreneurs to Success

by Eric Ries

To open up a new business that is an exact clone of an existing business all the way down to the business model, pricing, target customer, and product may be an attractive economic investment, but it is not a startup because its success depends only on execution—so much so that this success can be modeled with high accuracy.

(This is why so many small businesses can be financed with simple bank loans; the level of risk and uncertainty is understood well enough that a loan officer can assess its prospects.)

In other words, cultivating entrepreneurship is the responsibility of senior management.

However, learning is cold comfort to employees who are following an entrepreneur into the unknown. It is cold comfort to the investors who allocate precious money, time, and energy to entrepreneurial teams. It is cold comfort to the organizations—large and small—that depend on entrepreneurial innovation to survive.

Metcalfe’s law: the value of a network as a whole is proportional to the square of the number of participants.

I was a devotee of the latest in software development methods (known collectively as agile development), which promised to help drive waste out of product development. However, despite that, I had committed the biggest waste of all: building a product that our customers refused to use. That was really depressing.

Zero invites imagination, but small numbers invite questions about whether large numbers will ever materialize.

In enterprise products, it’s often about gaining a competitive advantage by taking a risk with something new that competitors don’t have yet. Early adopters are suspicious of something that is too polished: if it’s ready for everyone to adopt, how much advantage can one get by being early?

Wizard of Oz test, customers believe they are interacting with the actual product, but behind the scenes human beings are doing the work.

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 them up, write them a memo, send them a press release—go ahead, try it. The truth is that most managers in most companies are already overwhelmed with good ideas. Their challenge lies in prioritization and execution, and it is those challenges that give a startup hope of surviving.

of user stories, a technique taken from agile development. Instead of writing a specification for a new feature that described it in technical terms, Farb would write a story that described the feature from the point of view of the customer.

Teams that are used to measuring their productivity narrowly, by the number of stories they are delivering, feel stuck. The only way to start work on new features is to investigate some of the stories that are done but haven’t been validated. That often requires nonengineering efforts: talking to customers, looking at split-test data, and the like.

For a product with a viral coefficient of 0.1, one in every ten customers will recruit one of his or her friends. This is not a sustainable loop.

Changing customer segments required them to switch to hiring a sizable outbound sales staff that spent time attending conferences, educating executives, and authoring white papers.

Startups occasionally ask me to help them evaluate whether they have achieved product/market fit. It’s easy to answer: if you are asking, you’re not there yet.

Friendster effect, suffering a high-profile technical failure just when customer adoption is going wild.

The performance of the mentor and mentee were linked, so the mentors took this education seriously.

It is epitomized in the paradoxical Toyota proverb, “Stop production so that production never has to stop.” The key to the andon cord is that it brings work to a stop as soon as an uncorrectable quality problem surfaces—which forces it to be investigated.

incentivized