Here are some reasons why you should read this book summary
In order to develop a product, you don't need a large budget and several months of planning. According to Lean Start-up, you could just start selling and get feedback. As a result, you will know what works and what doesn't. Throughout this book, you will learn how to grow your business in a simple yet practical way. To believe it, you must read it if you are an entrepreneur or aspiring entrepreneur.
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Whether you're a business student, a product developer, an aspiring entrepreneur, or a business owner aiming to develop a new product or expand your business, there's something for everyone here
A little about the author
The author and entrepreneur Eric Ries has written several books. He worked for two start-up companies that closed down. He then became CTO of social network IMVU. In the business world, the Lean Start-Up became widely acclaimed. As CEO of the LTSE, Eric Ries established a new stock exchange in 2015.
Getting started
What is the first thing that comes to mind when you hear the word "startup"? A group of friends probably develop a new product in a garage. This is an exciting venture that promises big profits.
Silicon Valley is known for its dot com companies. As you probably know, that is how Apple started. But did you know that an established company can have a startup?
This book contains a lot of interesting ideas like that. We are living in a changing world of business. It is therefore necessary to change the traditional approach as well. A modern approach to business is presented in The Lean Startup.
There are startups that have very good planning. Their product and marketing strategies are well thought out. Their team is made up of intelligent individuals. Why do these startups fail despite investing so much time, money, and effort?
Could there be anything missing? Is the planning insufficient? You may want to start your own business. You may already be an entrepreneur looking for a new venture. In either case, this book is for you. We'll show you how startups can become multi-million companies if you're curious.
Start small, think big
The author Eric Ries was a member of a startup with his college friends in the early 2000s. The company offers a website where people can share their profiles with potential employers. Their product is excellent.
Their team is amazing, and their technology is excellent. When the dot com bubble burst, the startup failed, along with many others. Eric Ries was disillusioned. According to him, the magazine stories of success are false.
No matter how hard you work and how perseverant you are, you will still fail. You would still fail even if you were determined and had good ideas. Over the years, most startups have ended here, according to Eric. There are many great new products that fail.
In his experience, Eric learned that startups can achieve success by following a certain process. It is possible to learn and follow the right process. Eric co-founded another startup in 2004.
On an online platform, members can create their own avatars. They can be connected to friends. It's exciting about the startup that customers will create everything, including clothes, accessories, and furniture for their avatars.
Eric's team faces a big challenge. Engineering a virtual world and 3D avatar technology is a lot of work. The payment and customer buying features must also be designed.
IMVU is Eric's new company. He and his co-founders experimented with this new venture. Everything they did was wrong. An early version of the product was engineered. Customers were able to purchase it immediately after it was released.
This approach is a big mistake on the traditional business model. Rather than investing so much time in perfecting the virtual world, they allow customers to send feedback. Before releasing anything, everything should be prepared.
Strategy, products, and market predictions should already be in place. Today, modern businesses follow Eric's new approach. The Lean Startup was based on this principle.
Can you tell me what the Lean Startup is?
Experimentation is at the heart of the Lean Startup. Learning from mistakes is the main idea. A product isn't perfected over a long period of time. There is no need to spend years determining whether a product will sell or how customers will respond to it.
In the Lean Startup method, you create an early version of the product in small batches. You then make the necessary changes along the way. This prevents new products from being wasted and pulled off the shelves as a result of continuous innovation.
It is true that the Lean Startup has become a global movement. Many organizations around the world adopted it. Business experienced a renaissance as a result.
It was not just new companies that applied the principle, but also the most elite businessmen and Fortune 500 companies as well. IMVU, Eric Ries' company, earned $50 million in 2011 in total.
The Lean Startup is based on what principles?
Lean Startup is based on five key ideas. The first thing you need to know is that you don't have to start a business in a garage. No matter where you are, it doesn't matter. Entrepreneurship is an option you can choose.
Startups are defined by uncertainty. In the event of extreme uncertainty, any organization that wishes to create a new service or product is a startup. There is no industry or sector that cannot benefit from the Lean Startup.
The second factor is management. Startups refer to more than just products. In addition to the product, you are also referring to the people behind it. It is necessary to manage the people or the institution.
There is a need for a special form of management, especially since there is so much uncertainty involved. Number 3 is validated learning. An entrepreneur can test what works for their business using validated learning through a series of experiments.
It has experience testing scientific hypotheses. Startups aim to be sustainable, which is an important goal. Profit is not the only goal.
The fourth step is to build, measure, and learn. A startup's primary tasks are to build products, measure feedback from customers, and determine whether to pivot or persevere based on the feedback.
Turning and trying a different approach is pivoting. Perseverance means continuing on. If the feedback from the experiment is negative, pivot, and if the feedback is positive, persevere.
The fifth item is progress. Getting used to the build-measure-learn cycle is crucial for startups. It must learn more from the feedbacks in a shorter period of time. To achieve sustainable business, startups need to know which processes to follow.
Zappos
The Zappos website sells shoes online. Customer service is its best asset. The Zappos company is one of the largest e-commerce players on the global market. Having annual sales up to $1 billion, it is the most successful.
Zappos was founded by Nick Swinmurn, like all startups. A couple of years ago, he became frustrated because there was no single online site showcasing all kinds of shoes. The best buying experience was important to him.
Swinmurn could have spent a lot of time planning. He should have figured out everything first, from warehouses to distribution partners to potential sales. E-commerce pioneers followed that trend.
Zappos was founded by Swinmurn as an experiment. According to him, people are already confident about buying shoes online. In order to take pictures of their products, he asked the local shoe brands for permission.
The photos would be uploaded online in exchange for Swinmurn uploading them. In cases where customers ordered shoes, he would return to the stores to purchase them.
Zappos started out as a simple website. Swinmurn set out to answer the question of whether online shoe shopping is really in demand. As a result of interacting with actual customers, he was able to create the best payment, return, and customer support system.
This experiment is very different from market research. Swinmurn would have gotten what the customers wanted if he had conducted a survey. It was through building the site that he learned so much more.
In the first place, he got more accurate data by having real customers rather than made-up situations on a survey. The second thing he learned was what the actual needs of the customers were. Zappos might need to offer discounted prices, he learned.
Thirdly, he was able to deal with customer behavior. As a result, he learned how to deal with return issues. Zappos learned a lot from Swinmurn's experiment. Despite its small scale, the company was successful.
As a result of Swinmurn's experience, he knows what needs to be included in the online store. Zappos became a recognized brand. Amazon purchased the company for $1.2 billion in 2009.
Zappos' story proves the effectiveness of Lean Startup. As a result of the experiment, the company saved time, effort, and money. Swinmurn was right to ensure orders before stocking shoes.
As a result, he didn't have shoes in his inventory that no one wanted. Additionally, it eliminated the need for a customer survey. The actual customer interaction was more accurate.
Additionally, he was able to deal with actual problems and satisfy customers. Swinmurn began with a raw material. Through experimentation, Zappos became the perfect customer-friendly website.
It is called a Minimum Viable Product because it is a simple, functional site. MVPs are initial versions of products. Developing it is cheap, easy, and quick. Through experimentation, it would evolve into a perfect product.
Zappos started out with a lot of uncertainty according to the Lean Start-up principle. Shoes were not available online. In addition, Swinmurn was unsure if there was even a demand for one.
By launching the experiment site, Swinmurn tested his hypothesis. After dealing with real customers, he applied build-measure-learn. Swinmurn learnt which approaches to pivot or persevere, such as discounts and return policies. Zappos eventually became a sustainable company.
Laundry service in the village
In the past, only a few Indian homes had washing machines. Only 7% of the population can afford washing machines due to their high cost. The majority of people wash their clothes by hand.
In such a case, they hire a dhobi to do the laundry for them. The dhobi brings the clothes to the river. In order to wash the clothes, they would bang them against rocks and use river water to wash them. The Dhobi would need ten days to return the clothes, which probably aren't so clean.
This was an opportunity for AkshayMehra. For eight years, he was a brand manager at Procter & Gamble Singapore. His responsibilities included the Pantene and Tide brands in India and Southeast Asia. Providing affordable laundry services was AkshayMehra's goal.
AkshayMehra collaborated with Village Laundry Services after returning to India. In order to figure out the best business approach, they conducted experiments together. VLS loaded a washing machine onto a pickup truck as a first experiment. The truck was parked on a busy street in Bangalore.
VLS only spent $8,000 on the pickup truck idea. First of all, they wanted to know if people are willing to give their clothes and pay to wash them. On the truck, the clothes are not actually cleaned.
This was just for marketing purposes. VLS cleans the clothes somewhere. In order to learn more about the customers, the VLS parked the truck at various locations within a week.
What can they do to encourage more people to bring their laundry? Are people looking for faster cleaning times? Do they care about cleanliness? Are there any specific requests from the customers?
According to VLS, customers fear that their clothes will be stolen by the truck. In order to resolve the issue, VLS replaced the pickup truck with a customer-friendly mobile kiosk. A kiosk was also set up near a local grocery store as part of another experiment.
Customers also want their laundry ironed, according to VLS. The experiments done by VLS are productive. They discovered they can pay twice as much to get their clothes back within 4 hours.
The final product is a mobile kiosk measuring 3 feet by 4 feet. The washing machine and dryer are efficient. Clean water and quality detergents are used.
After the successful experiments, Village Laundry Service had 14 mobile kiosks in major cities, including Mumbai and Bangalore. As Akshay Mehra, CEO, proudly shared, "We have serviced 116,000 kg. in 2010. We have serviced more than 10,000 customers in the past year alone."
As with Zappos, we can see how VLS applied the principles of Lean Startup. Initially, AkshayMehra faced uncertainty. The laundry service would not be patronized by the people, he did not know.
As a second step, they produced an initial product. A pickup truck is an MVP, or Minimum Viable Product. Developing it did not cost them a lot of money, time, or effort.
Third, VLS was able to build-measure-learn from the feedbacks of its customers. With the ironing service, they got the idea to pivot the pickup trucks.
As a result of the experiment, they developed the perfect product that would satisfy customer needs. It was a huge success. As a result, the Village Laundry Service became sustainable.
What if VLS finalized their product before launching it? Can you imagine what it would be like if they spent years planning the perfect marketing strategy? How about conducting a survey first? In the traditional method of business, all of these would have worked. However, these are all inefficient for startups.
When starting a business, there is a great deal of uncertainty. Investing so much in products or strategies that aren't guaranteed to succeed is not a good idea for startups. Unless you deal with actual customers, you cannot be 100% certain.
It is better to start small when starting a new business. In the end, you will come up with the perfect sustainable product through experiments and the build-measure-learn method.
Groupon
Do you know about Groupon? This is the first online site to offer group coupons to customers. Due to Groupon's rapid growth, many sites have copied its concept. However, the company didn't start out well.
Groupon's first customers were 20 people who bought buy one take one pizza coupons. Andrew Mason did not intend for Groupon to be a social commerce platform. Mason and his team created a minimum viable product, however. The story goes like this.
In the beginning, Groupon was a Wordpress blog. Every day, Mason and his team posted something new. "This T-shirt will come in red, size large. If you want a different color or size, e-mail us." Groupon didn't even have an order form yet. The idea was very simple, but it worked.
They proved that there is a demand for their product through their experiment. There are customers who will find Groupon useful. Mason and his team then created actual coupons using only FileMaker. Groupon's first coupons were actually PDFs. Customers would receive PDF coupons via email.
There was a demand for 500 sushi coupons one day. The PDF file had to be emailed to all 500 customers. Groupon was really just trying to put things together in its first year.
However, Wordpess, FileMaker PDFs, and 20 pizza coupons all contributed to Groupon's success. A record-breaking growth rate has been achieved by the company.
One of the fastest to reach $1 billion is them. Groupon helps local businesses gain new customers today. Special affordable deals are available in 375 cities worldwide.
Startups use Minimum Viable Products to discover what their customers want. It is for this reason that MVPs are only easy, cheap, and quick to develop. Using MVPs, startups can begin the build-measure-learn cycle immediately.
To achieve perfection, products must undergo a long development process in traditional business models. MVPs, however, are more effective.
The startup is able to figure out the best product design and know the technical issues. Furthermore, MVPs provide answers to a lot of questions about business and marketing.
Toyota
Genchi Gembutsu literally means "go and see for yourself". The best decision can only be made by managers who see for themselves what's happening first-hand. As a company, Toyota is committed to this principle.
Genchi Gembutsu must be applied throughout the product development process, manufacture, distribution, sales, and even public relations. It's the Toyota Way. Managers cannot truly understand the problem unless they go and see for themselves.
Yuji Yokoya was the manager for the 2004 Sienna minivan. Throughout the production of Sienna, he was responsible for overseeing everything from concept to execution.
North America is the largest market for minivans. In that year, Yokoya made a bold business move. A road trip across all 50 states of the U.S. was undertaken by Yokoya, as well as across Canada and Mexico.
In total, Yokoya covered 53,000 miles on the Sienna. In every town and city, he rented the 2003 model to see what needed to be improved. Additionally, he observed and spoke with real minivan drivers. A critical part of the 2004 model's success was what Yokoya learned.
The minivan may be owned by parents and grandparents, but it is the kids who rule it. Kids occupy the rear two-thirds of the vehicle, and they are the most critical—and the most appreciative—of their surroundings. As I traveled, I learned that the new Sienna needed to appeal to kids."
As a result, Yokoya spent a lot of money on the interior comfort features of the 2004 Sienna minivan. Family road trips in America tend to be long distances, so comfort is important to the kids.
Since long road trips are not that common in Japan, Yokoya would not have learned this. The improved comfort features were very successful. Sales of the 2004 model are 60% higher than those of the 2003 model. Success followed Yokoya's travels.
Manager Yokoya demonstrated the effectiveness of Genchi Gembutsu. He is the best at what he does. As for startups, there is no other way than to see for yourself. The importance of experiments cannot be overstated.
In new companies, they are more effective than other business strategies. You wouldn't know what real customers want unless you created an MVP and experimented with them.
For startups, it is the best way to learn. It is not necessary to conduct long, costly, and difficult experiments. However, they produce impressive results.
Conclusion
You have a great business idea. Create an MVP to test that hypothesis. Keep in mind that your minimum viable product shouldn't be expensive. You can start small since you're just getting started.
Create a simple MVP in a short period of time. Once you have your MVP, you can start learning. Now you can begin experimenting. Keep in mind the build-measure-learn cycle. Create your product.
Learn from the feedback of your customers. It will be clear to you what ideas need to be pivoted and persevered.
Repeat the build-measure-learn loop until you have tested all your assumptions and answered all the uncertainties. As a result, you will come up with the best final product and business strategy.
By applying Lean Startup, you are not only set to make money. Since you interacted with real customers, you have a high chance of creating a sustainable business. Fight the uncertainties now and be on your way to success!
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