The Lean Startup

by Eric Ries

1. Build-Measure-Learn: The Core of Lean Startup Methodology

"The fundamental activity of a startup is to turn ideas into products, measure
how customers respond, and then learn whether to pivot or persevere."
Iterative process. The Build-Measure-Learn feedback loop is the cornerstone of
the Lean Startup methodology. It emphasizes rapid iteration and learning from
customer feedback. This cycle involves:
 Build: Create a minimum viable product (MVP) based on initial
hypotheses
 Measure: Collect data on how customers interact with the product
 Learn: Analyze the data to validate or invalidate hypotheses
Continuous improvement. By repeating this cycle quickly and frequently,
startups can:
 Minimize waste of time and resources
 Adapt to market needs more effectively
 Increase chances of success through validated learning
2. Validated Learning: Empirical Testing of Business Hypotheses
"The goal of a startup is to figure out the right thing to build—the thing
customers want and will pay for—as quickly as possible."
Scientific approach to entrepreneurship. Validated learning is about rigorously
testing business hypotheses through empirical experiments. This approach:
 Replaces assumptions with facts
 Helps identify and eliminate wasteful activities
 Guides strategic decisions based on evidence
Key components:
  Formulating clear, testable hypotheses about the business
 Designing experiments to test these hypotheses
 Analyzing results to draw actionable insights
 Applying learnings to refine the product and business model
3. Minimum Viable Product (MVP): Rapid Experimentation for Maximum
Learning
"The minimum viable product is that version of a new product which allows a
team to collect the maximum amount of validated learning about customers
with the least effort."
Efficient learning tool. An MVP is not about creating a stripped-down version
of the final product, but rather the simplest way to start the learning process.
Benefits include:
 Faster time-to-market
 Reduced development costs
 Early customer feedback
MVP strategies:
 Concierge MVP: Manually delivering the service to a small group of
customers
 Wizard of Oz MVP: Simulating automated processes with human labor
 Landing page MVP: Testing market interest with a product description
page
 Video MVP: Demonstrating the product concept through a video
presentation
4. Pivot or Persevere: Data-Driven Decision Making
"A pivot is a structured course correction designed to test a new fundamental
hypothesis about the product, strategy, and engine of growth."
Strategic flexibility. The pivot or persevere decision is a crucial moment in a
startup's life. It involves:
 Analyzing data from experiments and customer feedback
  Evaluating the current strategy's effectiveness
 Deciding whether to continue on the current path or change direction
Types of pivots:
 Zoom-in pivot: A single feature becomes the whole product
 Zoom-out pivot: The whole product becomes a single feature of a larger
product
 Customer segment pivot: Targeting a different set of customers
 Platform pivot: Changing from an application to a platform or vice versa
 Business architecture pivot: Switching between high margin, low volume
and low margin, high volume models
5. Innovation Accounting: Measuring Progress in a Startup
"Innovation accounting enables startups to prove objectively that they are
learning how to grow a sustainable business."
Metrics that matter. Innovation accounting provides a framework for
measuring and communicating progress in a startup environment. Key aspects
include:
 Focusing on actionable metrics rather than vanity metrics
 Establishing learning milestones to gauge progress
 Using cohort analysis to understand customer behavior over time
Three steps of innovation accounting:
1. Establish the baseline: Use an MVP to gather real data on where the
company stands
2. Tune the engine: Run experiments to improve the metrics towards the
ideal
3. Pivot or persevere: Decide whether the company is making sufficient
progress
6. Small Batches: Increasing Efficiency and Reducing Risk
"The ability to learn faster from customers is the essential competitive
advantage that startups must possess."
Agile production. Working in small batches allows startups to:
 Identify and fix quality problems earlier
 Reduce work-in-progress inventory
 Accelerate feedback loops
Benefits of small batch sizes:
 Faster iteration and learning
 Reduced risk of large-scale failures
 Improved ability to adapt to changing customer needs
 Enhanced overall productivity and efficiency
7. Continuous Deployment: Accelerating the Build-Measure-Learn Cycle
"The goal of continuous deployment is to shrink the batch size of work down to
a single deployment."
Rapid iteration. Continuous deployment involves automatically releasing code
changes into production as soon as they're ready. This approach:
 Reduces the time between ideation and customer feedback
 Minimizes the risk associated with large releases
 Encourages a culture of experimentation and learning
Key components of continuous deployment:
 Automated testing to ensure code quality
 Feature flags to control the rollout of new features
 Monitoring systems to detect issues quickly
 A culture that embraces rapid iteration and learning from failures
8. The Five Whys: Root Cause Analysis for Startup Problems
"By asking and answering 'why' five times, we can get to the root cause of any
problem and make corrections that prevent the issue from recurring."
Problem-solving technique. The Five Whys is a simple but powerful tool for
identifying the root cause of problems in a startup. It involves:
  Asking "why" repeatedly to dig deeper into an issue
 Uncovering systemic issues rather than just symptoms
 Developing appropriate countermeasures to prevent recurrence
Implementing the Five Whys:
1. Assemble a team of people connected to the problem
2. Define the problem clearly
3. Ask "why" the problem occurred, and document the answer
4. For each answer, ask "why" again until you reach the root cause
5. Develop and implement solutions addressing the root cause
9. Adapting to Customer Needs: Building Products People Want
"We must learn what customers really want, not what they say they want or
what we think they should want."
Customer-centric approach. Successful startups focus on understanding and
meeting customer needs through:
 Engaging with customers directly and frequently
 Observing customer behavior rather than just listening to their words
 Iterating quickly based on customer feedback
Strategies for adapting to customer needs:
 Customer development: Systematically engaging with customers to
validate business hypotheses
 Genchi Genbutsu: Going to the actual place and observing firsthand (a
principle from lean manufacturing)
 A/B testing: Comparing different versions of a product to see which
performs better with customers
 User experience (UX) research: Studying how users interact with the
product to identify areas for improvement
Last updated: January 22, 2025
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FAQ
What's "The Lean Startup" about?
 Framework for success: "The Lean Startup" by Eric Ries provides a
framework for building successful startups by applying lean
manufacturing principles to innovation.
 Validated learning: It emphasizes validated learning, rapid
experimentation, and iterative product releases to reduce uncertainty
and improve outcomes.
 Broad applicability: The principles can be applied to startups of all sizes,
including large enterprises and government agencies.
Why should I read "The Lean Startup"?
 Avoid common pitfalls: The book offers insights into avoiding startup
failures by focusing on learning and adapting quickly.
 Scientific approach: It introduces a scientific approach to
entrepreneurship, allowing for testing assumptions and making data-
driven decisions.
 Valuable lessons: Whether you're an entrepreneur or interested in
innovation, it provides lessons on building sustainable businesses.
What are the key takeaways of "The Lean Startup"?
 Validated learning: Startups exist to learn how to build a sustainable
business, validated scientifically through experiments.
 Build-Measure-Learn loop: Turn ideas into products, measure customer
responses, and decide whether to pivot or persevere.
 Innovation accounting: Focus on measuring progress, setting milestones,
and prioritizing work to improve outcomes.
What is the Build-Measure-Learn feedback loop in "The Lean Startup"?
 Core process: Central to the Lean Startup model, emphasizing rapid
iteration and learning.
 Build phase: Create a minimum viable product (MVP) to test
assumptions with real customers.
  Measure and learn: Use customer responses to decide whether to pivot
or persevere in strategy.
What is a Minimum Viable Product (MVP) according to "The Lean Startup"?
 Simplest version: An MVP is the simplest version of a product that allows
for a full turn of the Build-Measure-Learn loop.
 Testing hypotheses: Its goal is to test fundamental business hypotheses
and start the learning process quickly.
 Not about perfection: Unlike traditional development, the MVP is not
meant to be perfect but to provide insights into customer needs.
What is validated learning in "The Lean Startup"?
 Rigorous method: Validated learning is a method for demonstrating
progress by empirically proving valuable truths about the business.
 Data-driven: It uses data to validate assumptions and guide decision-
making, beyond after-the-fact rationalization.
 Core to success: Essential for avoiding waste and ensuring that a startup
builds something customers truly want.
What does "pivot" mean in "The Lean Startup"?
 Structured course correction: A pivot is a structured change in strategy
to test a new fundamental hypothesis.
 Feedback-based: It is based on marketplace feedback and is essential
when progress is insufficient.
 Avoid stagnation: Helps avoid getting stuck in the "land of the living
dead," consuming resources without growth.
How does "The Lean Startup" define success?
 Sustainable growth: Success is achieving sustainable growth through
validated learning and efficient resource use.
 Customer-centric: Focuses on delivering value to customers and
improving products based on feedback.
 Adaptability: The ability to pivot and adapt to market changes is key for
long-term success.
What is innovation accounting in "The Lean Startup"?
 Alternative accounting: A new kind of accounting for startups to
measure progress and hold innovators accountable.
 Three steps: Establish a baseline with an MVP, tune the engine of
growth, and decide whether to pivot or persevere.
 Learning milestones: Emphasizes learning milestones over traditional
metrics, aiding informed decisions.
What are actionable metrics in "The Lean Startup"?
 Definition: Actionable metrics provide clear insights into performance
and guide decision-making.
 Contrast with vanity metrics: Unlike vanity metrics, actionable metrics
are tied to business goals and customer behavior.
 Decision-making tool: They help evaluate progress, test hypotheses, and
make informed product development decisions.
How can "The Lean Startup" principles be applied to large enterprises or
government agencies?
 Entrepreneurial management: Entrepreneurship is a form of
management applicable to any size company.
 Innovation factory: Large companies can build an "innovation factory"
using Lean Startup techniques for continuous innovation.
 Case studies: Examples include Intuit and government initiatives
applying these principles for innovation and efficiency.
What are some of the best quotes from "The Lean Startup" and what do they
mean?
 "Startups exist to learn": Emphasizes that the primary goal is learning
how to build a sustainable business.
 "If we do not know who the customer is, we do not know what quality
is": Highlights the importance of understanding the customer to define
product quality.
 "The only way to win is to learn faster than anyone else": Underscores
the competitive advantage of rapid learning and adaptation.