Eric Ries - The Lean Startup - RailsConf 2011
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Keynote address by Eric Ries at RailsConf 2011 in Baltimore on May 17, 2011. Video here: http://www.youtube.com/watch?v=IVBVZGfzkVM
Eric Ries - The Lean Startup - RailsConf 2011
- 1. Why Rails Makes StartupsThe Lean Startup#leanstartupEric Ries (@ericries)http://StartupLessonsLearned.com
- 3. Watch what happens behind the scenes & see every experiment we’ve run at: http://lean.st
- 4. Lean Startup PrinciplesEntrepreneurs are everywhereEntrepreneurship is managementValidated LearningBuild – Measure - LearnInnovation Accounting
- 5. Lean Startup PrinciplesEntrepreneurs are everywhere
- 6. What is a startup?A startup is a human institution designed to deliver a new product or service under conditions of extreme uncertainty.
- 7. Nothing to do with size of company, sector of the economy, or industryWhat is a startup?STARTUP =EXPERIMENT
- 12. Who to BlameFather of scientific managementStudy work to find the best wayManagement by exceptionStandardize work into tasksCompensate workers based on performance“In the past, the man was first. In the future, the system will be first.” (1911)Frederick Winslow Taylor(1856 – 1915)
- 13. Lean Startup PrinciplesEntrepreneurs are everywhereEntrepreneurship is management
- 14. Entrepreneurship is managementOur goal is to create an institution, not just a product
- 15. Traditional management practices fail- “general management” as taught to MBAsNeed practices and principles geared to the startup context of extreme uncertainty
- 16. Not just for “two guys in a garage”The Pivot
- 17. I’
- 18. The PivotWhat do successful startups have in common?
- 19. They started out as digital cash for PDAs, but evolved into online payments for eBay.
- 20. They started building BASIC interpreters, but evolved into the world's largest operating systems monopoly.
- 21. They were shocked to discover their online games company was actually a photo-sharing site.
- 22. Pivot: change directions but stay grounded in what we’ve learned. Speed WinsIf we can reduce the time between pivotsWe can increase our odds of successBefore we run out of money
- 23. Lean Startup PrinciplesEntrepreneurs are everywhereEntrepreneurship is managementValidated Learning
- 24. Traditional Product DevelopmentUnit of Progress: Advance to Next StageWaterfallRequirementsSpecificationsDesignProblem: knownSolution:knownImplementationVerificationMaintenance
- 25. Achieving FailureIf we’re building something nobody wants, what does it matter if we accomplish it:On time?On budget?With high quality?With beautiful design?Achieving Failure = successfully executing a bad plan Agile Product DevelopmentUnit of Progress: A line of Working Code“Product Owner” or in-house customerProblem: knownSolution:unknownKent Beck(still alive)
- 26. Lean StartupUnit of Progress: Validated LearningSteve Blank(still alive)Customer DevelopmentHypotheses, Experiments,InsightsProblem:unknownData, Feedback,InsightsSolution:unknownAgile Development
- 27. Lean Startup PrinciplesEntrepreneurs are everywhereEntrepreneurship is managementValidated LearningBuild – Measure - Learn
- 28. Minimize TOTAL time through the loop
- 29. There’s much more…Build FasterUnit TestsUsability TestsContinuous IntegrationIncremental DeploymentFree & Open-SourceCloud ComputingCluster Immune SystemJust-in-time ScalabilityRefactoringDeveloper SandboxMinimum Viable ProductLearn FasterSplit TestsCustomer DevelopmentFive WhysCustomer Advisory BoardFalsifiable HypothesesProduct OwnerAccountabilityCustomer ArchetypesCross-functional TeamsSemi-autonomous TeamsSmoke TestsMeasure FasterFunnel AnalysisCohort AnalysisNet Promoter ScoreSearch Engine MarketingPredictive MonitoringMeasure FasterSplit TestsContinuous DeploymentUsability TestsReal-time Monitoring & AlertingCustomer Liaison
- 30. Lean Startup PrinciplesEntrepreneurs are everywhereEntrepreneurship is managementValidated LearningBuild – Measure - LearnInnovation Accounting
- 31. Innovation AccountingThe Three Learning MilestonesEstablish the baselineBuild aminimum viable product
- 32. Measure how customers behave right nowTune the engine- Experiment to see if we can improve metrics from the baseline towards the ideal Pivot or persevere- When experiments reach diminishing returns, it’s time to pivot.
- 33. QuestionsHow do we know when to pivot?Vision or Strategy or Product?What should we measure?How do products grow?Are we creating value?What’s in the MVP?Can we go faster?
- 35. Thanks!Buy the book @ http://lean.st
- 36. Startup Lessons Learned Blog
- 38. Getting in touch (#leanstartup)
- 43. SLLCONF 2011: http://sllconf.comMay 23 in SF
- 44. Myth #1MythLean means cheap. Lean startups try to spend as little money as possible.Truth The Lean Startup method is not about cost, it is about speed.
- 45. Myth #2MythThe Lean Startup is only for Web 2.0/internet/consumer software companies.Truth The Lean Startup applies to all companies that face uncertainty about what customers will want.
- 46. Myth #3MythLean Startups are small bootstrapped startups.Truth Lean Startups are ambitious and are able to deploy large amounts of capital.
- 47. Myth #4MythLean Startups replace vision with dataor customer feedback.Truth Lean Startups are driven by a compelling vision, and are rigorous about testing each element of this vision
- 48. Lean Startup PrinciplesEntrepreneurs are everywhereEntrepreneurship is managementValidated LearningBuild – Measure - LearnInnovation Accounting
- 49. Minimum Viable ProductVisionary customers can “fill in the gaps” on missing features, if the product solves a real problem
- 50. Allows us to achieve a big vision in small increments without going in circles
- 51. Requires a commitment to iteration
- 52. MVP is only for BIG VISION products; unnecessary for minimal products.Continuous DeploymentLearn FasterCustomer DevelopmentFive WhysBuild FasterContinuous DeploymentSmall BatchesMinimum Viable ProductRefactoringMeasure FasterSplit TestingActionable MetricsNet Promoter ScoreSEM
- 53. Continuous Deployment PrinciplesHave every problem onceStop the line when anything failsFast response over prevention
- 54. Continuous DeploymentDeploy new software quickly
- 55. At IMVU time from check-in to production = 20 minutes
- 56. Tell a good change from a bad change (quickly)
- 57. Revert a bad change quickly
- 58. And “shut down the line”
- 59. Work in small batches
- 60. At IMVU, a large batch = 3 days worth of work
- 61. Break large projects down into small batchesCluster Immune SystemWhat it looks like to ship one piece of code to production:Run tests locally (SimpleTest, Selenium)
- 62. Everyone has a complete sandbox
- 63. Continuous Integration Server (BuildBot)
- 64. All tests must pass or “shut down the line”
- 65. Automatic feedback if the team is going too fast
- 67. Monitor cluster and business metrics in real-time
- 68. Reject changes that move metrics out-of-bounds
- 69. Alerting & Predictive monitoring (Nagios)
- 70. Monitor all metrics that stakeholders care about
- 71. If any metric goes out-of-bounds, wake somebody up
- 72. Use historical trends to predict acceptable bounds
- 73. When customers see a failure
- 74. Fix the problem for customers
- 75. Improve your defenses at each levelMinimum Viable ProductLearn FasterCustomer DevelopmentFive WhysBuild FasterContinuous DeploymentSmall BatchesMinimum Viable ProductRefactoringMeasure FasterSplit TestingActionable MetricsNet Promoter ScoreSEM
- 76. Why do we build products?Delight customers
- 77. Get lots of them signed up
- 78. Make a lot of money
- 79. Realize a big vision; change the world
- 80. Learn to predict the futurePossible Approaches“Maximize chances of success”
- 81. build a great product with enough features that increase the odds that customers will want it
- 82. Problem: no feedback until the end, might be too late to adjust
- 83. “Release early, release often”
- 84. Get as much feedback as possible, as soon as possible
- 85. Problem: run around in circles, chasing what customers think they wantMinimum Viable ProductThe minimum set of features needed to learn from earlyvangelists – visionary early adopters
- 86. Avoid building products that nobody wants
- 87. Maximize the learning per dollar spent
- 88. Probably much more minimum than you think!Minimum Viable ProductVisionary customers can “fill in the gaps” on missing features, if the product solves a real problem
- 89. Allows us to achieve a big vision in small increments without going in circles
- 90. Requires a commitment to iteration
- 91. MVP is only for BIG VISION products; unnecessary for minimal products.TechniquesSmoke testing with landing pages, AdWords
- 92. SEM on five dollars a day
- 94. Paper prototypes
- 96. Removing features (“cut and paste”)FearsFalse negative: “customers would have liked the full product, but the MVP sucks, so we abandoned the vision”
- 97. Visionary complex: “but customers don’t know what they want!”
- 98. Too busy to learn: “it would be faster to just build it right, all this measuring distracts from delighting customers”Five WhysLearn FasterFive Whys RootCause AnalysisCode FasterContinuous DeploymentMeasure FasterRapid Split Tests
- 99. Five Whys Root Cause AnalysisA technique for continuous improvement of company process.
- 100. Ask “why” five times when something unexpected happens.
- 101. Make proportional investments in prevention at all five levels of the hierarchy.
- 102. Behind every supposed technical problem is usually a human problem. Fix the cause, not just the symptom.Rapid Split TestsLearn FasterFive Whys RootCause AnalysisCode FasterContinuous DeploymentMeasure FasterRapid Split Tests
- 103. Split-testing all the timeA/B testing is key to validating your hypotheses
- 104. Has to be simple enough for everyone to use and understand it
- 105. Make creating a split-test no more than one line of code:if( setup_experiment(...) == "control" ) { // do it the old way} else { // do it the new way}
- 106. The AAA’s of MetricsActionable
- 107. Accessible
- 108. AuditableMeasure the MacroAlways look at cohort-based metrics over time
- 109. Split-test the small, measure the largeLean Startup PrinciplesEntrepreneurs are everywhereEntrepreneurship is managementValidated LearningInnovation Accounting
- 110. Minimum Viable ProductThe minimum set of features needed to learn from earlyvangelists – visionary early adopters
- 111. Avoid building products that nobody wants
- 112. Maximize the learning per dollar spent
- 113. Probably much more minimum than you think!Minimum Viable ProductVisionary customers can “fill in the gaps” on missing features, if the product solves a real problem
- 114. Allows us to achieve a big vision in small increments without going in circles
- 115. Requires a commitment to iteration
- 116. MVP is only for BIG VISION products; unnecessary for minimal products.Split-testing all the timeA/B testing is key to validating your hypotheses
- 117. Has to be simple enough for everyone to use and understand it
- 118. Make creating a split-test no more than one line of code:if( setup_experiment(...) == "control" ) { // do it the old way} else { // do it the new way}
- 119. The AAA’s of MetricsActionable
- 120. Accessible
- 121. AuditableMeasure the MacroAlways look at cohort-based metrics over time
- 122. Split-test the small, measure the largeI’
Editor's Notes
- I’m not leaving you, I’m pivoting to another man
- Conference structure
- Truth: The Lean Startup method is not about cost, it is about speed. Lean Startups waste less money, because they use a disciplined approach to testing new products and ideas. Lean, when used in the context of lean startup, refers to a process of building companies and products using lean manufacturing principles applied to innovation. That process involves rapid hypothesis testing, validated learning about customers, and a disciplined approach to product development.
- Truth: The Lean Startup methodology applies to all companies that face uncertainty about what customers will want. This is true regardless of industry or even scale of company: many large companies depend on their ability to create disruptive innovation. Those general managers are entrepreneurs, too. And they can benefit from the speed and discipline of starting with a minimum viable product and then learning and iterating continuously.
- Truth: There’s nothing wrong with raising venture capital. Many lean startups are ambitious and are able to deploy large amounts of capital. What differentiates them is their disciplined approach to determining when to spend money: after the fundamental elements of the business model have been empirically validated. Because lean startups focus on validating their riskiest assumptions first, they sometimes charge money for their product from day one – but not always.
- Truth: Lean Startups are driven by a compelling vision, and they are rigorous about testing each element of this vision against reality. They use customer development, split-testing, and actionable analytics as vehicles for learning about how to make their vision successful. But they do not blindly do what customers tell them, nor do they mechanically attempt to optimize numbers. Along the way, they pivot away from the elements of the vision that are delusional and double-down on the elements that show promise.
- I’m not leaving you, I’m pivoting to another man