Book Notes #020 - The Lean Startup by Eric Ries.

Rating 4.5/5 ⭐️ (Very Good)

Topic: Non-Fiction: Startups, Entrepreneurship, Business and Innovation.

“Startup success is not a consequence of good genes or being in the right place at the right time. Startup success can be engineered by following the right process, which means it can be learned, which means it can be taught.”

BOOK REVIEW

  • Main Ideas - Very Good.

  • Examples and Stories - Good.

  • Engagement - Medium.


THE MAIN IDEA IN 10 SECONDS...


Most startups fail. But many of those failures are preventable. The lean startup is a new approach being adopted across the globe, changing the way companies are built and new products launched.


5 KEY TAKEAWAYS


1) PRODUCT, STRATEGY AND VISION.


A startup can be divided into three categories. Its vision, strategy and product.


The vision: is the true north of the company, usually set by the founders.


The strategy: is the plan on how to get to their true north. This can be their, business model, a product roadmap, a point of view about partners and competitors, and ideas about who the customer will be.


The product: is the end result and should reflect the vision and strategy of the company.

  • The Vision rarely changes, every setback is an opportunity to learn.

  • The Strategy may change, either the product, business model, and/or engine of growth needs to change by testing assumptions. (this is called a pivot).

  • The Product changes all the time through optimization and iteration. They should always get better with time and add value to customers.

2) VALUE VS WASTE.


There are two types of activities in a startup. Value-creating or waste.


"Lean companies define value as providing benefit to the customer; anything else is waste."

  • Costumers don't care how products are assembled, only that it works correctly.

  • The best way to find if they find something valuable is to test it and interact with real customers.


3) THE TWO MOST IMPORTANT ASSUMPTIONS TO TEST.

  • The Value Hypothesis: tests whether a product or service really delivers value to customers once they are using it.

  • The Growth Hypothesis: tests how new customers will discover a product or service.


4) THE THREE ENGINES OF GROWTH.

  • The Sticky Engine of Growth: products that are designed to attract and retain customers.

  • The Viral Engine of Growth: Growth happens automatically as a side effect of customers using the product.

  • The Paid Engine of Growth: If the company wants to increase its rate of growth, it can do so in one of two ways: increase the revenue from each customer or drive down the cost of acquiring a new customer.

Focus on only one at a time.