Summary: The Lean Startup by Eric Ries is a guide on how to build a business the right way. Ries aims to give entrepreneurs help and strategy on how successful businesses are created, and how this process is different than what many people perceive it to be. The theme that is evident throughout the book is how the best entrepreneurs use continuous innovation to create radically successful businesses. Ries dives into this in different ways, but the thing that is driven home most is how resources should be allocated very efficiently, so that the startup can innovate and grow in the right direction and at the right time.
People have the idea that startups all just come from one idea that turns into an enormous hit in a very short amount of time. Ries rejects this idea, and states that entrepreneurship is quite different. In order to be successful when starting any business, a lot of testing needs to be done in order to learn about and really understand the market needs. Searching for this Product Market Fit ensures that the product you are building is actually valued by the market, and that you are not wasting the company’s time and money. Ries stresses this point because the majority of startups fail, but much of the failure is avoidable. The Lean Startup is the way that startups can grow their business in an unconventional way, and do real testing that will prove their business is scalable and valuable. Ries emphasizes that spending too much time developing the “perfect” product is useless, because in a startup you have no idea if there is a market fit yet. The methodology he suggests is Build-Measure-Learn. I have heard this idea before, but the way Ries explained it was very simple and left an impression on me. Ries says that all there is to this Build-Measure-Learn methodology is building a product, measuring how people feel about the product, and the deciding whether to commit to this product and develop it, or shift to something new. This is very cost efficient for startups, and does not take up a lot of time, which allows this cycle to be repeated over and over again. Running these very measurable and scientific tests gives the startup a great sense of the market need, which results in the startup achieving product market fit.
As Ries dives further into this methodology that is presented in The Lean Startup, details of each phase become clearer. The “Build” phase does not mean you have to actually build the complete product. We are looking to save both time and money with this strategy, which is why the product is just a Minimum Viable Product (MVP). All the MVP needs is the essential features for the test to give accurate, meaningful results. It is important that before you start the test to clearly define what results are positive/negative, or come up with a baseline on how to measure the feedback from the customers. This combination of coming up with a minimum viable product and then analyzing the feedback of the product, then leads you to either pivot or persevere. These cheap and efficient tests are enough to tell an entrepreneur whether to persevere and commit to his product, or to pivot and try to refine the idea or come up with something new. Ries lays these ideas out in a very clear, organized way. I believe the book is a great guide for future entrepreneurs on the importance of allocating your resources efficiently, and truly understanding your market before diving headfirst into it.
In Depth: When reading what Ries had to say on the importance of testing little samples of potential products, or different yet similar ideas and analyzing the results, Rent The Runway immediately popped into my head. I read a case study on the Rent the Runway startup in the past, and this idea of Build-Measure-Learn is perfectly identified in that example. The two women that started the company did countless tests with different college students on whether or not they would buy a dress without trying it on, or only seeing a picture of it, or trying two and sending one back etc. Ries’ idea of trying many very measurable and cost effective tests was perfectly exemplified by Rent The Runway. The company achieved Product Market Fit because of these tests, and I am sure can credit a lot of their success to those tests they ran. I am excited to hear from the companies that we are going to visit on the tests they ran, the MVP’s they came up with, and how hard it was for them to develop a product that had a lot of value to their customers. I am interested to hear from the different companies on whether or not they truly did struggle to achieve this product market fit, and if tests/ MVP’s were how they were able to do so.
Recommendation: I would definitely recommend The Lean Startup to anybody interested in entrepreneurship or business. I think Eric Ries does a nice job of looking at startups through a unique lens that really focuses on the monetary restriction and overall lack of resources that all startups face. His suggestions on how to allocate resources efficiently and run simple tests that are easy and meaningful to measure were very interesting to me, and my guess is are very beneficial to new businesses. I would definitely recommend.