The Lean Startup by Eric Ries

Summary

The Lean Startup by Eric Ries tells the story behind Reis’s lean startup method. The goal of this method is to help entrepreneurs build their companies and find success with these companies in the most efficient way possible. Ries organizes his book into three different parts: Vision, Steer, and Accelerate. In the section of the book entitled “Vision,” Ries explains who entrepreneurs are, what their purpose is, and introduces the concept of validated learning. Next, in the section called “Steer,” Ries goes into deeper detail into his lean startup method where he introduces what a MVP is and provides examples of successful yet different types of MVP’s throughout tech history. Finally, in the “Accelerate” portion of the book, Ries provides readers with different techniques to grow at fast rates and churn throw his “build-measure-learn feedback loop.” Throughout the book, Ries explains his different points through countless examples about many companies that are thriving in today’s tech economy.

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One of Reis’s most promenade points throughout the book is the importance of validated learning. He explains that all business decisions are scientific experiments, where the business leader is searching to confirm or deny certain hypothesis about their company. He elaborates about how startups revolve around uncertainty. Uncertainty and risk are inherent risks with startups, so in order to receive the massive amounts of funding that many startups receive, these companies must try to eliminate some of their risk. That being said, an extremely effective way to eliminate such risk is to have some sort of proof that people actually want and will continue to use the product or service that they are selling. These are the two most important hypothesis that Ries says are make or break assumptions: The value hypothesis and the growth hypothesis. The value hypothesis tests whether a product or service really delivers value to customers once they are using it and the growth hypothesis tests how new customers will discover the product or if it will gain a serious market share. Once these hypothesis can be proven either right or wrong, then entrepreneurs can understand if they should pursue their ideas or not. Ries explains that if an entrepreneurs idea does not provide value or have the ability to scale, then they should not spend their money and time to build that product.

 

Furthermore, Ries continues by explaining that a fully finished , perfect, product does not need to be built in order to provide and answer to these hypothesis, but rather companies can use an MPV or a minimum viable product to test these hypothesis. All MVPs need is the essential features that will answer the predetermined hypothesis that the entrepreneur has set out to answer. That being said, an MVP is essentially a lesser, beta, or more simplified version of the product or vision the company has, which is used as a scientific experiment to learn if the product is worth spending the money to build fully. When an MVP is used as a scientific experiment, it can answer the questions of whether or not people actually want the product or service, if it can be scaled, and if the answer is “no” to both of these questions, it can provide insight to how companies can iterate to make their product more desirable and scalable.  MPVs are products given to early adapters, who are people that are more willing to use the product even if it does not have all of the features. And the data from the MVP and its early adapter feedback is what answers the hypothesis. An MVP saves companies massive amounts of money while providing them invaluable learnings about their product or service. After an MVP is executed, tested, and iterated several times, then an entrepreneur must use what they have learned to decide whether to pivot (take their company in a different direction) or persevere. Ries uses his build-measure-learn feedback loop to explain why to use an MVP as well as how to create it. First, he says by “building” an MVP, you can “measure” whether or not your product or service provides value, and then “learn” from these measurements. Going back through the loop backwards, he explains why to use an MVP. If you want to “learn” if your company is worth building or not, you should decide how to “measure” if it is worth it and then “build” an MVP to test your measurements.

 

Reis uses a variety of companies to explain how they used MVPs to test and eventually change their business. And once they do finally understand what their consumers what and will share with their friends, then they have the ability to accelerate their business by receiving funding and building out a perfect product that they now know people want and will share with their friends.

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In-Depth

While reading The Lean Startup, I couldn’t help but to think about and compare what Ries was writing to my experience at the startup, Jebbit. While at Jebbit, I was fortunate enough to be able to sit down with Tom Coburn, the CEO and founder of Jebbit to hear his founding story and ask questions. The founding story and even the current day operations at Jebbit align almost perfectly with what Ries wrote in his book.

 

During the founding of Jebbit, the original company idea was to have people answer questions after watching advertisements to prove that they actually watched the advertisement. And depending on how many questions they got right, the company who produced the advertisement would pay the viewer a small amount per questions. The founders were obsessed with this idea, so they went around door to door to thousands of small companies throughout Boston asking them to try their service. Zero companies agreed, and the Jebbit team was shocked. In order to prove that their idea would work, they created an MVP experience. What they did was build a series of questions that appeared after an advertisement and vowed to give 50 cents per right answer. Jebbit would pay the 50 cents per question themselves to prove to the large businesses that their concept was valuable. Jebbit released the advertisement and post-ad questions to the BC student body and marketed the experience across campus. Within minutes of launching their website, it crashed because it could not handle the influx of BC students who wanted to answer questions and watch advertisements. This simple scientific test, like the ones Ries talked about, proved that Jebbit would provide companies value because their platform would allow companies to reach thousands of people via marketing and advertising campaigns and be sure that they actually watched their advertisement.  After this test, Jebbit was able to acquire several clients and begin to build their business. And although the business model of Jebbit has changed even more after this test to today, this scientific experiment is what got the company off of the ground and proved to the founders that what they were doing had promise. I am extremely excited to see how companies have used MVPs, like Jebbit’s, to iterate their business in this class through case studies as well as on our trip to New York.

 

Review

I had a fantastic time reading The Lean Startup and would recommend it to anybody interested in entrepreneurship, startups, and especially someone who wants to start their own company. The book teaches its readers valuable business vocabulary along with extremely useful business concepts. Ries wrote the book in a way that not only clearly explains these concepts, but backs them up with real life examples, which keeps the book interesting through its ending. Finally, Ries’s explanation of an MVP is a great lesson to entrepreneurs who do not have the resources to build their full vision, as he explains how they can test if their vision has promise or not at minimal costs. I really enjoyed reading this book and am happy to talk about it further with anybody who is interested.

— Nick Briguglio

5 thoughts on “The Lean Startup by Eric Ries

  1. I think it’s awesome how you were able to connect what you learned and read about in The Lean Startup with your experience working with Jebbit. The incorporation of examples you mentioned when explaining business vocabulary and concepts is crucial for many people to be able to apply those ideas to real life and to their own business experiences. Also, I think the idea of validated learning is an interesting notion and really important to startups. This was my first time hearing a name for the value and growth hypotheses, and putting a name/definition to those concepts is really helpful in learning to understand the right ways to make decisions. Uncertainty is a big risk in the business world and it seems like this book is a great way to help startups navigate the dangerous waters of the unknown.

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  2. I read this book as well, and I think one of the most important things you mention is that to answer and really get meaningful results from the tests the product does not need to be perfect. His whole idea is about making products that are not that expensive and do not take way too long when running these tests. Really important for a startup.

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  3. Great job! I loved your anecdote from Jebbit. Tom Coburn came to a Lunch with an Entrepreneur my Freshman year and described the same story, and it still stands out in my mind for the exact reasons you described. Jebbit is a great case study for leveraging MVPs and data across multiple iterations.

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  4. I really enjoyed your explanation of the importance of validated learning. I remember reading about a few companies that worked to prove their hypothesis during Computers in Management. I’m pretty sure Rent the Runway did a few experiments to help test the demand for their service. Running tests to gauge interest definitely seems like a beneficial step to take before investing too much capital. Also – great connection to Jebbit. I would love to hear more about your internship at the company!

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