1. The Lean Startup#leanstartupØredevNov 4, 2009 Eric Ries (@ericries) http://StartupLessonsLearned.com

2. Most Startups Fail

3. Most Startups Fail

4. Most Startups Fail

5. Most Startups Fail But it doesn’t have to be that way. We can do better. This talk is about how.

6. What is a startup? A startup is a human institution designed to deliver a new product or service under conditions of extreme uncertainty. Nothing to do with size of company, sector of the economy, or industry

7. The Pivot What do successful startups have in common? They started out as digital cash for PDAs, but evolved into online payments for eBay. They started building BASIC interpreters, but evolved into the world's largest operating systems monopoly. They were shocked to discover their online games company was actually a photo-sharing site. Pivot: change directions but stay grounded in what we’ve learned. http://startuplessonslearned.blogspot.com/2009/06/pivot-dont-jump-to-new-vision.html

8. Speed Wins if we can reduce the time between major iterations we can increase our odds of success

9. A Tale of Two Startups

10. Startup #1

11. Stealth Startup Circa 2001

12. All about the team

13. A good plan? Start a company with a compelling long-term vision. Raise plenty of capital. Hire the absolute best and the brightest. Hire an experienced management team with tons of startup experience. Focus on quality. Build a world-class technology platform. Build buzz in the press and blogosphere.

14. Achieving Failure Company failed utterly, $40MM and five years of pain. Crippled by “shadow beliefs” that destroyed the effort of all those smart people.

15. Shadow Belief #1 We know what customers want.

16. Shadow Belief #2 We can accurately predict the future.

17. Shadow Belief #3 Advancing the plan is progress.

18. A good plan? Start a company with a compelling long-term vision. Raise plenty of capital. Hire the absolute best and the brightest. Hire an experienced management team with tons of startup experience. Focus on quality. Build a world-class technology platform. Build buzz in the press and blogosphere.

19. Startup #2

20. IMVU

21. IMVU

22. New plan Shipped in six months – a horribly buggy beta product Charged from day one Shipped multiple times a day (by 2008, on average 50 times a day) No PR, no launch Results 2009: profitable, revenue > $20MM

23. Lean Startups Go Faster Commodity technology stack, highly leveraged (free/open source, user-generated content, SEM). Customer development – find out what customers want before you build it. Agile (lean) product development – but tuned to the startup condition.

25. Rapid hypothesis testing about market, pricing, customers, …

26. Extreme low cost, low burn, tight focus

27. Measurable gates for investorshttp://bit.ly/FourSteps

28. Traditional Product Development Unit of Progress: Advance to Next Stage Waterfall Requirements Specification Design Problem: known Solution: known Implementation Verification Maintenance

29. Agile Product Development Unit of Progress: A line of Working Code “Product Owner” or in-house customer Problem: known Solution: unknown

30. Product Development at Lean Startup Unit of Progress: Validated Learning About Customers ($$$) Customer Development Hypotheses, Experiments, Insights Problem: unknown Data, Feedback, Insights Solution: unknown

31. Minimize TOTAL time through the loop IDEAS LEARN BUILD DATA CODE MEASURE

32. How to build a Lean Startup Let’s talk about some specifics. Continuous deployment Rapid Split-tests Five why’s

33. Continuous Deployment IDEAS LEARN BUILD Learn Faster Customer Development Five Whys Build Faster Continuous Deployment Small Batches Continuous Integration Refactoring DATA CODE MEASURE Measure Faster Split Testing Actionable Metrics Net Promoter Score SEM

35. At IMVU time from check-in to production = 20 minutes

36. Tell a good change from a bad change (quickly)

37. Revert a bad change quickly

38. And “shut down the line”

39. Work in small batches

40. At IMVU, a large batch = 3 days worth of work

42. Everyone has a complete sandbox

43. Continuous Integration Server (BuildBot)

44. All tests must pass or “shut down the line”

45. Automatic feedback if the team is going too fast

46. Incremental deploy

47. Monitor cluster and business metrics in real-time

48. Reject changes that move metrics out-of-bounds

49. Alerting & Predictive monitoring (Nagios)

50. Monitor all metrics that stakeholders care about

51. If any metric goes out-of-bounds, wake somebody up

54. Split-testing all the time A/B testing is key to validating your hypotheses Has to be simple enough for everyone to use and understand it 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 }

55. The AAA’s of Metrics Actionable Accessible Auditable

56. Measure the Macro Always look at cohort-based metrics over time Split-test the small, measure the large

57. Five Whys IDEAS Code Faster Learn Faster BUILD LEARN Continuous Deployment Five Whys Root Cause Analysis CODE DATA Measure Faster MEASURE Rapid Split Tests

59. Ask “why” five times when something unexpected happens.

60. Make proportional investments in prevention at all five levels of the hierarchy.

62. There’s much more… Startup Lessons Learned (season one 2008-2009) Every essay from the blog’s first year New beta – please send feedback http://bit.ly/SLLbookbeta

64. Agile Ways track at 13:10

65. Startup Lessons Learned Blog

66. http://StartupLessonsLearned.com/

67. Getting in touch (#leanstartup)

68. http://twitter.com/ericries

69. eric@theleanstartup.com

70. Startup Lessons Learned – in print

71. Beta version available today

72. http://bit.ly/SLLbookbeta