Saturday, March 15, 2014

The rest of the book covers each of the following meta-principles in detail in three parts.
Part II walks through the process of documenting your initial vision (or Plan A) using a portable one-page format called Lean Canvas. Your Lean Canvas will serve as your product’s tactical map and blueprint.
Part III helps you identify which aspects of your plan to focus on first. It lays some groundwork on the different types of risks startups face, shows you how to prioritize them, and prepares you to start the process of testing and experimentation.
Part IV outlines the four-stage process for systematically stress testing your initial plan and shows you how to iterate from your Plan A to a Plan That Works.
The first realization early on was that building in stealth is a really bad idea. There is a fear, especially common among first-time entrepreneurs, that their great idea will be stolen by someone else. The truth is twofold: first, most people are not able to visualize the potential of an idea at such an early stage, and second (and more importantly), they won’t care.
The second realization was that startups canconsume years of your life. I started WiredReach with just a spark of an idea, and before I knew it, years had passed. While I’ve had varying levels of
success with the products I built, I realized that I needed a better, faster way to vet new product ideas.
Life’s too short to build something nobody wants.
And finally, I learned that while listening to customers is important, you have to know how to do it. I used a “release early, release often” methodology for one of my products, BoxCloud, and launched a fairly minimal file-sharing product built on a new peer-to-web model we had developed in 2006. After we launched, we got covered by a few prominent blogs and dumped some serious cash into advertising on the DECK network (primarily targeted at designers and developers).
We started getting a lot of feedback from users, but it was all over the place. We didn’t have a clear definition of our target customer and didn’t know how to prioritize this feedback. We started listening to the most popular (vocal) requests and ended up with a bloated application and lots of one-time-use features.
Around that time, I ran into Steve Blank’s lectures on Customer Development, from which I followed the trail to Eric Ries’s early ideas of the Lean Startup. I had dreamt the big vision, rationalized it in my head, and built it and refined it the long, hard way. I knew customers held the answers but didn’t know when or how to fully engage them. That’s exactly what Customer Development and Lean Startup were attempting to address.
I was sold.
I had more questions than answers, which prompted my two-year journey in search of a better methodology for building successful products. The product of that journey is Running Lean, which is based on my firsthand experiential learning building products and the pioneering work of Eric Ries, Steve Blank, Dave McClure, Sean Ellis, Sean Murphy, Jason Cohen, Alex Osterwalder, and many others who I reference throughout the book.
I am thankful to the thousands of readers who subscribed to my blog, left comments week after week, sent me notes of encouragement to keep on writing, and subjected their products to my testing. This book was really “pulled” out of me by them.
Whereas my blog is a near-real-time account of my lessons learned, this book benefits from retrospective learning and from reordering and refining steps for a more optimal workflow.
I am applying this new workflow to my next startup, which is also a by-product of my blogging and learning over the past year. As of this writing, I have sold WiredReach and am in the process of building and launching a new startup, Spark59.
Everything in this book is based on first-hand experiential learning and experimentation on my own products. I encourage you to rigorously test and adapt these principles for yourself. The legal, financial, and accounting aspects of launching a company are outside the scope of the book. When the time comes, it is important to get competent professional advice about financing and structuring your company and its intellectual property assets.

There Are No Silver Bullets

No methodology can guarantee success. But a good methodology can provide a feedback loop for continuous improvement and learning.
That is the promise of this book.

day to find that it was vanity: but the dreamers of the day are dangerous men, for they may act their dreams with open eyes, to make it possible.
T.E. Lawrence, “Lawrence of Arabia”
Everyone gets hit by ideas when they least expect them (in the shower, while driving, etc.). Most people ignore them. Entrepreneurs choose to act on them.
While a strong vision is required to create a mantra and make meaning, a Lean Startup strives to
uphold a strong vision with facts, not faith. It is important to accept that your initial vision is built largely on untested assumptions (or hypotheses). Running Lean helps you systematically test and refine that initial vision.
Additionally, since most Plan As are likely to be proven wrong anyway, you need something less
static and rigid than a business plan. Taking several weeks or months to write a 60-page business plan largely built on untested hypotheses is a form of waste.
Waste is any human activity which absorbs resources but creates no value.
James P. Womak and Daniel T. Jones,Lean Thinking (Free Press)

I particularly like the one-page canvas format because it is:

Fast
Compared to writing a business plan, which can take several weeks or months, you can outline multiple business models on a canvas in one afternoon. Because creating these one-page business models takes so little time, I recommend spending a little additional time up front, brainstorming possible variations to your model and then prioritizing where to start.
Concise
The canvas forces you to pick your words carefully and get to the point. This is great practice for distilling the essence of your product. You have 30 seconds to grab the attention of an investor over a hypothetical elevator ride, and eight seconds to grab the attention of a customer on your landing page.[5]
Portable
A single-page business model is much easier to share with others, which means it will be read
by more people and probably will be more frequently updated.
If you have ever written a business plan or created a slide deck for investors, you’ll immediately recognize most of the building blocks on the canvas. I won’t spend time describing these blocks right now, as we’ll cover them in great detail in Part II of the book.
A key point I would like you to take away for now, though, is that your product is NOT “the product”of your startup.

Dave McClure of 500 Startups has sat through hundreds of entrepreneur pitches and will probably sit through hundreds more. During these sessions, he has repeatedly called out entrepreneurs for spending a disproportionate amount of time talking about their solution and not enough time talking
about the other components of the business model.
Customers don’t care about your solution. They care about their problems.
Dave McClure, 500 Startups
Investors, and more important, customers, identify with their problems and don’t care about your solution (yet). Entrepreneurs, on the other hand, are naturally wired to look for solutions. But chasing after solutions to problems no one cares enough about is a form of waste.
Your job isn’t just building the best solution, but owning the entire business model and making all the pieces fit.
Recognizing your business model as a product is empowering. Not only does it let you own your business model, but it also allows you to apply well-known techniques from product development to building your company.
If you take a step back, you’ll see that these meta-principles are nothing more than the divide and

conquer technique applied to the process of starting up.
Lean Canvas helps deconstruct your business model into nine distinct subparts that are then systematically tested, in order of highest to lowest risk.

The bigger risk for most startups is building

something nobody wants.
While what’s riskiest varies across products, a lot of that risk is driven by the stage of your startup, which we’ll cover next.
While ideas are cheap, acting on them is quite expensive.

A problem worth solving boils down to three questions:
  • Is it something customers want? (must-have)
  • Will they pay for it? If not, who will? (viable)
  • Can it be solved? (feasible)
During this stage, we attempt to answer these questions using a combination of qualitative customer observation and interviewing techniques that we’ll cover in great detail Chapter 5 andChapter 6.[6]
From there you derive the minimum feature set to address the right set of problems, which is also known as the minimum viable product (MVP).
Once you have a problem worth solving and your MVP has been built, you then test how well your solution solves the problem. In other words, you measure whether you have built something people want.
In Part IV of this book, we’ll cover both qualitative and quantitative metrics for measuring product/market fit.
Achieving traction or product/market fit is the first significant milestone for a startup. At this stage, you have a plan that is starting to work—you are signing up customers, retaining them, and getting paid.
Achieving product/market fit is the first significant milestone of a startup and greatly influences both strategy and tactics. For this reason, it is helpful to further delineate the stages of a startup as “before
product/market fit” and “after product/market fit.”
Before product/market fit, the focus of the startup centers on learning and pivots. After product/market fit, the focus shifts toward growth and optimizations. (See Figure 1-4.)

Traction is a measure of your product’s engagement with its market. Investors care about traction over everything else.
Nivi and Naval, Venture Hacks
While not the same thing, bootstrapping and Lean Startups are quite complementary. Both cover techniques for building low-burn startups by eliminating waste through the maximization of existing resources before expending effort on the acquisition of new or external resources.
  • Bootstrapping + Lean Startup = Low-Burn Startup
(For more, see How to Build a Low-Burn Startup in the Appendix.)

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