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TheLeanStartup#leanstartup
EricRies(@ericries)h7p://startuplessonslearned.blogspot.com
ThankYou!
• ScholarshipDonors– KISSmetrics– BillBraasch(@billmelater)
– BobAniello(@CornOnTheBob)
• CustomerAdvisoryBoard– HitenShah– JaredGoralnick– SiqiChen– AndrewMeyer– SimonNewstead– JeffreyBarman– SeanHeywood
MostStartupsFail
• Butitdoesn’thavetobethatway.Wecandobe7er.Thistalkisabouthow.
TheLeanStartupandYou
• ThinkingofstarXnganewcompany,buthaven’ttakenthefirststep
• Inastartupnowandwanttoiteratefaster• WanttocreatethecondiXonsforleaninnovaXoninsideabigcompany
ATaleofTwoStartups
Startup#1
Agoodplan?
• Startacompanywithacompellinglong‐termvision.
• Raiseplentyofcapital.• Hiretheabsolutebestandthebrightest.• Hireanexperiencedmanagementteamwithtonsofstartupexperience.
• Focusonquality.• Buildaworld‐classtechnologypla_orm.• Buildbuzzinthepressandblogosphere.
AchievingFailure
• Companyfailedu7erly,$40MMandfiveyearsofpain.
• Crippledby“shadowbeliefs”thatdestroyedtheeffortofallthosesmartpeople.
ShadowBelief#1
• Weknowwhatcustomerswant.
ShadowBelief#2
• Wecanaccuratelypredictthefuture.
ShadowBelief#3
• Advancingtheplanisprogress.
Agoodplan?
• Startacompanywithacompellinglong‐termvision.
• Raiseplentyofcapital.• Hiretheabsolutebestandthebrightest.• Hireanexperiencedmanagementteamwithtonsofstartupexperience.
• Focusonquality.• Buildaworld‐classtechnologypla_orm.• Buildbuzzinthepressandblogosphere.
Startup#2
IMVU
Newplan
• Shippedinsixmonths–ahorriblybuggybetaproduct
• Chargedfromdayone
• ShippedmulXpleXmesaday(by2008,onaverage50Xmesaday)
• NoPR,nolaunch• Results:2007revenuesof$10MM
LeanStartupsGoFaster
• Commoditytechnologystack,highlyleveraged(free/opensource,user‐generatedcontent,SEM).
• Customerdevelopment–findoutwhatcustomerswantbeforeyoubuildit.
• Agilesomwaredevelopment–buttunedtothestartupcondiXon.
Commoditytechnologystack
• Leverage=foreachounceofeffortyouinvestinyourproduct,youtakeadvantageoftheeffortsofthousandsormillionsofothers.
• It’seasytoseehowhigh‐leveragetechnologyisdrivingcostsdown.
• Moreimportantisitsimpactonspeed.
• Timetobringanewproducttomarketisfallingrapidly.
CustomerDevelopment
ConXnuouscycleofcustomerinteracXon
RapidhypothesistesXngaboutmarket,pricing,customers,…
Extremelowcost,lowburn,Xghtfocus
Measurablegatesforinvestors
h7p://bit.ly/tpTtE
Ataleoftwostartups,revisited
• Mirrorsthechangesindevelopmentmethodologiesoverthepastfewyears.
• Let’slookatthosechangesschemaXcally.
• Theseexamplesaredrawnfromsomwarestartups,butincreasingly:– Allproductsrequiresomware– AllcompaniesareoperaXnginastartup‐likeenvironment
Problem: known Solution: known
Waterfall
TradiXonalProductDevelopmentUnitofprogress:AdvancetoNextStage
Requirements
Design
Implementa2on
Verifica2on
Maintenance
Problem: Known Solution: Unknown
“Product Owner” or in-house customer
AgileUnitofprogress:alineofworkingcode
Problem: Unknown Solution: Unknown
ProductDevelopmentatLeanStartupUnitofprogress:validatedlearningaboutcustomers($$$)
MinimizeTOTALXmethroughtheloop
IDEAS
CODEDATA
BUILDLEARN
MEASURE
HowtobuildaLeanStartup
• Let’stalkaboutsomespecifics.Thesearenoteverythingyouneed,buttheywillgetyoustarted
• ConXnuousdeployment• Split‐test(A/B)experimentaXon• Fivewhy’s
ConXnuousDeployment
IDEAS
CODEDATA
BUILDLEARN
MEASURE
CodeFasterConXnuousDeployment
MeasureFasterRapidSplitTests
LearnFasterFiveWhysRootCauseAnalysis
Continuous Deployment • Deploy new software quickly
• At IMVU time from check-in to production = 20 minutes
• Tell a good change from a bad change (quickly)
• Revert a bad change quickly
• Work in small batches • At IMVU, a large batch = 3 days worth of work
• Break large projects down into small batches
Cluster Immune System What it looks like to ship one piece of code to production:
• Run tests locally (SimpleTest, Selenium) o Everyone has a complete sandbox
• Continuous Integration Server (BuildBot) o All tests must pass or “shut down the line” o Automatic feedback if the team is going too fast
• Incremental deployo Monitor cluster and business metrics in real-timeo Reject changes that move metrics out-of-bounds
• Alerting & Predictive monitoring (Nagios)o Monitor all metrics that stakeholders care abouto If any metric goes out-of-bounds, wake somebody upo Use historical trends to predict acceptable bounds
Whencustomersseeafailure:o Fix the problem for customers o Improve your defenses at each level
RapidSplitTests
IDEAS
CODEDATA
BUILDLEARN
MEASURE
CodeFasterConXnuousDeployment
MeasureFasterRapidSplitTests
LearnFasterFiveWhysRootCauseAnalysis
Split‐tesXngalltheXme
• A/BtesXngiskeytovalidaXngyourhypotheses
• Hastobesimpleenoughforeveryonetouseandunderstandit
• MakecreaXngasplit‐testnomorethanonelineofcode:
if(setup_experiment(...)=="control"){//doittheoldway}else{//doitthenewway}
TheAAA’sofMetrics
• AcXonable• Accessible• Auditable
MeasuretheMacro
• Alwayslookatcohort‐basedmetricsoverXme• Split‐testthesmall,measurethelarge
ControlGroup(A) Experiment(B)
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FiveWhys
IDEAS
CODEDATA
BUILDLEARN
MEASURE
CodeFasterConXnuousDeployment
MeasureFasterRapidSplitTests
LearnFasterFiveWhysRootCauseAnalysis
FiveWhysRootCauseAnalysis
• AtechniqueforconXnuousimprovementofcompanyprocess.
• Ask“why”fiveXmeswhensomethingunexpectedhappens.
• MakeproporEonalinvestmentsinprevenXonatallfivelevelsofthehierarchy.
• Behindeverysupposedtechnicalproblemisusuallyahumanproblem.Fixthecause,notjustthesymptom.
There’smuchmore…
IDEAS
CODEDATA
BUILDLEARN
MEASURE
CodeFasterUnitTests
UsabilityTestsConXnuousIntegraXon
IncrementalDeploymentFree&Open‐SourceComponents
CloudCompuXngClusterImmuneSystemJust‐in‐XmeScalability
RefactoringDeveloperSandbox
MeasureFasterSplitTestsClearProductOwnerConXnuousDeploymentUsabilityTestsReal‐XmeMonitoringCustomerLiaison
LearnFasterSplitTestsCustomerInterviewsCustomerDevelopmentFiveWhysRootCauseAnalysisCustomerAdvisoryBoardFalsifiableHypothesesProductOwnerAccountabilityCustomerArchetypesCross‐funcXonalTeamsSemi‐autonomousTeamsSmokeTests
FunnelAnalysisCohortAnalysis
NetPromoterScoreSearchEngineMarkeXng
Real‐TimeAlerXngPredicXveMonitoring
TheLeanStartup
• Youarereadytodothis,whetheryouare:– ThinkingofstarXnganewcompany,buthaven’ttakenthefirststep
– Areinastartupnowthatcoulditeratefaster– WanttocreatethecondiXonsforleaninnovaXoninsideabigcompany
• Getstarted,now,today.
Thanks!
• StartupLessonsLearnedBlog– h7p://startuplessonslearned.blogspot.com/
• Webcast:“HowtoBuildaLeanStartup,step‐by‐step”– May1,2009at10amPST– h7p://www.oreillynet.com/pub/e/1294
• TheLeanStartupWorkshop – Anall‐dayeventforaselectaudience– May29,2009inSanFrancisco– Signupat:h7p://bit.ly/a5uw8
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