Eric Ries is the author of the blog Startup Lessons Learned and the creator of the Lean Startup entrepreneurship methodology. He was the co-founder and served as Chief Technology Officer of IMVU, his third startup.
Entrepreneuship = awesome. It is the best time in the history of the world to be an entrepreneur. Softaware and technology is lowering the barriers to entry.
So why build a startup?
- You get to change the world>
- You get to build and organization of lasting value>
- You are able to make customer lives better>
But... most startups fail. So what does success really mean, which startups really live up to a higher standard of success? By that measure we're not doing particularly well. So many companies fail for fundamentally bad reasons. We need to end a waste of human potential because startups don't have to fail, we can do better and this is what Ries' mission is.
Ries' definition of a startup is that "A startup is a human institution designed to deliver a product or service in conditions of extreme uncertainty" - nothing to do with the size of the compan, the sector of the economy or the industry the business is involved in.
Ries' contends that entrepreneurship is management. Our goal is to create an institution, not just a product in attempting to achieve that traditional management practices fail and we need practices and principles that are geared to the startup context of extreme uncertainty.
So what do successful startups have in common? They pivot - starting with one concept or direction and changing tack mid-journey. They reduce time between iterations and in doing so increase the odds of success. Ries was involved with a business that looked promising. They had a plan that went:
- Start a company with a compelling long-term vision>
- Raise plenty of capital>
- Hire the absolute best and brightest>
- Hire an experience management team with tons of startup experience>
- Focus on quality>
- Build a world-class technology platform>
- Build buzz in the press and blogosphere>
But they achieved failure
- The company failed after $40 million and five years of pain>
- They were crippled by shadow beliefs that destroyed the effort of all those smart people>
- #1 - We know what customers want>
- #2 - We can accurately predict the future>
- #3 - That advancing the plan is progress>
Ries' second startup, IMVU had a new plan:
- They shipped the product in six months - a horribly buggy meta product>
- They charged from day one>
- They shipped multiple times a day (by 2008, on average 50 times a day)>
- No PR, No launch>
- Results - profitable, revenue over $20 million>
So why does one startup that follows "the rules" fail, while one that goes outside of the norm succeeds? How to build a lean startup
- Continuous deployment
- Deploy new software completely
- Tell a good change from a bad change
- Revert a bad change quickly
- Work in small batches
- Break large projects down into small batches