The Lean Startup Book Summary
Hello friends, this is the summary of Eric Ries book "The Lean Startup". This is a very interesting book summary, if you have some time, then read this entire summary.
In this book you will get to learn a lot about business startups which is very important for a business startups.
The Lean Startup Book Summary
INTRODUCTION
What comes to your mind when you hear Startup? You might think of four-five friends sitting in a garage who are making a new product. A very exciting venture which is expected to earn a lot of profit. Similarly, many Dot Com companies started in Silicon Valley. Maybe you know or not, but the apple company started like this.
But do you know that a start up can be opened inside a well known company. You will know this information and many such interesting things from this book.
Today the world of business is changing. Therefore, the traditional approach to this should also be changed. This is what Lean Startup offers a modern approach to business.
There are some start ups that are well planned. A team of intelligent members is also present behind them by choosing the product after careful consideration and marketing strategy. But why do these start ups fail despite spending so much time, money and effort? Where is the deficiency? Is planning not good?
There will be many of you who would like to start their own business. Or are you a businessman who wants to start a new venture? Well, whatever you are, this book will work for you. If you also want to know how to start a multi-million company starting from a start up, let's start from here.
Think big, but start small.
In early 2000, Eric Ries, the author of this book, started a start up with friends from his college. Their product was an online site where people could put their profile in front of Potential Employers.
His idea was amazing, the team was also very good and he had also used the latest technology, yet his startup failed. Along with him, many other start ups also drowned when the bubble of Dot com Companies exploded.
Eric Ries was shocked. Everything he read about success stories in magazines is a lie. No matter how hard you work and never give up, we can still fail.
A few years later Eric thought that perhaps this is why most start ups drown because many new products are unable to run. But from his experience, Eric came to know a Guaranteed Process from which no start up could fail.
There is a right way to understand this and if followed, success can be achieved. In 2004 Eric found another start up. His new product was an online platform where members could connect with their friends with their new avatar.
The exciting thing about this start up was that the customer could create everything in it. From clothes, accessories to furniture for your avatar. However, this work was a big challenge for Eric's team. Creating a virtual world, using 3D technology for avatar was all very hard work. They also had to create a buying feature device for Payment and Customer.
Eric's new company name I.M.V.U. Was. For this new venture, he experimented with his co-founder and did everything wrongly. He released the early version of the product which had a lot of revenue, released it and sold it to the customer. Instead of working so hard to make the virtual world perfect, he allowed the customer to send feedback.
His approach was considered a big mistake according to the traditional way of business. Everything should be ready before release, strategy, product, market prediction, everything. But this way of Eric's business launch became a new trend in the world of modern business. This approach has become a cornerstone for new principals in the business world, called lean startups.
What is lean start up?
A lean start up is actually a base on an experiment. Its main idea is to learn from mistakes. In this way, you do not spend years making the product perfect, you do not spend time thinking whether your product will be sold or how the customer will give it.
You can also remove the early version of the product in a low amount using a lean startup method. Then you can change it according to the need. It is Idea that innovation should go on so that the new product does not get wasted and does not get out of the market.
To tell the truth, today the Lean Start Up has become a global movement. Many organizations around the world have adopted it. This has created a new era in the business world. It has been applied not only by new companies but also by many well-known elite businessmen and Fortune 500. Interestingly, Eric Reese's company IMVU earned a full 50 million dollars in 2011.
What is the principle of lean startup?
The lean startup method has five important key ideas. Number one is that it is not necessary that you start any new business from the garage. It doesn't matter where you start when you are determined to become an entrepreneur.
In a start up you cannot predict anything in advance.
Any organization that starts a new service or product is its start up when it has no confidence in its running or not. Lean startups can apply to companies from every industry, every sector and size.
Management comes at number two,
When you talk about startups, it is not just about the product. People who make that product also join the start up. And those people or that institute need to be managed in a special way because they are very uncertain about that startup.
The third is Validate Learning,
Which means that such experiments are done in business to know how the results of those experiments will be on the business. This is the same as if there is a scientific hypothesis and it is also necessary in a way because it is the goal of a start-up to last a long time. It is not just about earning profits for a period of time.
The fourth number is BUILD — MEASURE —— LEARN.
The primary task of any start up is to create new products from Idea, measure customer feedback and learn from that feedback whether this thing will go ahead or not. That means To Pivot or PERSEVERE…. PIVOT means to bend over and think of another way, and PERSEVERE means to keep moving forward with your idea. If the feedback is not good, then you have to take another route and if the feedback is good then keep going.
PROGRESS is at number five.
Your startup should have a habit of following a build-a-learn cycle. It should work on its shortcomings as soon as the feedback is received. In order to achieve a sustainable business, startups must know what to do on their own process.
ZAPPOS
Zappos Shoes is an online shop. The best part of it is that it is customer friendly. Zappos is one of the largest international e-commerce businesses. The truth is that it is a very successful company with a $ 1 billion annual sale. But like all other start up businesses, this company started in a very simple way.
Zappos' founder is Nick Swinmurn. Years ago, when there was no online shop to buy all kinds of shoes available online, Nick Swinnam had great frustration. They wanted the customer to have the best shopping experience while sitting online.
Swinnam could have spent a lot of time in planning, he should have figure out everything from warehouses to distribution partners and potential sales first. Then it used to be a special trend to open an e-commerce company.
Nevertheless, Swinnam started Zappos as an experiment on the belief that people will be interested in buying shoes online. He first sought permission from the local shopkeepers to take a picture of his product. In return, Swinamam would put the pictures of those products on his website so that the customer could see them, and when a customer saw the picture and ordered it, Swinamam would buy it from that shop and sell it to the customer.
Zappos started from a simple functioning site. Swinnam wanted to see if there was really a demand for shoes in online shopping. By interacting with real customers, they used to get the best payment and also managed the return and customer support system correctly.
This experiment is very different from market research. If Swinamam had done the survey, he would have known what the customer's choice is. But they came to know more than this by creating a site.
First of all, by dealing with real customers, they got more accurate data from the survey. Secondly, they came to know about the actual need of the customer. He also understood that discounted prices may also have to be kept in Zappos. Thirdly, he got a chance to deal with the customer's behavior. He also learned to deal on return issues.
Zappos benefited greatly from Swinnam's experiment. Although the company started with a small scale, it gave good results. Swinnam got a good knowledge of what should happen in an online store, and thus Zappos became an established brand. Then in 2009 Amazon bought it for $ 1.2 billion.
Success of Zappos proves the efficiency of lean start up. This experiment saved the company time, effort and money. Before depositing the stock of shoes, Swinnam used to make sure the orders, then went and bought them directly from the shopkeepers and sold them to the customer, thus they did not have any inventory of the unwanted shoes.
And there was no need for a customer survey. It was better to deal with the real customer. Whatever was the real problem and solving it according to the customer, there was a customer satisfaction. Swinnam started with a new product and through experimentation Zappos became a perfect customer friendly company.
The simple functioning site they created is called the minimum portable product. Ie MVP
MVP is the initial version of a product. It is cheap, easy and can be developed easily. Then it changes from experiment to a final product which is ready for the market.
We can see how the launch of Lean Startup principal pay-based Zappos was quite uncertain as the idea of buying shoes online was not in anyone's mind then. Apart from this, Swinnam did not believe that even a single shoe should be sold.
But he applied for validating learning. Swinamam tested his confidence by launching his experiment site. Then he applied Build-Menager-Learn when he had to deal with real customer. Swinnam also taught which approach to PIVOT or PERSEVERE to adopt such as the discount and return system and then finally Zappos became a sustainable business.
Village Laundry Service
Many years ago there used to be washing machines in few houses in India. Because it was expensive, only 7% people could afford to buy it. Most people used to wash clothes with their hands or get them washed with a washer or laundry service.
The washermen used to take those clothes in the river. Clothes were first cleaned by banging on a stone and then washed in river water. It used to take a full ten days for the washerman to wash and dry and iron such clothes, and then he used to give the clothes back, and it was not that the clothes were still clean.
Akshay Mehra saw an opportunity in it. He had been the brand manager at Procter and Gamble Singapore for 8 years. He is the brain behind the Pentene and Tide brands in India and Southwest Asia. Akshay Mehra wanted to provide easy and affordable laundry service to the people.
On coming back to India, Akshay Mehra collaborated with Village Laundry System. Together, they experimented to find the best business approach. His first experiment VLS loaded a washing machine into a pick-up truck. They parked the truck in a busy street in Bangalore.
This pick-up truck cost Idea VLS just $ 8,000. First of all, they had to find out whether people would actually give them money to wash their clothes. By the way, the clothes were not washed in the machine in the truck in front of everyone, that was only for marketing purpose. In fact, the clothes were taken away and washed and then the washed clothes were delivered to the customer in 24 hours.
VLS parked those trucks in different places of the city for a week so that they can know more about the customer, how to anchorage more and more people to get the clothes washed? Did people need faster cleaning time? Or were people concerned about cleanliness? Or any customer had a specific request?
VLS came to know that most of the customers were worried that the truck might run away with their clothes. So to solve this issue VLS started using customer friendly mobile kiosk instead of truck. In his second experiment, he brought that kiosk to a grocery store.
VLS also came to know that people want to not only get the clothes washed but also press them. And they also came to know that some customers were ready to give double money in 4 hours in exchange of washed press clothes.
This experiment of VLS was very successful. Later he brought a final product which was a 3 feet by 4 feet mobile kiosk with an efficient washing machine and a dryer. It used good quality detergent and clean water to wash clothes.
After this successful experiment, 14 mobile kiosks of Village Laundry Service started operating in big cities like Mumbai, Bangalore. CEO, Akshay Mehra said Proudly "We served a total of 116,000 KGs in 2010… Last year we have served over 10,000 customers in total across all our outlets"
Like the story of Zappos, we can see how VLS, the principal of Lean Startup, also applied. Akshay Mehra was also the first unsure about his start up. He had no idea whether people would trust his laundry service or not.
Secondly, they removed the initial product as an experiment. The pick-up truck was their MVP i.e. minimum portable product, which did not cost any special money nor did it take much time and effort to develop. They could easily test their confidence at this low cost risk.
Thirdly, VLS was able to create build-manager-learn with customer feedback. They got the idea of a pivot from the pick-up truck and PERSEVERE came to know from the Ironing Service.
And the result of this experiment was that in the last they got a final product that was fulfilling the customer's needs. This was a huge success which enabled the Village Laundry Service to become a sustainable business.
What if VLS had made its final product before market launch? What if they kept planning the perfect marketing strategy for years? What if they had done a survey before starting the product? All these are traditional methods of business which have been adopted before any new business. But these old methods never work for any start up.
Starting any new business is very unsure situation. Start-ups should neither invest this much in the product nor spend so much time in the strategies that does not guarantee success. Actually, you cannot be 100% sure until you deal with the real customer.
For any new business, it is better to start small. With the help of experiment and build-learn-learn method, you will get a perfect sustainable product in the last.
GROUP ON
Have you heard the name Group On? It was the first online site to provide group coupons to customers. Seeing the increasing success of this, many other sites also started copying the group on. But it was not that Groupon went on night. The first customers of Groupon were a group of twenty people who took Buy One Take One Pizza coupons.
Andrew Mason, who was its founder, did not want to make it a social commerce platform at first .. But Mason and his team created a minimum portable product. So this story is like this -
Groupon started as a WordPress blog, Mason and his team used to post something everyday. Their first blog was "This T-shirt is available in red color and large size. If you want a different color or size, then let us know -Mail. The Group On did not even have a form for the order,
The idea was very simple but it worked. From this experiment, it has come to know that it is really in demand. There were many customers who found the group on work. Mason and his team then created genuine coupons from the Filemaker program. Groupon's first coupon was in a pdf format. They mailed these PDP coupons directly to the customer.
One day he received a demand for 500 coupons of sushi. They had to mail all these coupons to their 500 customers with PDF files. In its first year, it managed to manage things like Groupon Company. But in this journey, the WordPress blog, File Capricorn PDF and those 20 pizza coupons also have a special place. The company's growth was record breaking. She became the fastest company to reach the $ 1 billion benchmark in its time. Today Groupon helps local businesses find new customers. It provides special affordable deals to different 375 cities of the world.
The job of minimum virtual products is to help the start up by finding out the demand of the customer. Therefore MVP can be developed cheaply, easily and quickly. Its through start-up may soon start its build-mos-learn cycle.
In doing business in a traditional way, the product has to go through a long development period, then it gets perfection. But MVP methods are more effective. It is very helpful in creating the best product design for start ups and understanding the technical issues, and above all, MVP (MVP) answers many questions related to business and marketing strategies.
Toyota
Genchi Gembutsu means go and see for yourself. It is for the managers to go and see for themselves first to get the best decision. This is the core principal of Toyota. Here it is very important to adopt Genchi GameButsu for everything, from product development, manufacturing, distribution to sales and public affairs. This is the way Toyota works.
Here managers have no other way to solve problems except to go and see for themselves what is the problem, and the same was done by Yuji Yokova, Siena Miniven 2004 manager. He was assigned to oversee everything from Siena's concept making to production.
Mini Van has more market in North America. That year Yokova was set for a big business move. Those U.S. All of the 50 states went for road trips. Yokova also toured Canada and all of Mexico's countries. Altogether he measured a distance of 53,000 miles.
In every city and town, Yokova rented the Siena 2003 model. They wanted to know if there should be an improvement. He spoke to the drivers driving the minivan and also observed him. Whatever information Yokova gained from this was a threat to the success of the 2004 model.
Yokova said, "Of course parents and grandparents buy minivan, but in reality the children own it." Children take possession of two-thirds of its back, and it is the children who are the most dangerous and also tame. If I learned anything from my travel, then the next Siena needs to be made a kid special.
And thus Yokova then set a big budget for the interior of the Siena 2004 Minivan. It is very important for the children to get comfortable in the car, especially in the US where family road trips are often long. But in Japan, Yokova could not find this because long trips are not so common there.
The results of this new improved comfort feature were very positive. The sale of the Minivan 2004 model was 60% higher than the 2003 model. This journey of Yokova was a huge success.
Manager Yokova proves the effectiveness of Genchi Gembutsu. They proved that they do the best they can. The same thing applies in start ups as well. Because there is no other way than to go there and see for yourself. Experiment is very important. They are more effective than any other business strategies, especially in a new company.
You cannot understand the choice of the customer until you apply MvP nor do experiment with real customer. This is the best way for a startup. It is not necessary that your experiment is long, coastal or difficult, but their results are impressive.
Conclusion – The Lean Startup Book Summary
Well, if you have an amazing business idea, then you can also create an MVP and test your Hypothesis. Keep in mind that your minimum portable product should not be costal. Because you are just starting, then you can start from a small level. Develop a simple product in a short time.
When you have your MVP, you can start with your learning process. Now you start experimenting and remember to build your build-mos-cycle, major the customer feedback and learn from it. Then you will know which idea to pivot and which PERSEVERE.
Keep repeating this build-major-learn loop until you test all your ideas. Until all your uncertility goes away. In this way, the product you create in the last will be your best final product and your best business strategy as well.
By applying a lean start up, you will not only earn profit, but you will also create a sustainable business because there is a complete guarantee because it gives you a chance to deal with real customers. So from now on, remove the unsanitary cities and proceed on the path of success.
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