The Lean Startup - Eric Ries  ## Metadata - Author: **Eric Ries** - Full Title: The Lean Startup - Category: #books - Tags: #business ## Highlights - extremely fast cycle time, a focus on what customers want (without asking them), and a scientific approach to making decisions. (Location 133) - the business and marketing functions of a startup should be considered as important as engineering and product development and therefore deserve an equally rigorous methodology to guide them. He called that methodology Customer Development, and it offered insight and guidance to my daily work as an entrepreneur. (Location 144) - They exist to learn how to build a sustainable business. This learning can be validated scientifically by running frequent experiments that allow entrepreneurs to test each element of their vision. (Location 187) - The fundamental activity of a startup is to turn ideas into products, measure how customers respond, and then learn whether to pivot or persevere. All successful startup processes should be geared to accelerate that feedback loop. (Location 189) - Metcalfe’s law: the value of a network as a whole is proportional to the square of the number of participants. (Location 527) - This is one of the most important lessons of the scientific method: if you cannot fail, you cannot learn. (Location 761) - His hypothesis was that customers were ready and willing to buy shoes online. To test it, he began by asking local shoe stores if he could take pictures of their inventory. In exchange for permission to take the pictures, he would post the pictures online and come back to buy the shoes at full price if a customer bought them online. (Location 773) - If Zappos had relied on existing market research or conducted a survey, it could have asked what customers thought they wanted. By building a product instead, albeit a simple one, the company learned much more: (Location 779) - In fact, in 2009 Zappos was acquired by the e-commerce giant Amazon.com for a reported $1.2 billion. (Location 789) - The value hypothesis tests whether a product or service really delivers value to customers once they are using it. (Location 825) - growth hypothesis, which tests how new customers will discover a product or service, (Location 831) - 1. Do consumers recognize that they have the problem you are trying to solve? 2. If there was a solution, would they buy it? 3. Would they buy it from us? 4. Can we build a solution for that problem?” (Location 870) - The Lean Startup method builds capital-efficient companies because it allows startups to recognize that it’s time to pivot sooner, creating less waste of time and money. (Location 1025) - We saw the same phenomenon with Facebook, which faced early competition from other college-based social networks whose head start proved irrelevant. (Location 1108) - entrepreneurs must, in Steve Blank’s famous phrase, “get out of the building” and start learning. (Location 1128) - You cannot be sure you really understand any part of any business problem unless you go and see for yourself firsthand. It is unacceptable to take anything for granted or to rely on the reports of others. (Location 1136) - A minimum viable product (MVP) helps entrepreneurs start the process of learning as quickly as possible. It is not necessarily the smallest product imaginable, though; it is simply the fastest way to get through the Build-Measure-Learn feedback loop with the minimum amount of effort. (Location 1223) - Today, Dropbox is one of Silicon Valley’s hottest companies, rumored to be worth more than $1 billion.5 In this case, the video was the minimum viable product. (Location 1301) - If we do not know who the customer is, we do not know what quality is. (Location 1420) - A startup’s job is to (1) rigorously measure where it is right now, confronting the hard truths that assessment reveals, and then (2) devise experiments to learn how to move the real numbers closer to the ideal reflected in the business plan. (Location 1515) - A STARTUP’S RUNWAY IS THE NUMBER OF PIVOTS IT CAN STILL MAKE (Location 2134) - The true measure of runway is how many pivots a startup has left: the number of opportunities it has to make a fundamental change to its business strategy. (Location 2141) - Pivots come in different flavors. The word pivot sometimes is used incorrectly as a synonym for change. A pivot is a special kind of change designed to test a new fundamental hypothesis about the product, business model, and engine of growth. (Location 2311) - Zoom-in Pivot In this case, what previously was considered a single feature in a product becomes the whole product. (Location 2313) - Zoom-out Pivot In the reverse situation, sometimes a single feature is insufficient to support a whole product. In this type of pivot, what was considered the whole product becomes a single feature of a much larger product. (Location 2316) - Customer Segment Pivot In this pivot, the company realizes that the product it is building solves a real problem for real customers but that they are not the type of customers it originally planned to serve. (Location 2318) - Tags: #product - Customer Need Pivot As a result of getting to know customers extremely well, it sometimes becomes clear that the problem we’re trying to solve for them is not very important. (Location 2321) - Platform Pivot A platform pivot refers to a change from an application to a platform or vice versa. (Location 2328) - Business Architecture Pivot This pivot borrows a concept from Geoffrey Moore, who observed that companies generally follow one of two major business architectures: high margin, low volume (complex systems model) or low margin, high volume (volume operations model).6 The former commonly is associated with business to business (B2B) or enterprise sales cycles, and the latter with consumer products (there are notable exceptions). In a business architecture pivot, a startup switches architectures. (Location 2332) - This pivot borrows a concept from Geoffrey Moore, who observed that companies generally follow one of two major business architectures: high margin, low volume (complex systems model) or low margin, high volume (volume operations model). (Location 2333) - Value Capture Pivot There are many ways to capture the value a company creates. (Location 2338) - Engine of Growth Pivot As we’ll see in Chapter 10, there are three primary engines of growth that power startups: the viral, sticky, and paid growth models. In this type of pivot, a company changes its growth strategy to seek faster or more profitable growth. (Location 2343) - Channel Pivot In traditional sales terminology, the mechanism by which a company delivers its product to customers is called the sales channel or distribution channel. For example, consumer packaged goods are sold in a grocery store, cars are sold in dealerships, and much enterprise software is sold (with extensive customization) by consulting and professional services firms. Often, the requirements of the channel determine the price, features, and competitive landscape of a product. A channel pivot is a recognition that the same basic solution could be delivered through a different channel with greater effectiveness. (Location 2346) - Technology Pivot Occasionally, a company discovers a way to achieve the same solution by using a completely different technology. Technology pivots are much more common in established businesses. In other words, they are a sustaining innovation, an incremental improvement designed to appeal to and retain an existing customer base. (Location 2354) - 1. Be tolerant of all mistakes the first time. 2. Never allow the same mistake to be made twice. (Location 3136) - Whenever something goes wrong, ask yourself: How could I prevent myself from being in this situation ever again? (Location 3155)