LEAN STARTUP PRINCIPLES

RESOURCES

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 LEAN STARTUP

What it is and why Lean Startup is a methodology created by Eric Ries

that can help you tackle any type of project that
we use it entails a certain degree of innovation/risk (whether it
is a small decision or creating a company from
scratch)

Here are some of its numerous benefits:

- lowers the risk of failure

- reduces the investment in time and money
- maximizes the chances to "find" a winning
model
- creates powerful business models and products
- etc.

INNOVATING VS COMPETING

Innovating vs Whenever there is a certain degree of innovation or

risk, you have to apply the principles and method of
competing Lean Startup rigorously.

We have created a simple model in which we compare

two types of business decisions: Innovating and
Competing.

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 LOW UNCERTAINTY HIGH UNCERTAINTY
Competing Creating, innovating

You D
​ ON’T​ ​know​ what’s going to
CRITERIA You k
​ now​ what’s going to happen.
happen.

● Enter or compete in an
● Create something new for a
existing market with
non existing market
customers, competitors, etc.
● Enter an existing market with
SITUATIONS
a disruptive value proposition
E.g.: restaurant, sunglasses brand
like Hawkers, sneakers ecommerce
E.g.: ThePowerMBA, Shazam, Zappos
store, etc

Product Market Fit​: create

CHALLENGE Competing​: Gain market share
something that people want

RISK Lower Very high

SKILLS & Traditional management​: Business

Lean startup:​ engineered method for
METHODS plan, market research, competitive
innovation
YOU NEED advantage, market sizing…

ROAD TO DISASTER

Road to disaster There is a series of mistakes that are made

by millions of entrepreneurs and
companies on a daily basis, often leading
them to failure.

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 WHAT EVERYBODY DOES LEAN STARTUP
Road to disaster Principles underlying the
methodology

Business Plan (market research) Don’t think too much

Validated learning

Assume you know what’s going to happen Assume that you are going to be wrong

Look for advice from “experts” or friends’ When it’s very innovative, only validated learning
with real customers matters.

Delaying launch date & contact with customers Get out of the building & start learning ASAP
trying to build the perfect product

Don’t tell anyone Validate as soon as possible

Gain early traction The only goal is learning, everything else is

waste

Vanity metrics Actionable metrics

The learning cycle A cycle developed by Eric Ries, entitled

‘Build Measure Learn.’

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 We have changed the terminology, but
how it works remains exactly the same.

Here’s a simple t​ emplate​ for documenting

the process.

EXPERIMENTS TEMPLATE
We believe that...

HYPOTHESIS

To validate it, we are going to…

EXPERIMENTS / MVP
And we are going to measure...

We have learned that…

LEARNING

So we are going to change...

Hypothesis Hypotheses are statements or

assumptions about what is going to
happen, but they have not yet been

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 verified (how the customers are going to
behave, what the costs will be, the income,
the response of the channels, etc.).

Here are some examples:

• My customers do not wish to continue
using (certain products).
• The customer will pay €35/month for our
software
• We will convert 5% of our web visitors into
leads.
• We will reach a market share of 2%.
• I will attract clients through Google
Adwords at a cost of €13.

Don’t forget
Whenever an idea with a certain degree of
innovation or uncertainty pops up in your
head, the first thing you have to do is
identify the HYPOTHESIS that this idea
brings.

Why?
Because ultimately, success or failure will
depend on whether the hypotheses turn
out to be correct or not. That is why it is
very important to be able to identify the
most important hypotheses.

A common mistake
Taking hypotheses for granted and setting
out to build the product

Some examples and A problem-solution interview

Conversations with potential clients in
experiments with MVP
which "we try to sell them the product."
Details to follow in a separate Annex.

Landing page
Drive traffic to a landing page and see
what customers do.

Smoke test
This consists of creating alanding page,

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 forms, Call to Action buttons etc., that help
you to observe what customers do, but
without having developed anything else.

Wizard of Oz
The Wizard of Oz is a concept introduced
in Lean Startup as an example of MVP. It
consists of developing the front-end, so
that customers have as real an experience
as possible, but all the technology and
operations behind it are carried out
manually.

Crowdfunding
There are platforms like Kickstarter or
Indiegogo that allow you to validate the
attractiveness of your proposal.

Waiting List
A great way to observe customer reaction
without having to have the product
developed.

Targeting Advertising
Carry out marketing campaigns that allow
you to quantitatively measure the interest
generated by your proposal.

Actionable metrics vs vain As we have seen, we are going to build the

product progressively, based on learning,
metrics
therefore, we need metrics that allow us to
validate that we are "on the right track"

Eric makes a distinction between Lean/

Actionable Metrics and Vanity Metrics

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 VANITY METRICS ACTIONABLE METRICS

They are NOT good for learning
because they are not necessarily
CAUSE-EFFECT
a sign of a stronger Product
Market Fit
They are good for learning
because they are a clear sign of
having stronger Product Market
Fit

REPRESENTATIVE
The “size” of the business Individual behaviour
OF...

TYPES OF
Gross quantities Ratios and unit economics
METRICS
Conversion rate
Followers
Activation rate
Visitors
Cost per Acquisition
Leads
CLTV
EXAMPLES Apps download
Repeat rate
Total Customers Acquired
Churn Rate
Total revenues
NPS
...
...

WHEN When you want to scale Before Product Market Fit