The Lean Startup: How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses [Rilegato]

As of the writing of this review (August 2011), the US economy is still in pretty bad shape, banks aren't lending and companies are sitting on piles of cash. It's a perfect time to launch a startup, but capital is scarce. Fortunately, there are options for aspiring entrepreneurs. The Lean Startup by Eric Ries (co-founder of internet company IMVU) is a great place to begin.

When I first received the book I was a little concerned that it would be more focused on brick and mortar businesses to the exclusion of internet and content type startups. However, Ries focuses on a variety of entrepreneurial situations from traditional, physical businesses to those only existent on the web. If you are operating a business or thinking about starting one, chances are Ries has addressed your situation in some capacity within the book's 290+ pages.

The Lean Startup is filled with technical information, but also interesting stories that back up the author's assertions. I like this model because it allowed me to see what he was talking about in a real world setting. I also appreciate his inclusive vision of entrepreneurship. For example, he thinks entrepreneur should be a job category in larger companies and goes on to address the needs of people who are in charge of starting new projects within big corporations.

In short, the lean startup model focuses on getting a minimum viable product to the market, then receiving customer feedback along the way to improve the product and pivot (take a new approach) if necessary. This, of course, is in contrast to the old way of doing business where a product is launched fully functional backed by extensive market research. This method can be successful, but it costs a lot of money, pivoting is difficult, and failure can harm the bottom line (think Microsoft Vista).

I'm starting my own business and found The Lean Startup incredibly helpful. It basically functions as a general "how to" book for the lean startup method. While everything wasn't equally helpful for me personally, his advice on minimum viable product, how to find the root of personnel failures, and the creation of meaningful metrics is priceless.

If you are starting a business or thinking about expanding one, I'd highly recommend this book. I know my business will be more successful because of it.

Winston Churchill once said that we can depend on the United states to do the right thing - after they have exhausted all other alternatives. The same can be said for the startup company in cutting edge fields - they have to keep trying so many different options on the various product features, target market segments, pricing, technology architecture, and so on before they hit upon the right formula. And since companies will not have the necessary resources to try out the various permutations and combinations, most of them fail before they achieve success; unless they are phenomenally lucky.

But Eric Ries in his book `The Lean Startup' shows that it doesn't have to be so. He explains that startups cannot use traditional planning an management tools because their product and customers are unknown. So, what else? Here he comes up with his Lean Startup Methodology - which is a scientific approach for creating and managing startups. Since the product and customer are not known, startups needs to develop a process of "validated learning" through which they can learn to build a sustainable business. This is different from learning through failure - which is a very expensive and wasteful process. Startups need to have a "Build-Measure-Learn" process and get continuous feedback from the market, so that they can decide whether to continue with the current plan or `pivot' into other directions. Eric shows the various ways a startup can pivot: Zoom-in pivot, Zoom-out pivot, Customer segment pivot, Customer need pivot, Platform pivot, and so on. Eric also explains how the normal metrics which he calls `vanity metrics' fail to show how a startup is performing and he comes with solutions of defining new metrics for the startup which takes into account the continuous innovation that a startup should perform. I loved the concepts of `MVP' - minimum viable product and `power of small batches' which allow companies to be agile and experiment quickly without committing too much resources.

Over the last 25 years of my career, I have been involved with over 20 startups in various capacities - Founder, Investor or Advisor. Though every startup has been a different challenge, there are many commonalities that run across them. And the doubts that plague each one of them are the same - are we doing the right thing? are we making progress? should we presevere with what we are doing or change strategy? The `Lean Startup Methodology' is an excellent tool, which I wish I had known before. It is not that some or most of the things that Eric mentions have not been executed by me or other entrepreneurs, but we lacked the scientific approach and process that would have enables us to plan and manage better.

We look at successful startups and often feel that those winners just happened to be at the right place at the right time. With many real life examples Eric shows it is not just luck. The successful ones were able to manage the startup well through many of the principles explained in the `Lean Startup Methodology' - whether consciously or not. Further, after you move past the startup phase, how do you continue to get the company to innovate and be agile? How can large companies foster entrepreneurship? Can the smart startup maintain the spirit of entrepreneurship? Eric thinks so and lays out his thoughts of how that can be achieved.

Some caveats on the book though - please note carefully how Eric defines the entrepreneur and the startup. There will be many businesses and organizational structures that will not match that. It does not mean the `Lean Startup Methodology' will not work for those - but it will have to modified and fine tuned. Similarly Eric's experiences and the examples he quotes are mostly from the high tech fields and hence the learnings may not be exactly applicable for many traditional industries. Lastly, the book assumes that the Startup is good in execution - which from my experience, is not often the case. The management team in most Startups will have many gaps - some of which they are not even aware of - which leads to serious problems as they try to execute. However there are many other books and large number of consultants who can help the startup to solve those problems.

If you are an entrepreneur or involved with a startup in any capacity - this book is a must read; you will not regret the investment of the time and cost. I commend Eric Ries for making a significant contribution to the field of scientific entrepreneurial management.

The title may seem over the top, but actually the implications of Eric's new book are huge. I can't remember a text in recent years that predicted such significant conclusions for society, education, and world business.

**Concepts in the book that will make your head spin:

1) Ries's Law (I'm coining this right now) - Moore's Law that states the cost of new technology will rapidly decrease thereby reducing technological risk of innovation. It's not until The Lean Startup that we realize the cost of reaching customers and thereby market risk will also rapidly decrease.

2) Entrepreneur mythology as we know it is wrong (aka Steve Jobs is not what he seems). Iconic innovators ala the founders of Apple are believed by the public to be successful because of their creative vision of the future. The Lean Startup shows that in order for founders to be successful, they must test each element of there vision against reality.

3) Demystifying startup metrics. Even in a startup mecca like NYC, few entrepreneurs understand the metrics that drive their business. Eric's Innovation Accounting paradigm will change the early-stage VC industry as we know it.

**What I like about the book:

1) Comprehensive and a pleasure to read.

2) Real world examples (case studies) from tech startups to the non-profit industry. You will not find anything like these in other books.

3) Case studies in chapters 6 & 7 alone are worth the price of the whole book.

**What I don't like:

1) The chapter titles are a bit confusing and non-descriptive.

2) I could see some savvy entrepreneurs getting bored with the beginning when there's really great content in the later chapters. But if you're new to Lean Startup, the beginning chapters are a perfect introduction for you.

3) Some of the sources are outdates. I recently checked the links at the back of the book and gotten a couple 404's, but after searching on Google was able to find the sources. (this might be fixed now, not sure)

**Final Words
As someone who is very active on the latest research into innovation and entrepreneurship as well as an long-time entrepreneur myself, I love Eric's book and think that it's going to become a true classic and stand out as THE business book to read in 2011-2012. Don't listen to the haters, just look at the reviews from people like Marc Adreesen (founder of Netscape) and Dustin Moskovitz (cofounder of Facebook), these people don't endorse you unless you you are the real deal. Eric & The Lean Startup are the real deal.