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Introduction
1. For an up-to-date listing of Lean Startup meetups or to find one near you, see http://lean-startup.meetup.com or the Lean Startup Wiki: http://leanstartup.pbworks.com/Meetups. See also Chapter 14, “Join the Movement.”
Chapter 1. Start
1. Manufacturing statistics and analysis are drawn from the blog Five Thirty Eight: http://www.fivethirtyeight.com/2010/02/us-manufacturing-is-not-dead.html
Chapter 2. Define
1. The Innovator’s Dilemma is a classic text by Clayton Christensen about the difficulty established companies have with disruptive innovation. Along with its sequel, The Innovator’s Solution, it lays out specific suggestions for how established companies can create autonomous divisions to pursue startup-like innovation. These specific structural prerequisites are discussed in detail in Chapter 12.
2. For more about SnapTax, see http://blog.turbotax.intuit.com/turbotax-press-releases/taxes-on-your-mobile-phone-it%E2%80%99s-a-snap/01142011–4865 and http://mobilized.allthingsd.com/20110204/exclusive-intuit-sees-more-than-350000-downloads-for-snaptax-its-smartphone-tax-filing-app/
3. Most information relating to Intuit and SnapTax comes from private interviews with Intuit management and employees. Information about Intuit’s founding comes from Suzanne Taylor and Kathy Schroeder’s Inside Intuit: How the Makers of Quicken Beat Microsoft and Revolutionized an Entire Industry (Cambridge, Mass.: Harvard Business Press, 2003).
Chapter 3. Learn
1. The original five founders of IMVU were Will Harvey, Marcus Gosling, Matt Danzig, Mel Guymon, and myself.
2. Usage in the United States was even more concentrated; see http://www.businessweek.com/technology/tech_stats/im050307.htm
3. To hear more about IMVU’s early conversations with customers that led to our pivot away from the add-on strategy, see: http://mixergy.com/ries-lean/
4. A word of caution: demonstrating validated learning requires the right kind of metrics, called actionable metrics, which are discussed in Chapter 7.
5. This case was written by Bethany Coates under the direction of Professor Andy Rachleff. You can get a copy here: http://hbr.org/product/imvu/an/E254-PDF-ENG
Chapter 4. Experiment
1. Some entrepreneurs have adopted this slogan as their startup philosophy, using the acronym JFDI. A recent example can be seen at http://www.cloudave.com/1171/what-makes-an-entrepreneur-four-letters-jfdi/
2. http://techcrunch.com/2009/11/02/amazon-closes-zappos-deal-ends-up-paying-1–2-billion/
3. I want to thank Caroline Barlerin and HP for allowing me to include my experimental analysis of this new project.
4. Information about Kodak Gallery comes from interviews conducted by Sara Leslie.
5. The VLS story was recounted by Elnor Rozenrot, formerly of Innosight Ventures. Additional detail was provided by Akshay Mehra. For more on the VLS, see the article in Harvard Business Review: http://hbr.org/2011/01/new-business-models-in-emerging-markets/ar/1 or press coverage at http://economictimes.indiatimes.com/news/news-by-company/corporate-trends/village-laundry-services-takes-on-the-dhobi/articleshow/5325032.cms
6. For more on the early efforts of the CFPB, see the Wall Street Journal’s April 13, 2011, article “For Complaints, Don’t Call Consumer Bureau Yet”; http://online.wsj.com/article/SB10001424052748703551304576260772357440148.html. Many dedicated public servants are currently working hard to incorporate this experimental approach in the public sector under the leadership of President Obama. I would like to thank Aneesh Chopra, Chris Vein, Todd Park, and David Forrest for introducing me to these groundbreaking efforts.
Chapter 5. Leap
1. For example, CU Community, which began at Columbia University, had an early head start. See http://www.slate.com/id/2269131/. This account of Facebook’s founding is drawn from David Kirkpatrick’s The Facebook Effect (New York: Simon & Schuster, 2011).
2. Actual engagement numbers from 2004 are hard to find, but this pattern has been consistent throughout Facebook’s public statements. For example, Chris Hughes reported in 2005 that “60% log in daily. About 85% log in at least once a week, and 93% log in at least once a month.” http://techcrunch.com/2005/09/07/85-of-college-students-use-facebook/
3. I first heard the term leap of faith applied to startup assumptions by Randy Komisar, a former colleague and current partner at the venture firm Kleiner Perkins Caufield & Byers. He expands on the concept in his book Getting to Plan B, coauthored with John Mullins.
4. http://www.forbes.com/2009/09/17/venture-capital-ipod-intelligent-technology-komisar.html
5. “A carefully researched table compiled for Motor magazine by Charles E. Duryea, himself a pioneer carmaker, revealed that from 1900 to 1908, 501 companies were formed in the United States for the purpose of manufacturing automobiles. Sixty percent of them folded outright within a couple of years; another 6 percent moved into other areas of production.” This quote is from the Ford biography The People’s Tycoon: Henry Ford and the American Century by Steven Watts (New York: Vintage, 2006).
6. Jeffrey K. Liker, The Toyota Way. New York: McGraw-Hill, 2003, p. 223.
8. In the customer development model, this is called customer discovery.
9. For more on the founding of Intuit, see Suzanne Taylor and Kathy Schroeder, Inside Intuit.
10. For more on the Lean UX movement, see http://www.cooper.com/journal/2011/02/lean_ux_product_stewardship_an.html and http://www.slideshare.net/jgothelflean-ux-getting-out-of-the-deliverables-business
Chapter 6. Test
2. “Groupon’s $6 Billion Gambler,” Wall Street Journal; http://online.wsj.com/article_email/SB10001424052748704828104576021481410635432-IMyQjAxMTAwMDEwODExNDgyWj.html
3. The term minimum viable product has been in use since at least 2000 as part of various approaches to product development. For an academic example, see http://www2.cs.uidaho.edu/~billjunk/Publications/DynamicBalance.pdf
See also Frank Robinson of PMDI, who refers to a version of the product that is the smallest needed to sell to potential customers (http://productdevelopment.com/howitworks/mvp.html). This is similar to Steve Blank’s concept of the “minimum feature set” in customer development (http://steveblank.com/2010/03/04/perfection-by-subtraction-the-minimum-feature-set/). My use of the term here has been generalized to any version of a product that can begin the process of learning, using the Build-Measure-Learn feedback loop. For more, see http://www.startuplessonslearned.com/2009/08/minimum-viable-product-guide.html
4. Many people have written about this phenomenon, using varying terminology. Probably the most widely read is Geoffrey Moore’s Crossing the Chasm. For more, see Eric Von Hippel’s research into what he termed “lead users”; his book The Sources of Innovation is a great place to start. Steve Blank uses the term earlyvangelist to emphasize the evangelical powers of these early customers.
5. “To the casual observer, the Dropbox demo video looked like a normal product demonstration,” Drew says, “but we put in about a dozen Easter eggs that were tailored for the Digg audience. References to Tay Zonday and ‘Chocolate Rain’ and allusions to Office Space and XKCD. It was a tongue-in-cheek nod to that crowd, and it kicked off a chain reaction. Within 24 hours, the video had more than 10,000 Diggs.” http://answers.oreilly.com/topic/1372-marketing-lessons-from-dropbox-a-qa-with-ceo-drew-houston/. You can see the original video as well as the reaction from the Digg community at http://digg.com/software/Google_Drive_killer_coming_from_MIT_Startup. For more on Dropbox’s success, see “Dropbox: The Hottest Startup You’ve Never Heard Of” at http://tech.fortune.cnn.com/2011/03/16/cloud-computing-for-the-rest-of-us/
6. This description courtesy of Lifehacker: http://lifehacker.com/5586203/food-on-the-table-builds-menus-and-grocery-lists-based-on-your-familys-preferences
7. This list was compiled by my colleague, Professor Tom Eisenmann at Harvard Business School, Launching Technology Ventures for a case that he authored on Aardvark for his new class. For more, see http://platformsandnetworks.blogspot.com/2011/01/launching-tech-ventures-part-i-course.html
8. http://www.robgo.org/post/568227990/product-leadership-series-user-driven-design-at
9. http://venturebeat.com/2010/02/11/confirmed-google-buys-social-search-engine-aardvark-for-50-million/
10. This is the heart of the Innovator’s Dilemma by Clayton Christensen.
11. For more, see http://bit.ly/DontLaunch
Chapter 7. Measure
1. By contrast, Google’s main competitor Overture (eventually bought by Yahoo) had a minimum account size of $50, which deterred us from signing up, as it was too expensive.
2. For more details about Farb’s entrepreneurial journey, see this Mixergy interview: http://mixergy.com/farbood-nivi-grockit-interview/
Chapter 8. Pivot (or Persevere)
1. http://www.slideshare.net/dbinetti/lean-startup-at-sxsw-votizen-pivot-case-study
2. For more on Path, see http://techcrunch.com/2011/02/02/google-tried-to-buy-path-for-100-million-path-said-no/ and http://techcrunch.com/2011/02/01kleiner-perkins-leads-8–5-million-round-for-path/
3. Includes approximately $30 million of assets under management and approximately $150 million of assets under administration, as of April 1, 2011.
4. For more on Wealthfront, see the case study written by Sarah Milstein at http://www.startuplessonslearned.com/2010/07/case-study-kaching-anatomy-of-pivot.html. For more on Wealthfront’s recent success, see http://bits.blogs.nytimes.com/2010/10/19/wealthfront-loses-the-sound-effects/
5. IMVU’s results have been shared publicly on a few occasions. For 2008, see http://www.worldsinmotion.biz/2008/06/imvu_reaches_20_million_regist.php; for 2009 see http://www.imvu.com/about/press_releases/press_release_20091005_1.php, and for 2010 see http://techcrunch.com/2010/04/24/imvu-revenue/
6. Business architecture is a concept explored in detail in Moore’s Dealing with Darwin. “Organizational structure based on prioritizing one of two business models (Complex systems model and Volume operations model). Innovation types are understood and executed in completely different ways depending on which model an enterprise adopts.” For more, see http://www.dealingwithdarwin.com/theBook/darwinDictionary.php
Chapter 9. Batch
1. http://lssacademy.com/2008/03/24/a-response-to-the-video-skeptics/
2. If you’re having trouble accepting this fact, it really is helpful to watch it on video. One extremely detail-oriented blogger took one video and broke it down, second-by-second, to see where the time went: “You lose between 2 and 5 seconds every time you move the pile around between steps. Also, you have to manage the pile several times during a task, something you don’t have to do nearly as much with [single-piece flow]. This also has a factory corollary: storing, moving, retrieving, and looking for work in progress inventory.” See the rest of the commentary here: http://lssacademy.com/2008/03/24/a-response-to-the-video-skeptics/
3. Timothy Fitz, an early IMVU engineer, deserves credit for having coined the term continuous deployment in a blog post: http://timothyfitz.wordpress.com/2009/02/10/continuous-deployment-at-imvu-doing-the-impossible-fifty-times-a-day/. The actual development of the continuous deployment system is the work of too many different engineers at IMVU for me to give adequate credit here. For details on how to get started with continuous deployment, see http://radar.oreilly.com/2009/03/continuous-deployment-5-eas.html
4. For technical details of Wealthfront’s continuous deployment setup, see http://eng.wealthfront.com/2010/05/deployment-infrastructure-for.html and http://eng.wealthfront.com/2011/03/lean-startup-stage-at-sxsw.html
5. This description of School of One was provided by Jennifer Carolan of NewSchools Venture Fund.
6. For more on the large-batch death spiral, see The Principles of Product Development Flow: Second Generation Lean Product Development by Donald G. Reinertsen: http://bit.ly/pdflow
7. These lean health care examples are courtesy of Mark Graban, author of Lean Hospitals (New York: Productivity Press, 2008).
8. This illustrative story about pull is drawn from Lean Production Simplified by Pascal Dennis (New York: Productivity Press, 2007).
9. For an example of this misunderstanding at work, see http://www.oreillygmt.eu/interview/fatboy-in-a-lean-world/
10. Information about Alphabet Energy comes from interviews conducted by Sara Leslie.
11. For more on Toyota’s learning organization, see The Toyota Way by Jeffrey Liker.
Chapter 10. Grow
1. The Hotmail story, along with many other examples, is recounted in Adam L. Penenberg’s Viral Loop. For more on Hotmail, also see http://www.fastcompany.com/magazine/27/neteffects.html
2. For more on the four customer currencies of time, money, skill, and passion, see http://www.startuplessonslearned.com/2009/12/business-ecology-and-four-customer.html
3. http://pmarca-archive.posterous.com/the-pmarca-guide-to-startups-part-4-the-only
4. This is the lesson of Geoffrey Moore’s bestselling book Crossing the Chasm (New York: Harper Paperbacks, 2002).
Chapter 11. Adapt
1. Toyota Production System: Beyond Large-Scale Production by Taiichi Ohno (New York: Productivity Press, 1988).
2. For more on Net Promoter Score, see http://www.startuplessonslearned.com/2008/11/net-promoter-score-operational-tool-to.html and The Ultimate Question by Fred Reichheld (Cambridge, Mass.: Harvard Business Press, 2006).
3. Information about QuickBooks comes from interviews conducted by Marisa Porzig.
Chapter 12. Innovate
1. Jeffrey Liker, John E. Ettlie, and John Creighton Campbell, Engineered in Japan: Japanese Technology-Management Practices (New York: Oxford University Press, 1995), p. 196.
2. For one account, see PC Magazine’s “Looking Back: 15 Years of PC Magazine” by Michael Miller, http://www.pcmag.com/article2/0,2817,35549,00.asp
3. The following discussion owes a great deal to Geoffrey Moore’s Dealing with Darwin (New York: Portfolio Trade, 2008). I have had success implementing this framework in companies of many different sizes.
Chapter 13. Epilogue: Waste Not
2. http://www.goodreads.com/author/quotes/66490.Peter_Drucker
4. In fact, some such research has already begun. For more on Lean Startup research programs, see Nathan Furr’s Lean Startup Research Project at BYU, http://nathanfurr.com/2010/09/15/the-lean-startup-research-project/, and Tom Eisenmann of Harvard Business School’s Launching Technology Ventures project, http://platformsandnetworks.blogspot.com/2011/01/launching-tech-ventures-part-iv.html
