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The author and consultant at The Lean Startup takes questions from the Amplify audience
The discussion started with the term Eric coined, "the lean startup." Eric started out as a software engineer, and then he went the entrepreneur-route but found that every company he started, flopped. So he tried something new. He broke the rules and started a new company that put out a lot of software very fast, very early, and he did it cheaply. And, to everyone's surprise, he was significantly more successful with this route than ever before.
What is the Miminum Viable Product? He talks about it quite a bit. "The idea is as engineers, we're trained to be given a specification and we think we need to get it out quickly. But who gives us that specification? Someone made it up. We build a product and we do it quickly and on time, and then no one wants it."
The minimum viable product shifts that way of thinking away from the specifications to the learning process. The minimum viable product is the process whereby you learn the most in the least amount of time. He used the example of when he was at IMVU and had spent six months working to create a downloadable chat feature that no one downloaded. And then he thought about how much he learned in that time, and ways he could have learned faster.
"Every success story about entrepreneurship that you read about in the press is completely fabricated," said Eric. "The ones you read have survivor bias. For every startup that follows one process, a hundred others fail."
He also talked about pivoting. "Successful startups have this crazy zig-zaggy path. They start at one point and end up somewhere totally different, and it only makes sense in retrospect." Example: Starbucks had to make a decision about whether or not to actually sell coffee in their stores, rather than just sell beans and espresso machines. "It's hilarious in retrospect, but they actually sat down and had a meeting, because it wasn't clear... If you're reducing cost and slowing down your spending and learning process, you're just dying slower. You're better off moving faster and learning how to pivot faster."
The conversation moved onto customers. "If we're operating only at the whiteboard or spreadsheet, our likelihood of being successful is very low. Our brains are hardwired to read other people's minds. When you get into face-to-face meetings, you can really understand not just what a customer wants, but what their real underlying thoughts on your product are." For example, you ask a customer whether or not he likes your product. He shrugs and says "sure." "That actually means he hates it," said Eric.
If you're running your business without talking to customers, said Eric, you're running your business with your eyes closed. "If they don't respond positively, it's not the end of the world, but it will give you that kernel of information that will help you decide whether or not to pivot."
Eric also pointed out the fact that the personality traits that entrepreneurs tend to have in common--stubbornness, vision, refusal to accept defeat--are the personality traits that predict failure.
How do you know when to give up on something and pivot? When the numbers aren't right for where you want your product to go. Don't worry about the other guy who's getting a 10% click-through-rate, said Eric. It's a different product, so it doesn't matter what his results are. "If the numbers are just not going where you want them to go, and you try and try and it's just not happening, then it's time to pivot."
In sum: prioritize the learning process, talk to your customers, fail quickly, and be ready to pivot.
Eric's book, which is scheduled for release in fall 2011, can be purchased here.
Image source: webcitiz
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