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Web 2.0 Expo 2010 - San FranciscoAt the Web 2.0 Expo in San Francisco, one of the keynotes given was by author, speaker and consultant for The Lean Startup, Eric Ries and the topic was to tell companies to basically stop wasting people’s time. Earlier in the conference, Ries had moderated a day long session called the “lean startup intensive” which was designed to help startups understand how to operate better and more efficiently – in a manner of speaking, to be lean. Now you might think that a “lean startup” is something negative and that you should cut all unnecessary costs, but rather improving the rate at which you launch a product. In fact, during Ries’ keynote, he highlighted four myths associated with a lean startup:

MYTH: Lean means cheap. Lean startups try to spend as little money as possible.
The Lean Startup method is not about cost, it is about speed. Lean Startups waste less money, because they use a disciplined approach to testing new products and ideas. Lean, when used in the context of lean startup, refers to a process of building companies and products using lean manufacturing principles applied to innovation.

MYTH: The Lean Startup methodology is only for Web 2.0/internet/consumer software companies.
The Lean Startup methodology applies to all companies that face uncertainty about what customers will want. This is true regardless of industry or even scale of company: many large companies depend on their ability to create disruptive innovation.

MYTH: Lean Startups are small bootstrapped startups.
There’s nothing wrong with raising venture capital. Many lean startups are ambitious and are able to deploy large amounts of capital. What differentiates them is their disciplined approach to determining when to spend money: after the fundamental elements of the business model have been empirically validated.

MYTH: Lean Startups replace vision with data or customer feedback.
Lean Startups are driven by a compelling vision, and they are rigorous about testing each element of this vision against reality. They use customer developmentsplit-testing, and actionable analytics as vehicles for learning about how to make their vision successful. But they do not blindly do what customers tell them, nor do they mechanically attempt to optimize numbers.

In his keynote, one of the things Ries pointed out that most startups these days fail. So why do people still want to be entrepreneurs? Because it’s the “best time in history” to be an entrepreneur – low costs, barriers and people are seeking to find order out of chaos. In fact, Ries believes that entrepreneurship is the only profession that will allow people to simultaneously change the world, build an organization of lasting value and even make customers’ lives better.

So what’s the basis of Ries’ talk about not wasting people’s time? It’s not that we, as consumers, are impatient or bored by what’s out there in the ecosystem, but rather you, as a startup/company/business, need to expedite your process to get your product out the door. In some way, this reminds me of something Seesmic founder Loic Le Meur frequently says: “Don’t worry about getting your product finalized, just get something out there and improve on it later.” Obviously that quote is paraphrased, but the meaning is still true – speed is always a factor and you should get your product out there for people to try and use and then make adjustments as needed. In fact, according to Ries, speed wins – and this is where he introduces the pivot concept.

What is the pivot concept? Pivoting is all about shifting your business plan while staying grounded in what you’ve learned. Successful startup examples include companies that started out as digital cash for PDAs but soon evolved into online payments for eBay or a company that operated as an online games site, but soon realized that it was actually more useful as a photo-sharing site. These are examples of companies pivoting their business from one model to another – often to much success. So if you’re starting your business as one idea only to either accidentally or purposely come across another brilliant model, then you might want to pivot your resources towards that. But as Ries said…speed wins: if you can reduce the time between pivots, you’re going to be able to increase your odds of success – hopefully before you run out of money.

The big problem with any startup that somehow remains still shrouded in mystery is the dilemma about what is the problem and what is the solution? During Ries’ keynote, he tells a story about developing software that is so full of bugs that he’s afraid of what people will say, but yet it is rushed out to the marketplace regardless. Turns out that no one noticed the flaws in the software. Why? Because no one bought it – and that’s how they discovered who was their customer. With startups, entrepreneurs may know what issue they wish to solve (e.g. build a site on the Internet that will allow people to share messages, photos/videos and connect with other friends), but often it seems that the one thing eluding them is who their customers are and what the solution is to their problem. It is here where Ries introduces another concept called Validated Learning About Customers. This concept is meant to illustrate to startups and businesses that you need to understand who your customers are before building your product  - stop wasting people’s time (including your employees and yourself). Are people really going to buy your product because you think it’s a good idea or will they buy it because they know you built it for them?

Lastly, most startups go through what Ries calls the feedback loops, designed to help guide companies through the iteration process. From learning to building to measuring and back again, Ries believes that for lean startups to succeed, it is here in this cycle where pivoting can take place and companies can execute more programs to help make sure their product is reaching the right person. And thus, you’re not going to waste people’s time.

You can read more about Eric Ries’ thoughts on his website by clicking here. To watch his Web 2.0 Expo keynote address, it’s available here.

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