Entrepreneurial learning journey: The Lean Startup Conference, San Francisco

The Lean Startup Conference 2015, was a gathering for entrepreneurs, innovators and thought leaders from across sectors in a fast paced, highly curated program featuring the best of the Lean Startup community.

Held on November 16-19 in San Francisco, over 2,000 diverse Lean Startup thinkers and practitioners shared ideas that are shaping the future of the approach to startups, at the 6th Annual Lean Startup Conference.

Renowned speakers – including founder Eric Reis – collaborative workshops and interactive discussions created an unforgettable collective experience at the historic Fort Mason campus. It was a place to pick up knowledge on a variety of aspects and topics, providing some informative research into specific elements of the methodology, and insights and learnings from practitioners’ implementation experience.

The Fort Mason venue was a former U.S. Army post located in the northern Marina District. During World War II, Fort Mason was a key location, with 1.6m military passengers and 24m tons of supplies moved from the port into the Pacific theatre. Today, you still get a sense of the endeavour, enterprise and effort of those times in the fabric of the buildings, making it an iconic location for a conference focused on guiding and growing startup businesses under conditions of extreme uncertainty.

What is the Lean Startup approach? Simply, the Lean Startup methodology is a proven technique to help you achieve and sustain startup success – making fewer mistakes, burning less cash, getting there quicker and proven to deliver more success.

Instead of executing business plans and releasing fully functional prototypes, the Lean Startup advocates testing hypotheses, gathering early and frequent customer feedback and showing ‘minimum viable products’ – early prototypes of your product idea with a minimum feature set – to prospects.

Business plans rarely survive first contact with a customer. As boxer Mike Tyson said, everyone has a plan until they get punched in the head. Forecasting three years revenues ahead is a step into the great unknown – and based on what assumptions?

The Lean Startup approach thus requires a founder to establish and test a series of hypotheses underpinning their business model, and to ‘get out of the building’ and meet prospects to validate their business model by quickly iterating and assessing potential customers’ feedback. This customer discovery process recognises that searching for a business model is the primary task facing a startup.

Fundamentally, you’re trying to determine the problem you’re solving, not what the product is. Validating customers’ interest through early adopters and product usage provides feedback, from which the startup can ‘pivot’ by changing one or more assumptions in its business model. This ‘Customer Development’ process underpins the entire approach – a business model is all about the customer, not the product.

After customer validation, the product is refined enough to go to market. The startup creates customers, using its proven hypotheses to build demand and ramps up marketing and sales resources to scale up the business.

Why the Lean Start-up Changes Everything, an article in the Harvard Business Review by Steve Blank, makes the compelling argument that mainstream adoption of the Lean Start-up is not only attainable, but would provide the basis for a newer innovation based economy. During the conference, the key messages showed how this methodology breaks down the barriers to traditional innovation approaches:

  • The high cash cost of getting the first customer and the even higher cost of getting the product wrong are significantly reduced
  • Long technology development cycles are shortened, based on the MVP approach to product development
  • The risks inherent in founding or working at a start-up are lessened by reference to the customer development process

The lean approach reduces the first two constraints by helping new ventures launch products that customers actually want, far more quickly and cheaply than traditional methods, and the third by making start-ups less risky. The combination of all these forces is altering the entrepreneurial landscape.

Lean start-up approaches and methods have mostly been applied to software and Internet businesses – but it’s interesting to look at other businesses through the lean start-up lens – for example food trucks – especially as they fed the conference delegates!

  • Food trucks are much cheaper to start and can get to market much faster than brick and mortar restaurants.  In many ways, food trucks fit the Lean concept of the minimally viable product.
  • Food trucks can quickly and easily test new concepts, menus and recipes.  In many cases food trucks are being used as lean start-up-like laboratories to test potential brick and mortar restaurant ideas.
  • Food trucks take an iterative approach to their menus and even location based on customer feedback. ‘Build-measure-learn’ is a daily occurrence with food trucks.
  • Food trucks are tightly focused on their customers and interact with them every day.

So, a good practical example on our doorstep every dinnertime.

Great sessions from a number of contributors can be accessed here, click on the name to go to the Lean Conference web site and access the details of their talks and twitter accounts:

Aditya Agarwal Dropbox – managing through hyper growth

David Binetti Dinadesa – lean startup finance through innovation accounting

Gagan Biyani Sprig – focused on product-market fit

Chris Dixon Andreessen Horowitz – an interesting 121 conversation session with Eric Reid

Amy Jo Kim Shufflebrain – focus on early product development

Laura Klein Users Know – great insight in UX

Dan Olsen The Lean Product Playbook – practical guide to product-market fit

Alexander Osterwalder Strategyzer – how to design a startup culture

Frank Rimalovski New York University – insights ion the customer development process

James Warren Share More Stories & Johnson – using stories to share innovation

So over the four days of the Conference, here are my top ten takeaways for startup founders to embrace:

1. Have an open-minded experiment based culture. The Lean Startup describes the startup as an experiment for building companies that are creating new products and services in situations of extreme uncertainty. The key is experimenting and testing assumptions to then use that feedback to evolve your product and ‘fail fast’ if there is no product-market fit.

2. Focus on understanding exactly what your customer values. The customer rarely buys what the company thinks it sells. Many entrepreneurs focus on building their product without engaging the world. You need focus on understanding your market more than building your product. Validate and talk to customers. Also, make sure you are targeting the right audience so as not to skew your observations.

3. Think metrics, not pixels. There is so much emphasis on design (thanks to Apple!), however sometimes the things that work aren’t the obvious choices from a design perspective, so don’t over-do it. Test everything. Figure out what needs to be measured, then come up with experiments to improve those most critical items.

4. No excuses. Many founders shared some of their amazing MVP stories. My takeaway was that there really are no excuses, you can build an MVP to prove your idea and you can test it on any budget– they were just testing the viability of the idea. As the idea of experimentation matures, there’s a growing swell around the idea that evolution trumps intelligent design. That is, if you can run more experiments to test more hypotheses, and let data decide the winner, you stand a higher chance of being successful with your startup.

5. Eat your own dog food. Use what you are building often and uncover issues before your customers do.  If you don’t use it, why should your customers?  You will quickly identify and fix usability and functionality issues, thus enabling you to show a more polished product to your target end users. Be clear on the problem you are solving, that’s the key fundamental to take from the approach. For me, the Lean Startup is basically the scientific method applied to startups.

6. Nothing is cast in stone. Be willing to change. No emotional attachment to anything you build and no bruised egos when changing a previously stated direction. It is better to change direction early and be successful than to stay the course that leads to a dead-end. Most successful startups end up releasing a product that is vastly different than what they set out to build.

7. Avoid endless debates. Build-Measure-Learn. Try, test, measure, then pivot or persevere. It does not help to spend hours discussing if you should place a button here or there, so try it one way and measure your customer’s engagement. No one decision is ever perfect. This is Reis’ key mantra, the core practice of Lean Startup is to hypothesise, experiment, analyse results (focus on data) and iterate to success.

8. Embrace failure. If we do not want to fall down on the slopes, then we will never learn to ski.  Failures gives us valuable lessons on our quest for improvement. As an inventor, Edison made 1,000 unsuccessful attempts at inventing the light bulb. When a reporter asked, How did it feel to fail 1,000 times? Edison replied, I didn’t fail 1,000 times. The light bulb was an invention with 1,000 steps.

9. Set realistic but challenging milestones. Nothing rallies the team like the challenge of meeting a difficult but attainable deadline, be it an advisor demo date or a set of features in a mini release required to close a potential customer deal. Make it a habit to set challenging deadlines and always reward your team by celebrating these milestones no matter how small.

10. Have a vision and plan ahead. Do not make the mistake of thinking the experimental based approach to hypothesis testing implies Lean doesn’t require you to have a vision. Pivot on the strategy but always maintain your vision. Without a guiding north star, a ship will be lost in the endless sea. What makes a startup unique is the vision of its founders.

With the Lean approach, you get iterative early in the lifecycle of your startup business. You need to be agile in understanding your requirements and even who your customer might be – not so much sell what you can build, but build what you can sell.

The Conference was epic. Sessions ran from 8am to 9pm and there was just too much for me to summarise here. During the Conference I took lots of notes, asked tons of questions during the after-hours 1-on-1 sessions with experts, and received direct feedback from Eric Ries on the final day of the conference.

To close, my ‘top ten quotes’ that captured the essence of the Lean Startup approach that I noted at the Conference, were as follows:

‘Don’t jump from zero to Picasso. You have to go through the reality stage first’ @cdixon

‘Keep the business plan & spreadsheets, leave the fiction writing behind’ @EricRies

‘Your job is not to validate the product, but to validate the problem & how best to solve it’@rimalovski

‘A common trap for startups is convincing yourself there is a market when there actually isn’t’ @ericries

‘It’s like hand-to-hand combat, just run the experiment (see if it works)’ @EricRies

‘Eliminate your ego for product-market fit, it’s the idea you end up with that counts’. @gaganbiyani

‘Put hypotheses into every story to learn what customer wants. No shortcuts. It is hard’. @ericries

‘Innovate your product by getting stories from customers. Hear 100 stories in 100 days’ @warrenjwric

‘Innovation done right = idea -> hypotheses -> experiment -> learn -> act -> repeat!’ @alexosterwalder

‘Innovation is an insurance policy on your company’s relevance’ @dbinetti

Lean thinking defines value as providing benefit to the customer, anything else is waste, so the goal of a Lean Startup is to learn what is valuable to the customer. Learning is the essential unit of progress for startups, testing assumptions you’ve made about your business, its customers and how you’re serving them.  Your job is to find a synthesis between your vision and what customers want and recognise you’re providing a solution to a problem.  Just trying to make customers happy does not produce a sustainable business model.