lean startup Archive

Lean is a Mindset

Posted March 27th, 2012

At DeveloperTown, we partner with entrepreneurs to be the “Technical Co-founder” of startups. Part of this responsibility is making business decisions, and the Lean movement has made an impression on us. This post and others will dive into our thoughts behind Lean.

A year and a half ago, I was making $2 of profit a week selling fruit on Indiana University’s campus. Three years ago I was spending $20k building a college social network based on culture. Neither venture made it. But one of these sticks out in my mind as a success: selling fruit.

Why was Fruitocracy, my fruit venture, a success? Long before I knew what lean meant, I had started Fruitocracy “going lean.” And in retrospect, this helped me make the critical decision to shut the doors after only 4 months of operation.

I’ve argued that lean is a dangerous word to use, because few people are on the same page about what it means to “go lean.” After reflecting on my past experiences, I came to understand the following:

Lean is a mindset. It is not any one set of practices, but a state of thinking about your startup. You cannot “go lean” by implementing any number of processes or tools. The only required process is the thought process of how to answer the big questions about your business sooner rather than later.

And that is why lean techniques are difficult to learn. Learning requires gaining an intuition, which is not had by reading any one book or blog post. Instead, lean is a determination to make smart decisions about 1) when to mitigate risks, and 2) how to mitigate those risks.

The best way to teach lean, then, is to look at examples and counter-examples, so that an intuition can be built over time.

A Tale of Two Startups

I started two ventures my sophomore and senior years in college, CultureU and Fruitocracy. The first was a large undertaking, with $25k in financing and as many as 30 people working on the project at one time. The idea behind CultureU was to provide a platform for college students to expose their talent. The second, Fruitocracy, was a fruit-delivery service for students living in the dorms. It started with one person, me, and maybe $20.

CultureU

At CultureU, my mindset was, “awesome idea, let’s hire a team of programmers and DO IT!” Nothing was to get in my way of getting a first release out. Our measurement of success was how quickly we were able to build the product we wanted.

The problem was that I wasn’t focused on prioritizing risks. I understood the risks of building a product that no one wanted, but I didn’t make an effort to prioritize work around answering the big questions. And there were several risks that were ignored until many months into the CultureU’s life:

- There’s a considerable supply of student talent.
- Students want to expose their work to other students and professionals
- Employers (our potential customer) are facing a poor supply of talented students in the job market.

The result? It took 8 months for my team to learn that we had a lousy product that lacked a compelling business model. Lesson learned? “Tackle the biggest questions first.”

Fruitocracy: A different flavor of startup

When I set out to start Fruitocracy, I wanted to be smart about building the business. The pitfalls of moving too fast and failing to ask the big questions were clear in my head.

My vision was to engender healthy eating on IU’s campus. The initial idea was to sell local fruits and vegetables at a produce stand on Indiana University’s campus. I had seen a produce stand flourish on another college campus. The big question in my mind wasn’t, will people buy fruits and vegetables? Instead, I had two big questions:

- Will the campus permit me to run a produce stand?
- Can I sell fruit for a profit?

I set out to answer those two questions, and within a month had the answers: I could buy local produce wholesale to turn a profit, but the campus wouldn’t dare see a produce stand!

A pivot was in order. I decided to try delivering fruit to freshmen. I knew this group was crippled by their lack of access to grocery stores and healthy eating on campus. I also knew I could run this operation independently of the university.

The big questions then became:

- Will freshmen buy fruit?
- How can I get freshman to order on a regular basis?
- Will freshmen order food besides fruit?
- Can I turn a profit?

I answered the first question by going to a couple of my friends’ dorms and selling directly to students. After a few hours, I signed up 15 students to start a trial with It was clear I had something cool going.

With some initial traction, I set out to find how to get freshmen to order regularly. I thought that students might prefer ordering via text messaging. I had lots of ideas on how to build an automated ordering system, but that was not necessary to test whether students would use text messaging to order. Instead, I manually texted out my menu twice a week and responded to each text message. Sometimes, this took an hour of time during early morning class. No need to scale!

The third question was relatively straightforward to answer. I postulated that students might enjoy locally-produced goods like bagels from the Bloomington Bagel Company. I met with the owner, and sparked some interest in a partnership. But there was no need to do anything significant at this point: nope, I just added bagels to my menu and bought them from the bagel shop when needed. Turned out only a few students were interested in the extras on the menu.

All this time, I was learning more about the wholesale business, legal issues, farmers markets, and people’s demand for food. Despite having a tiny operation, I found myself stumbling upon interesting paths that my business could take to expand. That is the upside of doing instead of researching.

The final, and most pressing, question was answered within two months. I experimented with different prices and different product offerings, and I modelled my financials based on the results of my trial. That’s when it became clear that the stars weren’t aligning for my business. Furthermore, I discovered that the different growth paths I had previously brainstormed were leading me straight into the middle of some serious competition. Sadly, I closed shop, despite having accumulated a loyal group of customers.

Conclusion

Not every startup is bound for success. By keeping a “lean mindset” (despite having no idea what “lean” meant), I was able to answer big questions about my business in a mere 4 month period.

The problem with my experience from Fruitocracy is that I wasn’t quite sure what to take away. In the startup I pursued after Fruitocracy, I made many of the same mistakes that I had made before Fruitocracy.

And, I think, that’s where the lean movement can succeed. It’s helped solidify principles that many people understand but that are difficult to express. It’s taking the “black magic” out of entrepreneurship and giving people’s intuition a head start.

But no book, blog post, or speech will drive your success more than learning from experiences. So, go out and get ‘em!

I’m interested in learning how lean has impacted your thoughts on entrepreneurship, if it has had any impact at all. Have you found yourself better able to understand past failures and successes? How do you set out to answer the BIG questions?

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The 5 (Pretty) Faces of “Lean”

Posted March 5th, 2012

What does Occupy and the Tea Party have in common with the Lean Startup movement? Each has been misunderstood, by both their followers and observers.

I’ve been involved with 5 startups in the past. There’s no doubt that the Lean movement has answered many questions I’ve had about bringing new products to market. It started to take the black magic out of startup-land.

Then why is “lean” quickly becoming a dangerous-to-use word? The reason is that “lean” is almost cliche: it is overhyped and misconstrued by both those who claim to practice and those who criticize it. It’s failing to get its basic message across: use capital more efficiently. Entrepreneurs are still talking the same game: invests lots of money, hire lots of people, build big sites, and see what happens.

The “why” should be obvious–this is how movements come and go. But the “what” is more interesting to me: what are the different ways people see Lean? In this post I’ll breeze through the 5 positive connotations of Lean that I’ve grasped through experience and conversation.

1. Experimentation: Staying Objective

At a recent Verge event, I asked Brian Deyo of LastBite what came to his mind first when talking about Lean. His answer was experimentation.

Lean asks us, as entrepreneurs, to consider our startups a big scientific experiment, not just a bunch of activities that somehow turn into success overnight. Experimentation has a very special meaning in science: it is an objective way to measure the “correctness” of some statement. And by thinking about a venture as grand experiment, we immediately understand that an experiment can either conclude with accepting or rejecting our original statement.

In business, we make guesses all the time. These guesses form the “art” of entrepreneurship. The scientific part of entrepreneurship comes when we put some of the most critical guesses to test, whether this be a qualitative test (such as user testing) or a quantitative test (like a/b testing).

It’s always good to compare things to their alternatives: instead of experimenting, entrepreneurs could launch new products and features without ever realizing what it is about their business that customers really care about.

Ultimately, entrepreneurs LEARN from testing, just as science progresses through experimentation. This forces us to be more objective about our business, and to realize sooner rather than later whether we’re working on a solid idea.

2. Better Iterations

The concept of iterating has been around as long as humans have had the capacity to think…which is, like, forever. But the Lean movement asks us, how can we make each iteration count for more while spending less?

According to the popular Lean Startup by Eric Ries, an iteration starts with an idea (e.g. feature), continues to building the idea, and concludes with learning whether the idea improved the business. He emphasizes improving the quality of an iteration by focusing on a few things:

1) Minimizing the time & money spent on an iteration
2) Maximizing the amount of learning that comes out of the iteration

Notice that these are tradeoffs. If you take a feature and do a quick and sloppy job of building it, you may never learn whether the feature was a good or bad idea, since the sloppy job undermines the feature’s value.

So, better iterations: have clear objectives for what you want to learn from people when you plan a new product or feature, and make learning, not total revenue, the early measure of success.

3. Risk Mitigation

Startups can be thought purely in terms of risk assessment and mitigation. How can I ensure that I’m solving a real problem? How can I ensure that my idea will have traction before spending lots of dough?

Lean asks us to consider our biggest risks first. If we’re unable to tackle big risks early, then how can we ever hope to see the day when we worry about details?

What are the BIG risks, and which are insignificant early in a venture? Ash Maurya, author of Running Lean and founder of Lean Canvas, recently wrote about why he created the Lean Canvas, which is a simple summary of a startup’s most important parts. He writes, “My approach to making the canvas actionable was capturing that which was most uncertain, or more accurately, that which was most risky.”

The Lean Canvas proposes four major risks to tackle first (and in about this order, too): I’m solving a real problem (Problem), I know who my potential customers are (Customer Segments), I am different from others (Unique Value Prop), and I have a solution (Solution).

Sure, other risks abound. Will this idea make enough money? Will my idea scale? How will I market to find customers? But, in the end, mitigating these risks before others won’t be fruitful.

4. Avoid premature optimization

While similar to mitigating the highest risks first, I feel that “avoiding premature optimization” deserves a special mention. Seriously: Lean asks us to sit down and think what the is SMALLEST thing you can do to TEST something.

If you’re starting a new business, what’s the minimal amount of resources you need to get your product built? If you’re building a product, then what’s the minimal set of features required to get a version in front of customers? And if you’re building a new feature, what’s the minimal amount of code and design required to learn whether customers like the feature?

In other words, avoid optimizing your work as if you have a million customers, when in reality you have very few.

5. Reality over perception

This last view of Lean is more of a mindset than anything else. It’s not new that oftentimes entrepreneurs need to quell their egos for a minute to grasp reality. But Lean provides a compelling reason to grip reality sooner rather than later: we can be wasting our precious time and money on things that just don’t matter.

Entrepreneurs are great at seeing what others don’t see. It’s the entrepreneur’s perception of the world that makes them great at pushing vision forward. But let reality tell you whether you’re succeeding at reaching your vision. In the world of Lean, reality comes in the form of systematic experimentation, using both qualitative (user feedback) and quantitative testing (metrics).

Conclusion

What’s the point of all of this? It’s not clear what anyone means when they talk about “going lean.” Maybe this is natural for a movement that has many followers but only a few true practitioners. Hopefully the different connotations I’ve put forth have helped broaden your view of the word “lean.”

But, I’m most interested in what YOU think lean means. Please, share your reaction, or the “correct” way to view Lean, or what you’ve seen as the most-used definition of Lean.

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