Take care of your business from your youth or how to create a thrifty startup
So, you have created your own small IT company, and maybe even call it a startup. Typical growth mistakes immediately begin: risks, customer misunderstanding, unwillingness of the market to let you in, a feeling that you made another bike and depression, despair and a desire to give up everything. Alas, it happens with almost everyone, but this does not mean that it is worth updating your resume and returning to work. You need to be able to manage the situation - and preferably not on your own bumps (although you still have to).
We recently attended the Lean Startup professional conference in Las Vegas and decided to talk about the lean startup methodology that has been very popular with entrepreneurs and innovators around the world for many years.
Lean start-up methodology was developed by Eric Rees, who is known in Russia for his book "Business from scratch". In general, this methodology aims to understand customer preferences before you start creating a product and start a business. You make a product with minimal iterations and approaches. The main slogan is “create, measure and study until you make an ideal product,” and as you know, the ideal is not attainable. Therefore, Lean Startup is a whole methodology, a whole philosophy of creating a product that really meets the needs of consumers.
One of the important criteria for success - remove the "rose-colored glasses." Very often, when testing the basic hypotheses that guide companies in creating their product, incorrect initial data are found. It is important for businessmen to have the strength to accept the truth in order to understand that the underlying assumptions were initially wrong. After that, you can make breakthrough changes. The main thing to look at your product soberly and work with the client based on their needs.
Eric Rees calls any person who has his own startup an entrepreneur.
The basis of the Lean Startup methodology is six cyclically interconnected elements.
To test the hypotheses should prepare one or more variants of the business model. You need to choose the most attractive model based on the cost of money and time. Highlight the most risky hypotheses, for example - "Client" and "Problem" and then develop an experiment. Establish criteria for its success and various limitations on performance and deadlines. The experiment itself can take the form of an interview, observation, advertising campaign, etc. At the end of the experimental stage, the data are analyzed and hypothesis testing begins again. This verification cycle should be carried out until you are sure that the product is suitable for the market.
The ideal model of growth and transformation of a startup into a successful scaled business should consist of four main points.
The founder of the concept is American entrepreneur Eric Rees. He created a company that made virtual avatars for gamers. The company received fairly good funding, but after they spent the time and received as much money as they invested, they realized that users do not like their product and it “will not shoot”.
Then the company decided to conduct the first interview-study in order to understand what went wrong. It was found that many of the original hypotheses were false. If Rees’s company had checked them first, then a lot of things would have gone differently.
The initial misconception was that they decided that users would invite their friends. The study found that gamers do not want to invite friends, as this is a risk to their own reputation. The teenagers reasoned like this: “If I invite a friend, and he will tell me: these avatars are garbage, then I’d rather not do it.”
As a result, Rhys created a product that does not make sense without inviting other users. If he initially checked his ideas, then perhaps a product would turn out that would be valuable for independent use.
It was a sad experience for Reese, but thanks to this the company changed its business model and became successful in the market.
As part of TalkToChef, we also put up with similar problems in practice and used the Lean methodology to completely transform the company. Based on experience, perhaps the most difficult thing is to say goodbye to your own illusions about the potential of yours and the genius of your original idea. It took about 150 personal interviews with potential users that were conducted by all the main participants of our startup. This greatly helped to work out the first three punts using Lean Canvas and dozens of experiments online, working on the 4th. We can say that this methodology has helped us how to attract money for the development of the project in Silicon share, and later sell it to one of the players in the online education market.
Eric Rees shared his case, wrote the book "Business from scratch." 80% of the book is devoted to his personal experience as an entrepreneur and the creation of his company. Based on his methodology, many accelerators are built around the world. All of them help startups save money on a huge number of things.
This concept allows you to test your hypotheses in the shortest possible time, for example, in one day.
Lean Startup is effective for startups as well as for huge corporations like Apple or eBay. Rice introduces it in the corporation, where millions of dollars go down the drain. Lean Startup adapts well among large corporations, and for young startups this is not even a methodology - this is the meaning of survival.
The eBay online store also does several thousand experiments a day with testing hypothesis-assumptions, what functions will people demand and how to increase their sales by a percentage. eBay is actively using the methodology like many other successful IT companies.
It is always interesting to “compare clocks”, look at other successful Lean-entrepreneurs, find out what they think about the methodology, how the industry is developing, what works, what does not work, what new life hacks, what new ways of creating products and improving existing products.
For such meetings are organized Lean Startup Conference. The last such event was held in Las Vegas (USA). Exchange of experience is the main goal of such events. It is important, of course, to meet with potential partners and customers.
The Lean Startup Conference in Las Vegas brought together key speakers and opinion leaders in this direction. They are, for example, Tony Shay, the founder of Zappos and Brent Cooper, the founder of Moves the Needle and the author of a book on Lean-methodology.
By the way, Russia also hosted the Lean Startup conference, where Brent Cooper was invited - the author of the famous book “Startup Around the Client”, and with which we have already somehow recorded the podcast.
We hope Lean Startup will inspire you to test your own hypotheses about your business or your startup idea. And if you wanted to immerse yourself in the atmosphere of the Lean Startup conference, then we recorded a video there especially for you.
We recently attended the Lean Startup professional conference in Las Vegas and decided to talk about the lean startup methodology that has been very popular with entrepreneurs and innovators around the world for many years.
What is a Lean Startup / Lean Startup?
Lean start-up methodology was developed by Eric Rees, who is known in Russia for his book "Business from scratch". In general, this methodology aims to understand customer preferences before you start creating a product and start a business. You make a product with minimal iterations and approaches. The main slogan is “create, measure and study until you make an ideal product,” and as you know, the ideal is not attainable. Therefore, Lean Startup is a whole methodology, a whole philosophy of creating a product that really meets the needs of consumers.
One of the important criteria for success - remove the "rose-colored glasses." Very often, when testing the basic hypotheses that guide companies in creating their product, incorrect initial data are found. It is important for businessmen to have the strength to accept the truth in order to understand that the underlying assumptions were initially wrong. After that, you can make breakthrough changes. The main thing to look at your product soberly and work with the client based on their needs.
4 Common Truths by Eric Rice
Eric Rees calls any person who has his own startup an entrepreneur.
- A startup, in essence, is any enterprise with the goal of developing new products and services in extremely dynamic and uncertain conditions. Thus, this approach can be applied to companies of any size, regardless of the sector and sector of the economy.
- An important thing in any company is the management of a new type who must be able to work in ever-changing conditions.
- The main task for any startup is to make a profit, not just the production of goods. Any startup constantly needs training using scientific hypotheses.
- A successful startup should work according to the “create-evaluate-learn” model. At the creation stage, a minimally working product is formed. Then, the consumer's response is evaluated, and at the next stage, it is decided whether to follow the planned course or change the vector of business.
Basic concept
The basis of the Lean Startup methodology is six cyclically interconnected elements.
- Ideas and analysis. When creating a product, remember that it is designed to solve the problems of specific people. It is important to analyze the existing solutions and how the product you created will change the situation.
- Studying the audience. Chat with potential customers. Perhaps you will have ideas that you have not previously considered.
- Creating a product. From the most risky ideas, a basic minimally viable product is created. Trial version of your product on a small scale. At this stage, create an approximate financial model. In this model, costs and potential sources of income will be laid.
- Testing. At this stage, you get feedback from your audience. It is important to understand that the data must be objective in order to create a viable product.
- Work with data. When working with data, you must answer a few questions. How useful was your product? Have unexpected problems appeared? Was the product price for customers too high? If the test data says that the idea is not working, then you need to give up on it and start thinking about a new project.
- Scaling. It turned out good results - great. Use the data and go on to create a complete product.
Hypothesis Testing
To test the hypotheses should prepare one or more variants of the business model. You need to choose the most attractive model based on the cost of money and time. Highlight the most risky hypotheses, for example - "Client" and "Problem" and then develop an experiment. Establish criteria for its success and various limitations on performance and deadlines. The experiment itself can take the form of an interview, observation, advertising campaign, etc. At the end of the experimental stage, the data are analyzed and hypothesis testing begins again. This verification cycle should be carried out until you are sure that the product is suitable for the market.
The ideal model of growth and transformation of a startup into a successful scaled business should consist of four main points.
- Search ideas and customer.
- Identify the correlation between problem and solution.
- Customer verification and product compliance with the market.
- Scaling business.
The appearance of Lean Startup - the result of their own mistakes
The founder of the concept is American entrepreneur Eric Rees. He created a company that made virtual avatars for gamers. The company received fairly good funding, but after they spent the time and received as much money as they invested, they realized that users do not like their product and it “will not shoot”.
Then the company decided to conduct the first interview-study in order to understand what went wrong. It was found that many of the original hypotheses were false. If Rees’s company had checked them first, then a lot of things would have gone differently.
The initial misconception was that they decided that users would invite their friends. The study found that gamers do not want to invite friends, as this is a risk to their own reputation. The teenagers reasoned like this: “If I invite a friend, and he will tell me: these avatars are garbage, then I’d rather not do it.”
As a result, Rhys created a product that does not make sense without inviting other users. If he initially checked his ideas, then perhaps a product would turn out that would be valuable for independent use.
It was a sad experience for Reese, but thanks to this the company changed its business model and became successful in the market.
As part of TalkToChef, we also put up with similar problems in practice and used the Lean methodology to completely transform the company. Based on experience, perhaps the most difficult thing is to say goodbye to your own illusions about the potential of yours and the genius of your original idea. It took about 150 personal interviews with potential users that were conducted by all the main participants of our startup. This greatly helped to work out the first three punts using Lean Canvas and dozens of experiments online, working on the 4th. We can say that this methodology has helped us how to attract money for the development of the project in Silicon share, and later sell it to one of the players in the online education market.
Lean Startup - suitable for startups and large corporations
Eric Rees shared his case, wrote the book "Business from scratch." 80% of the book is devoted to his personal experience as an entrepreneur and the creation of his company. Based on his methodology, many accelerators are built around the world. All of them help startups save money on a huge number of things.
This concept allows you to test your hypotheses in the shortest possible time, for example, in one day.
Lean Startup is effective for startups as well as for huge corporations like Apple or eBay. Rice introduces it in the corporation, where millions of dollars go down the drain. Lean Startup adapts well among large corporations, and for young startups this is not even a methodology - this is the meaning of survival.
The eBay online store also does several thousand experiments a day with testing hypothesis-assumptions, what functions will people demand and how to increase their sales by a percentage. eBay is actively using the methodology like many other successful IT companies.
“To be honest, I can hardly imagine how to make a successful company without using the Lean Startup methodology. No, there are probably geniuses who can come up with a concept and it will work from scratch. Maybe this is Steve Jobs with his innovative Apple. But honestly, I have not yet met such geniuses with more than 2,000 entrepreneurs in the framework of the monthly Lean Startup Circle event, ”says Daniel Brodovic, an international IT entrepreneur, mentor in startup accelerators and co-organizer of Lean Startup Circle in San Francisco.
Learn from experience - a step to success
It is always interesting to “compare clocks”, look at other successful Lean-entrepreneurs, find out what they think about the methodology, how the industry is developing, what works, what does not work, what new life hacks, what new ways of creating products and improving existing products.
For such meetings are organized Lean Startup Conference. The last such event was held in Las Vegas (USA). Exchange of experience is the main goal of such events. It is important, of course, to meet with potential partners and customers.
The Lean Startup Conference in Las Vegas brought together key speakers and opinion leaders in this direction. They are, for example, Tony Shay, the founder of Zappos and Brent Cooper, the founder of Moves the Needle and the author of a book on Lean-methodology.
By the way, Russia also hosted the Lean Startup conference, where Brent Cooper was invited - the author of the famous book “Startup Around the Client”, and with which we have already somehow recorded the podcast.
We hope Lean Startup will inspire you to test your own hypotheses about your business or your startup idea. And if you wanted to immerse yourself in the atmosphere of the Lean Startup conference, then we recorded a video there especially for you.
Source: https://habr.com/ru/post/440994/