HowtoBuildaLeanStartup,step‐by‐step#leanstartup

EricRies(@ericries)h?p://StartupLessonsLearned.blogspot.com

Agenda

•  Whatisastartup?•  Whydostartupsfail?

•  IntroducJontotheLeanStartup•  ProductDevelopmentinaLeanStartup

•  Specifictechniques– ConJnuousDeployment– RapidSplit‐tesJng– FiveWhy’s

Whatisastartup?

•  Astartupisahumanins)tu)ondesignedtodeliveranewproductorserviceundercondiJonsofextremeuncertainty.

•  Nothingtodowithsizeofcompany,sectoroftheeconomy,orindustry

Whydostartupsfail?

•  Rarelyfailbecausetheproductdoesn’twork•  Usuallyfailbecausetherearenocustomers

•  QualityoftheiniJalideaisnotcorrelatedwithsuccess

•  StartupsthatsucceedarethosethatmanagetoiterateenoughJmesbeforetheyrunoutofresources

•  TimebetweentheseiteraJonsisfundamental

TheLeanStartup

•  AnythingwecandotoshrinktheJmebetweenmajoriteraJonswillincreasethelikelihoodofsuccess.

•  SpeedisthestartupcompeJJveadvantage.

LeanStartupsGoFaster

•  Commoditytechnologystack,highlyleveraged(free/opensource,user‐generatedcontent,SEM).

•  Customerdevelopment–findoutwhatcustomerswantbeforeyoubuildit.

•  Agileso]waredevelopment–buttunedtothestartupcondiJon.

Commoditytechnologystack

•  Leverage=foreachounceofeffortyouinvestinyourproduct,youtakeadvantageoftheeffortsofthousandsormillionsofothers.

•  It’seasytoseehowhigh‐leveragetechnologyisdrivingcostsdown.

•  Moreimportantisitsimpactonspeed.

•  Timetobringanewproducttomarketisfallingrapidly.

CustomerDevelopment

  ConJnuouscycleofcustomerinteracJon

  RapidhypothesistesJngaboutmarket,pricing,customers,…

  Extremelowcost,lowburn,Jghtfocus

  Measurablegatesforinvestors

h?p://bit.ly/tpTtE

Ataleoftwostartups,revisited

•  Mirrorsthechangesindevelopmentmethodologiesoverthepastfewyears.

•  Let’slookatthosechangesschemaJcally.

•  Theseexamplesaredrawnfromso]warestartups,butincreasingly:– Allproductsrequireso]ware– AllcompaniesareoperaJnginastartup‐likeenvironment

Waterfall

TradiJonalProductDevelopmentUnitofprogress:AdvancetoNextStage

Requirements

Design

Implementa2on

Verifica2on

Maintenance

Problem: Known Solution: Known

Problem: Known Solution: Unknown

“Product Owner” or in-house customer

AgileUnitofprogress:alineofworkingcode

Problem: Unknown Solution: Unknown

ProductDevelopmentatLeanStartupUnitofprogress:validatedlearningaboutcustomers($$$)

MinimizeTOTALJmethroughtheloop

IDEAS

CODEDATA

BUILDLEARN

MEASURE

HowtobuildaLeanStartup

•  Let’stalkaboutsomespecifics.Thesearenoteverythingyouneed,buttheywillgetyoustarted

•  ConJnuousdeployment•  Split‐test(A/B)experimentaJon•  Fivewhy’s

ConJnuousDeployment

IDEAS

CODEDATA

BUILDLEARN

MEASURE

CodeFasterConJnuousDeployment

MeasureFasterRapidSplitTests

LearnFasterFiveWhysRootCauseAnalysis

Continuous Deployment •  Deploy new software quickly

•  At IMVU time from check-in to production = 20 minutes

•  Tell a good change from a bad change (quickly)

•  Revert a bad change quickly

•  Work in small batches •  At IMVU, a large batch = 3 days worth of work

•  Break large projects down into small batches

Cluster Immune System What it looks like to ship one piece of code to production:

•  Run tests locally (SimpleTest, Selenium) o  Everyone has a complete sandbox

•  Continuous Integration Server (BuildBot) o  All tests must pass or “shut down the line” o  Automatic feedback if the team is going too fast

•  Incremental deployo  Monitor cluster and business metrics in real-timeo  Reject changes that move metrics out-of-bounds

•  Alerting & Predictive monitoring (Nagios)o  Monitor all metrics that stakeholders care abouto  If any metric goes out-of-bounds, wake somebody upo  Use historical trends to predict acceptable bounds

Whencustomersseeafailure:o  Fix the problem for customers o  Improve your defenses at each level

RapidSplitTests

IDEAS

CODEDATA

BUILDLEARN

MEASURE

CodeFasterConJnuousDeployment

MeasureFasterRapidSplitTests

LearnFasterFiveWhysRootCauseAnalysis

Split‐tesJngalltheJme

•  A/BtesJngiskeytovalidaJngyourhypotheses

•  Hastobesimpleenoughforeveryonetouseandunderstandit

•  MakecreaJngasplit‐testnomorethanonelineofcode:

if(setup_experiment(...)=="control"){//doittheoldway}else{//doitthenewway}

TheAAA’sofMetrics

•  AcJonable•  Accessible•  Auditable

MeasuretheMacro

•  Alwayslookatcohort‐basedmetricsoverJme•  Split‐testthesmall,measurethelarge

ControlGroup(A) Experiment(B)

#Registered 1025 1099

Downloads 755(73%) 733(67%)

AcJvedays0‐1 600(58%) 650(59%)

AcJvedays1‐3 500(48%) 545(49%)

AcJvedays3‐10 300(29%) 330(30%)

AcJvedays10‐30 250(24%) 290(26%)

TotalRevenue $3210.50 $3450.10

RPU $3.13 $3.14

FiveWhys

IDEAS

CODEDATA

BUILDLEARN

MEASURE

CodeFasterConJnuousDeployment

MeasureFasterRapidSplitTests

LearnFasterFiveWhysRootCauseAnalysis

FiveWhysRootCauseAnalysis

•  AtechniqueforconJnuousimprovementofcompanyprocess.

•  Ask“why”fiveJmeswhensomethingunexpectedhappens.

•  Makepropor)onalinvestmentsinprevenJonatallfivelevelsofthehierarchy.

•  Behindeverysupposedtechnicalproblemisusuallyahumanproblem.Fixthecause,notjustthesymptom.

There’smuchmore…

IDEAS

CODEDATA

BUILDLEARN

MEASURE

CodeFasterUnitTests

UsabilityTestsConJnuousIntegraJon

IncrementalDeploymentFree&Open‐SourceComponents

CloudCompuJngClusterImmuneSystemJust‐in‐JmeScalability

RefactoringDeveloperSandbox

MeasureFasterSplitTestsClearProductOwnerConJnuousDeploymentUsabilityTestsReal‐JmeMonitoringCustomerLiaison

LearnFasterSplitTestsCustomerInterviewsCustomerDevelopmentFiveWhysRootCauseAnalysisCustomerAdvisoryBoardFalsifiableHypothesesProductOwnerAccountabilityCustomerArchetypesCross‐funcJonalTeamsSemi‐autonomousTeamsSmokeTests

FunnelAnalysisCohortAnalysis

NetPromoterScoreSearchEngineMarkeJng

Real‐TimeAlerJngPredicJveMonitoring

TheLeanStartup

•  Youarereadytodothis,whetheryouare:– ThinkingofstarJnganewcompany,buthaven’ttakenthefirststep

– Areinastartupnowthatcoulditeratefaster– WanttocreatethecondiJonsforleaninnovaJoninsideabigcompany

•  Getstarted,now,today.

Thanks!

•  StartupLessonsLearnedBlog– h?p://startuplessonslearned.blogspot.com/

•  TheLeanStartupWorkshop– Anall‐dayeventforaselectaudience– May29andJune18,2009inSanFrancisco– h?p://training.oreilly.com/theleanstartup/

•  Otherupcomingevents– h?p://bit.ly/b9w1y