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The Lean Startup (Udemy Course) by Eric Ries (8/10)

The Lean Startup (Udemy Course) by Eric Ries: Summary & Review

The Lean Startup is a six-lecture course on entrepreneurship taught by instructor, Eric Ries, aimed at teaching how to effectively bring products to market. This is the official flagship course of the Lean Startup Co.

 

Bullet Summary

  • Know the difference between value and waste: it will determine whether or not your product is one your potential customers even want.
  • Avoid meaningless metrics: they’re useless for your business’s growth and success.
  • Pivot when your cashflow is underperforming: which means the current strategy isn't working

Full Summary

About The Author: Eric Ries is an American entrepreneur, blogger, and creator of the Lean Startup Methodology, which he explains in his book, The Lean Startup.

He studied at Yale in 2010 and became an Entrepreneur-in-Residence at Harvard Business School.

 

Introduction: “What Is a Lean Startup?”

According to Ries, the answer is a startup that knows the difference between “value” and “waste”.

Most new products built in the world fail because most startups don’t know how to make sure they’re raising the value of their product while avoiding wasting their time—which is what Ries believes makes the difference between a sustainable business that makes progress and one that’s “doomed from the start”.

#1: Entrepreneurship Myths (Extended)

As pointed out in his book, Ries says that determination being what leads startups to success is a myth.

In this course, he also talks about other myths out there that are purported as being what leads someone to entreperneurial success.

Ries: “I think we have a really deep conceited belief that if you’re just in the right place at the right time with the right idea and, of course, you have the right astrological sign and you have the right entrepreneurial attributes and you have a powerful reality distortion field and also you have a really good product idea and you build a great team and it’s a really high-quality product, if you just do all those things, then you’re guaranteed to make money. And, what’s amazing about the stories of real entrepreneurs is that there’s an incredible number of them who actually were in the right place at the right time, with the right idea, with a great team who still manage to fail…just having a vision, just having a plan is not enough to ensure entrepreneurial success.

#1.2: How to Start Building a Lean Startup

  1. Recognize that a business plan is only a series of assumptions: it’s only a series of guesses about what might happen in the future.
  2. Build your minimum viable product (MVP): the most simplistic, rudimentary version of your product that you can use to assess if you’re on the right track, test your vision, and test the assumptions of your business plan.

Note: based on how Ries explained this section, I’d say that there could be a step 1.2 saying something like, “Make a quick and simple business plan: in order to check its assumptions in step two or three’s testing phases.”

#2.: Embrace learning for better entrepreneurship

Ries continues his philosophy that entrepreneurs are managers

However, he also says that learning is looked down upon in management circles because if a manager claims or reports that they “learned” something, it means they didn’t have it right in the planning stage (so they failed to do something they said they were going to do).

That can mean that the manager either:

  • Didn’t make a very good plan OR
  • Made good plan, but didn’t successfully execute

So, does that mean you should throw out all learning?

No, because there’s a difference between traditional general management and management within the context of effective entrepreneurship. 

And that difference is:

Ries: “...the soil of extreme uncertainty that we plant startups in. We don’t know who our customer is. We don’t know what the product is going to be. We have all these unknowns. And so, the most important thing, if you find yourself in the situation of high uncertainty, is to as quickly as possible find out what you don’t know. And, that means that learning really is the essence of what it means to make progress in a startup.”

Note: a small adjustment here, I’d say implemented learning is the essence of progress. Learning (gathering data) alone is not enough. Action based on that acquisition of valuable information (execution) is far more important.

#2.2: Implement validated learning

Many entrepreneurs allow vanity metrics to distract them from the more important data.

Instead, use “actionable metrics” (more on that a little later).

Note: Artur Belka, writer at Boldare (a product design and development company) put it best (see their Lean Startup Series):

Belka: “If lean startup is all about rapid product iterations closely focused on user needs and requirements, then validated learning is that part of the process by which we learn just how close each iteration is to satisfying the people we’re building it for. 

In fact, inventor of the lean startup approach, Eric Ries, has described validated learning as ‘the unit of progress for lean startups.’ In other words, for a lean startup, success is not so much measured by the number of units you manufacture but by the measurable responses from your target users…

…the keyword is ‘measurable’. Validated learning is quantifiable, based on data such as revenue, user engagement, and feedback. The result is learning that is evidence-based and actionable, leading to genuine product improvements in each iteration. Done properly, validated learning is remarkably efficient.”

 

Innovation Accounting for Startups (The 3 A’s)

#1: What Are “Good” (Meaningful) Metrics?

Ries considers “good metrics” the data that doesn’t come from vanity metrics.

Those are the metrics that have (and should have) the most meaning to you, your product, and your business.

#2: The Three A’s of Meaningful Metrics

They are:

  • A: Actionable
  • A: Accessible
  • A: Auditable

#2.2: Split Testing for Meaningful Metrics

Here are a few examples Ries shares of how to implement the Three A’s (which he discusses in an interview with Farbood Nivi, founder of the education company, Grockit). 

Say that you’re using the tool of split testing to gather meaningful metrics. 

You create two identical landing pages, one with a $99.99 price point and another with a $29 price point.

  • Actionable: Pick the price point with a higher conversion rate

Or, let’s say you’re using split testing to determine if you should make a certain update to your product offering—presenting one offer that’s your original and another that’s your updated idea.

And, the results of the split test reveal a lower conversion rate for the updated version of your offer.

  • Actionable: Get rid of the update

Now, that’s actionability which is focused on gathering the data. 

On accessibility, you’re making sure people actually review the data.

And, Reis encourages the idea that to increase your data’s accessibility, you must increase people’s desire to read and review the data.

Here are examples of good and bad accessibility:

  • Bad: An overly detailed printed report with insurmountable heaps of data packed inside that takes 20 or more minutes to comprehend.
  • Good: a user-friendly webpage with a simple interface and the important information bolded and highlighted.

However, Nivi notes that even with an accessible platform it can be difficult to get people to pay attention to reading the data.

So, his solution in his company was:

  1. Hold a “Hackathon Day” where everyone has to create split test pages.
  2. Hold weekly team meetings that focus on discussing the results of the split testing (and turning those results into action)

It may not be enough to simply post the data you’ve collected on your company’s website and hope your employees read it and take necessary action on it. 

Making checking the reports more fun and engaging for everyone can minimize attention drop-offs and maximize productivity and results within the team.

That makes your reports more accessible.

Finally, here are some examples of how Grockit made their reports auditable:

  • Data on the report is presented in a simple interface
  • Key data are bolded and highlighted
  • Key unit is the number of people
  • Simplify the process

#3: How to determine what metrics to focus on

Here’s how Grockit does it:

  1. Find the major axis that defines the success of your company: for example, is it user engagement? Scalability? Effectiveness? 
  2. Find the criteria your company is running the business on: examples could be your return rate, sign-up rate, engagement rate with specific features, conversion to paid rate, and so on.

Then, use the answers to these prompts to determine your key metrics.

#4: How to evaluate the success of a new feature

The Lean Startup: “To assess the success of a new feature, look at whether it has moved the key metrics.”

If it moved the key metrics (in a positive direction), then that’s a good indicator that the new feature is moving toward success (because it improved the business).

 

Creating Experiments to Test Hypotheses

#1: The Three Steps to Creating an Experiment

An experiment is defined in this course as:

The Lean Startup: an experiment is a method of testing a hypothesis with the goal of explaining reality. 

In the lean startup, experimentation is the act of using analytical methods to test one or more product’s potential success in the market.

  1. Build one or more hypotheses.
  2. Choose a testing form for each hypothesis.
  3. Test the hypotheses rigorously.

And, remember, your hypothesis doesn’t have to be right:

The Lean Startup: “...being wrong moves you away from incorrect paths. Being right, on the other hand, is more often than not an indicator that you are asking the wrong questions.”

#2: What Type of Experiment Should I Run?

Hiten Shah, CEO of Kissmetrics, says, “Testing things that are more radically different from each other [than a test like Google’s famous 2009 experiment of testing 41 shades of blue on a button to see which one was most effective at getting the most clicks] is usually more effective at providing meaningful information.”

Shah also says that early on in a startup, you should aim for more qualitative data (such as by doing surveys) than quantitative so you’re more hands-on. He notes that this will allow you to quickly identify patterns about your product that will be useful information.

 

Lean User Experience

#1: What is Lean User Experience?

User experience is “UX”.

Lean user experience is designing with a focus on:

  • Customer research
  • Product creation and development based on customer needs
  • Learning from customers
  • Driving improvement using customer metrics

#2: How to Implement Lean UX?

Example 1: During the “Ideation” stage:

  1. Have a developer, designer, and product manager come up with 6 ideas each.
  2. Tape all 18 ideas to the wall.
  3. Vote on ideas.

This leads to more collaboration and better ideas.

Example 2: During the “Optimization” stage:

  • Run tests across all variables (more than A/B testing, run A/B/C/D/E/F)

More testing will lead to better improvements.

Note: this is only useful if you’re testing important variables. At some point, one can cross over into “over-analyzation” by testing too much which becomes counterproductive, in my opinion.

#3: How to Perform Customer Research for Lean UX?

According to Janice Fraser, former CEO of LUXr (a Lean Startup coaching and training firm for early stage companies), customer research can be gathered through either quantitative or qualitative forms.

Quantitative data can be measured through metrics or analytics. Qualitative data can be observed by speaking with your customers. (Think: TPM doing a basic poll in the forum that shows the number of people who selected a particular answer versus asking for feedback in a new thread and getting posts from users sharing their descriptive, in-depth thoughts.)

Fraser recommends gathering data two ways:

  1. Conduct “evaluative” usability testing: by giving a customer your product, asking them to do a task, and watching and learning.
  2. Ask your customers “generative” interview questions: for example, if you had a magic wand, how would you change this product?

Use usability testing to make your product better. Use generative questions to learn about your customer.

 

The Art of the Pivot

Main takeaways from entrepreneur, David Binetti’s experiences:

  • Keep the vision the same, only pivot the strategy: because “the product is a manifestation of strategy”.
  • No matter how much you believe in your product, pivot when the cashflow isn’t right: remember, pivots help prove the assumptions your product is making to investors (you being one of those investors). So, use evidence to show (yourself and others) why your vision is worth scaling.
  • Don’t be eager to rely on vanity metrics to make your product look successful

 

Real-Life Applications

  • Utilize split-testing 

Ries says, “Customers very rarely notice split testing and, even then, they (often) understand. Don’t be scared to use it!”

I tend to agree.

 

Cons

  • Again, focuses too much on software

Similar to the book.

So, the course comes across as less adaptable in certain areas for those with physical products. 

  • No downloadable content

Given that Ries uses long PowerPoints to present and share his ideas, making them downloadable could’ve been one way to add good value to his students.

Especially, since it’s already been requested in the Q&A section of his course by students before.

  • Seems to confuse accessibility with auditability

You’ll notice that a couple of the examples of how to make your reports auditable are very similar (if not the same) as the examples for making your reports accessible.

I think the instructor could have clarified some confusion by openly stating that accessibility deals with one’s ability to reach the data while auditability deals with one’s ability to (easily) read and consume the data (if that’s what Ries was trying to communicate).

Perhaps it was a mistake in the PowerPoint. And, if not, there’s still some explaining that could have been done to make things more clear.

 

Pros

  • Recommends tools (that are still around) for following their process

For example, the tool Ries recommends to follow the Three A’s is Pivotal Tracker (at PivotalTracker.com).

And, he recommends Balsamiq (at Balsamiq.com) for creating basic, MVP mockups of UI design very quickly.

  • Recommends solid attitudes with fun, creative quotes

As CEO, Farbood Nivi, warmly tells his team, “In God we trust…everyone else bring data :).”

 

Review

A fairly good course. 

Given that this is their flagship course (even linked to from their main website under the headline “Take the Lean Startup class”), I was hoping for more in terms of education. Plus, the presentation of the course is quite old now (a PowerPoint created over a decade ago). 

But, Ries asks his interviewees good questions and they give very practical, actionable responses back, making the course quite informative in a valuable way.

If one is looking for a good introduction to the lean startup approach, this might be it.

Also read:

Or, check out the best books on entrepreneurship.

Lucio Buffalmano and Bel have reacted to this post.
Lucio BuffalmanoBel

Thank you for this, Ali!

Feedback on the "final rating review" now.

Keeping in mind that the goal of TPM's rating system is to allow people to prioritize, I'd like to (positively) challenge your rating.

When I read the final review (combined with the other high-level review here):

Quote from Ali Scarlett on November 7, 2022, 11:58 pm

 

Review

A fairly good course. 

Given that this is their flagship course (even linked to from their main website under the headline “Take the Lean Startup class”), I was hoping for more in terms of education. Plus, the presentation of the course is quite old now (a PowerPoint created over a decade ago). 

But, Ries asks his interviewees good questions and they give very practical, actionable responses back, making the course quite informative in a valuable way.

(...)

It didn't exceed my expectations, but it wasn't worthless either. As an introduction to lean startup methodology with valuable suggestions and information, I'm glad I completed it.

I personally had to wonder whether it's worth an "8".

An 8 starts being that level where we recommend people to go for this resource over many others.

"Good" makes me think of a 7.

"Fairly good" makes me think of a 6-6.5.

I think that courses should be held at higher standards than books when they take more time and commitment than a book -as they often do-.
You can go through a "good" book because it's easy to do and can be done during downtimes. But not so much for a course.

Also considering that courses have a greater opportunity to deliver value -including more practical steps-, meaning that the higher grades should be even more challenging for courses than for books.

I expect more from a course than an introduction since the book already did that.
And I also expect more than an "expanded book version" or a series of interviews and chat -I expected tools that help me develop real-life skills like examples, case studies, techniques and strategies, self-development exercises, etc. etc.-.

I'd expect to come out of it with something more concrete, like better skills on how to execute, how to recognize potential, or with better planning abilities for your own ideas and projects.

The goal of the rating system is not only to say what's good or not, the goal of the rating system is to empower people with a busy life and who seek maximum ROI to prioritize for the highest ROI resources.
In this case, it seems possible to me that people would be better served going through the Lean Startup book than the course -and you correct me if I'm wrong-.

To make a parallel, The Social Strategist provides a great overview of TPM wisdom.
But if PU would provide little more than the same "introduction to power dynamics", I'd give it a 6 at most.
And if it was a series of interviews without examples, case studies and concrete steps to advance one's life, I'd give it a 2 because it was such a missed opportunity and wasted time and potential.
If that were the case, a good rating system to help people maximize time would tell them "save your time, and go for the book, it's almost the same wisdom, for less time and effort".

My bad for not properly communicating this sooner.

And let me know what you think, and if you disagree.

Ali Scarlett has reacted to this post.
Ali Scarlett
Have you read the forum guidelines for effective communication already?
Quote from Lucio Buffalmano on November 8, 2022, 1:29 am

Thank you for this, Ali!

Feedback on the "final rating review" now.

Keeping in mind that the goal of TPM's rating system is to allow people to prioritize between "best and OK but skippable", I'd like to (positively) challenge your rating.

When I read the final review (combined with the other high-level review here):

Quote from Ali Scarlett on November 7, 2022, 11:58 pm

 

Review

A fairly good course. 

Given that this is their flagship course (even linked to from their main website under the headline “Take the Lean Startup class”), I was hoping for more in terms of education. Plus, the presentation of the course is quite old now (a PowerPoint created over a decade ago). 

But, Ries asks his interviewees good questions and they give very practical, actionable responses back, making the course quite informative in a valuable way.

(...)

It didn't exceed my expectations, but it wasn't worthless either. As an introduction to lean startup methodology with valuable suggestions and information, I'm glad I completed it.

I personally had to wonder whether it's worth an "8".

An 8 starts being that level where we recommend people to go for this resource over many others.

"Good" makes me think of a 7.

"Fairly good" makes me think of a 6-6.5.

I think that courses should be at higher standards than books when they take more time and commitment than a book -as they often do-.
You can go through a "good" book because it's easy to do and can be done during downtimes. But not so much for a course.

Also considering that courses have a greater opportunity to deliver value -including more practical steps-, then the higher grades should be even more challenging for courses than for books.

From a course, I expect more than an introduction since the book already did that.

I'd expect to come out of it with something more concrete, like better skills on how to execute, how to recognize potential, or with better planning abilities for your own ideas and projects.

The goal of the rating system is not only to say what's good or not, it's to empower people with a busy life and who seek maximum ROI.
In this case, it seems possible to me that people would be better served going through the Lean Startup book than the course -and you correct me if I'm wrong-.

To make a parallel, The Social Strategist provides a great overview of TPM wisdom.
But if PU would provide little more than the same "introduction to power dynamics", I'd give it a 6 at most.
And if it was a series of interviews without examples, case studies and concrete steps to advance one's life, I'd give it a 2 because it was such a missed opportunity and wasted time and potential.
If that were the case, a good rating system to help people maximize time would tell them "save your time, and go for the book, it's almost the same wisdom, for less time and effort".

My bad for not properly communicating this sooner.

And let me know if you disagree.

Thank you for sharing your thoughts and feedback, Lucio.

I haven't completed the The Lean Startup book yet, and wanted to finish the course first because:

  • Due to the course format, I had that high expectation for it to be more value-giving than the book: which, based on the short amount of the book I've read so far, it may be an even amount of value.
  • TPM hadn't done a review on the course yet: which, given how high the book ranked on TPM's "best of" list before the recent updates to the entrepreneurship section, it seemed overdue 🙂

That said, there is that potential risk of making a star rating that doesn't take into account the other (potentially better) resources out there, such as Ries' book.

I think it's worth noting that I did quite a bit of research on lean startup methodology from other instructors while taking this course to better understand some of the things Ries' interviewees were saying. So, I think I accidentally ended up rating the course as a great "lean startup methodology resource" and not as an "entrepreneurship resource".

So, thank you for challenging me on this, Lucio. Giving it more thought, I'd change the rating to a 6.5 for those who haven't read the book and a 5.5 for those who have.

Lucio Buffalmano has reacted to this post.
Lucio Buffalmano

Actually, thank you Ali, you made me really think what's "unique" and different about this approach.

And I may add it ot the various reviews pages.

And it's this:

Opportunity Cost Mindset of Reviewing

I think what's missing in the market and what nobody else does is to review resources with an "opportunity cost mindset".

That's what allows for maximum ROI, not just for learning resources, but for life.

Because with that time you spend with a course or book or podcast, you could go through a different and better book/course/podcast, or exercise, or go out and network and meet great quality people, or spend time swiping/approaching/messaging to meet a high-quality partner, or working on your project/mission, or exercising/meditating, or just chill and sit for 5 minutes and watching a beautiful sunset... You get the point.

So in order to make the most out of life, TPM wants to provide a reviewing system for learning and self-development resources that allows readers to plan for the highest possible ROI resources.

Ali Scarlett has reacted to this post.
Ali Scarlett
Have you read the forum guidelines for effective communication already?
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