Lean Startup

aside 13 Jan

Meeting Eric Ries



Eric Ries is in London! If you don’t know who he is, he is the author of The Lean Startup book. Read my previous post on why there’s so much hype about this guy and why I subscribe really strongly to his principles in building up a company. This is the #1 must-read book for all entrepreneur.

Anyway it was great listening to him giving a talk at LSE yesterday although most of the things that he talked about (~85%) are material from his book. Managed to asked him the last question during Q&A and snatched another quick question when he was signing my book.

Here’s my question and Eric’s answers (not verbatim but rephrased to the best way that I understood his answers):

Q: What happens when you create an MVP and launch it but nobody uses your product. Do you blame the marketing division responsible because there is not enough traffic?

A: In startup, there is no such thing as a marketing division. Everyone is involved in marketing the product. Thinking of marketing as a separate division is an old management way of thinking about business. The idea is to position the product properly. Eric basically talked about customer acquisition method. He went on to describe how as CTO of IMVU he was also VP Marketing and had a daily marketing budget of US$5.00 to spend on Google AdWords and he had to try different keywords to get traffic to the site and get people to use his company’s product (which is basically an instant messaging software with 3D avatars). This story is well documented in his book.

Q: How do we apply The Lean Startup method in multi-sided markets businesses.

A: Focus on a niche where there is a ready small subset of ready buyers and sellers. For example, Facebook started out focusing only on Harvard students and slowly branched out to other universities. The same is eBay in auctions. Test out the MVP (Minimum Viable Product) using this method for this multi-sided markets business.

***

Eric stressed many times in his talk that at this day and age, we have all the technology that we want to produce almost any web app that is conceivable. The constraint is the idea. Heck, we can build a social network for dogs if we want to. The question that entrepreneurs should ask at the beginning is…

not whether a product can be built, but whether it should be build.

aside 29 Dec
Evaluating Biz Plans vs Entrepreneurs
I subscribe to the just-do-it school of thought of entrepreneurship. Whenever I see an idea and opportunity, I jump straight into the idea after some quick back-of-the-napkin calculations. The other approach in entrepreneurship is to spend months researching an idea to reduce the risks of failure by preparing an elaborate business plan.
I have now since nudged slightly to the other end by being a tiny bit more careful. But I still do not enjoy writing business plans especially the financial projection part because I simply think the numbers, especially projections 1 and 2 year from business commencement are simply plucked from thin air for a new startup and are based on too many assumptions.
Unfortunately, many people still want to evaluate a business through a business plan. While browsing LeanCamp today, I found that there are groups of people who seem to think there is a better way in evaluating startups – evaluating entrepreneurs instead of the business plan. I somehow agree with them. Entrepreneurs are rarely right on their first try. We make thousands of mistakes before finding the right approach to success.
aside 1 Dec

The Lean Startup



I met someone at a London entrepreneurial event near Old Street – London Silicon Roundabout a couple of weeks back and this other entrepreneur recommended that I read the following book – The Lean Startup by Eric Ries. I bought it off Amazon here and finished reading this book in less than 1 week. I have to admit that I am impressed by the ideas presented in this book. If there is one book that I would say any entrepreneur must read, this must be the book. Reading this book has made me realise that I have made several mistakes while launching SexyFoodie.

To keep things simple, I will write about the main idea that is presented in the book. Basically, every startup idea is based on a list of assumptions. The main objective of the founding team with a startup full of uncertainties is to test out these assumptions as quickly as possible so that a scalable business model can be built. To test out this assumptions, entrepreneurs must build a minimum viable product as quickly as possible with very limited features and test things out in the market. Do not spend months building a full feature product that potentially nobody will use – it is simply building castles on thin air if the product later on proves to not be in much demand (main assumption to be disproved with a minimum viable product). Also entrepreneurship must take a scientific approach to see which methods works best such as using an A/B testing method to see which webpage has the best conversion rate for customers etc.

This is just a very short summary on what I found most useful in this book. Go grab a copy and read it if you are thinking of starting a business. I am more convinced with this since I subscribe to the Just-Do-It style of entrepreneurship and this book help me very much in reducing my failure rate from ideas.

• About Me

  

  Hi, my name is Bobby. I am a final year Economics student at University College London interested in entrepreneurship. Entrepreneurship is a roller coaster ride. This blog aims to document the ups and downs of my entrepreneurship journey and to share tips for other aspiring entrepreneurs. Do also follow me on Twitter @bobbyong

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