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Thursday, December 3, 2009

Lessons I learned from Eric Ries

For those of you who are remotely interested in entrepreneurship and do not yet subscribe to Eric's blog, do so right now. Here is the address ( I'll wait.

I may be very biased here, but I think Eric has managed to elucidate the crux of the opportunity and challenge that startups face today. Using his own experience as a backdrop Eric walked us through the story that brought him to these realizations. The 2 life stories involve a company that made very long term plan, executed flawlessly only to realize the market wanted something else. With that experience Eric’s next company tested their market very early on, only to realize that they should have started even earlier. This brings us to the extreme view that the lean start-up advocates.

There are many take-aways from the talk and all can be found on his blog. I'll try and summarize what i found most insightful.

The lesson in one sentence is Be Agile!!!! In the common and the technical sense of the word. For those of us who are not coders, being agile means moving forward in short bursts and re-evaluating at every such step. The alternative (status quo) being making long range plans and executing in them. The genius of this methodology for a business is in the ability to test your assumptions and to react to new information. So beware what you plan for. Traditionally, and instinctively, we all make long term plans and defend our assumptions fiercely. These inclinations (according to Eric, and I bought in) are the main reasons businesses fail. Founders assume they know what the market wants and design a long road map to get there. The beauty of the tech environment today is that we don't have to adopt this strategy; we can test often and evolve when necessary. Looking at successful tech companies a pattern begins to emerge, almost all end up in a different business than the one they started in. PayPal started in encryption, Flickr in gaming, the list goes on. The key to their success, Eric argues, is the willingness to evolve as they learned about their customers. But note that evolution happens in small steps, and these companies do not re-invent themselves all of a sudden but rather PIVOT from one plan to another, always leaving one foot firmly planted in what they know.

In conclusion:

1) Know your customer (read this book!

2) Test your assumptions early and often (see Eric’s posts on A/B testing)

3) Repeat

Here are slides from a similar presentation Eric did.

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