The Lean Startup

Lean Startup method

  1. Entrepreneurs are everywhere - an intrapreneur in a company is a form of entrepreneur that operates in uncertain conditions.
  2. Entrepreneurship is management - since it operates with absolute uncertainty, a new management discipline is required.
  3. Validated learning - Startups exist not to make stuff or money but to build a sustainable business.
  4. Build-Measure-Learn - turn ideas into products, measure how customers respond and learn to pivot or persevere.
  5. Innovation accounting - measure progress, set up milestones, prioritise work.

We think that entrepreneurs and management are two different roles. The book promotes that these two disciplines be combined.


Start with a value and growth hypothesis. Test the market. Gather feedbacks then improve based on the feedback. Do it as quickly as possible.

Chapter 1 Start

Having a grand vision, decide the strategy to follow (batch working, efficiency), and then make the product.

Another way of describing the start is having a Big Hairy Audacious Goal (BHAG).

Chapter 2 Define

A Startup is a human institution designed to create a new product or service under conditions of extreme uncertainty.

Most large companies fail because the mid-managers cannot plan and execute properly. This is because mid-managers acts like politicians, they manage the 'storm', good news gets escalated and bad news is swept under the rug.

Mid managers lack accountability and power to make decisions and do not want to fail. 'Learning' is the common excuse they use when they fail.

Malcolm Gladwell mentioned PDI in Outlier, the further between the top manager and exec, the further the communication and likely for it to break down.

Peter Thiel mentioned a company in Zero to One should not exceed three-level from top management to execs to improve efficiency and communication.

Chapter 3 Learn

IMVU built a chat that integrates with other IM, but it didn't work because they had a terrible vision. As it turns out, users didn't want integrated IMs. They want to meet new friends, instead of inviting existing friends into the platform.

IMVU learned the hard way.

Chapter 4 Experiment

Which customer to listen to. Which to prioritise? It doesn't matter.

If you cannot fail, you cannot learn.

Value hypothesis - What value (gain or pain) are we solving and are customer willing to pay to solve it?

Growth hypothesis - what would make the customer want to share?

  1. Do consumers recognise that they have the problem you are trying to solve?
  2. If there was a solution, would they buy it?
  3. Would they buy it from us? Can we build a solution for that problem?"

Mark Cook (Kodak), "Success is not building features, but to learn how to solve customer problems"

Chapter 5 - Leap

Build  (Product) - Measure (Data) - Learn (Ideas) loopback to Build.

The goal is not to only make a complete cycle, but to run it as fast as you can. Build it as quickly as you get data.

FB took the leap of faith. Move quickly and break things.

Leap of faith assumptions - Value hypothesis and growth hypothesis.

Toyota uses 'Genshi gembutsu' which means "Go and see for yourself".

Strategy is based on assumptions. The one that is closer to users is the ones that make complete sense.

Chapter 6 Test

Test as often as possible. A split test, AB test whatever test you can get your hands on. Don't worry too much about the quality. Build the MVP (Minimum viable product) that is acceptable to work.

If we don't know who the customer is, we don't know what quality is

"Two pizzas for the price of one" is never a beneath-you idea. It has to work for people and Groupon (which soon failed in the industry).

Drew Houston - Minimum Viable Video showed people how things work for dropbox to make people understand how the 'magic' works.

Iteration has to be built into the calendar. It's a habit of producing things again and again until it's fully refined.

Chapter 7 Measure

The rate of growth depends on 3:

  • the profitability of each customer (AOV)
  • the cost of acquiring new customers (CPP) and
  • the repeat purchase of existing customers.

Three learning milestones. 

  1. Build MVP to get actual data on where the company is right now. - Set a baseline based on the valued customer to receive.
  2. Tune the baseline towards the ideal - a good design is the one that changes user behaviour for the better.
  3. Pivot or persevere. - if it's not moving our business model, it's time to pivot. 

Be careful when preserving, most businesses are too stubborn; they collapsed from their stubbornness.

3 A's of metric

  • Actionable - The data clearly shows the cause and effect. Not just a number.
  • Accessible - Who can access the data and make sense of it? The more people learn from the data, the more it is likely to be true.
  • Auditable - Who was responsible for the data? How truthful it is, and it should not be complex to understand.

Vanity Metric - Metric that makes you look good. Like revenue, no of followers, it actually tells you nothing.

Actionable Metric - Metric that you can do something about. Typically an outcome of formula, e.g. profit per customer, pages per user etc.

Chapter 8 Pivot or Persevere

Companies that can't pivot and are unwilling to face the data presented to them will face the land of the dead. Neither growing nor dying, consuming resources and employees' commitment without moving forward.

It's not about adding more widgets or features but tuning it towards growth, creating value and a growth engine.

Registration -> Activation -> Retention -> Referral

Failure is prerequistite to learning. 

Pivot requires Courage.

  1. Vanity metric allows a false conclusion to be formed. Living in your own bubble.
  2. Ent with unclear hypotheses will not experience complete failure. Without failure, you can't learn anything.
  3. Afraid. Fear can lead to low morale. Fear of vision being wrong < vision not able to prove itself.

Types of Pivot

  1. Zoom-in Pivot - A feature becomes a product by itself
  2. Zoom-out Pivot - A single feature cant stand on its own. Needs to be beefed up.
  3. Customer segment pivot - Change in the customer segment
  4. Customer Need pivot - Change in the value delivered to the customer.
  5. Platform Pivot - Change from application to platform and vice versa.
  6. Business Architecture Pivot - High volume-low margin (B2C), Low volume-High Margin (B2B)
  7. Value Capture Pivot - Monetisation strategy. How to turn value delivered into money?
  8. The engine of Growth Pivot - Viral, Sticky and Paid Chapter 10.
  9. Channel Pivot - The mechanism by which the value is sent to the customer. In other words distribution channel. Sell direct, sell via agent etc.
  10. Technology Pivot - Change in technology to solve the same problem

Failure to pivot – the decision is difficult. 

Chapter 9 - Small batch

Part 3 Accelerate

We must balance between speed and thinking in execution. Don't think too much, and Don't move too fast.

Going through without sacrificing speed and agility.

Its easier to make changes in small batches vs large batches. Doing letters one at a time, as opposed to in one big swoop is quicker (insert all, stamp all).

E.g. Reply to customer feedback. Act on it now, as opposed to collecting all and doing it later at one go. 

In small-batch, you can detect flaws much quicker compare to big batches.

Both have its advantage, right now, we are not mass-produced, we are finding a better way of doing it.

The startup way:

People < Culture < process < Accountability

Chapter 10 Growth Engine


A new customer comes from the action of past customers.

4 Ways to Grow Customers

  1. Word of Mouth - Spread from one customer to the other
  2. Side effects after usage - Cool new car, face looking better, etc., especially fashion or status
  3. Through advertising - paid ads. As long as Cost < Profit
  4. Through repeat purchase - usage periodically.

Three engines of growth

  1. Sticky - Depends on retention rate. Track the churn rate carefully. The rate of new customer > churn customer.
  2. Viral - Growth happens automatically when customers use the product. Hotmail PS: Get your free account today. Viral coefficient: How many customers use the product from every signup. VC = 0.1 is from 10 new signs up, 1 will tell their friends, therefore not sustainable.
  3. Paid ads - Increase revenue per customer or reduce the cost of acquisition. LTV > CPA

Don't try to make it all work. Focus one at a time. The best is running all three.

Achieve product-market fit, Andersen. When the product fit the market, keep pivoting. There is no such thing as a perfect product. 

Death of growth engine is when you look at vanity metrics, then you think it's good enough. Instead, the focus should be on improving user behaviour (so people keep using the product), finding new things to improve (pivot) and continuing buying the next iteration. 

Chapter 11 Adapt - Organisation Structure

Adaptive organisation. Train your staff.

Ask 5 whys, then empowers someone to take charge of the initiative. When finding fault, don't blame others; only try to get to the bottom. All relevant and related parties must come to the table to discuss when using the five whys.

Chapter 12 - Innovate

Large companies can innovate if they Learn to change their management philosophy.

Create smaller teams; this will help them with;

  • Give them authority to make decisions.
  • Empower them to take the leap of faith
  • Give them a personal stake, not limited to monetary
  • Create an area for experimentation. 
  • Protect the parent organisation. Harm can cause both ways.
  • Create a sandbox so the public can interact with it.


I thoroughly enjoyed the book. Though the idea in the book is not new to me, "The Lean Startup" was the starting point (or movement) and presented the ideas clearly.

The biggest mistake I did in life was to wait for it to be perfect.

Instead, I should accept the flaws, get feedback and improve further. I would need to work on my patience then.

A share would be, Sublime.

The Lean Startup

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