Studyguide Flashcards
What is a startup and what is its job?
It is a human institution designed to create new products or services under conditions of high uncertainty.
Its job is to measure where it’s at right now and devise experiments to move its numbers closer to the ideal outlined in its business plan
The Lean Startup Method’s 5 Principles
- Entrepreneurs are everywhere
- Entrepreneurship is management
- Validated Learning
- Build-Measure-Learn
- Innovation Accounting
Learning is
the essential unit of progress for startups. Validated learning can always be demonstrated by positive improvements in a startup’s core metrics
Validated Learning
Rigorous method of demonstrating empirical progress. Take an idea or hypothesis, test it out, and measure the results to validate and learn.
What is a Pivot?
It is a structured course correction designed to test a new fundamental hypothesis about the product, strategy, and engine of growth.
How do you know when you need to pivot?
When there is decreasing effectiveness of product experiments and there is a general feeling that product development should be more productive.
How do you know if a pivot is successful?
When the experiments is more successful than the experiments being run before.
What are MVPs?
Minimum Viable Product: The fastest way to get through the build-measure-learn feedback loop with minimum amount of effort. the smallest iteration of work you can do to validate your assumptions. FAIL FAST
How complex are MVPs; how complex should they be?
They don’t have to be complex; it’s best to simplify. The point is to fail quickly so that it can be perfected more quickly through validated learning.
What is the goal of a MVP?
To test the fundamental business process (or leap of faith assumptions) and to help entrepreneurs begin the learning process as quickly as possible
What is acceleration of MVPs?
Typically, each time a company pivots, the quicker the MVP cycle becomes because they are learning from previous mistakes and learning more about what their customers want and learning more about the market and its strategy.
Wizard of Oz testing
This is when customers believe they are interacting with an actual product but behind the scenes someone else is doing the work.
Split testing (A/B testing)
It is an experiment where different versions of a product are offered to different customers at the same time; by observing the changes in behaviors one can make inferences about the impact of the variations. Helps teams refine their understanding of what customers want and don’t want
Land of the Living Dead
Company has achieved some degree of success-just enough to survive- but is not living up to the expectations of the founders and investors. It is neither growing or dying, just consuming resources, draining human energy.
Innovation Accounting - what is it?
Enables startups to prove objectively that they are learning how to grow a sustainable business; begins by turning leap of faith assumptions into a quantitative financial model.
What are the 3 Milestones (steps) of innovation accounting?
- Use MVPs to establish real data on where the company is right now.
- Tune the engine from the baseline toward the ideal
- Pivot or persevere
Actionable Metrics
Metrics that demonstrate clear cause and effect; lead to informed business decisions. Can validate with split testing, cohort analysis
Vanity Metrics
Only look good on paper, there is no cause and effect and do not accurately reflect key drivers of business
What are the 3 As of Metrics?
Actionable
Accessible
Auditable
Early Adopters
The customers who feel the need for the product most acutely. They are more forgiving of mistakes are willing to accept an 80 percent solution. They are more willing to provide feedback. They care most about being the first to use or adopt a new technology. They are suspicious if a product is too polished. Visionaries - able to use their imagination to fill in what the product is missing. Most people are NOT early adopters.
Analysis Paralysis
Some entrepreneurs fall victim to endlessly refining their plans; too much analysis is dangerous. Overanalyzing (or overthinking) so much that a decision or action is never taken.
Genchi Gembutsu
“Go and see it for yourself” A core principle of Toyota Production System. One must go see for themselves. You cannot understand any part of problem unless you see for yourself firsthand - don’t rely on reports of others or take things for granted.
Leap of Faith Assumptions
Value Hypothesis: Our product will be valued - tests whether a product/service really delivers value to customers once they are using it. (experiments offer good gauge)
Growth Hypothesis: Our market share/business will grow. Tests how many new customers will discover product/service. Most important thing to measure? Behavior.
Can be tested with MVPs which will prompt either perseverance or pivoting.
Grit
TED talk by Angela Lee Duckworth
Grit is a significant predictor of success. It is passion and perseverance for very long term goals. It is having stamina, sticking with your goals day in and day out. It is living life like is a marathon, not a sprint. Those with grit tend to have a growth mindset; ability to learn is not fixed and can change with your effort. Failure is not a permanent condition - they will fail, get over it, and try again.
