Lean Startup Lessons: Will it Fly? The Value of Validated Learning

Summary

The speaker emphasizes the importance of 'validated learning' in startups, cautioning against the pitfall of 'achieving failure' by executing a flawed plan perfectly. He argues that traditional product and business milestones can be misleading when facing high uncertainty. Instead, startups should focus on learning milestones that validate or invalidate their business assumptions. The speaker shares his experience of building a complex product that no one wanted, leading to a pivot and the realization that minimal viable products can provide the same learning opportunities as extensive development efforts. He advocates for a lean approach to entrepreneurship that prioritizes learning and adaptability over excessive planning and execution.

Takeaways

• 🚀 The concept of 'achieving failure' is highlighted, where a business plan is executed perfectly but the end result is unwanted by customers, leading to a downfall.
• 📈 There is a critique of traditional business and startup practices that focus on meeting milestones and staying on budget, rather than validating the demand for the product.
• 🔍 The speaker introduces 'validated learning' as an alternative milestone, which is about discovering if a startup is on the path to a sustainable business or needs to pivot.
• 🛠️ The software business is described as a catalyst that transforms ideas into code, with all other activities being side effects of this transformation.
• 🔄 The importance of a feedback loop is emphasized, where customer interaction with products generates data that can be measured and learned from, influencing the next set of ideas.
• 📉 The speaker shares a personal anecdote about building a product that was ultimately rejected by customers, leading to a realization about the importance of validated learning.
• 📚 The idea that building something no one wants is the biggest waste in development, despite following agile and lean principles, is discussed.
• 🤔 The script questions why learning is often an afterthought or an excuse for failure, rather than a goal during the development process.
• 📉 The realization that less can be more in terms of development; a simple webpage experiment could provide the same learning as months of complex coding.
• 🛑 The need to work backwards from what we want to learn to determine the least amount of work required to achieve that learning is a key takeaway.
• 🚧 The script advocates for a shift in focus from execution to learning and validation, which can lead to more efficient and successful startups.

Q & A

What is the concept of 'achieving failure' mentioned in the transcript?

Achieving failure refers to the scenario where a business plan is meticulously executed but ultimately fails because the initial plan was flawed or the product did not meet customer needs.

Why is it problematic to focus solely on executing a plan without considering its validity?

Focusing only on execution without validating the plan's relevance or desirability can lead to significant waste of resources, time, and effort on something that ultimately has no market demand.

What is the alternative to traditional milestones proposed in the script?

The alternative is 'validated learning,' which emphasizes learning about customer needs and adjusting the business strategy accordingly, rather than just meeting predefined product or business milestones.

How does the speaker describe the process of a software company in the context of validated learning?

The speaker describes a software company as a catalyst that transforms ideas into code, with everything else being a side effect necessary for this transformation. The focus should be on generating data from customer interactions to learn and inform the next set of ideas.

What is the significance of the three-stage feedback loop mentioned in the script?

The three-stage feedback loop is significant because it allows startups to continuously learn from customer interactions, measure outcomes, and adapt their strategies based on this learning, which is crucial for navigating uncertainty and finding a sustainable business path.

What was the speaker's experience with building a product that was not well-received?

The speaker spent six months building a product that was complex and of high quality but was not well-received by customers. This led to a realization that the effort could have been significantly reduced if the focus was on learning rather than perfect execution.

Why did the speaker feel that the product development process was wasteful despite following agile and lean methodologies?

The speaker felt that the process was wasteful because the product developed did not meet customer needs, and thus all the code written was essentially discarded. The focus on execution without validated learning led to this waste.

What is the importance of considering validated learning during the product development process?

Validated learning is important because it ensures that the product development process is aligned with customer needs and market demands, reducing the risk of investing in products that will not be successful.

How did the speaker's realization about the inefficiency of their product development process change their approach to building products?

The speaker's realization led to a shift in focus from perfect execution to validated learning, questioning the necessity of each feature and considering the minimum viable product that could still provide valuable learning about customer needs.

What is the speaker's suggestion for a more efficient approach to startup product development?

The speaker suggests working backwards from the goal of learning to determine the least amount of work required to achieve that learning, which can lead to significant efficiency savings and better alignment with customer needs.

How does the speaker illustrate the concept of validated learning with the example of a single webpage and a download button?

The speaker uses the example to show that even a simple webpage with a screenshot and a download button can provide valuable insights into customer interest without the need for a fully developed product, thus emphasizing the importance of validated learning over extensive development.

Outlines

00:00

🚗 Achieving Failure Through Validated Learning

The speaker discusses the concept of 'achieving failure', where a business plan is executed perfectly but ultimately fails because it doesn't meet customer needs. This is likened to driving a car off a cliff while celebrating good gas mileage. The speaker emphasizes the importance of 'validated learning' over traditional product and business milestones, which often don't account for whether the product is actually desired by the market. The goal of a startup should be to discover if they are on the path to a sustainable business, and if not, to make changes. The speaker uses the analogy of a software company as a catalyst that transforms ideas into code, with customer interaction generating data that can be measured and learned from, forming a feedback loop. The speaker shares a personal anecdote about building a product that no one wanted, which led to a pivot and the realization that much of the work done was wasted effort. The focus should be on learning what is necessary for the business to succeed, rather than just executing a plan.

05:00

🔬 Experimentation and Efficiency in Startups

In this paragraph, the speaker reflects on the efficiency of startup operations by questioning the value of extensive development work. They consider the hypothetical scenario of supporting fewer networks or creating a simple webpage with a screenshot and a download button, which would have led to the same learning outcome with significantly less effort. The speaker suggests that startups should work backwards from the learning objectives to determine the minimum work required to achieve those learnings. This approach can lead to breakthrough efficiency savings, as opposed to simply building or measuring faster. The speaker humorously contrasts their role as a chief technology officer with the idea of being a 'chief one-page landing page officer', highlighting the potential absurdity of focusing on minimal viable products for the sake of learning and efficiency.

Keywords

💡Validated Learning

Validated learning is a concept that emphasizes the importance of learning through validation rather than just executing a plan. In the video, it is presented as a way for startups to determine if they are on the right path to a sustainable business. The speaker uses the term to critique the traditional focus on meeting milestones without considering whether the end product is desired by customers.

💡Achieving Failure

Achieving failure refers to the scenario where a business successfully executes a plan that ultimately turns out to be flawed or unwanted by the market. The speaker uses this term to highlight the irony of being proud of executing a plan that leads to a product or service that no one wants, drawing a parallel to driving a car off a cliff while celebrating good gas mileage.

💡Product Milestones

Product milestones are specific goals or checkpoints in the development process of a product. In the script, the speaker points out that startups often focus on hitting these milestones without validating whether the product is actually needed or wanted by customers, which can lead to achieving failure.

💡Business Plan

A business plan is a formal statement of a set of business goals, the reasons they are believed attainable, and the plan for reaching those goals. The speaker discusses how following a business plan to the letter without validation can result in building something that is ultimately not desired, leading to failure.

💡High Uncertainty

High uncertainty refers to situations where predicting outcomes is difficult due to a lack of information or the inherent unpredictability of the environment. The speaker mentions that startups often face high uncertainty, which makes traditional forecasting and planning less reliable, and thus validated learning becomes crucial.

💡Feedback Loop

A feedback loop is a process that involves receiving and incorporating feedback to improve a product or process. In the context of the video, the speaker describes a three-stage feedback loop that includes transforming ideas into code, generating data from customer interactions, and using that data to learn and influence the next set of ideas.

💡Sustainable Business

A sustainable business is one that can maintain its operations over the long term without depleting resources or causing harm to the environment. The speaker mentions that the ultimate goal of a startup is to discover if it is on the path to a sustainable business, and validated learning helps in making that determination.

💡Quality

Quality refers to the standard of something as measured against other things of a similar kind; it is the degree of excellence of a product or service. The speaker shares an anecdote about a product that was of poor quality, which was a result of trying to meet deadlines and budget constraints, illustrating the potential pitfalls of focusing too much on execution without validation.

💡Pivot

Pivot refers to a change in strategy or direction of a business in response to new information or changing market conditions. The speaker talks about having to pivot the business to a different strategy after realizing that the initial product was not desired by customers.

💡Experiment

An experiment in a business context is a method of testing a hypothesis or idea to see if it works. The speaker suggests thinking of startups as experiments, where the focus should be on learning as efficiently as possible, often by doing the minimum viable work to validate an idea.

💡Efficiency Savings

Efficiency savings refer to the reduction of waste and the optimization of resources to achieve more with less. The speaker argues that the most significant efficiency savings in startups come from working backwards from what needs to be learned to determine the least amount of work required to achieve that learning, rather than simply working faster or measuring faster.

Highlights

The concept of 'achieving failure' where a business plan is executed perfectly but the end product is unwanted.

The importance of validated learning over traditional product and business milestones in startups.

The three-stage feedback loop in software development that focuses on customer interaction and data generation.

The realization that forecasting is not possible in high uncertainty environments, thus validated learning becomes crucial.

The idea that a startup's purpose is to discover a sustainable business path or make necessary changes.

The story of a startup that spent six months developing a product only to find out it was not needed.

The paradox of being proud of executing a plan that ultimately leads to an unwanted outcome.

The inefficiency of building a product with high quality that no one wants.

The need for startups to focus on learning and adapting rather than just executing a plan.

The example of a CTO who wrote thousands of lines of code that were eventually discarded due to lack of product demand.

The argument that learning from failure should be a goal from the start, not an afterthought.

The concept of working backwards from what we need to learn to determine the minimum work required.

The idea that a simple webpage could provide the same learning as six months of development work.

The challenge of balancing the desire for a perfect product with the need for validated learning.

The importance of measuring customer interaction and data to inform the next steps in product development.

The realization that startups should focus on experiments and learning rather than just building products.

The call to action for entrepreneurs to rethink their approach to planning and execution in light of validated learning.

Transcripts

so I'm gonna talk about validated

learning I said if we were wasting

people's time on an industrial scale and

here's why we are busy doing what I call

achieving failure which is when we build

a really excellent business plan and we

successfully execute it to the letter

and then it turns out that it wasn't a

very good plan in the first place that

nobody wants the thing and then you know

we go right off a cliff so I liken it to

your driving your car off a cliff and

you're like but we're getting great gas

mileage right right as you go over the

side and yet if we're building something

that nobody wants

why are we so proud of having done it on

time and on budget when I go startup

board meetings when I work with you know

new product teams who are being asked to

give reports in big companies they're

always reporting on how like we're doing

just what we said we're gonna do

everything's on plan you know or on

budget it's got high quality that where

the test plan is being executed

successfully and yet relatively little

conversation is being had about does

anybody actually want this thing at the

end and you know the reason I'm most the

startups I've worked at have failed is

because we successfully executed a bad

plan

actually really really good at that so

what's the alternative if we can't judge

our progress according to product

milestones in business milestones

because remember forecasting is just not

possible when you face high uncertainty

we want to create a different kind of

milestone we call it validated learning

our whole purpose as a start-up is to

discover if we are on the path to a

sustainable business and if not make a

change and graphically it looks like

this since we're all in the software

business we can speak candidly but it

would be true at other businesses too a

software company is a catalyst that

transforms ideas into code everything

else is a side effect all the meetings

and documentation and pizza and mountain

do that's all interesting side effects

that are necessary to transform ideas

into code and when customers interact

with our products that necessarily

generates a data qualitative and

quantitative that we can choose to

measure if we want and then from that we

can learn which influences our next set

of ideas so very simple three stage

feedback loop but still very powerful

concept because it allows us to

reconcile the seemingly contradictory

advice we're constantly being given as

entrepreneurs so if we spend as I did

one one company I built spent six months

building a product that I thought was

really awesome but the problem was it

was like such an expansive product but

in six months we had to cut some corners

the engineers in the room

no time quality money pick two yeah so

we didn't have any any time or any money

so that's just engineering speak for

this product was terrible and I mean I'm

not kidding it's probably more likely to

crash your computer then it would be to

give you any kind of delightful

experience I'm being totally honest and

when we were about to launch this

product I was super nervous because I

was like how what if people find out and

you know I had this image in my mind

journalist gets this product on launch

day and they read this article is my

last company called in view and so the

headline would always say idiots at IMVU

don't know what quality means you know

there's my picture

you know never hire these guys again

it's a subtitle and we're like okay well

we got to get it out there see what

happens and I kid you not at first I was

completely relieved when no one would

even try the product and so that at

least nobody found out how bad it was

and I was like whoa dodged a bullet

that's and I was like wait a minute I

just spent six months of my life killing

myself to build this product and yet no

nobody wants it and to make a long story

short we weren't having to pivot the

business to a different strategy and all

the code that I had written during those

six months basically got thrown away I

was depressed he just sympathized with

me for a second I was the CTO I per

thank you right

I personally with my bare hands wrote

thousands and thousands of lines of

extremely elegant

well factored well documented well

tested code okay and it all got thrown

away and I done it all agile all lean

which is all supposed to drive out the

waste for my development process right

and yet Here I am committing the biggest

waste of all which is building something

that nobody wants and so I was really

disturbed because I said wait a minute

why did I even have to be here could my

co-founder cup thrown away couldn't I

have been on vacation on a beach

somewhere starting this time what why

did I have to be here and I was like

okay we all know exactly what I did to

make myself feel better you've all done

this at some point in your life when

you're running out of excuses when you

really fail there's always scraping the

bottom of the barrel looking for an

excuse the last one you can reach out

you'd always be like well if I hadn't

done this thing we hadn't ship this

product customers hadn't rejected it we

would not have learned this important

thing right and therefore the learning

justifies the failure and you all know a

manager who's bragging how much they

learned in other companies anyway is

about to get fired because they means

they didn't make a very good plan or

they did make a good plan and didn't

execute it which is like you should be

double fired for that one and yet that's

our fate as entrepreneurs we're

constantly having to learn and so the

thing that really bothered

was learning was my goal these six

months how come I'm only talking about

it now at the end as an excuse my

co-founders and I weren't ever talking

about learning during the six months

right what did we talk about you know

what features do we absolutely have to

have in version one which bugs do we

absolutely have to fix what should be in

the test plan which customers do we want

to target of course what kind of car are

we gonna drive when we're all super

successful like all conversations none

of which contribute anything to our idea

of learning and so I started to work

backwards and say wait a minute this is

a product you know you did the book for

more details that would you did in

cementing interoperability and we

supported a dozen different networks out

of the gate and I asked myself would the

learning have been the same if we

supported only six networks or only

three or only one namely the customers

won't even try the product yeah same

learning was like geez from an

engineering point of view that's already

a 10x reduction amount of code I would

have had to write from 12 networks to

one that's pretty depressing and then I

had this thought I said wait what if we

just created a single webpage with a

screenshot of the product we proposed to

build on a gigantic download button

would we even have had to create page

two or we apologize that there's no

product to download no why because what

did I say before I said they wouldn't

try it but he literally wouldn't click

the download button so it really didn't

matter what was on page two and that was

really disturbing how is it possible

that you know a one-day landing page

experiment could have the same value as

my six months of beautiful code right

what did I say my business card Eric

Ries chief technology officer not chief

one page landing page officer right how

depressing was that and yet I think if

we think about startups as experiments

the way we get really breakthrough

efficiency savings is not by building

faster or measuring faster it's by

working backwards from what are we

trying to learn to what is the least

amount of work we have to do to learn

that thing