4 Surprising Truths About How Lean Startups Work
Magazine / 4 Surprising Truths About How Lean Startups Work

4 Surprising Truths About How Lean Startups Work

4 Surprising Truths About How Lean Startups Work

In his instant classic about modern entrepreneurship, The Lean Startup, Eric Ries figured out an efficient and effective strategy for startups to approach audience/user feedback. Below, Ries refutes some common misconceptions about Lean Startups.

Myth: Lean means cheap. Lean startups try to spend as little money as possible.

Truth: The Lean Startup method is not about cost, it is about speed. Lean Startups waste less money, because they use a disciplined approach to testing new products and ideas. Lean, when used in the context of lean startup, refers to a process of building companies and products using lean manufacturing principles applied to innovation. That process involves rapid hypothesis testing, validated learning about customers, and a disciplined approach to product development.

Myth: The Lean Startup methodology is only for Web 2.0/internet/consumer software companies.

Truth: The Lean Startup methodology applies to all companies that face uncertainty about what customers will want. This is true regardless of industry or even scale of company: many large companies depend on their ability to create disruptive innovation. Those general managers are entrepreneurs, too. And they can benefit from the speed and discipline of starting with a minimum viable product and then learning and iterating continuously.

Myth: Lean Startups are small bootstrapped startups.

Truth: There’s nothing wrong with raising venture capital. Many lean startups are ambitious and are able to deploy large amounts of capital. What differentiates them is their disciplined approach to determining when to spend money: after the fundamental elements of the business model have been empirically validated. Because lean startups focus on validating their riskiest assumptions first, they sometimes charge money for their product from day one – but not always.

Myth: Lean Startups replace vision with data or customer feedback.

Truth: Lean Startups are driven by a compelling vision, and they are rigorous about testing each element of this vision against reality. They use customer development, split-testing, and actionable analytics as vehicles for learning about how to make their vision successful. But they do not blindly do what customers tell them, nor do they mechanically attempt to optimize numbers. Along the way, they pivot away from the elements of the vision that are delusional and double-down on the elements that show promise.

A version of this post originally appeared on Eric Ries’s Startup Lessons Learned.

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