Reflections on a movement | Eric Ries (creator of the Lean Startup methodology)

Oct 29, 2023 2h 14m 56 insights Episode Page ↗
Eric Ries, creator of the Lean Startup, discusses the methodology's evolution, misconceptions, and AI's impact on product development. He also shares insights on effective MVPs, strategic pivots, and building companies with values aligned to human flourishing and robust governance.
Actionable Insights

1. Prioritize Company Values Early

Take seriously early on the risk of building a company you hate or that becomes a malign force, as this is far worse than a startup failing.

2. Explicitly Define “For the Better”

When aiming to “change the world,” explicitly define what “for the better” means for your company’s vision, as this crucial aspect is often overlooked.

3. Embed Promises in Org Structure

To build a truly trustworthy organization, embed its promises (e.g., ethical conduct, mission alignment) into its fundamental structure, ensuring they are upheld even if individual leaders change.

4. Act Early on Governance

Implement governance structures (e.g., public benefit corp, mission pledge) early in your company’s life, as delaying until later stages often makes it impossible due to resistance.

5. Review Fiduciary Duties for Ethics

Understand your company’s fiduciary duties under standard incorporation documents, and if they obligate you to sell to an unethical buyer, take steps to change this.

6. Proactively Implement Governance Protections

Proactively ask your lawyer about specific governance mechanisms (e.g., founder preferred shares, mission pledges) to protect your company’s soul, insisting on implementation despite potential investor resistance.

7. Build Perpetual Ethical Alignment

Understand that maintaining an ethical, mission-driven company is a relentless, perpetual process, requiring continuous alignment between governance, management, and culture.

8. Reject Shareholder Primacy for Value

Reject the shareholder primacy theory, as it can be detrimental even to long-term shareholder returns, often leading to short-sighted decisions that “kill the goose that laid the golden egg.”

9. Intentionally Design Mission-Driven Structures

Don’t wait for idiosyncratic circumstances to build a mission-driven company; intentionally design governance structures to align with your values from the start.

10. Leverage Collective Power for Ethics

Recognize the collective power of founders to set the terms for how new companies operate, insisting on ethical preconditions and resisting system demands that compromise values.

11. Align Company to Human Flourishing

Design your company’s purpose and operations around promoting human flourishing, fostering an environment where every employee feels a fiduciary duty to this goal.

12. Cultivate a Customer-Centric Ethos

Cultivate an ethos of genuinely loving your customers and treating them like family, as this creates strong loyalty, high retention, and a significant competitive advantage.

13. Build a Company You Want

Prioritize building a company that genuinely excites you and aligns with your desires, as it’s better to fail pursuing your passion than to succeed in a “zombie” company you hate.

14. Stand Firm on Principles

Be willing to be fired for upholding your core principles and doing what you believe is right, as this can accelerate your career by attracting like-minded opportunities.

15. Disassociate Ego from Company

To preserve mental health and enable learning, disassociate your ego from your company’s fate, allowing the company to die or pivot without feeling like a personal death.

16. Honestly Assess if Company Works

The most difficult step is honestly admitting whether your company or product is truly working, as founders often struggle to accept this reality.

17. Introspect on Desire to Continue

If leading a “zombie” company, deeply introspect if you genuinely want to be there; if you could start fresh, would you choose this company? It’s okay to move on if the answer is no.

18. Be Honest in Investor Updates

Avoid misleading investor updates by falsely claiming success when the company is struggling, as this prevents timely intervention and honest assessment.

19. Seek First Principles Understanding

Don’t blindly follow anecdotal advice or “just so stories.” Instead, strive to understand why something works and if it’s applicable to your specific context.

20. Embrace Failure for Learning

Recognize that the inability to admit failure psychologically prevents learning; embrace the scientific method’s premise that you must be able to fail to learn.

21. Identify Catastrophic Risks Early

Proactively identify and test for potential catastrophic failures that could destroy your company, aiming to discover them as early as possible to allow for corrective action.

22. Define MVP by Learning Efficiency

An MVP is the most efficient way to validate a hypothesis, not necessarily a bare-bones or low-quality product; its “minimum” is determined by what’s needed to learn.

23. Radically Reduce MVP Features

To define your MVP, list all necessary features, then cut that list in half, and then in half again, aiming for an uncomfortably small initial product.

24. Clarify Learning Goals for MVP

If struggling to define your MVP, clarify your specific learning goals and admit what you don’t know, as unclear objectives often stem from a reluctance to acknowledge uncertainty.

25. Focus on One High-Quality Feature

If your market demands high quality, build an MVP with only one critical feature at that high-quality level, rather than many features at lower quality.

26. Quality is Customer-Defined

Understand that “quality” is defined by the customer, and without knowing your customer, you cannot truly define or achieve product quality.

27. Conduct a Series of Experiments

Avoid drawing definitive conclusions from a single experiment; instead, commit to a series of experiments to gain comprehensive understanding.

28. Test In-Progress Product with Customers

During product development, when you have a partial product (e.g., half-built), let customers use it to gather early feedback on its usability and perceived quality.

29. Seek Early, Direct Customer Feedback

Find a small group of customers (e.g., 10) to use your product and openly tell you what’s wrong or missing, as this feedback is crucial for early learning.

30. Establish a Baseline for Learning

Even if confident, test your product with a small group to establish a baseline of current performance and customer reaction, allowing you to measure future improvements.

31. Separate Product from Marketing Launch

For early-stage startups, launch your product to a small customer base without a public marketing announcement, allowing for private iteration without brand risk.

32. Develop Craft Through Experimentation

If you lack inherent taste or design ethos, use experimentation to learn what works and develop the “habits of mind” and patterns that lead to effective craft.

33. Use Craft to Enable Speed

Invest in craft (e.g., quality code, right tools, skilled team) not as a delay, but as a means to maintain options, increase speed, and avoid future firefighting.

34. Align Craft with Customer Perfection

Define “perfection” in your craft by understanding what your customer values, ensuring your efforts align with their perception of quality for a specific purpose.

35. Trust Your Intuition on Pivoting

If you’re questioning whether to pivot, your intuition likely already knows the answer; true product-market fit leaves no time for such doubts.

36. Dedicate Fixed Time to Test

If unsure about pivoting, dedicate a fixed period (e.g., six weeks) with 100% focus on one critical assumption or new direction to see if it moves the needle.

37. Assign Dedicated Resources to Initiatives

When exploring new directions, ensure at least one full-time individual (not a part-time committee) is dedicated to making the new initiative work within a set deadline.

38. Facilitate Open Discussion on Direction

In a team setting, ask everyone what they wish they were building if starting over. This can uncover shared, unexpressed desires and align the team on a new direction.

39. Test Multiple Pivot Ideas Sequentially

If you have multiple promising pivot ideas, test them sequentially for fixed periods (e.g., one month each) to see which gains traction, especially when runway is limited.

40. Accept Company Closure if Exhausted

If the team is collectively exhausted and wants to return money, accept that closing the company is an acceptable outcome, rather than prolonging a painful situation.

41. Tactically Address Zombie Company Exit

Once you decide to move on from a zombie company, engage in tactical discussions about shutting down, returning money, or executing a hard pivot, based on your specific situation.

42. Take Ethically Robust Actions Now

Given the high uncertainty of AI’s future, prioritize actions today that make ethical sense across a wide range of possible future scenarios.

43. Advocate for Transparency and Leadership

Regardless of future AI scenarios, advocate for increased transparency, stronger state capacity, more competent leaders, and companies committed to explicit values.

44. Prepare for AI-Saturated Communication

Anticipate a future where communication channels are saturated with AI-generated content, and consider developing or using AI tools to filter and summarize information.

45. Leverage AI for Fairer Information

Utilize AI agents to define and apply fair procurement policies or information filters, allowing credible proposals to reach you based on merit, rather than traditional advertising or personal connections.

46. Earn Trust by Moral Responsibility

To earn public trust, companies building powerful, invasive technologies must take moral responsibility for their impact, moving beyond rhetoric about “changing the world” to actual accountability.

Consult with your lawyer about implementing governance structures to protect your company’s mission and values, especially regarding long-term commitments.

48. Avoid Oversimplifying Complex Processes

Be wary of advice that makes entrepreneurship or scaling sound too easy with simple step-by-step instructions, as this can mislead and set people up for disappointment.

49. Document Ideas to Filter Engagement

Write down your core ideas and stories, then share them as a pre-read before meetings. This filters out those who disagree fundamentally, saving time and avoiding unproductive conflict.

50. Embrace New Effective Practices

Adopt new practices that prove effective, rather than being threatened or upset by them, as the core principle is that “whatever works is lean startup.”

51. Iterate on Communication of Ideas

If your ideas are misunderstood or misused, take responsibility to improve your communication and make them clearer, rather than blaming the audience.

52. Question Best Practices’ Applicability

When evaluating a “best practice,” always question the specific situations where it might not be applicable, as true understanding requires knowing its limitations.

53. Study Engagement Loops for Stickiness

Beyond viral loops, deeply study “engagement loops” to understand the dynamics of how customers return to a product, as this science of stickiness is often overlooked.

54. Appoint a Chief Engineer for Vision

In larger organizations, appoint a “chief engineer” with moral authority over an entire product line to make critical trade-off decisions and maintain a coherent design vision.

55. Seek Quietly Ethical Companies

Look for models in companies quietly doing the “right thing” rather than those with loud, controversial public profiles, as true ethical practice often correlates inversely with public fanfare.

56. Experiment with New Ideas, Share

Experiment with new ideas, even if they seem unconventional, and share your findings (whether success or failure) with the community to contribute to collective learning.