Before The Curatours’ official launch, Danielle and I each read Erich Ries’ The Lean Startup. In the beginning, we were excited to share our project, but, because we had little entrepreneurial experience, we committed to seeking insight from some renowned entrepreneurs like Ries. The Lean Startup remarkably demystified some of our beliefs about entrepreneurship. Though any entrepreneurial journey is filled with uncertainty, Ries argues that how you test and build on your ideas is in fact a science. We continuously revisit some of the book’s principles to help guide us toward fulfilling the mission and vision of The Curatours. Below are 12 terms from The Lean Startup that we believe will help you build a strong foundation for your projects, too.
The Lean Startup Method | While it’s hard to fully describe this methodology (seriously, the book is a must-read!), the basic goal is to offer startups a way to get their product or service in front of customer faster and more efficiently. The method puts startup teams in a Build-Measure-Learn loop, allowing room for multiple iterations of a product after it has been made available to customers. This prevents startups from spending months or years building a product customers don’t want or need; instead, they spend that time learning what features will best serve the customer.
Entrepreneur | A common misconception about entrepreneurs is that in charting their own path, they’re choosing to live some sort of glamorous, carefree lifestyle. But in actuality, entrepreneurs must accept that they’ll struggle and wear several different hats in an effort to get their project off the ground. Ultimately, an entrepreneur must be a visionary. He or she must be comfortable with challenging the status quo, taking risks and innovating. An entrepreneur could be someone who starts a new project for a Fortune 500 or an individual who creates a startup.
Startup | Here’s Eric Ries’ definition of a startup: “a human institution designed to create a new product or service under conditions of extreme uncertainty.” He offers an extremely broad definition, suggesting that an idea of any shape or size has the potential to be a startup. If you are planning to create something new, chances are you can refer to it as a startup if you accept Ries’ definition.
Bootstrap | To bootstrap means to fund a project on your own. Much attention is given to the worlds of venture capitalists and angel investors, but most startups are bootstrapped. If you can succeed by scrapping together funds and hustling your way through, investors will be fighting to get a piece of your company.
Value hypothesis | The value hypothesis is fundamental to why you created your startup. Are you filling a void? In creating your project, you assumed that you could add value to your target audience or customer. Well, are you adding value? That’s a question you’ll ask yourself repeatedly.
Growth hypothesis | The growth hypothesis is a second critical assumption you made: you believed that your idea was scalable – I hope. How will you attract the right audience to your startup? If you’re not growing, what adjustments need to be made?
Early adopters | Research has proven that there’s a significant difference between an early adopter and average user of any product or service. Your goal should be to thoroughly understand who your early adopters are and allow them. They will lead you to the mainstream. Of course, it’s not that simple, but through some testing and analysis, you can give yourself a better chance to reach the right people.
Minimum Viable Product (MVP) | An MVP, as its name suggests, isn’t designed to have every feature imaginable; it’s supposed to include just enough for you to begin learning about your target audience. Instead of building a robust product from the beginning, an MVP lets you test your assumptions and then use your findings to start building a better product that your audience actually wants to use. It’s a more efficient process.
Feedback loop | If you made it this far in the article, you’ve picked up on the notion that entrepreneurship can be given structure. This systematic method is designed to maximize learning and do so with intentionality. Each test you perform should have the aim of speeding up your feedback loop, so that each iteration of your product or service is better than the last. Innovation accounting How will you know that you’re making your product better?
Innovation accounting | The goal of innovation accounting is to objectively demonstrate that you are in fact growing and building a sustainable business. The concept is centered on your ability to ask difficult questions and answer them truthfully.
Vanity metrics | If you’re not practicing innovation accounting, you may be relying on your organization’s vanity metrics to make you feel better. Vanity metrics are gross numbers in revenue, site visitors, customers, etc. Even if those numbers are high, they won’t tell you much about the health of your business.
Cohort analysis | Instead of using vanity metrics, try dive deeper using cohort analysis. Perhaps examining your data by age groups, location, or new vs. returning users might reveal more. There are many ways to break it down, but using cohort analysis as a comparative tool can be extremely valuable.
The terms above only scratch the service of The Lean Startup. The book provides a more in-depth look at each, and is filled with Eric Ries’ wisdom on how to do the little things that’ll make you a more successful entrepreneur.