Lenny's Podcast: Product | Growth | Career
Reflections on a movement | Eric Ries (creator of the Lean Startup methodology)
Episode guests
Podcast summary created with Snipd AI
Quick takeaways
- Building an MVP is about understanding the minimum features necessary for testing assumptions and validating hypotheses.
- Common misconceptions about MVPs include sacrificing quality and building limited feature products.
- The lean startup methodology emphasizes learning, experimentation, and iteration based on customer feedback.
- Entrepreneurs should embrace MVPs as a tool for validation and learning, not fear failure.
- AI technology requires responsibility, trustworthiness, and ethical action from companies.
- Companies must embed core values of human flourishing to create competitive advantage and positive outcomes in employees and customers.
Deep dives
The Importance of Building a Minimum Viable Product
Building a minimum viable product (MVP) is a crucial step in the startup journey. The concept of an MVP is not about building something cheap or low quality, but rather about understanding the minimum features and functionality necessary to test your assumptions and validate your hypothesis. It's about finding the most efficient way to get the validation you need about whether your idea will resonate with customers or not. The key is to start small and focus on the core elements that will help you gather meaningful feedback. By being open to feedback and learning from your customers, you can iterate and improve your product over time.
Addressing the Misconceptions about MVPs
There are common misconceptions about MVPs that can hinder entrepreneurs' understanding of their purpose. One misconception is that MVP means building a product of low quality or with minimal features. However, the concept of an MVP is not about sacrificing quality, but rather about focusing on the most crucial features that will allow you to test your assumptions and gather valuable customer feedback. Additionally, MVPs are not static and can evolve as you learn more about your customers and the market. It's important to keep in mind that the definition of 'minimum' will vary depending on your specific context and target audience.
The Role of Lean Startup Principles in MVP Development
The lean startup methodology offers a valuable framework for developing an MVP. It emphasizes the importance of learning and experimentation in the early stages of a startup. The goal is to validate your assumptions and iterate quickly based on customer feedback. The lean startup approach encourages entrepreneurs to think in terms of hypotheses and learning metrics, and to continuously refine their product based on real market insights. By adopting a mindset focused on learning and taking a lean approach to development, entrepreneurs can build efficient and effective MVPs that have the potential to lead to successful products and businesses.
Overcoming the Fear of Failure and Embracing MVPs
One of the challenges entrepreneurs face in embracing MVPs is the fear of failure and the unwillingness to admit uncertainty. However, building an MVP is not about accepting failure but rather about mitigating risk and increasing the likelihood of success. In the startup journey, it's crucial to embrace the mindset of rapid experimentation and use MVPs as a tool for validation and learning. By being open to feedback, entrepreneurs can identify and address potential issues early on, pivot if necessary, and ultimately increase their chances of building a successful and valuable product.
The importance of trust and ethical action in AI
AI technology requires companies to take responsibility for its consequences and be trustworthy in its deployment.
AI as a management technology
AI has the potential to change the way organizations are managed, particularly with tasks such as summarization and decision-making.
Uncertainty and ethical action
Given the unpredictable nature of AI advancements, it is crucial to take ethical action that makes sense in a wide range of future scenarios.
Using AI tools for sales and communication
AI tools can be used to automate sales outreach and communication, providing more efficient and tailored messaging.
The importance of embedding values in company governance
To create net new value and avoid becoming a bureaucratic nightmare, companies must deeply embed promises and values of human flourishing into their governance. This requires a new movement where every person in a company feels a fiduciary duty to promote human flourishing, leading to an environment where people genuinely want to work, creating a competitive advantage and positive outcomes for customers and employees alike.
The need for a new movement in company building
The speaker emphasizes the need for a new movement in company building to prioritize human flourishing. By creating companies where human flourishing is at the heart of every decision, founders can differentiate themselves and create a competitive advantage while positively impacting society. Examples of successful companies with an ethos of love and customer centricity are mentioned, highlighting the power of doing the right thing in business.
Challenges in implementing new company structures
The speaker mentions the need for a new way of building companies and shares examples of foundation-controlled and family-run companies that have successfully prioritized long-term thinking and stakeholder value. However, the challenge lies in implementing these structures in practice, often facing resistance from investors, legal complexities, and timing constraints. The speaker encourages founders to work with lawyers, explore legal designations, and proactively protect against potential ethical dilemmas to create true sustainable and ethical growth.
Eric Ries is the creator of the Lean Startup methodology, author of the New York Times bestseller The Lean Startup, and founder of the Long-Term Stock Exchange (LTSE). He’s also a multi-time founder and currently advises startups, VC firms, and larger companies on business and product strategy. In today’s episode, we discuss:
• The current state of the Lean Startup methodology
• Common misconceptions about the Lean Startup methodology
• Understanding how to actually think about MVPs (minimum viable products)
• When to pivot and when to stay the course
• Thoughts on AI and how to deal with uncertainty
• How to structure your company around core values and create products that benefit humanity
• The philosophy behind Eric’s current big idea: the Long-Term Stock Exchange
• Much more
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Find the full transcript at: https://www.lennyspodcast.com/reflections-on-a-movement-eric-ries-creator-of-the-lean-startup-methodology/#transcript
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Where to find Eric Ries:
• LinkedIn: https://www.linkedin.com/in/eries/
• X: https://twitter.com/ericries
• Website: https://theleanstartup.com/
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Where to find Lenny:
• Newsletter: https://www.lennysnewsletter.com
• X: https://twitter.com/lennysan
• LinkedIn: https://www.linkedin.com/in/lennyrachitsky/
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In this episode, we cover:
(00:00) Eric’s background
(04:46) Eric’s recent activities and projects
(06:23) Eric’s start in advising and first-principles thinking
(10:56) Lessons from designing the Lean Startup process
(14:04) The current state of lean startup methodology
(22:33) Common misconceptions about the methodology
(24:28) Changes Eric would make in an updated version of Lean Startup
(27:52) An explanation of minimum viable product (MVP) and why Eric still stands by the process
(37:36) An example of “Less is more”
(41:24) More on MVPs and the importance of testing your hypotheses
(41:24) How LTSE had to pivot after a partnership fell apart
(48:37) Eric’s take on the concept of craft
(53:36) Why getting fired for standing by your conviction can be a career accelerator
(55:17) Tech’s mental health crisis
(56:28) Advice for founders stuck in a “zombie company”
(1:00:16) How continuous pivots shape a company’s vision, with a real-life story
(1:08:20) Challenges in assessing companies from an external perspective
(1:13:17) Practical advice for businesses considering a pivot
(1:18:42) The impact of artificial intelligence
(1:26:59) The current capabilities of ChatGPT and its potential use as an equalizer in the marketplace
(1:31:26) Eric’s current work with founders on human flourishing
(1:42:40) Advice for founders who want to build ethical companies
(1:49:37) Examples of first-principles thinking
(1:53:42) Why shareholder primacy theory is wrong
(1:55:19) The “spiritual holding company”
(1:58:12) Lightning round
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Referenced:
• The Long-Term Stock Exchange: https://ltse.com/
• The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses: https://www.amazon.com/Lean-Startup-Entrepreneurs-Continuous-Innovation/dp/0307887898
• Lean manufacturing: https://www.techtarget.com/searcherp/definition/lean-production
• Six Sigma: https://www.6sigma.us/six-sigma.php
• Clay Christensen: https://claytonchristensen.com/
• Eric Ries on 4 Common Misconceptions About Lean Startup: https://www.entrepreneur.com/starting-a-business/eric-ries-on-4-common-misconceptions-about-lean-startup/286701
• Anakin Skywalker meme: https://knowyourmeme.com/memes/for-the-better-right
• Linear: Building with taste, craft, and focus | Karri Saarinen (co-founder, designer, CEO): https://www.lennyspodcast.com/inside-linear-building-with-taste-craft-and-focus-karri-saarinen-co-founder-designer-ceo/
• Snow Crash: https://www.amazon.com/Snow-Crash-Neal-Stephenson/dp/0553380958
• IMVU: https://about.imvu.com/
• Ben Silbermann on LinkedIn: https://www.linkedin.com/in/silbermann/
• Wonder Boy: Tony Hsieh, Zappos, and the Myth of Happiness in Silicon Valley: amazon.com/Wonder-Boy-Zappos-Happiness-Silicon/dp/1250829097
• Understanding Steve Jobs’s Reality Distortion Field: https://www.emexmag.com/understanding-steve-jobs-reality-distortion-field
• Paul Graham’s website:http://www.paulgraham.com/raham
• Segment: https://segment.com/
• Loom: https://www.loom.com/
• The Slack story: https://www.paperflite.com/blogs/slack-story
• The Social Network on Netflix: https://www.netflix.com/ca/title/70132721
• Thomas Kuhn: Paradigm Shift: https://www.simplypsychology.org/kuhn-paradigm.html
• Conway’s Law: the little-known principle that influences your work more than you think: https://www.atlassian.com/blog/teamwork/what-is-conways-law-acmi
• Monty Python and the Holy Grail Guards Scene on YouTube: https://www.youtube.com/watch?v=eVWH01E2weA
• Toyota Production System: https://global.toyota/en/company/vision-and-philosophy/production-system/
• Warren Buffett’s Forbes bio: https://www.forbes.com/profile/warren-buffett
• The Enlightened Capitalists: Cautionary Tales of Business Pioneers Who Tried to Do Well by Doing Good: amazon.com/Enlightened-Capitalists-Cautionary-Business-Pioneers/dp/0062880241
• The Grace of Kings (The Dandelion Dynasty): https://www.amazon.com/Grace-Kings-Dandelion-Dynasty/dp/148142428
• All Systems Red: The Murderbot Diaries: https://www.amazon.com/All-Systems-Red-Murderbot-Diaries/dp/0765397536
• Star Wars: Andor on Disney+: https://www.disneyplus.com/series/star-wars-andor/3xsQKWG00GL5
• Tesla Powerwall: https://www.tesla.com/powerwall
• Levoit Classic 300S ultrasonic smart humidifier: https://www.amazon.com/LEVOIT-Humidifiers-Ultrasonic-Essential-Customized/dp/B09C24TYGQ
• The Law of Sustainable Growth: https://www.linkedin.com/pulse/20121015181612-2157554-the-law-of-sustainable-growth/
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Production and marketing by https://penname.co/. For inquiries about sponsoring the podcast, email podcast@lennyrachitsky.com.
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Lenny may be an investor in the companies discussed.
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