This document provides an overview of the Lean Startup methodology developed by Eric Ries. It discusses that a startup is an organization designed to create a new product or service under conditions of uncertainty. The Lean Startup methodology advocates for the build-measure-learn feedback loop to test hypotheses, build minimum viable products, measure customer feedback, and iterate based on validated learning. It provides examples of how companies like Airbnb have used this process and discusses when to pivot or persevere based on measured metrics.

1. The Learn Startup Methodology
Mijbel F. AlQattan
Head of Business Development
Cubical Services

2. What is a Startup?
• “A startup is a human institution designed to
create a new product or service under conditions
of extreme uncertainty.”
– Eric Ries, The Lean Startup
• “A startup is not a smaller version of a large
company. A startup is a temporary organization in
search of a scalable, repeatable, profitable
business model.”
– Steve Blank, The Startup Owner’s Manual

3. The story of Airbnb
• Humble beginnings in a San Francisco
apartment.
• Debut at SXSW.
• Pivot in the business model.
• The rest is history..

4. What is Lean Startup?
• Lean Startup is a working methodology
developed by Eric Ries that defines a framework
for operating a startup.
• The goal is to form a set of hypothesis around
your main idea, construct a minimum viable
product to test those assumptions, test and
analyze the results, then iterate.
• The goal is NOT to get bogged down in defining
all features of the product before launch.

5. Who is Eric Ries
• Former Silicon Valley entrepreneur who
worked at IMVU 2004-2008.
• Originally posted his ideas on Lean Startup in
an anonymous blog.
• After positive response, revealed his identity
and wrote a book.

6. Build-Measure-Learn Loop
• Central to the Lean Startup Method is the Build-
Measure-Learn feedback loop:
• You have IDEAS to test so you BUILD a PRODUCT that
can MEASURE customer feedback, and use the DATA to
learn the validity of the ideas, and develop new IDEAS..

7. Why Build-Measure-Learn
• Go through the Build-Measure-Learn loop as fast
and as often as you can. Each iteration removes a
layer of uncertainty from the business model.
• Make validated learning the aim of your startup.
This can only be achieved with experiments.
• Focus on the value proposition you will be
delivering to customers. It is NOT what the
customers tell you they want verbally, but what
the SHOW you they want behaviorally.

8. Ideas to BUILD a Product
• Critical assumptions to test are:
– The value creation hypothesis: Is what you’re
suggesting adding value to customers?
– The growth hypothesis: Can you deliver what’s
wanted at a price that’s profitable and
sustainable?
• Start with a clear set of hypothesis to test.
• Build a minimum viable product to test these
assumptions

9. The MVP
• The Minimum Viable Product is one that has
enough features to test your assumptions and
allow you to have validated learning.
• Depending on which iteration of Build-
Measure-Learn we’re on, MVP can be as basic
as google ads or a paper sketch up to multiple
versions of a live product. There is no formula.
• When in doubt, simplify.

10. Product to MEASURE Data
• Innovation Accounting in three steps:
– Use the MVP to establish real data on where the
company currently is.
– Attempt to shift the engine from baseline towards
ideal.
– Decide whether to pivot or persevere.
• Metrics used to measure must be actionable (can
be done), accessible (can be understood), and
auditable (can be believed).

11. Establish a baseline
• Single or multiple MVP products to establish
baseline metrics for the company.

12. Tuning the Engine
• Every product development or business
development initiative is done with the aim of
improving the growth drivers.
• Examples:
– Improving the design to make the product easier
to use (metrics: activation rate, average time
spent on site).
– Changing the pricing points of a product (metrics:
customer lifetime value, % of customers who are
regular users).

13. Be Wary of Vanity Metrics
Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12
Monthly user 550 608 680 739 800 845 901 955 1007
Daily users 293 327 372 417 457 483 526 552 584
Revenue
(millions) 467 731 731 895 954 1131 1058 1184 1262
Revenue per
user $0.90 $1.26 $1.14 $1.26 $1.24 $1.38 $1.21 $1.28 $1.29

14. Monthly vs. Daily Users
1200
1000
800
600
400
200
0
Monthly user Daily users

15. Total Revenue vs. Revenue Per User
14
12
10
8
6
4
2
0
Revenue (00's millions) Revenue per user

16. Pivot or Persevere
• Simply put, if the changes implemented when
testing the hypothesis and fine-tuning the
engine don’t improve the metrics from
baseline to desired, it is time to consider
pivoting one or more aspects of the business
model.

17. Data to LEARN Ideas
• “Every entrepreneur eventually faces an
overriding challenge in developing a successful
product: deciding when to pivot and when to
persevere.” –Eric Ries.
• A pivot is a change in one of the key business
model assumptions: Value proposition, customer
relationships, customer
segments, channels, revenue streams, key
activities, key resources, key partners, or cost
structure.

18. Some Pivot Types
• Zoom-in pivot: Where a single feature becomes the product.
• Zoom-out pivot: Vice-versa.
• Customer segment pivot: Building a solution for a different customer
(e.g., moms).
• Customer need pivot: Solve other problems for the customer.
• Platform pivot: Change from platform to app or vice versa.
• Business architecture pivot: Low volume/high margin to high volume/low
margin or vice versa.
• Value capture pivot: Change your revenue model or how you monetize
your product.
• Engine of growth pivot: Change between paid, viral or sticky growth.
• Channel pivot: Deliver the product via a different distribution channel.
• Technology pivot: Change the technology to something that offers
superior price or performance.

19. Pivot type examples
• What pivot was applied in each of these cases:
– Facebook pivot 1 (hotornot to thefacebook)
– Airbnb
– Facebook pivot 2 (university students to everyone)
– Instagram
– Facebook pivot 3 (introduced advertisements)

20. Accelerate
• After many Build-Measure-Learn iterations on
your product, you’ll reach a stage where you are
ready to accelerate the growth.
• Scale in small batches to control cost of scaling.
• Determine your sustainable growth metric
(paid, sticky or viral), and direct energy towards
growing it.
• Build an adaptive organization and keep teams
nimble and agile

21. Questions?
• You can reach me at:
– Email: mijbel@cubicalservices.com
– Twitter: @MijbelF