In this video, we are going to learn about a concept called Lean Startup and it provides a very unique approach to software development. The basic idea behind this approach is hoping you learn faster about your market or your user need. A lot of software development models out there, they are quite a bit mostly focused on the delivery of the software. This model actually focuses a lot on understanding or fast learning about real user need. Let's see what it looks like. The Lean Startup model or Lean Startup concept was made popular by Eric Ries with his book, The Lean Startup and primarily, it was geared towards the start-up companies, but now it has been used by a lot of the industry, at least the concept is very popular in the software industry. As you can see, the model is very straightforward. It's a cycle of build, measure, learn, and then again, keep doing this cycle. That's the basic idea behind the software development, but there are a couple concepts that make it really powerful. The first one is how Eric Ries says about validated learning. Here is what Eric says, "We must learn what customers really want, not what they say they want, or what we think they should want. We must discover whether we are on a path that will lead to growing a sustainable business." What he's talking about here is validated learning. You can learn about things by asking someone so you can just say, "Hey I'm planning to build this functionality, would you use it?" People will say. "Yeah, sure, I will use it." But then, what he's talking about is validated learning where you actually collect data to find out whether somebody is going to use your feature or functionality that you are building. That's concept number one is validated learning. Another idea is to complete the cycle as quickly as possible. It's all about time. Like how quickly can you do the cycle so that you can iterate and reduce the waste or reach your market in a faster way. The third thing I want to talk about is a way to think about this Lean Startup concept. Whenever you have an idea that you want to build or something new that you want to launch, a lot of times there is assumption or assumptions about that model that have to be true for that model to be successful. And so, in the Lean Startup concept, you think about those assumptions and then you talk about what metric, what can I measure to validate or invalidate my assumption? And then, once you have that metric, you think about what experiment can I give, can I do? And I made it red color intentionally to say that just an experiment, it's not even a product, it may not be even a product. You do that experiment to get the metric and that metric will validate or invalidate the assumptions and then you can think about what are the next steps. It has the concept of validated learning because you're doing an experiment and getting a metric, and then you are doing this as fast as possible. Abd that experiment has to be in such a way that you don't spend years to learn about that metric. Let's take a couple examples to learn about this concept. So you may have heard of Zappos.com. It's a website that sells shoes online. When the founder of Zappos.com, part of this idea of selling shoes online he was thinking like, "Will people actually buy shoes online?" He wasn't sure and he didn't want to spend or invest too much money creating an inventory of all the shoes and then start selling. What he did is this, he went to a local store. He went to a local store with his camera and then took pictures of all the shoes in the store and then uploaded those pictures of those shoes on a website and basically made it a store online store for people to buy. Then, he just said like, "Let's see if people buy." Pleasantly surprised, people bought shoes from the website and then it became very popular and then he started talking about inventory and all that stuff. As you know, Zappos.com was acquired by Amazon. It's a very successful venture, but as you can see how he started. Now, let's apply the Lean Startup model on this. When the founder was thinking about building this online shoe store, he had an assumption that people will buy shoes online. And so, he thought of, "What metric can I measure that can validate or invalidate my assumption?" He thought of like if I know how many number of shoes sold online, that would be a good metric. And so, what is the fastest way I can learn about this metric, or how can I collect this metric? And he thought, "Why don't I just create a website with shoe pics and see if people buy?" As you can see, he had an assumption, he thought of a metric, and then he did an experiment to validate his assumption. Let's take another example. You must have heard of Dropbox, and so again, the company who created Dropbox with a lot of technical people. Again, they had an assumption or they were thinking like, "Will people need something like this where you want to share your content, or you want to synchronize your files into multiple devices?" Again, what Dropbox did is that they actually didn't build the product. They just built the video and the video basically shows how it will work or what will be the user experience if they were to build the functionality. Then, on the bottom of their video, they had a link, or a place for people to provide their email address to be notified when this functionality is available. Again, pleasantly surprised, overnight they got thousands of emails saying that, "Yep, I'm definitely interested in this kind of functionality and we would like it." Then, Dropbox actually executed on it, and you know where it is right now, it's very popular and is a very well known brand in the industry. Again, let's apply our Lean Startup model on this as one of the assumptions. In this case the assumption was, people would want the functionality to sync files on multiple platforms and the metric that they thought what they will need is the number of people who sign up to use the service. And the experiment they did is to create a video that will show how it will work. Again, they validated their assumption after they did this very fast and easy, even not very fast and quick experiment, to collect the data to validate their assumption. Let's take one more example. And so the third example is about a company called Buffer. They allow you to share and schedule your content on social networks or social network sites like Twitter, Facebook, and things like that. Again, they wanted to know if people will be interested in it. So they didn't even create a video or a product. They just created a dummy page. They created a dummy page which says; here is what our service will do. Are you interested? And then, the next page shows that, "Okay, we are working on it and here is an email that you can provide and we'll get back to you." Then, once they validated that, then they did another experiment, which was; Hey, will people pay for it? Then, what they did is they created a page between these two, and so if the user says, "Yup, I'm interested in it." Then, they showed a page where they say, "Okay, select the payment plan that you would like and then, when they click on the one of the payment plan." Then they will say, "Okay, it is still a work in progress and we'll get back to you, if you provide your email address." Again, they did two rounds of this validation of their assumption. Again, let's apply the MVP model, see if that works. their assumption in round one was, "Would people actually want to do this, like would they want a schedule posting content on social media?" The metric will be the number of people who click on the link to show the intent. The experiment was to create a dummy page for people to show interest. Once they got this cycle done, then there is another cycle of the same, build, learn and measure. Build, measure and learn cycle which is what people pay for the functionality and their metric was number of people who will click to, actually, the second page which is the pricing plan. The experiment was to include another page which will show the pricing plan and for people to actually select the pricing plan. Again, they did two rounds, and so you can keep on iteratively making sure that you're going in the right direction for your product in a very iterative fashion and quickly, as soon as you see that something is not going to work out, you can drop this idea and start with another idea. So this Lean Startup concept really allows you to quickly learn about your users or your market. One question that comes to mind is that, all of the examples that I gave are for kind of the startup companies, so does it even apply to a big industry? Luckily or whatever you want to call it, recently I ran into this situation where I was paying for a service and in the last five years, the service, the price I was paying, or the cost I was paying for ... the service fee that I was paying was almost doubled. I wanted to check and I wanted to talk to the customer service company ... call customer service for the company and say, "Why did it get doubled?". To find that, I wanted to see the invoice which was five years old, and the invoice today, and I wanted to get those numbers so that I can show it to the customer service that, "Hey, you guys have changed so many fees and it has almost doubled." To do that, I went to their website and I was looking at it, and I saw a link. It was showing me the current and the last year invoices, but then, there was a link to view older documents. When I clicked on that link, it actually showed me this message saying, "We are currently working on adding new features to the documents page, such as adding multiple years of documentation. By clicking this link, you're giving us valuable data to determine the demand for documents beyond two years. Thank you for helping us complete this announcement, a full functioning page will be available soon." Clearly, whether they intentionally did it or not, but this is clearly an idea or a concept of Lean Startup that the big company used to make sure that they are working on the things that the users actually need. Again, let's apply the model. In this case, the assumption was there is a need to see all invoices, the metric would be the number of people that click on the link to see the old invoices, and the experiment was to create a dummy link to show the old invoices. As you can see, again it's a concept that could be applied to startup, as well as in big industry, big companies you can apply this concept there. Let's summarize what Lean Startup is all about. It's about validated learning and it's about completing the cycle as quickly as possible. Of course, it's incremental and an iterative approach, and then it kind of believes in this very, very short cycle. In terms of the predictive and adaptive cycle, obviously, it's very obvious that it is very much on the adaptive side. In fact, it's on the negative side of the adaptive that it even goes beyond. In terms of pros and cons, I would say it helps you learn faster, and helps you build the right product and, of course, the speed to market, you can quickly go to the market by validating it. In terms of cons, again, it may result in a rework and it requires you to experiment iteratively with your clients, not just with some proxy for the users but actual users and the client. You experiment with them directly. In the examples that we saw, we had just a link and then, when somebody clicks on it, it just says, "Oh, we are still working on it." There is a little bit of risk there that you're experimenting with your users and your clients directly. Where do you use this? If you have a very doubtful business case, or a user need, or if there is a lot of high probability risk, then you can use this concept. Of course, if you are building a big product and you're just not sure about a specific feature, then you can use this concept to validate it before you put too much effort into that feature. So that's Lean Startup.
