The Biggest Idea of 2011:
Think Lean
Accelerators & Incubators: TechStars Blazes a Path for Others
500 Startups Hits New York
The year of the cloud, the tablet, the social network. 2011 was perhaps all of those. But when it comes to ideas that will drive business in the future, try the year of the lean startup.
In September, Eric Ries’ book, The Lean Startup was published and quickly hit bestseller lists. Though distributed to a wide audience, the ideas in Reis' book had been circulating in the startup community (and had been discussed at some smart larger companies) for years.
Those concepts, boiled down and oversimplified, amount to urging entrepreneurs to get a viable product out the door as quickly as possible without worrying about perfection. The next step is to scientifically test those products and ideas with customers and be willing to change products to fit the market’s demands.
Ries is the first to admit that the ideas aren’t exactly all new; he borrowed a lot of the thinking from the lean manufacturing method pioneered by Toyota decades ago that reduced waste in the manufacturing process, led to better cars, and helped the company become the largest auto firm in the world.
But applying them to startups—especially those in the tech space—is new, as is the insistence that bringing a new product or business to market can be similar to the work of scientists. This is because the lean startup approach is based on scientifically testing hypotheses about what the market wants, then pivoting from earlier ideas to deliver the right products.
“In some ways this is old wine in a new bottle. Great old wine in a shiny new bottle. Great entrepreneurs have followed the philosophy of test-then-invest forever," said Tom Eisenmann, a Harvard University business professor. Harvard Business School hired Reis as entrepreneur-in-residence and is using his book as part of its curriculum.
"We’re using it. I’m a big believer in the power of these ideas,” Eisenmann told Portfolio.com.
Beyond academia, programs have popped up around the country to teach lean startup principles, and incubators such as TechStars have incorporated them into the work they do with new companies.
Trevor Owens launched a program in New York to work with entrepreneurs on incorporating the ideas into their businesses, and he tuned in to the movement by reading Ries’ blog. Ries started the blog in 2008 after learning lessons about how to create a lean startup through a company he cofounded, IMVU, a chat and online community.
“I definitely think this is the way all startups are going to be done in the future unless something better comes around,” said Owens, who works with 70 people at a time in seminars around the world. “Entrepreneurship is a serious career path right now. This is really the new skill set that’s needed.”
For Ries, the past year “has been a wild ride.”
Since publication of the book, Ries said he has heard from hundreds of entrepreneurs who have said his ideas have changed their approach to business for the better. “People have been coming out of the woodwork to tell me their stories,” he told Portfolio.com. “I really think it’s not about me. It’s about the hunger for ideas that’s out there.”
He pointed to one example of an entrepreneur who had developed a prototype for turning garbage into energy.
The developer of the product had expected to sell much larger versions of the prototype, and kept being turned down because the product he was pushing was too expensive. But customers kept telling him they would buy the demonstration units for much less. Until being exposed to the lean startup ideas, the entrepreneur had ignored those requests. Afterward, he started selling the demo units and generating revenue.
“The old way really was not serving him well,” Ries said. “The answer was sitting in front of his face.”
For Ries, that kind of learning has been available all along. But for a new set of ideas, an old method of distribution could be setting startups on a new path.
“Books still have a magic power,” he said, as both large companies and small startups have approached him to talk about his ideas. “Now that I have a book, those companies are coming to me.”
Kent Bernhard Jr. is News Editor of Portfolio.com
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