Beyond Lean: the 2 Best Books to Work Like a Startup

Inspired by Marty Cagan has been the most impactful book to me since becoming a founder. It's very complimentary to Lean Startup. Inspired is based on the notion that "there is a tremendous difference between how the best companies produce products. Photo by Mario Gogh on Unsplash

Beyond Lean: the 2 Best Books to Work Like a Startup

Eric Ries's Lean Startup is hands down the most recommended book to me since I became a founder. It came out in 2011 and was truly revolutionary. Lean Startup is based on the notion that we are fed stories of startup success propelled by hard work, the right product and grit. But these stories rarely mention that entrepreneurship is a kind of management and "startup success can be engineered by following the right process."

These are the main pillars of Lean Startup:

  1. New approach to creating continuous innovation
  2. Design thinking
  3. Customer development
  4. Agile Development
  5. Lean manufacturing

Work fast and always embed learnings

Ries favours a build-measure-learn feedback loop. Startups should try and go through that loop as quickly as possible to get the product to customers fast. Shrinking batch sizes and accelerating cycle times is the aim. This is the most revolutionary part of the Lean Startup methodology: working together in small teams to create a product as quickly as possible.

Too many founders build a product they think customers will want and spend years perfecting it without once showing the product to the customer. Ries' methodology stops startups from falling into that trap.

Once a team has an idea, the trick is to create a "concierge minimum viable product" as quickly as possible. This is a product in its most basic form that can be shown to a user, so that they understand the idea. Unlike a traditional focus group, the aim is to measure what customers actually do with this early product. By using this model, an experiment is more than an inquiry, but a product. Startups should get in the habit of productising, testing and learning.

Vision is Crucial

There are several requirements to execute vision:

  1. Product roadmap
  2. Point of view of partners and competitors
  3. Ideas about who the customer will be

Ries is adamant that startup founders should be asking the right questions before they even start building. Instead of "can this product be built," the question is rather, "Should this product be built?" More, "can we build a sustainable business around this set of products." Ries maintains that every product, every feature, every marketing campaign is understood to be an experiment designed to achieve validated learning.

Importance of Early Adopters

Another crucial part of Lean Startup methodology is finding early adopters. Ries defines these as "customers who feel the need for the product most acutely." In the early-stages of product ideation, early adopters are happy to use their imagination to fill in the gaps. They care above all about being the first to user or adopt a new product or technology. We need to move away from trying to create the "perfect product" and identify early adopters that your product is solving a pressing need for. As Facebook, COO Sheryl Sandberg once said, "done is better than perfect."

Places like Product Hunt, Indie Hackers and Quora are great for testing out your hypotheses and finding those early adopters. More recently Facebook groups have also been a great place to surface initial ideas and recruit testers.

Limitations

Given how often this book is recommended to me, I definitely went in with high expectations. I quickly realised that the words "lean" and "agile" are frequently used in tech to denote working styles that are antithetical to the very foundations espoused by Ries in this book. It's good to go in with an open mind and leave any preconceptions behind when you start reading.

I may have read an old version of the book, but I often felt the examples used were a little out of dates, but some of the concepts and ways of working are still crucial to how to work effectively as a startup.

Inspired by Marty Cagan has been the most impactful book to me since becoming a founder. It's very complimentary to Lean Startup. Inspired is based on the notion that "there is a tremendous difference between how the best companies produce products and how most companies produce them." According to Cagan, when he started to analyse product teams, "the state of the art was very different from the state of the practice."

Cagan frames his argument around some key overarching questions: "Who decides what products we should build? How do they decide? How do they know what we build will be useful?" These are the questions founders and frankly any product team should be asking themselves. The chasm between the best product teams and the average product team is huge and here is a great diagram from the book to illustrate this gap:


Common Mistakes

Cagan compares and contrasts traditional businesses vs great product teams. The diagram above illustrates what he terms a waterfall process that usually works something like this:

  1. A business comes up with ideas (usually straight from the management team and not based on a holistic view of the customer's pain points)
  2. The management team creates a business case to work out "two things about the idea (1) How much money or value will it make? and (2) How much money or time will it cost?"
  3. The product manager comes in to come up with a list of "requirements" (user stories or functional specification)
  4. The user experience design team is asked to provide the designs
  5. The engineers receive these design specs and "this is usually where agile finally enters the picture."
  6. The engineering team then break up the work into "sprints" to build out the idea
  7. The new idea is then "finally deployed to actual customers"

If this sounds like the way your company does things, Cagan argues you "have already embarked on a slow death spiral." By getting ideas without any data points from customers "this model leads to sales-driven specials and stakeholder driven products." Business cases are also quite irrelevant as there's no way of knowing how much money will be made, as "the cold, hard truth is that, at this stage, we have no clue about either of these."

Unlike Ries, Cagan is very critical of product roadmaps, due to what he calls the two inconvenient truths about product:

  1. At least half of ideas are just not going to work
  2. Even with ideas that do prove to have potential, it takes several iterations to get the implementation of this idea to the point where it delivers the necessary business value

Importance of Product Management

Probably the most central message in Inspired is the importance of effective product management. Cagan argues that "behind every great product there is someone- usually someone behind the scenes, working tirelessly- who led the product team to combine technology and design to solve real customer problems in a way that met the needs of the business." These people are usually product managers, but could equally be a startup founder or CEO.

In Chapter 10, "The Product Manager" Cagan states that, "the honest truth is that the product manager needs to be among the strongest talent in the company."

Product managers need to combine:

  1. Deep knowledge of the customer: "qualitative knowledge (to understand why our users and customers behave the way they do) and quantitative learning (to understand what they are doing)"
  2. Deep knowledge of data: being comfortable with how users interact with the product by leveraging everything from sales analytics, usage analytics and A/B tests
  3. Deep knowledge of your business: understanding of key stakeholders and what their limitations are. All the way from "management, sales, marketing, finance, legal, business development and customer service."
  4. Deep knowledge of your market and industry: "not only knowledge of your competitors but also key trends in technology, customer behaviours and expectations"

It's a tough role to fill. The best and worst thing about it is that there isn't a set blueprint for how to get there.

Product Market Fit

Mentions of startups are littered throughout the book, but particularly in relation to product-market-fit. Cagan notes that "the reality of startup life is that you're in a race to achieve product/market fit before you run out of money." Similar to Ries, Cagan notes that moving through the build-measure-learn feedback loop as quickly as possible is crucial while money and time are typically tight, "good startups are optimized to learn and move quickly, and there's normally very little bureaucracy to slow them down."

As Marc Andreesen stated, "Whenever you see a successful startup, you see one that has reached product/market fit." Product market fit is when you have a product that solves a specific pain point for a customer. This is what investors are looking for from Series A and beyond, prior to that they are investing in the team's ability to develop a solution.

"And you can always feel product/market fit when it's happening. The customers are buying the product just as fast as you can make it -- or usage is growing just as fast as you can add more servers. Money from customers is piling up in your company checking account. You're hiring sales and customer support staff as fast as you can. Reporters are calling because they've heard about your hot new thing and they want to talk to you about it."

Part 4: the only thing that matters: https://pmarchive.com/guide_to_startups_part4.html

Culture of Innovation

Cagan argues that the few startups that "succeed are usually those that are really good at product discovery." Great product teams are able to quickly take learnings from putting a product in front of users and adapting. There also is no real end to product management, as even once the product is live, "know they need to ensure consistent product innovation. This means constantly creating new value for their customers and for their business."

It's much easier to maintain a culture of discovery and innovation when just starting out with an idea. You have no choice, but to keep iterating and collecting proof points to better serve customers, as you probably only have one product. As Cagan argues, "when the company was young, it likely had a clear and compelling vision. When it achieves enterprise stage, however, the company has largely achieved that original vision and now people aren't sure what's next."

My Take

I honestly don't know why I waited so long to read Lean Startup when I've been working in tech for this long. I understand why it was so revolutionary at the time and agile development and design thinking are at the core of what I would want out of the tech teams I work in. As Cagan states in Inspired, "I am convinced that Lean and Agile values and principles are here to stay."

Which brings me nicely to Inspired. This is the strongest case of right book right time that I've ever experienced. My co-founder recommended this book to me and when he described it I must admit I wasn't super excited at the prospect of diving into the minutia of product management. As soon as I started, I completely understood the recommendation, Cagan writes with authority, precision and Inspired is incomparable to most business books. I feel that the actionable insights, examples and descriptions are perfectly paced.

The two books together should be required reading for anyone creating tech products.