the lean start-up formula

the lean start-up formula Internet companies have steadily taken advantage of the falling costs of getting up and running — often spending just hundreds of thousands of dollars instead of the millions that were required several years ago. But the lean start-up formula adds management practices tailored to exploit the Web environment.

The concepts apply both to designing products and to developing a market, and emphasize an early and constant focus on customers. To be sure, the methods often build on the work of others.

In product development, for example, Mr. Ries is an enthusiast of so-called agile programming methods, which emphasize rapid development, small teams and constant improvement. But, he adds: “The agile practices have to be adapted, shifting the focus somewhat from generating stuff to learning about what customers will want. Most technology start-ups fail not because the technology doesn’t work, but because they are making something that there is not a real market for.”

So the lean playbook advises quick development of a “minimum viable product,” designed with the smallest set of features that will please some group of customers. Then, the start-up should continually experiment by tweaking its offering, seeing how the market responds and changing the product accordingly. Facebook, the giant social network, grew that way, starting with simple messaging services and then adding other features.

The goal, explains Mr. Blank, is to accelerate the pace of learning. “A start-up is a temporary organization designed to discover a profitable, scalable business model,” he says.

Mr. Ries points to his own experience as a study in contrasts between the traditional start-up model and the lean approach. He was a senior engineer at There.com, a 3-D virtual world, from 2001 to 2003. There.com raised $40 million and spent years in stealth mode, building impressive technology, he recalls. But it had so much invested in one technology path and one business plan that the company lost its ability to change, Mr. Ries says.