Friday night Santa Clara University’s California Program for Entrepreneurship (CAPE) had the pleasure of hosting serial entrepreneur, Derek Dukes, co-founder and CEO of Dipity, and early (1996-2005!) employee at Yahoo!.  Great discussion moderated by Dan Aguiar, but two specific things stuck with me: (1) How Derek’s experience has led him to see value in Lean Startup, (2) How Lean Startup fits with the bottom-up, but evidence-based approaches to innovation and management that I think (hope) are gaining broad traction.

My still-early understanding of Lean Startup begins with Eric Ries’ blog, Ries writes (excerpt below, my comments in brackets): "What are the characteristics of a lean startup? One that is powered by three drivers, each of which is a part of a major trend:

  1. The use of platforms enabled by open source and free software.... [The cost of starting a company has come down as much infrastructure and access/distribution is now available for free]

  2. The application of agile development methodologies which dramatically reduce waste and unlock creativity in product development.... [See Slide 15: Split A-B testing. Continuous Deployment. Just-in-time Architecture and infrastructure. Use defects to drive infrastructure investments. This is evidence-based management for startups.  It also sounds a lot like the innovation approach Intuit is taking: As an innovation moves throughIntuit’s Brainstorm process, innovators are asked to test hypotheses step-by-step.  This is in contrast to an older approach that seemed to ask innovators to “eat the elephant” in one sitting by starting with almost a full business plan.]

  3. Ferocious customer-centric rapid iteration.... [Very hypothesis focused.  From Four Steps to the Epiphany: (p. 26): Customer Discovery Step-by-Step: State your hypotheses. Test “Problem Hypothesis.  Test “Product Hypothesis.” Verify.]

My belief is that these lean startups will achieve dramatically lower development costs, faster time to market, and higher quality products in the years to come. Whether they also lead to dramatically higher returns for investors is a question I'm looking forward to studying." Steve Blank’s work on customer development is foundational to the ideas of lean startup. He notes, “startups fail from a lack of customers, not product development failure” and “The goal for release 1 is the minimum feature set for earlyvangelists [sic].” The critical point being that you need feedback from your customers to generate key insights.

I also found value in Ries’ Top 5 Myths About the Lean Startup and his talk for Stanford’s eCorner, Evangelizing for the Lean Startup Derek said he’s trying out the lean startup approach in a project using his “free” innovation time. He mentioned that they worked for over a year before publicly showing Dipity.  

Knowing what he knows now, both from his own experience and from following the development of the lean startup ideas, he wouldn’t work that long without going to users/customers. My intuition is that the practice of lean startup is another example of systems savvy.  Derek Dukes, Eric Ries, and Steve Blank see the value in taking a step back and assessing the overall system. They understand the technology (either the developing one or the one they’ll use in their production). They understand the organizational practice (and how past product development practices have been the death of products and companies). They understand the people/customers and how we need to understand by getting our, and our customers’, hands dirty and learning from the result (see my prior post on learning about systems savvy).   

Successful practitioners of the lean startup model will be constantly looking for how to effectively -- and efficiently -- weave together technology tools, organizational practice, with a deep understanding of the customer. Thank you, Derek, for giving me this homework.  

Readers, anything else I should add to my studies? Please leave a reply below.