Monday, November 28, 2011


The following is a rather unusual guest post. One of the more surreal parts of speaking publicly and putting ideas out into the ether is to watch other people run with them. I can't seem to help tuning into comment threads on blogs, news aggregators, etc. Internet people being what they are, a lot of these comments are nasty, brutish, and short. 

However, every once in a while, I come across someone who consistently corrects other people's mistakes. Someone who seems to get it. And who am I to complain if that someone happens to be a giant robot dinosaur named FAKEGRIMLOCK? As it turns out, FAKEGRIMLOCK is a writer and artist with a unique style. This guest post has been authored entirely by him, and views expressed are his own.

What follows is FAKEGRIMLOCK's perspective on the importance of vision in a startup. He understands that vision and iteration are allies, for there can be no science without vision. Only vision is worth testing. I'll let him take it from here...







































Tuesday, November 15, 2011

That old-time startup religion

Warning: the video below may be offensive to some readers. It contains irreverent use of religious language. Viewer discretion is advised. 

So there I was, on stage in front of a large crowd, when Jason says "Has anyone seen the movie Apostle?" That's when I knew things were about to get interesting.

I was in Los Angeles on book tour a few weeks ago. The Los Angeles Lean Startup Circle arranged a spectacular event. I was interviewed - live on stage - by Jason Calacanis for This Week in Startups. The video became Episode #199, and you'll get to watch it below.

Jason's a controversial - and always entertaining - character. He's the founder and CEO of Mahalo, as well as the This Week In network. Oh and he also plays the occasional hand of televised high-stakes poker. So I really did not know what to expect when I met him on stage. For just about an hour, we had an in-depth interview, with Jason asking the kind of questions you only get from someone who has lived through the real highs and lows of entrepreneurship. I thought things were going well.

And then things took a pretty hilarious turn. Jason decides, on the spot, that we're going to have our very own revival meeting. In a full-on southern preacher accent, he invites entrepreneurs up on stage for some "hands on healing" as they share their real stories of problems, challenges, and obstacles in their startups. And, to my great surprise, people come forward. To be honest, I thought it was going to be a disaster, but I was wrong. The rest you have to watch for yourself.

Eric Ries of Lean Startup - TWiST #199

(The "Praise Jesus" starts at about 56 minutes in. Don't say I didn't warn you.)

I wanted to share this video with you, and not just because it is extremely entertaining. At the end of the session, I can tell that something is starting to bother Jason. We've been talking all along about pivots, vanity metrics, and validated learning. And I can see it start to dawn on him that, like the founders we've been "healing" all night, he has some questions about Mahalo that he wants answered.

And so we have a conversation, live on stage, about whether and how Mahalo should pivot from their current business (educational web videos) to a place where they're having unexpected success (paid iPad instructional video apps). A few days later, I noticed this in my newsfeed: Mahalo Lays Off 25 Percent for Shift to Apps From Video. And a few days after that, Mahalo got in touch to ask if I'd come into their studio to record a video instructional app based on The Lean Startup. After all that, how could I say no?

So if you'd like to see the next chapter in this story, you're cordially invited to a video shoot, which will take place next Monday, November 21, at Mahalo World HQ in Los Angeles. I'll be lecturing, we'll take questions from the audience, and - if anyone has the courage to come on stage - we'll even do some "hands-on healing" case studies with real entrepreneurs. Want to come? Sign up here.

See you Monday.

Tuesday, October 25, 2011

Case Study: The Nordstrom Innovation Lab

Today's case study answers a bunch of questions all at once about Lean Startup principles: can they be used inside a Fortune 500 company? can they be used to sell physical low-tech products? can they be used in a retail store? I have been confidently answering questions like these non-stop for the past few months. I do believe the answer is yes. But, as the saying goes, seeing is believing. And now you won't have to take my word for it.

Nordstrom is currently ranked #254 on the Fortune 500 (yes, I looked it up) with over $9 billion in revenues. Scrappy startup they are not. And yet they face the same competitive pressures that are causing every modern company to take a long, hard look at the process they use to innovate. Anyone who has read The Innovator's Dilemma knows just how hard it is for a company that has been successful to invest in potentially disruptive innovations.

I have been talking to JB Brown, the manager of the Nordstrom Innovation Lab about publishing a case study. At the same time, Nordstrom had sent a camera crew to document the Lab at work. When I saw the rough cut of the videos they were producing, I knew they would be a powerful teaching tool. It's one thing to talk about "rapid experimentation" and "validated learning" as abstract concepts. It's quite another to see them in action, in a real-world setting. Proving his understanding of minimum viable product, JB suggested that we start small, by posting a "case study MVP." That's how this post came to be.

Below, you'll find two videos: one about the lab, and one containing a case study of the team at work. Watch them both. If you have questions, JB has generously agreed to make himself available to answer them in a future post. Just leave your question as a comment to this post. If there's sufficient interest, we'll expand this MVP.

"A Lean Startup Inside a Fortune 500 Company"

"We Really Don't Know What the Features Are Yet..."

Here are some highlights that I found especially interesting:
  • One-week iterations. One of the hardest things about corporate innovation is breaking through the slowness that is the default speed for most initiatives. The Nordstrom Innovation Lab solves this problem by working in one-week increments. In the second video above, you'll see them build an entire new product in one week end-to-end.

  • Genchi gembutsu. This is one of my favorite concepts from the Toyota Production System. It translates roughly as "go and see for yourself" - it's the Toyota version of "get out of the building." By talking face-to-face with customers, salespeople, and managers in a physical store, the innovation team is able to identify an opportunity that they can execute against extremely quickly. But they go beyond simply "getting out of the building" - they actually set up shop physically in a retail store for the entire week. They build products, test new features, and get feedback all out in the open. You really have to see it to believe it.

  • Simple, rapid, experiments. I hear all the time that developing for iOS, with its myriad approval delays and deployment obstacles means that you can't use rapid development techniques on that platform. Yet in the video you'll see this team overcome that bias with a little ingenuity. They simply brought two iPads with them. While the app is in development, the sales team is using one iPad, and the developers are working on another. At every break, the sales team swaps iPads with the developers - always using the latest version of the app. (The same technique works with paper prototypes, too.)
Have questions for JB and the rest of the Nordstrom Innovation Lab team? Post them as comments.

Thursday, September 29, 2011

Best. Birthday. Ever.

Last week I turned 33, while on the road. I received an incredible amount of good news all at once. First off, I received the big news that you'll get to read if you open up the paper this coming Sunday: The Lean Startup has debuted at #2 on the New York Times Bestseller List.

Look closely, and you'll see The Lean Startup right below televangelist Joel Osteen and right above The Guinness Book of World Records.

The Wall Street Journal also maintains a bestseller list specifically for business books. The Lean Startup debuted there at #2 as well:

On the very same day, my friend Hiten Shah was the first to spot this strange sight on a local newsstand:

If you click through, you'll get to read a significant excerpt from the book in the current issue of Inc Magazine.

But by far the best part of my birthday was getting to spend it with so many of you. (OK, the Chicago Lean Startup Circle's minimum viable birthday cake was pretty awesome, too). I have spent the past two years working on this book. I have believed all along that - with your help - we could take these ideas to a mainstream audience. You've done your part. By supporting the book in such large numbers, you've put it on the map for thousands of new people: entrepreneurs, managers, investors, and policy makers.

As those people actually get a chance to read the book, we'll find out if I've managed to live up to my part of the bargain. I hope the book is worthy of the faith you all have placed in it.

In any event, thank you. It's been an amazing ride - and the ultimate birthday present.

Monday, September 19, 2011

Updates from the road

Greetings from Toronto, stop four on my book tour. I thought I'd share a few updates; for a firehose of detailed updates, follow me on Twitter or Plancast.

Bundle Deadline Extended
First things first: remember the Last Lean Startup Bundle, the one that I said was only going to run for 48 hours? Well, I keep getting talked into extending the deadline. I'm glad I did, since some folks have put the extra time to good use. For example, One of my favorite venture firms (who believed early in IMVU), Menlo Ventures, bought a Super Mentor Bundle for their portfolio companies. How cool is that?

However, today is really truly the last day to order the bundle. Monday, September 20, 11pm EST.

The early reviews are in
I've been waiting months to find out how the world at large would react to the book itself, and it's such a relief that the moment is finally here.

I'm extremely honored by this review in the Financial Times:

Every so often a business book comes along that changes how we think about innovation and entrepreneurship. Clay Christensen’s theories on disruptive innovation and Geoffrey Moore’s potent metaphors of “crossing the chasm” from small to mass markets, and going “inside the tornado” of starting a business, have loomed large over entrepreneurial theory for years. Eric Ries’s The Lean Startup has the chops to join this exalted company.

I'm equally proud of the comments and reviews from actual entrepreneurs and practitioners. And I even appreciate the constructive criticisms and other feedback. (And see how I'm resisting the urge to feed the trolls?)

David ForrestCongratulations to  on his new book Lean Startup - - a MUST READ for any entrepreneur

Craig Rutkunasericries I was a bit sceptical because of all the hype, but I'm reading the  and it's awesome. Time well spent Eric.

Sukumar RajagopalJust finished reading by  in one sitting ~ ****ing brilliant. Groundbreaking stuff. Must read.
And then there's the nearly 100 reviews on Amazon. Go check them out and, I hope, leave your own contribution.

Photos from the tour
Thanks to the folks at Montabe, there's a realtime image gallery of photos related to the book launch. I appreciate everyone who's taken the time to upload a photo of the book in the wild or a snapshot at one of our launch events. Here's a few of my favorites:

That's it from the road. Having an amazing time. Thank you all so much.

Tuesday, September 13, 2011

The Lean Startup Book Tour

Today, September 13, 2011 is launch day! And, for me, it's literally a launch into a crazy amount of travel. For the next two weeks, I'm going to do as many events, interviews, and talks as I physically can. I hope you'll join me, either in person or virtually.

A complete list of book tour stops for the first leg of my journey is below. To stay up-to-date, you can get the firehose of updates by following me on Twitter or for "just the facts" follow me on Plancast.

However BEFORE WE CONTINUE with the list of events, can I ask just one favor? Many of you who pre-ordered the book -especially those of you on Kindle- have already received your copy. The reviews page for the book has just opened to the general public (up until now it's been limited to Amazon Vine reviewers). The first 24 hours are critical in establishing that all-important "average star rating" that tends to settle in. Would you take just a few minutes to post your honest impressions of the book on Amazon? I'd really appreciate it.

Now, on with our regularly scheduled launch...

Tuesday, September 13 - San Francisco

TechCrunch Disrupt
It all begins at TechCrunch Disrupt. At 11:45am I'll be honored to share the stage with two great entrepreneurs:
Introducing The Lean Startup, by Eric Ries with case studies, Intuit’s Scott Cook and Instagram’s Kevin Systrom
And in the evening, the book launch party is also part of Disrupt. We'll be in the concourse from 5:30-7:30pm. Please come celebrate. If you like to support local independent bookstores, Book Passage, one of my favorite SF bookstores will be on hand selling copies, which I'm happy to sign.

Wednesday, September 16 - On your TV

Update: Just got word that I'll be appearing on Bloomberg West at 3pm PST. Be sure to tune in!

Thursday, September 15 - Los Angeles

Drucker Business Forum
It starts bright and early at the Drucker Business Forum, with a breakfast event at 7:45am (talk starts at 8:15). Tickets are $35, which includes a copy of the book (I know you already have one - but give it to a friend?). I have a limited number of free tickets to give away, first-come first-served. You can grab one here. Details:
The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful BusinessesTickets $20, $35 includes Ries’ book The City Club on Bunker Hill
333. S. Grand Avenue, 54th Floor
Los Angeles, CA 90071
Lean LA + This Week in Startups
Twice on this trip, I'm sitting down with an over-the-top free-wheeling no-holds-barred interviewer that is guaranteed to be entertaining. How could I stop in LA without filming an episode of This Week in Startups with Jason Calacanis? Luckily, the amazing Lean LA meetup group has organized to do this in front of an audience, at the Santa Monica Civic Auditorium. Tickets are $30 and include a copy of the book. I'll be signing copies as well. Register here.
A Conversation with Eric Ries

Thursday, September 15, 2011, 7:30 PM

1855 Main StSanta MonicaCA (map)

Price: $30.00/per person
Eric not only created the term "Lean Startup", he has sparked a movement that is changing the way people think about startups.
In a very special Lean LA event, serial entrepreneur Jason Calacanis from Mahalo and This Week in Startups will interview Eric Ries live on stage at the Santa Monica Civic Auditorium.

Friday,  September 16 - Seattle

On Friday, I fly to Seattle, where I'll be for two days. The first day kicks off with two corporate events, one at Amazon (in their Fishbowl series) and one at Microsoft. Employees only.

That evening, there will be a casual talk followed by a book signing at Town Hall Seattle (co-sponsored with Lean Startup Seattle).

Friday • September 16 • 6pmThe Lean Startup: How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses by Eric RiesHappy Hour with Startup Guru Eric Ries
The Lean Startup: How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses (CROWN)
Town Hall Seattle, 1119 8th Avenue, Seattle (Enter on Seneca)
For Eric Ries, a "startup" is an organization dedicated to creating something new under conditions of extreme uncertainty, no matter what the size. So how is it best to deal with uncertainty? How does an organization like this thrive? By learning to be rapidly responsive and agile. Ries wants to show you how.
Please Note: Autographed copies of books are only available after the event.
Presented by the Town Hall Center for Civic Life. Series media sponsorship provided by PubliCola. Series supported by The Boeing Company Charitable Trust and the RealNetworks Foundation. Tickets are $5 at or 1.800.838.3006, and at the door beginning at 6pm. Town Hall members receive priority seating.
$26.00  Buy an Autographed Copy

 Saturday,  September 17 - Seattle

StartupDay 2011 by Startup Weekend & Seattle 2.0 

Startup Weekend and Seattle 2.0 are teaming up to put on an awesome all-day conference on Saturday. I'll be the closing keynote at 4:30, but you should really come for the whole day if you can. They've got an amazing line up of speakers, including Sean Ellis, Scott Porad, Rand Fishkin and many more. Register here.

Monday, September 19 - Toronto

My only Canadian stop on the tour is in Toronto at the Rotman School of Management. 
Startup Experts Speaker Series @ Rotman5:00 sharp to 6:00pm presentation and Q&ASPEAKER: Eric Ries, Author, Startup Lessons Learned Blog and The Lean Startup (Crown Business, September 13, 2011); Entrepreneur-in-Residence, Harvard Business School; Co-Founder and former Chief Technology Officer, IMVUTOPIC: “The Lean Startup: The Radical New Approach Savvy Entrepreneurs Use to Unleash Creativity, Work Smarter and Get Products to Market Sooner”PLACE: Fleck Atrium (ground floor), Rotman School of Management, University of Toronto, 105 St. George Street, Toronto (ON)BOOKSALE: additional copies of The Lean Startup will be available for sale at the eventFEE: $30 per person (fee includes HST, the session and 1 copy of The Lean Startup)TO REGISTER: Click Here

Tuesday, September 20 - New York

Unfortunately, all of my events in New York on this trip are closed to the public. Mostly, I'll be doing media and interviews, followed by a reception at IDEO. Never fear, I'll be back in a big way in October, centered around the Web 2.0 Expo

Wednesday, September 21 - Boston

A big event at Harvard Business School, where I'm returning this year as an Entrepreneur-in-Residence. This is event is free and open to the public. The talk itself will be in Burden Auditorium on the HBS campus, followed by a reception & book-signing in the brand-new Harvard i-lab:

5pm: The Rock Center & Harvard i-labpresent: Eric Ries
Hear from Rock Center Entrepreneur-in-Residence, Eric Ries. Eric is the creator of the Lean Startup methodology and the author of the popular entrepreneurship blogStartup Lessons Learned.
6pm: Harvard i-lab reception with Eric Ries
Following the talk with Eric Ries, join us for a reception - the inaugural event - at the Harvard i-lab. Co-sponsored by the Rock Center & the Harvard innovation lab.
Thursday, September 22 - Chicago + Around the World

The Chicago Lean Startup Circle and Northwestern University are hosting me on my birthday. As a birthday present, they've teamed up with Crown to organize a Virtual Book Tour version of this event. If you want to organize your own gathering anywhere in the world, and participate via live simulcast, you're welcome to do so. Just contact Paul Lamb at Random House. Details:

Join us on Thursday, September 22nd for a Conversation with Eric Ries.
Crown Books is releasing Eric Ries' book The Lean Startup in September, and Eric will be at the Chicago Lean Startup Circle on September 22nd for an "Actors Studio" style conversation with Bernhard Kappe.  The price of the ticket also includes a copy of Eric's book The Lean Startup.Thanks to Michael Marasco and the Farley Center for Entrepreneurship at Northwestern's McCormick School of Engineering, we'll be hosting this event at Northwestern University's Thorne Auditorium on Chicago Avenue by the lake. 
Register here. 

September 23-26 - TBA

I'll be in New York and then Washington DC for media on these days, but don't have anything public on the schedule to announce. 

Tuesday, September 27 - San Francisco

Home, home again. 


I'm honored to be hosted by the Commonwealth Club of California, who I've spent many hours listening to on public radio. They obviously have a lot of courage, because not only are they putting me on stage, they've invited Dave McClure to interview me. He's promised to keep it clean enough for radio. We'll see. At least his crazy fonts can't shine through an audio-only medium, so he won't blind anybody.

In all seriousness, I'm really excited about this event. If you can, please come out and join us. It'll be fun.

Eric Ries: The Principles of a Lean Startup

Sep 27 2011 - 6:30pmThe Principles of a Lean StartupEric Ries, Author, The Lean StartupIn conversation with Dave McClure, Founder, 500 Startups
Starting one, working for one, going public with one – startups seem to be the thing to do in SF. But how do you make your startup great? Ries, the guru behind the “Lean Startup” sensation, asks: Is your startup employee-centric and knowledge-obsessed? Is your company functioning at optimal efficiency? Is your office a fun place to work? Ries will reveal what he believes to be the necessary hard facts that lead to a successful startup.
Location: SF Club Office
Time:  6 p.m. check-in, 6:30 p.m. program, 7:30 p.m. book signing/networking reception

Cost: $20 standard, $12 members, $7 students
Location  Blue Room, The Commonwealth Club  

As always when I'm on tour, if you're a reader of this blog, please do come say hello. Your support and enthusiasm mean a lot to me. Thanks.

Monday, September 12, 2011

The power of small batches

The following is an excerpt from The Lean Startup: How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses published by Crown Business. 

In the book Lean Thinking, James Womack and Daniel Jones recount a story of stuffing newsletters into envelopes with the assistance of one of the author’s two young children. Every envelope had to be addressed, stamped, filled with a letter, and sealed. The daughters, age six and nine, knew how they should go about completing the project: “Daddy, first you should fold all of the newsletters. Then you should attach the seal. Then you should put on the stamps.” Their father wanted to do it the counterintuitive way: complete each envelope one at a time. They told him “that wouldn’t be efficient!” So he and his daughters each took half the envelopes and competed to see who would finish first.

The father won the race, and not just because he is an adult.

The one envelope at a time approach is a faster way of getting the job done even though it seems inefficient. This has been confirmed in many studies, including this one (from LSS Academy):

Why does stuffing one envelope at a time get the job done faster even though it seems like it would be slower? Because our intuition doesn’t take into account the extra time required to sort, stack, and move around the large piles of half- complete envelopes when it’s done the other way. It seems more efficient to repeat the same task over and over, in part because we expect that we will get better at this simple task the more we do it. Unfortunately, in process-oriented work like this, individual  performance is not nearly as important as the overall performance of the system.

(If you're skeptical, you're in good company. For a frame-by-frame breakdown of where the time went in that video, see this post.)

But even if the amount of time that each process took was exactly the same, the small batch production approach still would be superior, and for even more counterintuitive reasons. For example, imagine that the letters didn’t fit in the envelopes. With the large- batch approach, we wouldn’t find that out until nearly the end. With small batches, we’d know almost immediately.

All these issues are visible in a process as simple as stuffing envelopes, but they are of real and much greater consequence in the work of every company, large or small. What if it turns out that the customers have decided they don’t want the product? Which process would allow a company to find this out sooner?

Lean manufacturers such as Toyota discovered the benefits of small batches decades ago. When I teach entrepreneurs this method, I often begin with stories about manufacturing. Before long, I can see the questioning looks: what does this have to do with my startup?

But the theory that is the foundation of Toyota’s success can be used to dramatically improve the speed at which startups find validated learning.

Toyota discovered that small batches made their factories more efficient. In contrast, in the Lean Startup the goal is not to produce more stuff efficiently. It is to— as quickly as possible— learn how to build a sustainable business. Think back to the example of envelope stuffing. What if it turns out that the customer doesn’t want the product we’re building? Although this is never good news for an entrepreneur, finding out sooner is much better than finding out later. Working in small batches ensures that a startup can minimize the expenditure of time, money, and effort that ultimately turns out to have been wasted.

Want to know more about how small batches can dramatically change the way you work? Click here to pick up your copy of The Lean Startup.

Wednesday, September 7, 2011

The Last Lean Startup Bundle: claim $3,000,000 in prizes

The Lean Startup Book launches in just under a week.

[Forget the verbiage, just show me the deal! OK: do you want 5-100 copies or 100+ copies?]

How many copies will this book sell in its first week – real, hardcover, paper copies? If that number crosses some unknowable threshold, the book will debut as a bestseller, and then an awful lot of people are going to read it. People who would never bother with an entrepreneur’s blog, who may not even see themselves as entrepreneurs: shopkeepers and policy makers, CFO’s and private equity managers, and even future entrepreneurs. With your help, our movement can reach a truly mainstream audience, one that – at least in my humble opinion - truly needs to hear what we have to say.

But there’s no reason we can’t have a little fun along the way. I wanted to create an absolutely irresistible offer, one that would entice you to buy not just a single book – but to buy one for your entire team, entire company, or just for everyone you know. This bundle is 100% stuff I think you will really use. No phony discounts. No free trials. The more books you buy, the more valuable the rewards.

This blog post is going to be long, and below you will see every last detail of every last tier of prizes.

I chose Amazon Web Services to be our marquee reward, and not just for the obvious reason that so many of you are - right this very moment – already hosting on AWS EC2. Almost any startup - in any industry - can use AWS to find and serve customers. I chose AWS because it offers so many different services, from hosting to databases to payments (FPS) to content delivery (CloudFront) - even e-commerce fulfillment (FWS). The AWS team is excited about the book, too, and they’ve stepped up huge: the tiers below contain almost $100,000 in AWS credits. Some of the packages are almost worth buying for that value alone.

But only almost! Because at every level I have tried to give way more value than you’re paying. When you read the descriptions below, you’re going to think the “value” column is crazy. How could it possibly be that high? But I urge you to read the whole thing, check my math, and see if it’s real. Each and every package is worth what it says. Add them all up, and we're talking about $2,933,061.00 worth of prizes. No kidding around here.

Some of the prizes are practical, like Pivotal Tracker, KISSmetrics, Ask Your Target Market, Assistly, Hello Bar and Sauce Labs. I’ve only included services that I believe in and that I think you’re going to use.

Some of the prizes are just fun. My personal favorite (the prize I am secretly hoping won’t sell out so I can skim one for myself): a signed hardcover copy of one of my favorite new books, the crazy 80’s-video-game-themed sci-fi bestseller Ready Player One by Ernest Cline. (Yes, you will get one in the mail, courtesy of my publisher, and his, Crown/Random House). Trust me, when this book gets made into a movie and becomes the next WarGames, you’re going to feel pretty cool having this signed copy on your shelf.

You’ll get awesome video content, including the video Lean Startup course I created exclusively for Udemy. You’ll the complete video recording of the amazing Lean Startup track at SXSW 2011, every single presentation. And many of you will get seven awesome action videos courtesy of Appsumo.

And then there are the special bonus packages, for those who can make use of extremely large quantities of books. I asked some of the top Lean Startup super-mentors to volunteer to be prizes, and they are here. You can get time with me, too. And we’ve even got a spot in the extremely exclusive (and extremely cool) Lean User Experience Residency (LUXr) program, which normally costs $15,000. And, if you are disappointed that my book tour doesn’t take me to your city, you can instruct my publisher to change it.

Truly, that’s just the tip of the iceberg. Dive in below and see what you think.

Monday, August 29, 2011

The ink is on the dead trees

I am holding in my hand one of the very first print editions of The Lean Startup. The Zen-inspired design by Marcus Gosling looks amazing in physical form. And in just two weeks, on September 13, 2011, it will be in bookstores everywhere. Read below for details on the book tour, how to get a free book, and more.

Excitement about the book continues to build, and I am a little overwhelmed by all the attention. Over the weekend, The Lean Startup hit #1 on Barnes & Noble overall (it's still there as I'm writing this, wow). Amazon and B&N have been involved in a bit of a price war, dropping the price below $14 for the first time. And, in a minor but satisfying victory, my publisher has dropped the price of the Kindle edition to $12.99.

The early reviews and endorsements have been amazing. I'm incredibly honored to have so many legends and personal heroes on this list (you can see them all on the Amazon listing). Here's a taste:
"Eric has created a science where previously there was only art.  A must read for every serious entrepreneur—and every manager interested in innovation." —Marc Andreessen, co-founder of Andreessen Horowitz, Opsware Inc. and Netscape
“This book should be mandatory reading for entrepreneurs, and the same goes for managers who want better entrepreneurial instincts. Ries’s book is loaded with fascinating stories—not to mention countless practical principles you’ll dearly wish you’d known five years ago.” —Dan Heath, co-author of Switch and Made to Stick
"The Lean Startup isn't just about how to create a more successful entrepreneurial business, it's about what we can learn from those businesses to improve virtually everything we do. I imagine Lean Startup principles applied to government programs, to healthcare, and to solving the world's great problems.  It's ultimately an answer to the question 'How can we learn more quickly what works, and discard what doesn't?'"— Tim O'Reilly, CEO O'Reilly Media 
The Book Tour
Starting in two weeks, I'm going on a crazy action-packed book tour. We'll officially launch the book at TechCrunch Disrupt in San Francisco. From there, the tour goes through Los Angeles, Seattle, Toronto, New York, Boston, Chicago, DC, and culminates back in San Francisco at the Commonwealth Club on September 27. And that's just round one - I'll be back on the road in October, too.

To get all the details on the tour, be sure to follow me on Plancast. I'll be posting links to every event there once they are online.

Virtual Book Tour
For cities that aren't on the tour, you can still participate remotely, via simulcast. This will probably take place September 23. We'll be offering the stream for free to organizers who want to create their own local events, as we did for Startup Lessons Learned. If you're interested in organizing an event, please contact Paul Lamb at Random House.

One Last Lean Startup Bundle (& looking for beta testers)
I'm going to be making one last push for book pre-orders, with an amazing bundle that will go live next week. It will be focused on evangelists who are willing to buy copies for their entire company. The prizes will make it an incredibly good deal - the lineup includes everything from tons of Amazon Web Services credits to time with world-class mentors to signed (!) copies of the new (and awesome) sci-fi novel Ready Player One. Unlike past bundles, this one will be tiered, so more copies = more prizes, and strictly quantity limited.

Want to get a first look at the bundle? I'm looking for beta testers who want to get early access and be guaranteed to get in on the action before their preferred tier sells out. If you sign up for the beta program, you'll find out about the specific prizes and have a chance to order before everyone else. And, in case you hadn't guessed, you'll be looking at a minimum viable product - with details subject to change. If that sounds interesting, sign up now.

Who Influences You?
As the printed books roll off the presses, my publisher will be following the standard launch playbook: mailing early copies out to members of the press, influencers, and bloggers. I get a personal allocation of books to send out, and I'd like to invite you to tell me who to send them to. Who influences you? We all know that one person in our lives who is truly influential, who always gives good advice and who people look up to.

It could be someone in the media, someone you work with, or just someone you know casually. If you want to nominate them to receive an early copy of the book for free, just let me know here. Please don't nominate yourself.

LOL your way to a free early copy
I only have a few early copies I can give away, and not everyone can be an uber-influencer. And I'm getting a little tired of taking this all so seriously. So I am including one last way you can get a completely free copy: create some Lean Startup-themed lulz. You can choose from any of these three memes: Lean Startup Junkies, Winter is Coming, or Lean Startup Cats. Post your entry in the comments (below), or vote for your favorite by replying to the comment. I'll send a free copy to the funniest entry or entries, as judged by the community.

Thank you for your continued support. This book represents over two years of work. I can't wait to hear what you think. Stay tuned...

Wednesday, August 10, 2011

Winter is coming

It doesn't matter if you call it a boom or a bubble. The startup business moves in cycles, and what goes up will eventually come down. We're in summer. One easy way to tell: notice all the startup experts and prophets that have sprung up in the last two years (myself included). Notice how many of them made their money during a previous boom. George R. R. Martin would call them summer's children.

Summer will end. When, how much, and why - I don't know. These are questions for financial analysts and investors, people with their ears (and attention) much lower to the market-ground than entrepreneurs can afford. But the signs of winter are all around us: persistently high unemployment, market shocks, ill-timed austerity measures. For a while, startupland can stay insulated from these broader forces, but not indefinitely. The LP's that fund booms are, after all, pension, municipal, and sovereign wealth funds. Consumers need disposable income to invest in the latest products, as do the companies who serve them and advertisers who reach them.

We've enjoyed these years of summer. But winter is coming.

Entrepreneurs should be prepared. Obviously, those who depend on raising money at a specific time in the future should be on their guard. Anyone whose plan is to "raise money in six months" is really saying, "I am planning on no significant financial crises happening six months from now." I wouldn't want to be making such specific predictions right about now. As every expert has been saying: if you can raise money on fair terms right now, do it. If you can spend money fueling your engine of growth, do it. If you need to double-down on a major pivot, on a drive to hit product-market fit, do it.

But we have much bigger questions to tackle about what will happen in winter. For example, entrepreneurship will suddenly stop being cool, and go back to being seen as risky, a little crazy, and a little dangerous. Those of us promoting the idea that entrepreneurship is a viable career option need to be ready. Right now, the "startup career" is an easy case to make. It's going to get harder. We need to be ready.

Those people working to nurture and support new startup hubs may see all of their hard work destroyed. I am especially worried about the burgeoning scene in places like New York. Will Union Square become another Silicon Alley? I hope not. We need to be thinking about this now. The endless networking groups that thrive on hype and sizzle will suddenly wither. Do we have enough groups that are focused on the nuts-and-bolts of real entrepreneurship to keep those ecosystems vibrant? Which kind of group are you investing your time and energy into right now?

I expect that a shocking number of the current crop of incubators, accelerators, and other startup-support programs will suddenly disappear. In summer, it's all-too-easy to have your program look like a success, because there is an endless supply of talented people becoming first-time entrepreneurs and an endless supply of investment dollars chasing them when they graduate. It's hard to know, in summer, which of these programs actually add value and which are glorified admissions officers. Winter will tell. If you depend on one of these program for support, be ready.

This may sound like all doom and gloom, but I'm feeling personally very optimistic. Hype gets in the way. Every ounce of energy invested in vanity metrics and success theater could have gone into building real value instead. As I've been saying in my talks for a while now, the real entrepreneurship - not the caricature from pop culture and mass media - is boring, tedious, and extremely difficult. It's anything but cool: product prioritization meetings, deciding which customers to listen to and which to ignore, and valiantly trying to keep the vision alive in the face of contradictory facts. To recruit people into that business, the real innovation business, should be our goal. I hope all of us are ready to reach out to those founders and would-be founders and nurture and support them through the hard times. That will create real value.

As I see it, the big opportunities to change entrepreneurship come in winter. During the last crisis, I was asked constantly for my advice on how to save money and cut costs. Most people didn't really expect my answer to be about the Build-Measure-Learn feedback loop and all the rest of the Lean Startup methodology. But the truth is: to save money, we have to cut any costs that are slowing down our ability to find validated learning about whether we're on the path towards a sustainable business. Cutting any other costs just help us go out of business more slowly.

But this begs the question: if we're spending money on something that is slowing us down, why are we doing it all? And why did we have to wait for a financial crisis to cut those costs? Why not cut them now?

Fall is a pretty good season to get serious about discovering which actions really contribute to creating value and which are waste. It's harder to act in a disciplined way in summer. All around you, you see excess and nonsense, companies being bought or funded for zillions of dollars without traction. It's hard to stay focused. Remember: most of those "lucky" companies die inside their new parent companies. Remember: in the long run, the surest way to be successful is to create more value than you capture. Remember: the truly great entrepreneurs didn't get in this to make money, but to change the world. Stick to that plan, and - even if you fail - you'll feel good about yourself in the morning, in any season.

Tuesday, July 26, 2011

Venture Deals

I was very pleased to receive an advance copy of Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist the other day. After reading it, I've concluded that it's like having a super-mentor on your shelf.

I have been extraordinarily fortunate throughout my career to have been blessed with amazing mentors. Men like Will Harvey and Steve Blank have been there to help me, encourage me, and push me to do better. For any entrepreneur, these super-mentors are one of the secret weapons that can make a difference: answering difficult questions, making key introductions, or offering sage advice.

However, there is one thing that the best mentors do which is most important: they can help you figure out what the $@%@$ is going on. When things get really tricky, often we find ourselves asking the wrong questions, or not even knowing enough to ask.

When raising money, for example, you might think that most negotiations happen in a rational way, over just a few deal points that have a clear meaning. You might think that "company valuation" refers, naturally, to how much your company is - you know - valued. But this kind of thinking will get you in trouble fast. Because in reality, these negotiations hinge on hundreds of hidden factors, incentives, and sources of agency bias. Nothing is straightforward, especially if you haven't done it before. These are the moments when the truly great mentors stand out in their ability to cut through the BS and help you understand the motivations and systems that are driving seemingly incomprehensible behavior.

All of this is by way of saying that if you already have a mentor of the caliber of a Steve Blank or Brad Feld on speed-dial, you probably don't need to read Brad's new book Venture Deals.

What's that you say? You don't - or you're not sure? Well then, you absolutely, positively, without-any-doubt have to read Brad's new book Venture Deals. Here's why.

Book endorsements are a funny thing. I get asked all the time to endorse books, in the hopes that you all will buy them and read them. And I often want to help other authors, because I know just how hard it is to get people to give a new book a chance (you may have noticed that I've been pushing a certain book pretty hard lately).

But if you look at my past book reviews and the "recommended reading" widget in the sidebar on the right, you'll notice that I recommend very few books. That's because I have an iron-clad rule: I will not use this space to recommend any book that I do not personally believe will directly impact entrepreneurs in a positive way. This creates a lot of awkwardness, because so many people have sent me books that I genuinely like, but which I don't feel are appropriate to endorse.

I say all this because I want you to understand why I am writing this post. Brad Feld and I have a bit of a mutual admiration society going. He and I have worked together on the Startup Visa initiative. He's said nice things about me and my book. I think he's a great guy. I even contributed a chapter to his previous book, Do More Faster.

But none of that is enough to get me to recommend this new book, co-authored with Jason Mendelson.
In fact, when I received my advance copy, I was a little worried. I generally try and stay away from topics like "how to raise VC" or "how to sell your company" because the startup landscape is already saturated with tips and tricks. And reading a term sheet has all the entertainment value of watching dried paint get even drier.

But Venture Deals is quite a surprise: it's readable, engaging, and addresses issues way below the surface.

It is not a how-to manual or a collection of tips. It's an in-depth explanation of what the @$%$ is going on when an entrepreneur considers raising money or doing an M&A transaction. And even if you don't think you're going to do that for your startup, this is very valuable information to have - because you never know who might approach you in the future. This is a book you'll want to have handy, just in case.

I've dealt with a bunch of different kinds of investors over the years, from so-called "dumb money" all the way up. The hardest thing to understand when working with them is that they are subject to forces and incentives that are rarely disclosed openly. When I came to Silicon Valley, I was inducted into a body of accumulated wisdom about how to handle them. This is the same advice I hand down again to entrepreneurs who are seeking my counsel. That advice is completely consistent with what's contained in Venture Deals.

For example, the right way to think about a term sheet is as a negotiation over just two things: economics and control. Everything in a term sheet is negotiable - if and only if you already have sufficient leverage. (Do you know the sources of leverage in a VC deal? Wouldn't you like to?) There are many founder-friendly terms you can push for, from automatic acceleration to reduced vesting - but each risks reducing the alignment of interests between founders and investors. And even if you're an old pro at raising money, you're likely to find a few surprises in here. Are you sure you know the formula for how your VC reserves capital for your future rounds (I didn't)?

And even the most battle-tested entrepreneur would be forgiven if they were a little confused by the following bit of poetry in a term sheet:
Antidilution Provisions: The conversion price of the Series A Preferred will be subject to a narrow-based weighted average adjustment to reduce dilution in the event that the Company issues additional equity secuities...
Now even though us old pros know that there are different kinds of antidilution provisions, are you absolutely sure you remember which one is the good kind and which is the horrible kind that caused all those problems in 2001? Are you sure your lawyer will catch it if the formula isn't quite right? Wouldn't you rather be sure? I've lived through a crisis where a company's antidilution provisions kicked in and nobody could agree on how the formula was to be interpreted. I wish I'd had this book on my shelf back then.

Which brings me back to my claim at the top about having a super-mentor in book form. Venture Deals explains not just what to do but why it works that way.  Every VC term sheet I've ever seen has come with a claim that its terms are all "entirely standard" and "as simple as possible" - whether it was one page or a dozen pages long. That can be frustrating, but what do you do about it? Which terms really are standard for good reasons, which are standard for bad reasons, and which are just gotchas designed to skew the negotiation?

Venture Deals has negotiating tips, same as other books, but - much, much more importantly - its negotiating section is called What Really Matters? When you're in the thick of it, only a truly great mentor can tell you which provisions are negotiable, which are negotiable-but, and which are really non-negotiable. ("negotiable-but" means you can possibly win that fight, but it will damage your reputation in the process.)

Now, it's important to keep in mind that Brad and Jason are themselves VC's, albeit ones with an entrepreneur-friendly reputation. So you always have to take their advice - like anyone's - with a grain of salt. But they've thought of that, too. Throughout the book, they've given space for brief commentaries by an experienced entrepreneur, Matt Blumberg, CEO of Return Path. In several places he gives an important counterpoint to Brad and Jason's perspective. It's a combination that is unique to this book.

I hope all of you who are reading this - no matter where you live, no matter what kind of company you have - will one day get to make the pilgrimage to Sand Hill Road in Silicon Valley, or another famous startup hub. It's an exhilarating experience. But it's not without its risks. As the old saying goes, "watch your wallet." And bring your copy of Venture Deals.