The Lean Startup - Eric Ries: Know if your product will sell before creating it

Scan time: 3-4 min / Full read time: 5-7 min

Chapters in book: 14 / Chapters in here: 12 (same order as book)

Hey rebel solopreneurs 🦸‍♂️🦸‍♀️

You've been lied to.

The business world told you that if you build something amazing, customers will magically appear.

So you spend months perfecting your course, your template, your digital product - only to launch to crickets.

But here's the thing - Eric Ries discovered the real secret at his startup IMVU: treat your business like a science experiment, not a guessing game.

His Build-Measure-Learn system has helped thousands of entrepreneurs build profitable businesses by testing ideas before betting everything on them.

Time to unlock the secret.

💰 Multi-millionaire entrepreneurs who love this book

⛳️ The author's journey: From failed founder to startup guru

Eric Ries believed the same lie you probably do: build it perfect, and they will come.

His first startup, Catalyst Recruiting, crashed and burned because he spent years building features nobody wanted.

He was doing everything "right" according to business school - writing detailed plans, raising money, building in stealth mode.

But wait - customers didn't care about his beautiful, complex solution.

The failure devastated him, but here's the crazy part - it also opened his eyes to a game-changing truth.

At his next startup, IMVU, Eric tried something crazy.

Instead of building the perfect instant messaging add-on, they launched a broken, buggy version and watched what customers actually did.

The results shocked them: customers hated their original idea but loved using it as a standalone avatar chat.

This wasn't failure - it was discovery!

"says Eric" - "We really had customers, often talked to them and did not do what they said."

By treating his business like a laboratory instead of a factory, Eric built IMVU into a company with over 40 million users and $22 million in revenue.

His approach became the Lean Startup methodology that changed how the world builds businesses.

Let's unlock Eric's game-changing strategies that will turn your product guessing into customer-validated gold, so you can build what people actually want.

1. 🚀 Start treating your business like a science experiment (Entrepreneurial management)

🧸 Example

IMVU is a social platform where users create avatars to chat and interact.

The company started with over 40 million users and generates millions in revenue.

But here's the crazy part - they did everything "wrong" according to traditional business advice.

They launched a product full of bugs, charged money before it was ready, and constantly changed features based on customer feedback.

Instead of following a perfect business plan, they treated every decision as a hypothesis to test.

This wasn't reckless - it was scientific.

🔥 The power insight

• Entrepreneurial management means running your business like a laboratory where every assumption gets tested with real customer data

• Traditional management assumes you know what customers want; entrepreneurial management assumes you need to discover it through experimentation

🍿

• It's like the difference between following a recipe and being a chef who tastes as they cook

• Foundation solid... but can you handle rapid growth?

2. 📍 Define what type of business you're really building (Startup definition)

🧸 Example

Intuit's TurboTax team operates like a startup inside the massive corporation.

The company has thousands of employees and billions in revenue.

Yet the TurboTax team constantly runs experiments, tests new features with small groups, and pivots based on customer data.

They don't rely on corporate bureaucracy to make product decisions.

Instead, they validate every assumption with real user behavior.

Size doesn't matter - uncertainty does.

🔥 The power insight

• Startup definition means any person or team creating something new where you don't know if customers will want it

• This applies to solo creators building their first course just as much as venture-funded tech companies

🍿

• It's like being an explorer in uncharted territory versus taking a guided tour of Disney World

• Identity clear... but how do you actually learn from customers?

3. 🧠 Learn what customers want through data, not opinions (Validated learning)

🧸 Example

Zappos founder Nick Swinmurn wanted to test if people would buy shoes online.

Instead of building a warehouse and fancy website first, he got creative.

He visited local shoe stores, took pictures of their inventory, and posted them on a simple website.

When someone ordered shoes, he bought them at full retail price and shipped them himself.

This "fake" business model proved customers would buy shoes online before he invested in inventory or technology.

Pure validated learning in action.

🔥 The power insight

• Validated learning means proving your assumptions with real customer behavior data, not surveys or focus groups

• Progress isn't measured by features built or hours worked, but by assumptions tested and validated with actual users

🍿

• It's like learning to cook by actually making meals for people instead of just reading cookbooks

• Learning method locked... but what assumptions should you test first?

4. 🔬 Experiment with your riskiest assumptions first (Leap of faith)

🧸 Example

Facebook started as a simple directory for Harvard students to connect with classmates.

The company now has billions of users worldwide.

But in the beginning, Mark Zuckerberg made a massive leap of faith assumption: students would willingly share personal information online with people they knew.

This was risky - privacy concerns were huge, and social networking didn't exist yet.

Instead of doing market research, they launched and watched actual student behavior.

Students loved it, validating the core assumption that led to global expansion.

🔥 The power insight

• Leap of faith means identifying the dangerous assumptions your business depends on and testing them with real experiments

• Every business plan contains hidden assumptions that could kill your business if they're wrong

🍿

• It's like testing if a bridge can hold weight by actually walking across it, not just looking at the blueprints

• Assumptions identified... but how do you test them efficiently?

5. 💎 Leap into testing your value hypothesis (Value hypothesis)

🧸 Example

Groupon started as The Point, a platform for organizing group campaigns and activism.

The company is now worth billions and pioneered the daily deals industry.

But originally, founder Andrew Mason had a different vision entirely.

The leap of faith was that people would use collective action for group buying discounts.

They tested this manually in Chicago, creating daily deals by hand before building automated systems.

When people actually bought the deals, they proved value before scaling technology.

🔥 The power insight

• Value hypothesis means testing whether customers find enough value to actually use and pay for your product once they have it

• This is different from testing if people like your idea - it tests if they'll actually change their behavior and spend money

🍿

• It's like testing if people will actually eat your cooking by inviting them to dinner, not just asking if the recipe sounds good

• Value confirmed... but what's the smallest way to start testing?

6. 🚀 Test with the smallest possible version (Minimum viable product)

🧸 Example

Dropbox is a file-syncing service used by millions of people worldwide.

The company is worth billions and changed cloud storage forever.

But their first "product" wasn't even functional software - it was a simple 3-minute video.

The video showed how file syncing would work across devices, demonstrating the concept clearly.

This generated thousands of signups and proved demand before they wrote a single line of actual code.

Smart founders validate before they build.

🔥 The power insight

• Minimum viable product means the smallest thing you can create that lets real customers start giving you real feedback

• The goal isn't to build a perfect product, but to start the learning process as quickly as possible

🍿

• It's like making a single cupcake to test your recipe before opening a bakery

• MVP ready... but how do you know if it's actually working?

7. 📊 Measure what actually matters for your business (Innovation accounting)

🧸 Example

IMVU is a social platform where users create avatars and virtual worlds.

The company has millions of users and generates substantial revenue.

But they ignore vanity metrics like total user count that make founders feel good.

Instead, they track cohort metrics showing which users become valuable customers over time.

They discovered that users who engaged with certain avatar features in their first week had dramatically higher lifetime value.

This actionable data guided every product decision.

🔥 The power insight

• Innovation accounting means tracking metrics that actually predict business success, not vanity numbers that make you feel good

• Focus on customer acquisition cost, lifetime value, and retention rates instead of downloads or social media followers

🍿

• It's like measuring your health by how you feel and perform, not just your weight on a scale

• Metrics locked... but what happens when the numbers look bad?

8. 🔄 Pivot when your strategy isn't working (Strategic pivot)

🧸 Example

Twitter is one of the world's most influential social networks.

The company is worth billions and changed how people communicate globally.

But it started as Odeo, a podcasting platform that was failing miserably.

When Apple launched iTunes podcasting, the founders realized their strategy was doomed.

Instead of stubbornly persevering, they pivoted to a side project they'd built - the status update feature.

This pivot transformed a failing company into a global phenomenon.

🔥 The power insight

• Strategic pivot means making a fundamental change to your approach while keeping your core vision alive

• The key is pivoting based on data, not emotions - when evidence shows your current strategy won't reach your goals

🍿

• It's like changing your route when you realize the road you're on doesn't lead to your destination

• Pivot mastered... but how do you work more efficiently?

9. ⚡ Batch your work into tiny pieces (Small batches)

🧸 Example

Toyota changed car manufacturing with their production system.

The company builds millions of vehicles and became the world's most valuable automaker.

Their secret wasn't building faster - it was building in smaller batches.

Instead of producing thousands of cars before checking for defects, they check quality constantly.

When they find a problem, they only have to fix a few cars, not thousands.

This approach prevents small issues from becoming expensive disasters.

🔥 The power insight

• Small batches means working in tiny increments to get faster feedback and catch problems before they become disasters

• This reduces waste because you identify issues sooner, when they're cheaper and easier to fix

🍿

• It's like taste-testing your soup throughout cooking instead of waiting until you've made a huge pot

• Efficiency maximized... but how do you grow sustainably?

10. 🌱 Grow through happy customers, not just marketing (Engines of growth)

🧸 Example

PayPal achieved viral growth by paying both senders and receivers for transactions.

The company changed online payments forever and sold to eBay for billions.

Their growth strategy seemed expensive - giving away money for each transaction.

But this created a viral loop where every payment introduced the service to new users.

Satisfied users naturally referred friends and family because they got paid to do it.

This led to exponential growth without traditional advertising costs.

🔥 The power insight

• Engines of growth means sustainable expansion comes from customers paying more, referring others, or viral spread

• Focus on making existing customers so happy they become your sales force instead of constantly acquiring new ones

🍿

• It's like growing a garden where healthy plants naturally spread seeds to create more plants

• Growth engine running... but how do you improve systematically?

11. 🔍 Adapt by finding root causes (Five whys)

🧸 Example

IMVU's website kept crashing during important product launches.

The company was losing customers and revenue with each outage.

Instead of just fixing servers and moving on, they used the Five Whys technique.

Why did it crash? Server overload. Why? Unexpected traffic spike. Why weren't we prepared? No load testing. Why no testing? No process for capacity planning. Why no process? No one was responsible for infrastructure growth.

This revealed the real problem wasn't technical - it was organizational.

🔥 The power insight

• Five whys means digging deeper when problems occur by asking "why" five times to find root causes

• This prevents you from treating symptoms while missing underlying issues that will keep causing problems

🍿

• It's like figuring out why your car keeps breaking down instead of just getting it towed every time

• Problem-solving mastered... but how do you manage different types of projects?

12. 🎯 Create different approaches for different projects (Innovation portfolio)

🧸 Example

Google manages different types of projects across three categories with different rules.

The company has become one of the world's most valuable by balancing different types of bets.

Core products like search and ads follow traditional metrics and optimization.

Adjacent experiments like Gmail and Maps use lean startup methods with rapid experimentation.

Transformational bets like self-driving cars require entirely different evaluation criteria and timelines.

Each category gets managed with appropriate methods instead of one-size-fits-all approaches.

🔥 The power insight

• Innovation portfolio means managing different types of projects with different rules based on their level of uncertainty

• Don't use the same processes for breakthrough experiments as you use for optimizing existing products

🍿

• It's like using different cooking methods for baking bread versus making a stir-fry

🧘‍♀️ The simple success recipe

1. Test your assumptions scientifically - Like a researcher proving theories with experiments

2. Start with the smallest possible version - Like making one perfect cupcake before opening a bakery

3. Measure what predicts real success - Like tracking your actual health, not just the number on a scale

🥂 Your turn!

That's it, my fellow rebels!

Turn your business building into a scientific experiment where you test your biggest assumptions with real customers as quickly as possible.

"says Eric" - "The fundamental activity of a startup is to turn ideas into products, measure how customers respond, and then learn whether to pivot or persevere."

Start today by identifying one key assumption about your digital product and design the smallest experiment to test it with real potential customers.

Stop guessing what people want and start discovering what they'll actually pay for.

Ready to turn your biggest dreams into your new reality.

Keep zoooming 🚀🍧

Yours 'helping you build a biz with almost zero-risk' vijay peduru 🦸‍♂️