00:00hi everyone welcome to the Asics & Z
00:02podcast I'm sonal and Michael and I are
00:05here together interviewing Eric Ries who
00:07wrote the book on the Lean Startup and
00:09it's been actually now over fight is
00:10that right Eric about over five years
00:12since that that book came out yeah it
00:14came out in 2011 so next fall will be
00:16the five year anniversary of his
00:17publication and of course the
00:19publication was like you know the end of
00:22a process of blogging and writing and
00:24kind of building that community I was
00:25about to say cuz I feel like your book
00:27came out well after Lean Startup was
00:29already on its way yeah um well the
00:31other interesting thing that I think
00:32we'd like to talk to you about is how
00:34things have changed since then and now
00:37but more importantly we'd love to also
00:39because one of the things that's
00:40happened is that Lean Startup is now
00:41outside of Silicon Valley and it's gone
00:43also outside of startups interestingly
00:45so we want to hear a little bit about
00:46your insights from that and then kind of
00:48talk about not just the Lean Startup but
00:50what it means for the future of the firm
00:52what is a Lean Startup and if it's not a
00:56start-up how does how does that apply
00:58yeah so the basic idea is to take a more
01:02scientific more iterative and more
01:04customer centric approach to product
01:06development and customer building it's
01:08called Lean Startup because we take
01:09ideas from lean manufacturing around
01:11cycle time and batch size and iteration
01:13but we apply them not to the factory
01:15floor but to the process of innovation
01:17itself where the signal that pulls work
01:20from us is not the order from a customer
01:22since in most startups we don't have a
01:24customer yet we don't know who the
01:25customer is going to be the pull signal
01:27is our hypotheses our beliefs about what
01:30the customer will want in the future or
01:32another way of saying it is we write
01:33these business plans that are full of
01:35assumptions and hypotheses and guesses
01:37about the future and Lean Startup says
01:39rather than take those things for
01:40granted and hope that they're true let's
01:43test them scientifically accepting the
01:44fact that every startup faces high
01:46uncertainty about the future so how do
01:48you respond to critics who say look I
01:51would say actually thinking about it
01:53more at no graphically that you're
01:55essentially only then building for
01:57people who know what they like it's
01:59based on what the market is getting his
02:01feedback versus like true internal
02:03creativity that's an internal compass
02:04yeah it's an interesting thing because
02:07customers don't know what they want and
02:09everyone knows that to be true or talks
02:11about it and if you imagine I'm a
02:14I'm gonna do chemistry and then I'm like
02:15oh shoot electrons don't know what they
02:17want and I can't do a focus group with
02:19protons like forget it I guess I can't
02:21Duke Energy be like that person is
02:22bonkers I thought what what as I'm a
02:24mental problem for some reason we talk
02:25about customers we get confused about
02:27this taking a scientific approach means
02:29having a very strong belief uh someone
02:31say a visionary belief about what's
02:33gonna work and finding out if that
02:35vision is right and what we discover
02:37with if you look at the stories of
02:38entrepreneurs not the kind of movie
02:40version and the Hollywood version that
02:42you read in the magazines but if you get
02:43the real story but you're not with
02:44actual entrepreneurs what you discover
02:45is that even if the vision is right on
02:47and I see the future the specifics of
02:50the strategy often have fatal flaws and
02:52until you systematically figure out
02:54which elements of the strategy make
02:55sense right do we have the right
02:56business model and the right target
02:58customer and the right you know approach
02:59the disruptive innovation are we on the
03:01right technology platform have we gotten
03:02our timing right you have to work to get
03:04all those details right and the the best
03:06entrepreneurs I know are extremely
03:07rigorous in their thinking because it's
03:10precisely because they care so much
03:11about the vision they feel like they
03:12have to get the details right and so all
03:15we're saying is that we should approach
03:16that with the most you know scientific
03:19kind of rigor that we can write
03:21essentially a business a business plan
03:23is a hypothesis so I can sort of test
03:25out not just whether it works or not
03:27really but actually the details of how
03:28to execute on that because the vision is
03:30a large thing so why is it then and we
03:33talked about this was the five year
03:34anniversary how is it this is a resident
03:37it's so well outside of the Silicon
03:39Valley startup world be you know what
03:41are ya what are the things that people
03:43are kind of grasping to it whether it's
03:45aspirational or or really like I can
03:47roll up my sleeves and do this yeah you
03:50know it's a question I think a lot about
03:51because I no one is more surprised than
03:54I am about how this has grown beyond
03:56just a book and beyond just a set of
03:57like idiosyncratic I mean you know I
04:00feel like I have to disclaim
04:01periodically that Lean Startup is not a
04:03religion and like if you have to if you
04:05have to say that then something's you
04:06know something's a little suspicious
04:07here like what you know I think that's
04:09that's fair game I think that first time
04:12I got a look at the timing of it I
04:13started writing about this idea in
04:142008-2009 and right in the height of the
04:16financial crisis when people had kind of
04:18lost confidence in kind of traditional
04:20ideas about how company should be built
04:22so there was a kind of a hunger for
04:23something new I think having a called
04:24Lean Startup at a time when people were
04:27freaking out about money was probably
04:28good good time and good branding and I
04:31think that as Daz entrepreneurship has
04:33become more democratized what do you
04:35mean by entrepreneurs have become
04:36democratized so you know I think there
04:38was a time when if you wanted to become
04:41an entrepreneur you had to have the
04:42right connections you had have access to
04:44a lot of money in capital you had to
04:45kind of look the part and you know if
04:48you look at the like famous
04:49entrepreneurs in history a lot of them
04:51came from very specific kinds of
04:52backgrounds and it was a rare thing it
04:54was considered a little bit crazy you
04:56know as as the semiconductor revolution
04:59is kind of systematically you know
05:00eradicated barriers to entry for
05:02everything I think about it you go back
05:04to the old Karl Marx idea of who owns
05:06the means of production we are now
05:08living through a time where you can rent
05:09the means of production which means that
05:11if you want to test an idea if you want
05:13to start something in your dorm room at
05:14Harvard you know just because you
05:16started small just initial I mean it
05:17can't scale to something we know
05:18massively large and so you have that
05:20phenomenon plus the fact of the Internet
05:22itself has made the idea of
05:24entrepreneurship as a possible career
05:26path accessible to people who you know
05:28you used to have to like know somebody
05:29in Silicon Valley to kind of like
05:30understand what was happening here now
05:32Silicon Valley it's like a reality TV
05:34show that everyone on the world watches
05:36I want I want to go back to Karl Marx
05:38just for a minute you say who owns them
05:42sounds like Amazon does but maybe owning
05:44the means of production isn't worth as
05:46much as it's worth a lot to Amazon but
05:48yeah well I think the kind of older
05:51industrial thinking was that if you own
05:53something then then the right thing to
05:54do was to control it in order to
05:56maximize the return you would get from
05:57it and I think what we are having a
05:59recognition probably partly through that
06:01just the realities of how technology
06:02works but I think also partly due to you
06:05know like better management thinking
06:06frankly is that if you make those tools
06:09available to other people so that you
06:11don't have complete control if you turn
06:12it into a platform if you give people
06:13open access the sum total of the
06:16creative power that you unleash when you
06:18do that means that you have a smaller
06:20piece of a much larger pie so speaking
06:22of the shift in management thinking
06:24let's talk about the surprise that you
06:26have and that we're surprised by that
06:29big companies are trying to be lean
06:31startup like I mean because I think one
06:32of the things that's interesting about
06:33the management point is that we're
06:35living through an interesting time right
06:37now where a lot of the old-school
06:38theories about management like they may
06:40I in certain way but in other ways
06:41there's a real gap a real need for like
06:44how do you really the world has changed
06:45and it's very trite to say that but it's
06:47true so talk to us more about my story
06:50when I was doing the research for the
06:51lean starts drama the five year
06:52anniversary I was doing the research for
06:54the book I read everything I get my
06:55hands on about management business books
06:57I felt like I need to understand what
06:58came before and I remember reading about
06:59the development of our modern accounting
07:01system which I didn't really know a lot
07:03never thought about what going back to
07:05the 1920s and Alfred Sloan and that
07:06whole movement and I read realize at
07:08certain point that though we had develop
07:10this accounting system not to keep track
07:12of the money which kind of how we think
07:13about it now it was originally developed
07:15as a system of accountability so you
07:17could figure out which managers are
07:18really doing a good job because if some
07:20manager makes more money this year than
07:21last year they say I should be promoted
07:23but you're like hold on if you had a
07:24forecast how much money you were
07:26supposed to make this year and you fell
07:27short of the forecast you don't get
07:28promoted for that week we take that so
07:30for granted in our world today but when
07:32I first read that I almost fell out of
07:34my chair because I wait a minute I'm
07:35sorry you're telling me there's a part
07:37we're a part of history or anywhere
07:39where people make forecasts for things
07:41and then they come true I never heard of
07:44that you know as an entrepreneur I had
07:46no idea why I was always asked to make
07:48forecast I thought the spreadsheet I put
07:50in my business plan when I raised VC was
07:52like a Kabuki ritual I did to show how
07:55much pain I could endure to show that I
07:57was tough I didn't think anyone would
07:59read the content of those spreadsheets
08:01and take them seriously we just made
08:02those numbers up we had no idea but of
08:04course if you think about that like that
08:06is so specific to my experience as an
08:08entrepreneur and I was like okay well
08:10how is it that I've never seen an
08:11accurate forecast but in the in the in
08:13the real world in mainstream business
08:14forecast rule the world why and so I you
08:17know say that learned about it when my
08:19realization was like forecast is
08:21accurate only to the extent that it is
08:23an extrapolation from a long and stable
08:25operating history and so anytime you
08:29don't have that either because you're
08:31doing something brand new or because
08:33you're long and stable operating
08:34history's just gone unstable on you and
08:35oh my god then you're in a situation of
08:38high uncertainty and my since my
08:39definition of entrepreneurship is trying
08:41to create something new under conditions
08:42of extreme uncertainty then you are an
08:44entrepreneur no matter what it says on
08:46your business card now when I first
08:48heard of saying that out loud you know
08:49talks and conferences you know a couple
08:51years ago this weird thing happens
08:54me where people would come up to me
08:55after the talk and they would say oh hi
08:56I'm a general manager at such-and-such
08:57large business and I accept your
09:00first time it happened I was like what I
09:02already talked about you said because of
09:06the definition of it this can apply to
09:07companies of all sizes all sectors all
09:09industries I said yeah I just say that
09:10so they're like I would like to go you
09:12know prove that that can work and I was
09:13the first time it happened to me I was
09:14like good luck yeah I what does have to
09:16do with me I go okay that sounds great
09:18this was just a deduction from a theory
09:20that's not my responsibility but then
09:22luckily for me really some very
09:24visionary you know big company folks
09:27kind of dragged me kicking and screaming
09:29to the realization that there are real
09:32honest-to-god entrepreneurs just as
09:34visionary just as exciting to work with
09:35inside some of these larger
09:37organizations as you walk down the
09:39street here in Silicon Valley and and is
09:41that Lean Startup kind of army being
09:43activated because of the conditions now
09:45facing these large companies I mean that
09:47you describe or I think that's right I
09:49mean look big homies have always faced
09:51the forces of disruption they're they're
09:52old that's an old phenomenon but the
09:54rate of change and the the kind of
09:56existential crisis of some of these
09:58companies find themselves and I think
09:59it's more severe than ever and there's
10:01more of a recognition that they need
10:03entrepreneurial activity in order to
10:06survive so I think that has created a
10:08fertile ground for these ideas to come
10:10in because so many companies want to act
10:11more entrepreneurial you know the idea
10:13you're gonna act like a start-up or have
10:14internal startups just like almost
10:15almost to the point of cliche here and
10:17yet most of the companies that I meet
10:18that have that as a plan there's no plan
10:21I mean you know how to make it happen
10:22right exactly but I do want to say that
10:24they do have long-standing processes I
10:27mean R&D deciding about where to invest
10:30your resources that's all about decision
10:31making under uncertainty yeah and
10:33they're actually entire schools of
10:35portfolio management for managing rnd
10:37yeah around that which some of it is
10:39varies not dissimilar to managing a
10:40portfolio as a VC with a lot of startups
10:42and so I think I wanted to pause for a
10:45minute you said about things happening
10:46faster and just make sure we reflect on
10:48what that really means yeah because
10:49that's a you know array of phrase people
10:52use like rapid changes now things are
10:54dynamically evolving what we're really
10:56saying is that these big companies which
10:58before could have quickly acquired
11:00startups to help them do some of these
11:02things now those companies get too big
11:05they reaches a point where their market
11:07observe this for them to even consider
11:10affording the ability to then take on
11:13that company so it's a really big deal
11:15that they can't some of these companies
11:17can't then innovate themselves so it's a
11:19big job when you're talking about its
11:21how to get at that so anyway so given
11:23this condition like how what have you
11:25seen about how people are becoming I
11:27mean isn't there a word called
11:28intrapreneurs that's been gone forever
11:29like what does that mean yeah I you know
11:31I don't actually like that word that
11:33much because I feel like you know an
11:34entrepreneur as an entrepreneur it
11:35doesn't matter if they live in a garage
11:36they wear a suit or they have health
11:38benefits so the ramen noodles like the
11:40the surface details don't matter what
11:42matters is the fundamental you know
11:43reality their job which is they're
11:45trying to create something fundamentally
11:46new and you know a lot of big companies
11:49actually have outstanding research labs
11:50where they're doing breakthrough science
11:52and they manage the scientific
11:53uncertainty really well and yet as soon
11:55as they take those discoveries out of
11:57the lab it's like okay we're done with
11:59the science now the astrology and it's
12:01like they take these hot world-class
12:02scientists and like forget everything
12:03you know about science now we're gonna
12:04build a business plan tell me what's
12:05gonna happen in the future and then make
12:07it happen through the power of your mind
12:10talking about that doesn't make sense to
12:13me and when I go to I've now work with a
12:14lot of big companies a lot of comes with
12:16high science research labs I meet these
12:19scientists and I say so tell me about
12:20some of the great breakthroughs you've
12:22had in the lab and they're very excited
12:23tell me about that so great tell me
12:24which of those have been commercialized
12:26and are in products today and which ones
12:28are sitting on a shelf and now you may
12:30as well start the violin music because
12:32it is really depressing life-saving
12:34treatments unbelievable breakthroughs
12:36sitting there and it's like these
12:37companies can spend through their
12:39technology readiness level you know
12:41analysis and portfolio they can do the
12:43smart research to spend 5 10 15 50
12:46million dollars to have a breakthrough
12:48and then they they often are not able to
12:50spend the like two million extra dollars
12:52that would be necessary to commercialize
12:53it because they're organized around
12:55functional silos and there's nobody
12:57whose job it is to actually take it out
12:59of the lab and make sure that the
13:00businesses that operate that are mostly
13:02tied to quarterly short-term incentives
13:04you know have the ability and the
13:06incentives and the time in the space to
13:07figure out how to incorporate
13:08commercialize how do you mean that it's
13:10nobody's job to do that I mean two
13:12million dollars that should get done and
13:14then we're off and running it's like
13:15everybody's job yeah it's everybody's
13:17job which means that it's nobody's job
13:18my observation is that in most companies
13:21function for entrepreneurship there's
13:23just nobody in charge of making sure
13:26that new ideas are taken from concept to
13:28execution there's not a discipline
13:31systematic way of testing new ideas so I
13:33used to think I'm a Silicon Valley
13:34person quite arrogant about the world
13:35our way is the best you know I used to
13:37think if I had a big company person down
13:38I said hey do you have any ideas for how
13:40your company could be better that they
13:42wouldn't have any good ideas because
13:43people are dumb if they working big
13:44companies that's that's what I used to
13:45believe and you know what I've learned
13:47into the hard way is it that such a
13:48dangerous question to ask because you
13:49gotta have four or five hours to spare
13:51to get the answer because you can't shut
13:52people up they got tons of amazing ideas
13:54that we could do better the biggest
13:55thing is that disruptors always know
13:57what's coming it's not like they don't
13:58know yes I'm gonna know the information
13:59great ideas are in the company already
14:01and the talent is in there too if you
14:03want to shut them up real quick just say
14:04okay tell me the process to test out
14:06those ideas to see if they're any good
14:08and they're like I guess I got to ask my
14:10manager to ask their manager to go
14:12across the silo the other man
14:14so like visualize you put the idea in a
14:16pneumatic tube it gets sucked up the org
14:17chart somewhere sent somewhere else sent
14:19down and they're just like forget it and
14:20they're just nobody pays it don't pays
14:22attention it's like just just the just
14:24discussing the process is like so
14:26painful they're like forget it I'm just
14:28gonna go back to do it my job but isn't
14:29that so here's the thing it sounds to me
14:31like these large companies are coming to
14:32you in some sense for youth like you see
14:34in the movies where you know they're the
14:36witches sucking the youth out of a child
14:39but isn't it the natural course that
14:41these companies they get big they get
14:43old and they get plowed under I mean
14:45that's a very common business are you
14:47gonna change that I I basically used to
14:50think that too but I don't believe it
14:51anymore I think that you know I come in
14:54as a consultant I so I come in as an
14:55outsider and one of my strengths is I
14:56don't run a consulting company that I
14:57don't have 50 associates on trying to
14:59feed I come in I can tell companies the
15:00truth when I tell them is listen as a
15:02consumer of products in your category I
15:04don't care if you live or die I know
15:06that five or 10 years from now the
15:08person who provides me this service it's
15:10gonna be technology enabled it's gonna
15:12be developed according to these
15:13principles it's gonna be rapidly evolved
15:15to suit my needs so consumer I'm fine
15:16either because you will have adapted to
15:18that new reality or some some startup my
15:21friends down on Sand Hill Road are
15:22funding right the second will disrupt
15:23you and displace you and I don't
15:24personally care so whether you live or
15:26die now as a consulting that's not
15:27generally considered a nice thing to say
15:29but it helps because people who don't
15:30want to hear that kick me out of their
15:31office and we save ourselves a lot of
15:32time and heartache the ones that have
15:35say okay what would it take to do the
15:37transformation and it's hard I think
15:40have seen really dramatic results so I I
15:42have become a believer that even that
15:44the burek that the bureaucracy and
15:46slowness and kind of ossification that
15:47we take for granted as a result of scale
15:50is not an inevitable development but
15:51it's a choice about the systems of
15:53management that we use so can you tell
15:54us a little bit more than about what
15:55you've seen on a big company side
15:57because frankly I think yes you're right
15:59there isn't like a chief entrepreneurial
16:01officer that owns a function or the
16:03process for that matter but there are
16:05groups within a company that try to like
16:09they have weird titles often which is
16:12probably also a sign of not a good thing
16:14but um that do own this in some way
16:16shape or form I mean what's the how do
16:18you prevent the risk of that just being
16:19yet another idea that doesn't go
16:22anywhere like how you got as lean
16:23startup kind of help with that like what
16:24have you seen on the front lines well if
16:26someone was came up to me after a talk
16:27and they said I have a question for you
16:28there's this guy in my company who has a
16:30c-level title I think it was title was
16:32like chief information a chief
16:33innovation officer or something say that
16:35guy always comes to work in red pants he
16:38has no responsibility doesn't do
16:40anything as far as I can tell he has
16:42nothing he does not know operational
16:43he's not response for any quarterly
16:44targets he's like I came into work
16:45dressed like that and talking like he'd
16:47I'd be fired in a heartbeat
16:48he's literally coming up to me like can
16:49you explain to me what this person is
16:54like I don't blame me like paying
16:57lip-service innovation is easy doing it
17:00is really hard and the question I always
17:01have is like what I want to find an
17:03entrepreneur inside a large organization
17:05I can usually I go to the middle manager
17:06I say listen to you I got this kind of
17:07wacky crazy project you know a lunatic
17:09who would be dumb enough to sign up for
17:11this suicide mission they're like well
17:13let me show you my secret black book you
17:15know there's these certain people that
17:16are known in the organization if I pull
17:18their personnel file from HR they are
17:20full of black marks does not play nice
17:23my favorite is like refuses to obey the
17:25standards they defy the standardization
17:27of work and that drives people crazy a
17:29lot of companies they get fired and
17:30bought back more than once sometimes if
17:33we're their startup them it's just it's
17:35crazy look these people exist then it's
17:37like what's their job title and some
17:40companies that are product manager
17:41they're engineer there are market or
17:42whatever they are you know how do they
17:44get promoted if they're good at what
17:46they do if they were really good
17:47entrepreneurs how do they get promoted
17:48where do they live in the work chart who
17:50do they look up up to and what I've been
17:53working on lately I've been thinking
17:54about it's like a grand unified theory
17:55of entrepreneurship which is this in
17:57most companies including by the way
17:59startups that have gone through hyper
18:01like Google I mean how many people leave
18:02Google a start started me now
18:03unbelievable you have basically four
18:06completely different jobs but to me are
18:09the same okay you have somebody who's
18:11like a product manager or tasked with
18:12leading on brand new product development
18:14so you say we're gonna enter a brand new
18:15market with something that's radically
18:17different we're to try to be the
18:18disrupter for once you're that person he
18:21has someone in charge of a new internal
18:22system I think about how many new IT
18:24systems you spend years and millions of
18:27dollars on in their dead-on-arrival it's
18:28like it's the same old waterfall
18:30development it was the old-school
18:31Silicon Valley way too much money too
18:33little customer feedback too long
18:34development that's true for new HR
18:36policies new finance policies I mean you
18:38name it that's actually an entrepreneur
18:40challenge too then you have somebody in
18:42the business development you know office
18:45who's supposed to be evaluating outside
18:47startups for purchase and they make
18:49these catastrophic errors you know
18:50they'll buy a start-up for nine hundred
18:51million dollars and three years later
18:52it's worth fifteen million dollars you
18:54know like that in most parts of the
18:56corporation making catastrophic errors
18:57like that would get you fired but but in
18:59biz dev it's like we don't know how to
19:00ask the right questions to figure out
19:02who's doing good job and who's not we
19:04went up flooding the entrepreneur
19:05ecosystem with some money and then you
19:06have people who are responsible for
19:07partnering with startups most big
19:09companies are terrible partners they
19:11don't understand how to pilot things
19:12they don't understand how to work with
19:14startups in a way that don't kill them
19:15they spent way too much time on contract
19:17negotiations and and they just they're
19:18unreliable and then you have the non
19:20invented here syndrome which pretty much
19:21kills anything internal so what all
19:24those jobs have in common to me is this
19:26entrepreneurial reality that they deal
19:28with situations of high uncertainty and
19:30therefore we need a discipline as a
19:31company to be able to look at what are
19:33the right metrics to hold those people
19:34accountable how do you identify who's
19:36actually good at that job and who's not
19:37how do you share best practices across
19:39these similar things so you start to add
19:42up these tasks a career path a sense of
19:45professional pride in accomplishments
19:46standardization you know having the
19:49right metrics oh my gosh that sounds a
19:51lot like a corporate function right
19:52that's what we do that in marketing we
19:53do that engineering we do it in R&D and
19:55people are like well entrepreneurship is
19:56too creative to be managed but it's like
19:58if we can manage R&D we can manage
20:00Muppet labs you know people working on
20:02they can be managed that's right so I
20:04just I don't buy it I think that we have
20:06just made a mistake about how the
20:07companies are organized so that we can
20:09pay lip service to innovation and claim
20:11we want to have continuous innovation
20:12but I asked these CEOs that I move all
20:14the time who's in charge of making sure
20:17that that happens and they don't know
20:18there's not there's nobody in the
20:20organization they can point to for
20:21accountability on that score so what are
20:23these organizations that you talked to
20:25who are you know stuck in the present
20:26and perhaps in the past you know when
20:28you think about the organization of the
20:29future what does that start to look like
20:32you know when you look at the org chart
20:33or when you look at it sort of
20:35structurally yeah and just a pause there
20:38for a second I think we're not just
20:39asking about you know what does this
20:41Lean Startup applied to a big company
20:43it's really about reinventing the nature
20:46of the firm yeah so people talk about
20:49Lean Startup for startups and then Lee
20:51startup for the enterprise which i think
20:52is really silly I understand why people
20:54do it but doesn't make sense to me and
20:56the reason is only the bad startups are
20:59small companies right that no one what
21:01the people are unintentionally small
21:02companies but they're not that's not
21:03what they're trying to do and I I need
21:05all kinds of entrepreneurs who are who
21:07became an entrepreneur because they hate
21:08working for big companies and they find
21:10them bureaucratic and sclerotic and they
21:11decide and I always ask them the same
21:13question I say listen if you hate big
21:15companies so much why trying to create a
21:17new one and what happens is five years
21:20later they have all the success they
21:22gave product market fit you know in the
21:24in the blog posts in the books you know
21:25and everywhere except for Ben's book it
21:28sounds like when you get product market
21:29fit all your problems are solved but you
21:30know like the reality is everything gets
21:32way harder and the curse of it is you
21:34have these founders who I meet with all
21:35the time now who have a hundred five
21:38hundred thousand five thousand person
21:40organization and they're like you know
21:41we've gotta get them privately off the
21:43record they'll be like I'm not sure I
21:45would even want to work here right I
21:47mean it's I got a good gig cuz I'm the
21:48founder CEO that's pretty fun but like
21:51if I wasn't what I actually want to like
21:54be a regular employee here and if I was
21:56trying to do something entrepreneurial
21:57here or what what people understand how
21:59to do it and they don't have founder
22:01CEOs like desperate to hold on to that
22:03feeling of how it was in the first year
22:05first five years right yeah they hate
22:08star they can feel the loss of it and
22:10they feel the frustration cuz people
22:12come to them with plans I mean I was
22:13talking to it too if
22:15very famous recent mega success story
22:18and they're telling me this unbelievable
22:20story where the the founder was being
22:22pitched on a new app you know the new
22:25bit line of business for them it was
22:26like founder was like okay that seems
22:28like a pretty reasonable spera it should
22:29take about two ways like I could
22:30probably code that in a week or two
22:31weeks it's like I'll do it in a week so
22:33you get in it and the team was pitching
22:34him on like a 12-month
22:36multimillion-dollar like mega plan
22:39that's like over engineered to the max
22:41and he's just like what have I done
22:43how could I possibly have a company
22:44where people think that's a good idea
22:45and the challenge for me you know
22:48talking to them is to be like look I
22:49hate to be the bearer of bad news but
22:50you need to look in the mirror and now
22:52you're looking at the problem because
22:54you have to make a fundamental choice as
22:56you know as any kind of leader are you
22:58trying to preserve that entrepreneurial
23:00feeling for yourself or are you taking
23:02the steps necessary to push that
23:03entrepreneurial opportunity down into
23:05the ranks of your company and in fact
23:08most of the CEOs who are good at this
23:10realize that they are so used to being
23:12on one side of the accountability table
23:14they're the entrepreneur pitching on
23:16their board and their VCS are always
23:17asking them about progress and they're
23:19having that negotiation what they don't
23:20realize is that that now the roles are
23:22reversed for the people inside their
23:24company they're the VC they're the
23:26source of funding and political capital
23:27that everybody needs to sustain what
23:29they do so when they're being pitched
23:31crap it's the same as I I know a lot of
23:34a lot of board members online companies
23:35are like why do these companies always
23:36give me this these stupid reports these
23:38dumb updates like cuz that's what they
23:40think you want to hear so if you want
23:42them to do something different you have
23:43to be the one to say here's how I intend
23:45to hold you accountable and then when we
23:47have that real conversation a lot of
23:48these entrepreneurs they themselves have
23:49amazing intuition and really good
23:52natural instincts for like what are the
23:53right metrics to look at what are the
23:54right cuts you know they all kind of
23:56naturally gravitate to the Minimum
23:57Viable Product and the idea that you
23:59know a small number of extremely
24:00passionate customers is way better than
24:02a large number of people who kind of are
24:03indifferent about about your product but
24:05they don't understand why the people
24:06that work for them don't have those
24:07instant so what's the hard I mean it all
24:10sounds pretty hard I'll be honest well
24:11what's not what stands in the way like
24:13again if I know what I need to do if
24:15I've done it before as a start-up you
24:17know I've my startup has grown and
24:19successful like what stands in the way
24:21in the companies that you talk to from
24:24them actually realizing their
24:26entrepreneurial kind of style and flavor
24:28and goals yeah the promise strictly
24:31scale so the founder can go lead a lake
24:34you got to go on a side project and be
24:36like forget it I'm gonna do it myself
24:37and I'm gonna take my I'm gonna step out
24:39of the CEO chair and go chose project
24:41team what to do but they can only really
24:43do that one like that most one project
24:45at a time but these companies are too
24:47big for that they need to be doing you
24:48know if you want to have a new
24:50successful disruption every couple of
24:52years you need to have hundreds of
24:53experiments going at any one time
24:54so then it's like you need to have a way
24:56to train and reward the entrepreneur
24:59people in your in your organization and
25:00they have natural instincts for that but
25:03that's really different from saying how
25:04do you teach that approach to other
25:06people and that really I think is why
25:08Lean Startup has taken off inside these
25:09larger organizations which by the way is
25:11both legacy organizations that are like
25:13a hundred years old and are now adopting
25:15it recently as well as these companies
25:17that started as lean startups but then
25:18blossomed into this traditional company
25:20and by the way by organizations that
25:21includes governments oh yeah I've heard
25:23like the former CTO of the United States
25:25talking about how they're trying to
25:26adopt a lean startup like methodology
25:28inside Iran it's amazing I mean if I was
25:31actually just in DC the other day and
25:32and meeting with teams they showed me
25:34this um there's almost unbelievable
25:36story about this team inside of the
25:38Immigration Service that processes
25:41applications still on paper and the
25:43paper applications can't be stored in a
25:46normal office building because the
25:47backlog is so large at the physical
25:49weight of the paper requires a
25:50structurally reinforced oh my god and
25:53therefore one at one of the processing
25:55centers I think they said in Kentucky
25:56the processing center is literally in a
25:58cave that's not a metaphor now they have
26:01historically had these big outside
26:03contractors come in and do these
26:04multibillion-dollar or IT initiatives
26:06they were telling me about one they
26:07spent I think a billion dollars in seven
26:09years and it couldn't process even one
26:11form faster but the great thing is the
26:13solution was to move to a cave right
26:16think about the human cost of these bad
26:19management systems think about the poor
26:20people actually trying to get this
26:21worked on the best way they know how and
26:22that's the best they could come up with
26:24they sent a Lean Startup team in I think
26:26from the United States digital service
26:27at the White House and you know they
26:30partnered it wasn't just IT people
26:32coming and telling everybody what to do
26:33but they had real partnership real user
26:34centered design really and startup
26:36experimentation techniques and they
26:38built a small team of technologists and
26:40people who were experts in the
26:42and they're now processing something
26:43like 40% of the applications digitally I
26:46think it took like six months so instead
26:48of spending a billion dollars in kind of
26:50I call it not the healthcare.gov plan
26:51and I said of executing the
26:53healthcare.gov plan we did something a
26:55little bit better and I love those
26:56stories because when I meet with private
26:58sector folks I meet a lot of CIOs now
26:59and they'll tell me about some new major
27:01initiatives they haven't gone and I'll
27:02say oh that's great it sounds like the
27:03healthcare.gov plan I'm sure you'd be
27:05fine and they're like how dare you
27:06suggest such a thing that's government
27:08I'm like listen let me draw a little
27:09chart here the things they did in
27:10healthcare.gov right big upfront design
27:12no customer no interaction and so that
27:17and let me show you that chart for what
27:19they did and what you're doing so what's
27:20the difference and they get all they get
27:22mad at me but I said look the truth is
27:23that system of managing work is not a
27:26good one for our time maybe it was a
27:28good maybe it made sense in a different
27:29era but it really doesn't make sense now
27:31and there is a better way what you're
27:32really getting at and I don't think this
27:33is as evident to people who aren't
27:34necessarily inside the software industry
27:36is that in a lot of ways Lean Startup is
27:40almost synonymous with the world being
27:41eaten by software because it's really
27:43about a mindset for how people move fast
27:46have a certain methodology ability to
27:48democratize as you talked about the
27:50ability to be agile whatever all those
27:52adjectives are they actually have
27:54meaning they're buzzwords but they have
27:55meaning yeah tell me more then about how
27:57software reinvents the firm as a
28:01it's really interesting because I'll
28:03tell you two stories I think rrg when I
28:05was I was talking to a company that was
28:06really struggling with its agile
28:08transformation forgetting you start out
28:10they're still trying to get their
28:11software that they write eight employed
28:12lots and lots of software developers
28:14they're trying to get it everyone to go
28:15agile and I was meeting with the folks
28:16that they're you know in the software
28:19part of their business and they said to
28:20me you know we're really having a hard
28:22time getting the non software functions
28:24in the company to do agile we're doing
28:27pretty good in the engineers but like
28:28getting people in the hardware
28:29manufacturing supply chain but also HR
28:31finance they're like straight up
28:33leadership managers to understand agile
28:35they're like people like I don't want to
28:36do some like software thing Lean Startup
28:38has created a neutral terrain where
28:41different functions can come together to
28:43do this and I think there's just a
28:44natural resistance to doing a
28:47methodology from someone else's function
28:48so like if you ever tried to get
28:49software engineers to do design thinking
28:51writing on supply non-manufacturing
28:53people to do lean manufacturing
28:54you know you try to get nan operations
28:56people to do that bops it's like people
28:57gonna be like that's not my thing that's
28:58their thing and what are they trying to
28:59do Doug lean startup is a neutral
29:01terrain it is you know not associate
29:03with any one specific function and
29:05therefore you know and it's denominated
29:07in terms of business results only so
29:10people talk about all we show new people
29:13in finance our burn down chart and they
29:14can see how fast we're making this end
29:15people in finance don't care like how
29:17much money am I gonna make and you know
29:19it we have this thing in a startup
29:20called innovation accounting which is a
29:22formal methodology for translating what
29:24we are learning about customers in our
29:25business plan into financial performance
29:27results that give us leading indicators
29:29and confidence about the future it's
29:30very important part of the method so
29:32that's one thing is is that although
29:33this is software enabled it is not a
29:35software specific thing but you're what
29:38the point you made that is exactly right
29:40and this is true for every kind of
29:41software or semiconductor related change
29:43it really is about mindset more than
29:45tools and materials and I'll tell you a
29:46funny story I was working with a
29:48consumer electronics company and they
29:51were building this new device for their
29:54confidentiality I will tell you what it
29:55was but whenever I work with hardware
29:57I'm a software guy by nature I grew up
29:59in my parents basement program in
30:01computers I passed me so whenever I deal
30:02with Hardware things and I've worked
30:03with you know the GES of the world the
30:05Toyotas of the world on big physical
30:06that if it can explode I tend to be very
30:09humble you know it's like well I sing
30:11about software's it doesn't tend to
30:12explode I always appreciated that so so
30:14I you know is we're gonna steam I said
30:15gosh it's probably gonna be very hard
30:17for us to build a product we had to
30:18build the minimum viable products
30:19instead of building 10,000 units or a
30:20hundred thousand units what would it
30:22take to create five or 50 units or even
30:24one unit and I was like gosh that's
30:26probably gonna be really challenging and
30:28and of course whenever you have
30:29engineers in the room once you frame the
30:30problem correctly they're like oh that's
30:31no problem we've actually already done
30:33that we were just playing around with
30:34some 3d printers and soft tooling we
30:36have a prototype of it in our office
30:37right now well then the problem is are
30:39how do we find an MVP sales channel I'm
30:42not gonna get Walmart to carry some
30:43unknown prototype device we're probably
30:45got to find a local store so I start to
30:46like how can we find a place we can get
30:48cut they're like well actually we we run
30:50a model store in our company you know
30:52where we can showcase new technologies
30:54for for customers so customers are in
30:56there 24/7 you know looking at new
30:58things I said oh well the problem must
30:59be then that that stores really far away
31:01or like how do we get them like how do
31:03we get access to the store and they're
31:04like no it's it's in the same building
31:05where we work I was like okay is it
31:08like on a different security system you
31:09don't have the right badge to get down
31:10there like is it a different team that
31:12operates it so they like know that we
31:13operate source outside okay do we need
31:16like a dolly or something to move the
31:18thing the hundred yards from your office
31:20to the model store they're like no we
31:22could just pick it it's heavy but the
31:24four of us could easily carry it there
31:25and I was like okay time out you have
31:28everything you need you have the
31:30advanced now if you look in that story
31:32why do they have a model store why were
31:34they able to produce this prototype what
31:36like there's software lurking in the
31:37edges there here there be dragons in
31:40that story in many places but it's not
31:41really about software it's about the
31:43fact that the company has the capability
31:45to work in this new way but they had
31:46never occurred to them to do it when I
31:49said you should take this thing out of
31:50your office walk at 100 meters to the
31:52store and offer it for presale to
31:54customers they were like they thought I
31:56was crazy they looked at me like with
31:59wide eyes like what are you suggesting
32:00that seems nuts but then we really
32:02walked through the method and walked
32:04through the you know reasoning from
32:05first principles about why that would be
32:07a good idea and it revolutionized their
32:09business and they eventually got to a
32:11place where they can show they can
32:12iterate this so quickly now they can
32:14build a new version of that device every
32:16week used to take them three to six
32:18years to build a new model now they can
32:19do a new a new version every week so
32:21they're constantly getting testing an
32:22iteration with customers and like that's
32:24not gonna scale up to a million units
32:26but that could get us you know it's like
32:28what if customers don't ever want to buy
32:29the thing will never have to scale up to
32:31millionaires we just saved ourselves a
32:32lot of costs and time and energy so like
32:34what's a high level moral of that story
32:35so there's a couple things one is just
32:38people use it as an example I think to
32:40see how a Minimum Viable Product
32:41thinking can work right so reduce scope
32:43reduce the number of customers affected
32:45try to figure out what is that
32:47experiment that can help us learn
32:48whether our strategy is actually right
32:50and in this case what they learned was
32:52that what they thought customers wanted
32:53was wildly different what they actually
32:54wanted but the other moral of the story
32:56is that this before it is anything else
32:58is a management issue
33:00it is not technology issue is not a
33:02process or tools issue is really about
33:04how do we manage people people most
33:06companies have all the raw material they
33:08need to work in this more
33:09entrepreneurial way including by the way
33:10the actual people that you would need to
33:13act in this creative way I mean I'm
33:15amazed at the caliber of people who work
33:17at these companies who are being told
33:18what to do you're right and in fact I
33:20think people are born
33:22and really do have I wasn't think of
33:24this analogy of children always coloring
33:25when they're little grunts who beats the
33:28coloring out of them as a now this
33:30actually this trend where there's all
33:31these adult coloring books with
33:32something of itself but the point I
33:34think is that the creative never dies in
33:37or died I just tell you one more story
33:38uh it's such a cliche and I hate even
33:42saying that we're gonna unlock the
33:43creativity of our people but I'll tell
33:45you the story you tell me how to
33:46describe this that doesn't sound cliche
33:48I was once said to one of my workshops a
33:50twenty five person team was sent by
33:52their company it was the true
33:54multi-headed Hydra of the most despised
33:56functions in corporate America it was a
33:58joint finance and IT committee Wow
34:01tasked with creating a new finance IT
34:04system that would be a new global
34:06standard for how this cup this giant
34:09corporation would do oh my god is I mean
34:11just the entities you're describing it's
34:12the fact that there was a task and a
34:14committee and it's just a standard I
34:16mean there's just a lot of what I'm
34:18trying to startup be and product people
34:20about the story they start moaning and
34:22groaning before I even get to the we've
34:23got to the setup let alone the punchline
34:25there's like Oh God right you know
34:26exactly and it was like these people
34:28were not happy to be in this workshop
34:30yeah and they've been sent to this thing
34:31and they were just like what am i even
34:33there I was like okay if you want to do
34:34this wait I think like a startup
34:36you're gonna adopt a customer service
34:38mentality and really like you gotta
34:40understand that the people who use this
34:42product are your customers even though
34:43they're employees of the company and I
34:44thought I was gonna be burned alive I
34:46mean the looks I was getting from people
34:47just like what are you - who is this kid
34:49telling us what to do you know but we we
34:52did the work and we went through the
34:53method like I said I think being able to
34:54derive lean startup from first
34:55principles it's very helpful
34:57you know accepting people's skepticism
34:59is natural and being able to walk them
35:00through look be skeptical but what is
35:02the experiment that could demonstrate
35:03after three days working with this team
35:05they were totally transformed and they
35:08change their plan from this the original
35:10plan would take this huge committee they
35:11really spent 18 months gathering
35:12requirements hand those requirements off
35:15to all these implementation teams around
35:16the world who would spend another 18
35:17months do it all over again right it's
35:21like listen first of all one of my rules
35:23is the laws of physics are required
35:25everything else is optional so the word
35:27requirement does just does not apply to
35:29like a giant worldwide focus group of
35:31random things that customers ask for
35:32those are not requirements those are
35:33hypotheses or guesses about
35:35what customers might want so instead of
35:37doing this big global thing it's gonna
35:38take three years there's gonna have no
35:39accountability right because the
35:40committee will disband the things won't
35:42be done correctly there'll be no
35:43productivity savings will be in the same
35:45IT finance mess we're in now they took a
35:48different approach and they decided on
35:50their own accord to condense down to a
35:52five person dedicated cross-functional
35:54team so the no 25 person committee they
35:56went to their customers the PNL leaders
35:58of the different businesses in the
35:59company and they made them an offer they
36:01said whoever says yes to this offer the
36:03next day our whole team is on a plane to
36:06your headquarters wherever you are in
36:07the world where you're gonna sit with
36:09your people and build the software live
36:12before your eyes and we will show it to
36:14you every every month or every couple of
36:16we gotta sprint iteration cadence right
36:18now but we'll show it to you
36:19periodically and when you voluntarily
36:22decide to adopt it you adopt it so no
36:24corporate mandates we will show that
36:25it's better than what you have now and
36:27we will not leave if we will keep
36:29iterating in a software for as long as
36:30it takes to prove to you P&L leader that
36:32you have an actual productivity
36:34improvement so not we met the
36:36requirements and now good luck but we
36:37will keep measuring how much work is
36:39actually done in this function and it's
36:41kind of complicated what the thing was
36:42but we had the metrics to prove it's a
36:43good idea and then and only then will we
36:46take it to a second P&L a third P&L and
36:48then eventually scale it up to the whole
36:49company right this is a goes back to
36:51your point about the methodology for
36:52scaling and that being my biggest
36:53challenge yeah exactly right one of my
36:55someone told me that the easy way to
36:57remember it is start small think big
36:59start small scale fast it's like that's
37:02really that is right so like prove that
37:03it works at scale X then prove that it
37:05works at scale 2x and just repeat until
37:06you have the whole thing these guys
37:08transformed into honest-to-god
37:10entrepreneurs every bit is enthusiastic
37:12and creative as the people I meet you
37:14know in Soma everyday right what so even
37:17though it is really cheesy I agreed to
37:19say like unlocking human potential and
37:21creativity I do think it's a really
37:23important argument for a future of a
37:25world cuz when we talk about everything
37:26becoming software like companies
37:28changing everything changing for a world
37:30where more things are getting automated
37:32and being able to really have something
37:34to contribute as a human being with
37:37judgment and creativity is something you
37:38can't codify into a program
37:41the debate over robots stealing all the
37:43jobs and everything like has baked into
37:45the into both sides of the disagreement
37:47this fundamental premise that work is
37:49yeah and so like should we let robots do
37:52the boring work or should we let humans
37:54do the boring work and it's like no no
37:56no that's just evil I just can't I
37:58cannot buy into that idea at all first
38:00of all worked at his monotonous and
38:02routine should be automated because
38:04every human being has a right to use
38:05their creativity in their job this is a
38:07lesson going all the way back to the
38:08Toyota Production system of years ago
38:09even on the factory like the canonical
38:12job that was supposed to be noqreh know
38:14all creative creativity sapped out by
38:16Fred Taylor back in the days right
38:17someone just doing the repetitive you
38:19know stressful work on the line even
38:21their human creativity can be can work
38:24to our advantage how much more so in
38:27knowledge work and in management and all
38:28these kind of systems were talking about
38:29so to me this is saying these companies
38:33have locked up a massive amount of human
38:36potential I think the scale of this we
38:38are only is hard even to fathom because
38:41these companies are so large and so many
38:43of the people are trapped in systems
38:45that prevent them from exercising their
38:46independent judgement and creativity I
38:48mean that's just people like people
38:50debate whether that could be changed or
38:52it's a law of nature but it's a fact
38:53that is happening today and what I have
38:56seen is that you can you can change it
38:58it's hard not to sound utopian about it
39:01but I really think it's gonna have a
39:02profound impact I just want to ask the
39:05distinction though between does that
39:06mean everyone needs to be an
39:07entrepreneur or entrepreneurial yeah
39:11that's a great question it's a source of
39:13great confusion because if the companies
39:15that have adopted this system formerly
39:17you usually like you know even lean
39:20manufacturing the Toyota Production
39:21system it's not called lean
39:22manufacturing it's called the Toyota
39:23Production system every company makes it
39:24their own so like a GE they have this
39:26program called fast works which is their
39:28version of lean startup at Intuit they
39:29have a program called design for delight
39:30everybody has their own you know version
39:33of it and one of the questions they get
39:35all the time is well there's this system
39:36apply only to special projects or is it
39:40and every company has had to deal with
39:41this duality where they say actually
39:43there's two versions of this there is
39:45the version four like when you want to
39:47make a big bet disruptive new product
39:49like there's a I think I talked about as
39:51a startup as an atomic unit of work it's
39:54like one of these and why Amazon is so
39:55effective they have the two Pizza team
39:56rule right they can say yeah that's a
39:58good idea let's throw a start-up at it
40:00just to clarify the to pizza team rule
40:03should be big enough and you know just
40:08like but it face its way of saying small
40:09teams small teams can try things so they
40:11have like it's a tool in the management
40:13toolbox to throw a team at something and
40:15not let it turn into a big sprawling
40:16committee but keep it focused keep the
40:18people cross-functional and dedicated no
40:20multitasking no passing work between
40:22silos that is the death of innovation
40:23but then you also have like it at G they
40:26call it fast works every day and I said
40:28look no matter what work you're doing
40:30even down to they always give this
40:31example of you're preparing a PowerPoint
40:34presentation for a meeting even that
40:36very simple task you can ask yourself
40:39who's the customer for this task and is
40:41there a Minimum Viable Product version
40:43is there a way to test an experiment how
40:45do I really know that this work is
40:46valuable and the number of people in
40:48corporate America who do work where I
40:50asked them this question I say listen
40:51what is the evidence
40:53how do you know that the work you do
40:56everyday matters to anybody except your
40:57boss I used to think people everyone
41:00would just be like oh of course I know
41:01here's and the number of people who are
41:03like I don't know I just assume we're
41:05just kind of moving along like zombies
41:07in the workplace and you're like what
41:09what kind of job is that like how are
41:11you gonna feel at night when you go home
41:13saying gosh I hope I accomplished
41:15something today versus now like imagine
41:18a world in which everybody knows it in
41:19their bones because they just they have
41:21the scientific rigor to always be
41:22testing and when you see that I mean
41:25I've seen people go before I've seen the
41:27before-and-after photos so the people
41:28have gone through that transformation
41:29and it's truly powerful even in places
41:32you know I was thinking about like a
41:34factory where we did this transformation
41:36and we're talking to like the union reps
41:37for the people in the factory and and to
41:40see them go through the transformation
41:41even places where I think we we have a
41:43prejudice I like there no no it can
41:44certain culture or certain places
41:46certain functions they those people
41:47would never get it I've seen it
41:49everywhere that you can see it and it's
41:51really a it's a wonderful thing to see
41:52so I want to wrap up and then kind of
41:55revisiting the question of how do how do
41:58how do people adopt this amazing
42:00movement and mindset as we've said is
42:02important and the tools that come with
42:05without veering into cult territory
42:07where then I start holding on to like
42:09the the letter of the rules the
42:11principle behind the rule because that
42:12seems to be a phenomenon that happens
42:13with anything of course but it's also a
42:16happening with even with things like
42:17Lean Startup so how do you certainly I
42:19mean I hear many of my VC friends
42:21complain like about lean washing they
42:23call it it's like people saying that's
42:25so funny crappy venture pitch but now
42:28it's lean it's like lean crappy venture
42:29pitch and I'm saying look first of all
42:31do not please if you're listening to
42:33this you try this at home do not use the
42:35terminology to like dress up your dumb
42:37idea I don't care if you use a
42:39terminology at all in fact I have a have
42:41a secret product manager is like meetup
42:44group that I do for one of the big tech
42:46companies where we get together it's
42:48secret I can't name the group it's a
42:51group because they they work in a
42:55company that has a real strong not
42:56invented here culture and lean startup
42:59is forbidden so they if they talk about
43:01minimum viable product or pivots like
43:02inside the company it's just like at do
43:05not want to hear about it so what they
43:06have figured out is like they have to
43:07create a company specific vocabulary
43:09version of it so we meet periodically to
43:11talk about like how do we get people to
43:13adopt these concepts without like
43:15putting code names around it yeah
43:17because like to be honest what matters
43:19is that you have a precise and clear
43:20language that you can communicate with
43:21your co-workers about I don't care if
43:23you used my language or somebody else's
43:24as long as it has a rigorous foundation
43:26so so and the people who argue about
43:29like I get periodically get a phone call
43:31from someone and they're like so-and-so
43:32is blogging a bad thing about Lean
43:34Startup like they're using it wrong you
43:36need to make them stop yeah and I'm like
43:39I can't excommunicated anybody like what
43:42power do you think I have to make
43:44somebody like that kind of like inside
43:46baseball hold on let me get the stone
43:47tablets you know it's funny because I
43:51said in a recent talk I was like listen
43:53Lean Startup stands for what works so if
43:55I said something wrong if we discover
43:57ourselves as a movement we use our own
43:59scientific process discover new things
44:00they obsolete the old things and we
44:02should be always be getting better and
44:03what we wrote five years ago should
44:05always seem a little bit creaky or we're
44:07not learning to close it out then let's
44:09just take the two most popular terms
44:11which are also often specifically
44:14organized and I think therefore have a
44:16lot of misunderstandings of them and
44:18pivot and MVP sure and and I would love
44:21to start with MVP for Minimum Viable
44:23Product because one thing that I've seen
44:26on the other side is that people
44:27sometimes mistake doing an MVP
44:30when sometimes the big visionary ideas
44:32require you to over invest and not under
44:35resource absolutely a Minimum Viable
44:38so you actually sometimes they don't
44:39want to so I'd like to you talk about
44:41that yes it's really interesting because
44:43people really love the bumper sticker
44:44version of Lean Startup okay there's
44:46like certain concepts that just people
44:47really gravitate to pivot MVP continuous
44:50deployment you know and some of the like
44:53lean buzzwords are people are all
44:55excited about but if you actually read
44:57the book which I think a lot of people
44:58who are doing this buzzword bingo
44:59haven't actually done if you read the
45:01book the vast majority of it the bulk of
45:03it by weight it's not about you know
45:05these this jargon but it's about the
45:07management system it's about the
45:08innovation accounting it's about the
45:10math that underlies this way of working
45:12and you know I get that accounting
45:15doesn't make a good bumper sticker and
45:16we can't cram the math into your slot
45:19like so I understand why the slogans get
45:20the attention that makes sense to me but
45:23but one of the problems with that is
45:24people who have a kind of a flip
45:25understanding don't really have the
45:28context to do it correctly and so in the
45:30no viable product or MVP that is a
45:32pretty common problem the core mistake I
45:34think people make is they think that
45:36it's a minimum product right like if
45:37you're trying to do something small in
45:39this world you don't need to do an MVP
45:41you just do it like if it's if a thing
45:43itself is cheap and easy and has an
45:45obvious application and use its software
45:47yeah you don't need to test it you don't
45:49heed to experiment just just ship it
45:50it's only people who have a
45:53consequential vision that this is a good
45:56idea for or isn't necessary for it all
45:57in fact the first part of my book is
45:59called vision because people think like
46:01oh taking a scientific approach to
46:03innovation means taking the creativity
46:05out of it which i think is very
46:06insulting to our friends who are
46:07scientists I'm sorry I think science is
46:10one of humanity's most creative pursuits
46:11and as someone once said to me if you
46:13could turn entrepreneurship into a
46:14science and everybody could do it that
46:16wouldn't be good I was like first of all
46:17science is a science and very few people
46:19are good at it okay it's actually like
46:21it's really hard with all due respect
46:22like some of the smartest people who
46:24have ever lived have been been are
46:25scientists and not just smartest or most
46:27creative people so science is not just
46:28turning a spreadsheet right it really is
46:30having those leaps of insight to form
46:32good hypotheses in the first place and
46:34that is what and all MVP is saying is
46:36take those hypotheses and put them to
46:39the test in a cost-effective way so that
46:42sustained our investment in the vision
46:44over time some visionaries in this world
46:47are independently wealthy and can
46:49sustain investment in their project for
46:52as long as they want some have the knack
46:54for raising money just in the strength
46:56of their personality and some can even
46:58take a company public and resist the
47:00temptations of Wall Street and just do
47:02what I mean there are some people who
47:04have that ability to sustain their
47:05vision indefinitely but most people do
47:07not most people even the ones that have
47:09very very powerful visions struggle with
47:11how do I command resources how do I get
47:13resources put to me and they feel
47:14frankly a lot of resentment about the
47:16just huge amount of that is
47:18required to do what we call success
47:19theater putting on a show about how good
47:22your thing is doing so that you keep
47:24attracting investment and I think every
47:25ounce of energy we force visionaries to
47:27put into success theater as an ounce of
47:29energy they didn't put in to making
47:31their vision a reality they didn't put
47:32in into serving customers so I think of
47:34lean startup in MVPs in particular as a
47:36way to demonstrate progress towards the
47:39vision to sustain that interest over
47:41time during the long flat part of a
47:43hockey stick when the vanity metrics are
47:45really low and there isn't instantaneous
47:47overnight success so then the last word
47:49pivot completely over you I mean it's
47:52actually just God look I can't we waited
47:54so long team and say it on this podcast
47:55yeah I try I mean I have to like I'm a
47:58little bit embarrassed now almost how
47:59much it's become an overused buzzword
48:01and I I saw this this is cartoon you can
48:03google it as a cartoon of The New Yorker
48:05magazine awhile ago or and there's a man
48:07and a woman sitting in the cafe and she
48:08says I'm not leaving you I'm pivoting to
48:10another man what have I done I'm sorry
48:14no well it is I mean you called it a
48:17movement when we were talking about it
48:18and I mean that's kind of part of it
48:20right I'm sure people have pivot
48:21tattooed that would be a weird tattoo do
48:23you see some pretty odd yeah but it is
48:25part of this kind of I don't know
48:27language and culture and and fascination
48:30with what you've done with lean startup
48:32yeah you know first of all I don't
48:35apologize for the fact that pivot is a
48:36very useful concept for startups in fact
48:38you can go back and read stuff that was
48:41written about startups before that word
48:42came into the common vocabulary and
48:44people struggle to explain this weird
48:47phenomenon which is it seems like the
48:50great entrepreneurs persevered through
48:52everything and they you know stuck to
48:53the vision no matter what and yet they
48:56about certain details so like that's all
48:59I'd like how do you what do you do and
49:01so like I so I first people who are new
49:03to the concept the right definition of a
49:05pivot is a change in strategy without a
49:08change in vision right so the vision is
49:10our true north our destination but the
49:12specific strategy weren't like what is
49:13the business model what is the what kind
49:15of product is it is it software as it
49:16Hardware is a devices service I think
49:18about you know the Google Search
49:20and the pivot to Adwords right that
49:21didn't give up on the vision of
49:22organizing the world's information but
49:24they said that's a dumb business model
49:25and this is a good business model so
49:26like that that's okay but if someone had
49:28said like let's get out of the search
49:30and information business and just sell
49:31cars you know there would've been like
49:33oh that's that's not a pivot that's a
49:34bandit and revisional though course not
49:35they are gonna sell cars so so you know
49:44is is personal and it's it's deep in the
49:47in the minds and the souls of the
49:49founders and eventually into the whole
49:51company and its DNA so it's from the
49:53outside it can be a little bit hard to
49:54understand like what really is the
49:55vision and what are the incidental bits
49:57like I think people you know certainly
49:59would have thought a certain point that
50:00Netflix is all about sending in DVDs by
50:01mail and when they first I don't know
50:03people was very controversial they start
50:05to become an online streaming service
50:06that would actually have fewer movies
50:08and less options it seemed like it was
50:10getting worse like it's not a lot of
50:11abdication of the vision and now to
50:12programming their own content I mean
50:14yeah so so you never know where you know
50:16you have to be flexible about the
50:17specific strategy but you have to be
50:19willing to you know to invest in and
50:21stay true to the vision so that that
50:23really is why the concept of pivot is
50:24important word and the reason it's such
50:26critical part of lean startup is if we
50:28can get to the moment of pivoting sooner
50:29cheaper faster then we extend it's like
50:32magically extending the runway of the
50:33startup without raising more money and
50:34that's why it's such a powerful idea
50:35it's a movement it's not a cult is
50:39gathering momentum you know outside of
50:41Silicon Valley and and Beyond and we'll
50:44try and extract the information on your
50:46secret product management group lately
50:48I'm going to start like tailing you and
50:50driving following you everywhere I see
50:51where that goes thanks so much for
50:52coming to the next book thank you very
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