ERIC RIES and Steven Blank think they have a better way to build a start-up, one that takes less time and money to try new ideas and find paying customers.
They are leading proponents of the “lean start-up” — a fresh approach to creating companies that has attracted much attention in the last year or so among Silicon Valley entrepreneurs, technologists and investors.
The concept is gaining a following beyond the Valley as well. “If it works, it will reduce failure rates for entrepreneurial ventures and boost innovation,” says Thomas R. Eisenmann, a professor at the Harvard Business School. “That’s a big deal for the economy.”
The term “lean start-up” was coined by Mr. Ries, 31, an engineer, entrepreneur and blogger. His inspiration, he says, was the lean manufacturing process, fine-tuned in Japanese factories decades ago and focused on eliminating any work or investment that doesn’t produce value for customers.
“This is lean manufacturing for start-ups,” explains Mr. Blank, 56, a serial entrepreneur.
Since 1978, he has been a founder or early employee in eight start-ups, both winners and losers. To cite a couple, Rocket Science Games, a once-promising video game maker, founded in 1993, cratered amid losses a few years later, while Epiphany, a business software company, founded in 1997, was acquired by a larger corporation for $329 million in 2005 — “one my grandchildren will be grateful for,” Mr. Blank notes.
Technology animates the lean start-up process. Free open-source programming tools and easily distributed Web-based software drive down the cost of developing new products and services. The early companies embracing the principles live largely on the Web, which makes it possible to measure and track customer behavior constantly and to invite suggestions and criticism.
Internet companies have steadily taken advantage of the falling costs of getting up and running — often spending just hundreds of thousands of dollars instead of the millions that were required several years ago. But the lean start-up formula adds management practices tailored to exploit the Web environment.
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