The Lean StartUp - 3 Learn

Ries begins this Chapter by pointing out that startups use 'learning' as an excuse for not executing. Hence, in this book he outlines a different concept/perspective called validated learning, which will allow companies to actually be able to measure progress and whether there is a real need for their products by the customers. 

The author's successful startup, IMVU, would bring in random people for in-person interviews in order to get direct feedback on their product. This is an example of primary research, which was talked about in a previous Chapter. 

Consequently, after conducting numerous interviews, Ries's team was able to understand the needs of the customers and they therefore, pivoted towards a slightly different way of connecting people to instant messaging (IM). After all, however, the new product was still not favorable among the customers. As a result, the startup realised that the IM add-on that they were working on, was defective. 

The author, then, found himself throwing away countless hours of work and coding, which he worked on tirelessly for 6 months. He subsequently thought that there had to be a quicker way of realising that a product would be defective and not likable by customers. Therefore, the system of validated learning is one where startups are able to figure out quicker whether customers would find their product not interesting in order for them to move on and pivot. This, according to Ries, would prevent a needless waste of time. This is not to say, however, that learning what the customers want is a waste of time, it is merely that there is a more efficient approach to realising this. In fact, Ries points out that 'learning is the essential unit of progress for startups.' Appropriately, validated learning is all about 'empirical data collected by real customers.' 

Eventually, after a lot of primary research and feedback from customers, IMVU was starting to make real progress and as Ries makes clear, it was because they were working smarter, due to the comprehension of the needs of the customers. One striking example of validated learning and understanding the needs of consumers is the following passage from the book: "in one early experiment, we changed our entire website, home page, and product registration flow to replace 'avatar chat' with '3D instant messaging.' New customers were split automatically between these two versions of the site; half saw one, and half saw the other. We were able to measure the difference in behavior between the two groups. Not only were the people in the experimental group more likely to sign up for the product, they were more likely to become long-term paying customers."

Notably, the author identifies that the key questions a founder should ask before starting a business are: "Can this product be built?"

"Should this product be built?"

"Can we build a sustainable business around this set of products and services?"

To answer these questions, validated learning, which includes experimenting/testing, is necessary.