How One FinTech Company Used Lean Startup in a Regulated Industry

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Before he founded Artivest, CEO James Waldinger was frustrated with the dinosaur pace of the investment world. He watched as bigwigs in other sectors figured out how to make that crucial shift from analog to a digital. But as he told CEO CFO Magazine, “investing in a private alternative is still back in the stone age.” Not to mention that there wasn’t a great way to analyze investor behavior.

Waldinger worked as an advisor and investor in the startup world, and sensed it was time to leverage his background at Clarium Capital to resolve this digital divide. With New York as his backdrop, he also had access to the best minds in the financial industry close by, so he built Artivest, a tech-driven platform that expands access to leading private equity and hedge funds, right there in Silicon Alley.

Artivest is one of the exciting New York City-based startups we’ll be visiting as part of our Lean Startup Labs Enterprise Summit Feb. 24-25. It’s also an example of a company working in a highly regulated industry that’s busted free from the old stone age mentality (a little inspiration for those of you wanting to get the hell away from all that analog paperwork too) and tightened the customer feedback loops along the way.

Before we meet his team in person, here’s a little more about Artivest, and how Waldinger was able to implement Lean Startup into his company.

What fundamental problem were you solving for by starting Artivest?

We enable individuals and their financial advisors to access leading private funds. Traditionally, only large institutions like pensions and endowments were able to invest in top private equity and hedge funds. The process was cumbersome and inefficient, e.g., paper-based documentation flows, which kept investment minimums high. Artivest streamlines operations and distribution — the entire process is now digital and consistent across all funds on our platform. Our behavioral analytics capability also greatly improves the understanding of market needs in real-time, helping to efficiently match funds to investors and investors to funds. With these innovations, Artivest is able to offer qualified individuals and their advisors access to premier private funds at lower minimums, while keeping fees competitive.

What have you learned about your audience that’s different than the assumptions you had about them in your early days of thinking about the company?

We knew that financial advisors and asset managers would find value in our platform since it expands their access to a larger selection of premier funds and a larger capital base. What we didn’t know is how excited they would be about the technology itself. We now have a business line that provides a white-labeled, customized version of our technology and operational solution to asset managers, private banks, and advisory networks that need to manage their own processing of alternatives. We’ve realized that part of what is so innovative and appealing about our technology is the amount of data we can potentially collect. Because alternative investing was previously an “offline” process, there was no data to understand advisor and investor behavior — with Artivest, because we can track and analyze how advisors and investors behave over time, we can better match product need with availability and make the sales process more efficient.

What’s been your biggest success so far?

Our biggest success has been the amount of traction we’ve gained in such a short period of time. Even though we were only in “beta” launch until early 2015, we have amassed an engaged user base that includes some of the largest independent advisors, broker dealers, funds, and asset managers in the world.

What was a big fail that turned into an excellent learning moment?

As a startup, we’re constantly failing, learning, iterating, and improving. Some early “rejections” actually came back to us with great interest after a few months, and we realized that the adoption cycle varies greatly for different types of customers depending on their needs. For example, those who are newer to private investments may be hesitant to pull the trigger after finding interesting funds on our platform, simply because they’ve never gone through the process before. Seeing the technology used at larger institutions can help them become familiar with the process and our product. We’re now able to quickly segment customers according to where they are in the investment cycle.

How has Lean Startup methodology come into your product and/or process?

Getting customer feedback during the product development phase has been critical for us. Very early on, we established an “Early Access” program which allowed us to test our software with financial advisors and quickly come up with a minimum viable product, then iterate to perfect it. Developing consultative relationships with our clients has enabled us to spend our time and effort on the features and functionality with the highest value-add for our audience.

How do you see the financial market differently since working on Artivest?

I don’t know that we see the market differently, but in the last year, market conditions have certainly highlighted the need for increased access to a wider selection of private funds. As investors have struggled to chase returns in public markets, it has become clear that there is inadequate access to alternatives, an asset class that has the ability to dampen volatility, improve diversification, and generate alpha through top managers.

Generally how does the New York startup scene differ from Silicon Valley’s in your mind?

Financial services has many additional compliance, regulatory, and operational constraints when compared to other industries. The density of financial services firms in New York means the knowledge base around this area is not only deep and wide but also extremely current. As a fintech startup, having access to and being a part of this extensive financial services community is incredibly advantageous in terms of building robust, reliable, and compliant infrastructure. We rely heavily on this community in terms of finding new team members, customers, partners, advisors, and backers and learning from their great wealth of knowledge and experience. Here in New York, we’ve been able to assemble an amazing team with wide expertise, from organizations ranging from Merrill Lynch and Goldman Sachs to Second Market. We’ve also attracted a very diverse set of backers, including KKR, Peter Thiel, RRE Ventures, and Nyca Partners.


Learn more about Artivest at the Lean Startup Labs Enterprise Summit startup tours in NYC Feb. 24-25th. The summit is limited to 200 people, so grab a ticket for yourself or your team before we sell out.

Running A Lean Startup within GE

Photo by The Lean Startup Conference/Jakub Mosur and Erin Lubin
Photo by The Lean Startup Conference/Jakub Mosur and Erin Lubin

As the oldest company on the stock exchange, GE might not seem like a candidate for most innovation, but to Johanna Wellington, CEO of GE Fuels, it makes perfect sense. “You don’t survive that long if you don’t continually reinvent yourself,” she explained.

Johanna, who has worked at GE for years, says Lean Startup principles are truly embraced at GE, by leadership and employees alike. That’s one reason why her unique career path was possible: she started managing GE’s standard business divisions, but a new position within their Global Research Center meant her role became essentially that of an internal VC angel, focusing on projects to support within the company.

Because of GE’s Lean culture, every department and employee is encouraged to have big ideas, which have the potential to then gain support and funding from the research team.  One of those big ideas Johanna eventually supported zeroes in on the potential of fuel cell technology. GE’s plan is now to build industrial-size, highly efficient oxide fuel cells that may positively impact the environment.  Ultimately, the concept was good enough merit its own startup structure within the company, and Johanna stepped forward to lead it.

In her talk at the Lean Startup Conference 2015, “Running a Lean Startup Inside a Big Corporation”,  Johanna shared her experience as the CEO of GE Fuel Cells, providing insight not only on running lean within a giant corporation, but also at a giant manufacturing company.

Although GE embraces Lean culture across the organization, there were some notable differences when it came to running a true startup within the corporation.

The Known Unknown  

At big corporations, forecasting and accurate predictions are an integral part of business operations. Working on a completely new technology meant that Johanna frequently had to accept and admit, both to her team and her superiors, that she simply didn’t know certain things – whether it was how long a project would take or whether a method would work at all. It also meant that she prioritized figuring how to do things right over just getting it done. Sometimes, that means missing milestones rather than moving forward with a flawed process. At the same time, Johanna notes the lack of a rigid roadmap makes the day-to-day more exciting; in her leadership role, she is making big decisions every day with the help of her team.

Planning for Failure

At a company like GE, most business units are expected to be hitting goals and benchmarks. In contrast, in the startup environment, you actually have to plan for failure. At a minimum, that means building time for failure into any project plan. It also must be factored in when having conversations with execs, specifically when it comes to managing expectations. Instead of making promises, Johanna is more likely to let her bosses know ahead of time that, somewhere along the road, things are probably going to break. Finally, it changes how she interacts with her team. Creating an environment where honesty and problem-solving are more valued than “quick wins” is critical to a startup’s success.

Re-Thinking the MVP

There are all sort of creative ways to approach the MVP, and not all of them have to resemble the final product. For GE Fuel Cells, producing even a prototype was a massive undertaking, due to its demand for complex hardware and technology. So when Joanna first approached customers to get feedback, her MVP was simply a data sheet. She used it to validate the need and consider basic requirements before she went about building the product itself. The next iteration of her MVP was also unique, consisting of the process for building the fuel cells. Testing and validating whether they could make the fuel cells at scale was the biggest priority for the startup, and so the MVP had to be process rather than product.

Leveraging Internal Resources

Despite the challenges, there are some big advantages to having the support of a big company behind your startup, and one of them is access to internal resources. Johanna’s familiarity with many teams at GE and the GE catalogue enable her to execute more efficiently and effectively. Plus, GE’s lean, innovative culture means she’s not afraid to ask a favor from someone in another GE business unit, even when the project or favor might not be specifically tied to their own goals. That level of corporate support empowers her to move quickly once a concept is validated and is ready to go.

Overall, GE has created an environment where each of its divisions can work the way it needs to in order to reach its set targets. As Johanna explains, the bigger company is like an ocean liner. It shouldn’t move quickly or turn too fast because it might capsize. On the other hand, she says, illustrating her startup’s need for flexibility, “I’m a motorboat. I have to hit a bunch of points, and if I can’t move fast, I’m going to run out of gas before I get there.”


Learn more about GE Fastworks at Lean Startup Labs: Enterprise Summit in New York City on Feb 25. Or immerse yourself in a full week of Lean Startup methodology and entrepreneurship at Lean Startup Week in San Francisco, Oct 31 – Nov 6.

Bringing the Lean Process to Big Finance Corporations

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Photo by The Lean Startup Conference/Jakub Mosur and Erin Lubin

The Lean Startup methodology is often associated with innovative, small companies, but Andrew Breen, VP of Product Delivery at American Express, says he actually considers it a somewhat conservative approach. Not because it doesn’t enable change, but because its data-driven, customer-driven framework and systematic approach to product development actually make it an ideal way to bring innovation to big, established companies.

Previously, product management was somewhat of a “dark art,” explained Andrew in his presentation at The Lean Startup Conference 2015. While it’s imperative that big corporations change from predictable environments to responsive ones, such evolution can present a huge challenge, especially without a framework for innovation. Building transparency and communication into product development is essential at organizations that aren’t used to being nimble.

When AmEx recognized the need to make a shift in order to stay current in the fast-growing payments world, they brought in Andrew to implement a Lean process right in the heart of the company’s customer service department. AmEx made the important decision to innovate within their existing framework, rather than create a separate labs division. This critical and strategic choice ensures new product development is woven into the fabric of the organization, leading to a more responsive culture overall.

Placed right in the thick of daily operations, Andrew set to work shifting the company’s mindset by implementing processes to facilitate change.

De-risking innovation

At big companies, there’s no shortage of new ideas, but there can be little incentive or opportunity to execute on them. What results is lots of conversation, and very little change. Lean Startup provides a framework for evaluating and mitigating the risk of new ideas. That means a focus on customer validation and understanding the requirements of the MVP. Once those are completed, it’s easy to grasp both the impact and the risk of a project.

Re-thinking the role of the customer

Many big companies have a process for testing a concept that isn’t likely to yield the most valuable information. For example, using employees to test products is fine for QA, but not if you’re truly seeking to build products that will increase customer engagement and satisfaction. Similarly, vetting a new concept with the customer advisory board or a group of most valued customers might make them feel good, but it won’t necessarily tell you what you need to know. Innovation requires validating new ideas with a large group of users (think thousands) and picking customers who aren’t already your biggest fans. That’s where you’ll find the insight that drives growth.

Breaking Down Departmental Silos

Part of the reason product development happens slowly at big companies is because teams are set up to function as an assembly line rather than a collaborative group. They suffer from what Andrew calls the “throw it over the wall mentality.” Product tosses it to design, who tosses it to engineering. A better way to approach development is with Lean Squads, where one member of each functional team joins a project/product team and collaborates with the other stakeholders from the get-go. Not only does this help you work smarter, with better ideas and efficient troubleshooting, it can also help you work faster, as each member of the team fully understands the project and their specific role.

Above all, there is shift in culture and mentality that needs to take place in order for an organization to make the transition to Lean. It’s a shift that must happen at the managerial level, so that employees understand they need to do more than just deliver. Across the organization, everyone must be measured on the actual performance of products. That doesn’t mean they can’t fail, it means that experimentation and learning are smaller, valuable goals on the path of production. Creating smaller projects where testing and learning are not only supported but mandated is the best way for big companies to make significant transformations.


Hear Andrew Breen speak about changing the corporate culture for innovation at Lean Startup Labs: Enterprise Summit in New York City on Feb 25. Or immerse yourself in a full week of Lean Startup methodology and entrepreneurship at Lean Startup Week in San Francisco, Oct 31 – Nov 6.

How to Avoid Building Bad Products with Rapid Validation

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Photo by The Lean Startup Conference/Jakub Mosur and Erin Lubin

 

Despite our best efforts, there are a lot of products out there that aren’t so great. We know from Lean Startup that one of the ways to avoid going down the rat hole with bad products is to be willing to fail fast, but Amir Shevat, Director of Developer Relations at Slack, former Googler and Entrepreneur, believes that there are ways to avoid building bad products in the first place.

In his session at the Lean Startup Conference 2015, Amir explained how rethinking the way we experience products can help us to get feedback faster. The key is thinking about interactions with products as a conversation, and measuring how well that conversation is going.

To demonstrate his point, he called a member of the audience up to the stage, said “hello” and then promptly asked for the man’s personal information. The volunteer was briefly caught off guard, as anyone might be if abruptly propositioned for a phone number or address. In the context of social conversation, we can easily see that such a request is awkward, but we still build apps that immediately ask for a username and a password without first engaging the user or explaining what the user will get out of the app.

Amir next quizzed the audience by presenting two user experiences that a family-photo-sharing app had tested for their sign up process. The first flow was much shorter, while the second was longer and prompted the user to add connections and post a photo.

Almost the whole audience guessed that the first flow was more successful, but they turned out to be wrong.  As Amir explained, the second flow had steps that engaged the user and drove better retention and usability. This exercise showed that people should be shown the value of the app as part of the initial conversation. Any requests for information should be part of an organic conversation or exchange, so users understand what they’re getting.

It also functioned as a lesson on why it’s so important to measure customer feedback not based on what they say, but rather based on what they do within the product.

Amir gave another example of this from his own experience as an entrepreneur, when he was building an app to help people meditate. He found that although people were eager to try meditation, there was a significant amount of drop off after they began actually using the app. Asking users for feedback wasn’t providing clear answers, but observing them in conversation with the app gave better clues.

He ultimately observed that the session time was too long to keep users engaged. In an experiment to dramatically shorten the duration of meditation, he got the response he’d hoped for: more engaged users.

Amir noted that one important part of running experiments is actually not telling the user it’s happening. This reinforces that the in-app conversation is the ultimate source of truth. Telling the user that you’re going to run an experiment and then, for example, sending them a survey to ask if they liked it, is not as effective because it’s too far removed from their natural usage.

Observing the quality of conversation between app and user is what Amir calls “rapid validation.” Hearing from customers, getting feedback, iterating and failing fast when necessary are all key principles of Lean Startup.

Focusing on empathy and conversation is a way to accelerate that process, and get to product/market fit even more efficiently. There will always be products that don’t work out and companies that don’t succeed, but using rapid validation, you save yourself from mistakes that are easily avoidable.


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Developing Your Vision with Lean Startup

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Photo by The Lean Startup Conference/Jakub Mosur and Erin Lubin

As an early engineer at the well-known financial management tool, Mint.com, Poornima Vijayashanker learned about building products and starting companies the hard way: by doing it herself.

She’d always been a fan of the Lean Startup methodology, but she found that the more she worked, the more practical, how-to information she craved. She documented what she was learning as she went along on her blog and education platform, Femgineer. She also shared her methodology at the Lean Startup Conference 2015.

In her workshop, Poornima addressed the two of the most important issues that people tend to face when they’re starting companies: 1) Developing ideas, and 2) Recruiting technical talent. Although they may seem like very different phases of the process, they are inextricably linked. Before you can recruit the right people, you need a clearly validated and expressed idea. That helps you shape the vision you’ll pitch to technical talent when the time comes.

1) Talking about and testing your idea

Although developing the idea might seem like the easy part, there’s a lot more work involved than just a quick stroke of genius. In fact, founders often have an idea about a product they want to build but they haven’t correctly identified the problem they think they have. Even when pitching to friends and family, these four questions will be critical in clarifying the essence of your product:

  • Who is it for?
  • What is the problem?
  • What is the solution?
  • What is the benefit of the solution?

If you can answer these questions, you’ll not only have an easier time explaining your project to friends and loved ones, but you’ll have a clear path forward to validating your idea to customers. And if you can’t, you probably need to rethink the product you’re building. These questions are not only important when it comes to developing product features, but also for determining if you have the right product in the first place.

Poornima talked about one client who decided that she wanted to make software that would help doctors with patient retention. This woman noticed that many doctors had patients who visited once, but didn’t come back for recurring appointments. But following the Lean Startup methodology, when she went to validate her product with actual doctors, she discovered she wasn’t solving the problem they found most pressing.

Doctors turned out to be much more concerned with the logistics of getting paid by the patients who had visited them (whether one time, or many.) In short: Billing. The founder revised her plan based on meeting the actual needs of her potential customer base.

With this renewed focus, she could revise her answers to those important four questions, and also start building on a compelling vision.

2) Recruiting Technical Talent

That clearly defined vision is actually more critical than most founders think when it comes to recruiting technical talent. Many founders imagine that the first thing they need to do is get a technical co-founder. In reality, there’s a right time to recruit, and it’s later than most people think; initial customer validation is key when it comes to finding the right people to bring your idea to life.

Poornima explained that technical folks really want to see what they built exist in the world. If you haven’t validated your idea, initial concepts, and maybe even a prototype, they’re likely to spend a lot of time working on features that will never see the light of day. Her big message was:

Don’t recruit early. First, figure out if you’re committed.

This doesn’t mean that engineers need to be told how to build your product. But they do need an idea of where they’re going, in order to develop an intuition around the products they are building.

Your job as founder is to convey your vision. The important distinction Poornima made is that you don’t want to sell them on your product. You want them to buy into the experience, and how your product/company will make an impact in the real world.

Using Lean Startup to Build Your Vision

Ongoing customer validation is the best way to ensure that your vision is one that continues to inspire employees, customers, and advocates alike. Poornima said she still spends hours a day, even as CEO of the education platform Femgineer, listening to what her customers have to say.  She continues to make discoveries about the needs of her audience, and is able to use that feedback to iterate her offering and grow her audience.


At Lean Startup Co., we’re continuously learning about our customers’ needs and challenges too. What are you looking to learn in 2016? How can we support you? We’re brewing up some exciting new programs this year, but we need your help with validating our ideas. Can we take a half hour of your time for some feedback on future ideas? Sign-up for a friendly customer development call with us here.

End the Year with Our Favorite Talks of 2015

We love hearing about all the different ways that people are internalizing Lean Startup principles. Eric Ries’ scientific approach continues to embolden a global community of thought leaders, many of whom we heard from at this year’s Lean Startup Conference.

Before we give 2015 a rest, we’re looking back at the powerful talks that our conference attendees told us they loved most. So regardless of whether you were able to make our big event, we have eight important and entertaining bits of workplace wisdom to share.

1. The Modest Experiments That Became Huge Companies

Know this: Successful companies start by focusing on small target communities and growing their MVP from there.

Laura Klein’s (Users Know) lightning tips talk spotlights the small-scale experiments that today’s big tech darlings crafted on their way to global domination. Examples include focusing on problems affecting a core group of users (Facebook), building an internal tool whose effectiveness could be calibrated in real time (Slack), testing assumptions locally before scaling those ideas globally (Airbnb), and creating a product manually before getting into automation (Product Hunt).

2. The 10 Keys to Building a Strong Community

Know this: Sending your users personal emails, memorable swag, and other messages that they’re important keeps them involved with your brand.

Speaking of Product Hunt, founder Ryan Hoover knows how to stoke and support a rabid fanbase, and he has great advice for growing a community of your own. Highlights include seeding that initial base and personally welcoming new users, recognizing both good behaviors and the bad actors, and sharing mockups of redesign concepts with your users. “You’re changing their home,” he says of the importance of design transparency, “so you want to make them feel like they’re part of the design process.”

3. How to Intentionally Design a Lean Startup Culture

Know this: Map out the right kind of culture for your business with this cool new tool.

Strategyzer’s Alexander Osterwalder understands that the belief systems, attitudes, and values held by employees directly affect the products a company creates. He’s part of the team behind The Culture Map, which helps organizations intentionally shape the purveying ethos in an office. He shows us how to use this tool to design a Lean Startup culture.

4. Testing the Riskiest Assumptions First

Know this: Build stronger startups by testing the assumptions that could topple your business before you tackle the easy stuff.

Gagan Biyani has been involved with renowned startups Udemy, Lyft, and Sprig, companies that maintain their singular missions while changing what they’ve created over time. He shares the specific Lean Startup practices that’ve made these organizations so successful, including strategizing creative ways to solve customer problems and untethering your ego from the products your company creates.

5. Applying Lean Startup to Storytelling

Know this: Savvy movie producers and fiction publishers alike are crafting tighter audience feedback loops that allow them to edit their way to big hits.

There’s nothing Lean Startup about the typical Hollywood blockbuster. As Telepathic’s Prerna Gupta explains, studios generally sink hundreds of millions of dollars into a production and hope they have a hit on their hands. But there are ways to use data and audience feedback to create more compelling movies — and books — while keeping the artistic process intact. Gupta explains how to fine-tune both our storytelling methods and the business models supporting them, through examples ranging from The Martian to her company’s innovative text message YA novels.

6. Spreading Intrapreneurship Across an Organization

Know this: Instigate genuine innovation in your organization by creating a model for intrepreneurship that empowers people in all levels of the company to build and test new ideas.

So you’ve become your company’s innovation evangelist — how do you go from being a singular force to incentivizing widespread change? Intuit’s Bennett Blank breaks down the steps through which Lean Startup practices moved through his company, such as allowing coworkers to make these practices their own and giving people a safe space in which to test out new ideas.

7. The Playbook for Creating Product Market Fit

Know this: Make sure the products your business creates are the ones your target customers really want by taking a page or two from the Lean Product Playbook.

Dan Olsen, author of The Lean Product Playbook, takes us through the methodology behind his book, which includes determining the underserved needs of your specific customer base and creating a strong value proposition and MVP.

8. Lean Startup, The Musical

Know this: Definitely the funniest interpretation of Lean Startup ideas that we’ve ever seen. Really, you’re just gonna have to watch this one. Especially if you’re a TLC fan.

We’d yet to get serenaded by stories of innovation until we met designer William McDonnell.

What’s Next in 2016

On that (ahem) note, there’s more cool stuff on the horizon for 2016: we’ll host our annual flagship conference in San Francisco, of course. Save the date for the Lean Startup Conference Week on November 1 – 7. It’s the one week in the year where you’ll strengthen your foundation of the Lean Startup methodology, learn advanced strategies and tactics for implementing Lean within your organization, and meet experts from your industry who are facing similar challenges. Early bird registration opens in January.

And if you can’t wait til Fall to see us, there’s our inaugural Lean Startup Labs series, which are industry-focused summits around the country. We’re starting with an enterprise lab in New York City in February; later in the year we’ll have summits in Detroit and New Orleans on startups and social good, respectively.

Revolutionizing Publishing with Lean Startup

Photo by The Lean Startup Conference/Jakub Mosur and Erin Lubin
Photo by The Lean Startup Conference/Jakub Mosur and Erin Lubin

 

For 94 years, the Harvard Business Review (HBR) has stayed true to its mission to bring the best ideas in leadership and management to their audience of successful business people. That mission is still at the core of what they do, but as the publishing industry has shifted in the wake of the digital revolution, HBR has faced the same choice as many other notable publications: Evolve or Die.

Eric Hellweg, managing director of product management and strategy for HBR, came on board with the goal to help drive that evolution by expanding HBR’s product into one that meets the needs of modern audiences. Following the methodology of some of Lean Startup’s intellectual forebears, he and others at HBR began the process of shifting the mindset at an established, century-old organization.

He spoke about this experience – and the team’s ultimate success – at The Lean Startup Conference 2015. Implementing some of the concepts of Lean methodology at a well-established company is quite different than doing it at a new startup, but it is equally integral to product and brand development.

There are advantages to starting with the foundation of a successful company, such as a loyal audience, willingness to pay for products and thus the opportunity to test new ones. However, there are some setbacks that you certainly wouldn’t find at a startup. For example, Eric shared an anecdote from early on in his time at HBR, when a colleague rather emphatically said, “We will be blogged about, but we will never blog.” He also noted that it’s harder to sell people on the idea of “failing fast” when there’s an established reputation to uphold. Perhaps most interestingly, employees at HBR had very little experience talking to users and implementing feedback.

That said, he found that Lean Startup and other related frameworks are a strong foundation for developing a product-focused discipline within HBR. At The Lean Startup Conference, he shared a framework that proved invaluable to the team in building a successful digital business inside an established organization.

1. Be something

In order to be something, you need to evaluate the current organization to determine what you’ll forget, what you’ll borrow and what you’ll learn. You’ll need to forget legacy approaches that aren’t adaptable. In HBR’s case, they need to “forget” the print editorial process and adapt one that was more suitable for the digital platform. At the same time, you also want to borrow elements of the core company that can give you an advantage, i.e. a strong user base. Along the way, you learn what’s appropriate as you grow your innovation and identity within the larger company.

2. Be patient

Eric noted that at the outset (and even along the way), transformation can seem daunting. Especially if you’re used to the way things work in the startup world, you may have to temper your expectations when working inside established organizations. HBR started its digital transformation eight years ago, which is a testament to how much can be accomplished with measured, consistent work.

3. Be obsessed with the user

User feedback is a key pillar of Lean Startup, but for HBR, that required a shift in how they thought about their audience. Previously, they had subscribers: people who made a purchase at the beginning of the year and consumed the content determined by editorial. As they made the move to digital, they had to think of their audience as members of a community, which was centered online, nurtured with content and measured in continuous engagement both online and off.

Of course, one of the biggest changes came from realizing that HBR was no longer just an editorial publication, but a company with a real product that was independent from editorial. The UX and editorial are equally important elements, but they don’t need to be run by the same people. To that, taking the leap towards innovation and establishing the product function with HBR has enabled writers and editors to focus on what they do best. The ability to think of these disciplines as independent ultimately supports the growth and overall excellence of the brand.

Continue learning with Lean Startup Co. in 2016. We have a new series called Lean Startup Labs, in addition to our flagship Lean Startup Conference in the Fall.

Written by Rachel Balik, contributor for Lean Startup Co.

Saving Storytelling with Lean Startup

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Photo by The Lean Startup Conference/Jakub Mosur and Erin Lubin

Long before we had apps, metrics, user experience or testing tools, storytellers would travel from village to village, perfecting their craft by observing how live audiences responded to their stories.

That’s why Prerna Gupta, founder of the storytelling app, Hooked, says that in some ways, the idea of using data to tell stories isn’t actually that revolutionary. But it is highly valuable, to authors, publishers and studios alike, if you look at some the evidence from the past few years.

In her presentation at the Lean Startup Conference 2015, Prerna gave the example of The Martian, one of this past summer’s highest grossing blockbusters. The Martian started as a blog, then became a book and was eventually made into a movie. Its success was no accident, but rather, it was the result of ongoing market validation and customer feedback. Essentially, the blog (and each blog post) was the MVP, and by building out his “product” based on input from his audience, author Andy Weir was able to launch something the market loved.

Prerna, a writer herself, recognized that this kind of customer validation could be applied to storytelling, which is how she got the idea to build her app, Hooked. She realized that by bringing the idea of scientific experimentation to storytelling, she could improve the experience for both the author and the reader.

When she and her team were building out the product initially, they used data to determine the best UX for the app. Noticing that there was significant drop off around 35% of the way through a session, they set about innovating the format. Adding images or changing fonts didn’t seem to make a difference. What they landed on was an app that tells stories via text messages. To continue reading, the user has to click “next.”

Completion rates went dramatically up. They had discovered a way to reformat fiction to suit reduced attention spans of the modern reader. Hooked put out a call for stories to MFA programs, offering to pay for creative writing.  With UX now in place, they used data again, this time to evaluate the quality of the stories.

Prerna shared one example in which a story they thought would do well was failing to engage users. She reread the beginning, realized it had some confusing elements, and edited it. As she hoped, the story began performing significantly better.  Essentially, what Hooked is doing is giving authors the ability to create “lean fiction.” Not only does this format help authors refine their craft and their storytelling abilities, it also ensures that users consume the product, even ones that aren’t likely to sit down and read a hundred – or even a dozen – pages.

Prerna herself is a huge believer both in the power of fiction and the power of the Lean Startup methodology. She says that following a data-driven and customer-driven approach to product management was one of things that helped her to gain traction for Hooked in Silicon Valley, where fiction is not exactly the flavor-du-jour. Being able to prove the concept, take things one step at time, and consistently back up assumptions with metrics was critical.

By merging the creative and technical, Prerna has been able to create an app that serves both creators and consumers, without compromising on the core values of storytelling. Hooked stories have characters, plots and complex ideas: everything that makes fiction so valuable to read. But it does it in a way that truly takes into account the experience of the user, rather than an unfounded whim of the author or a publishing house.


Continue learning with Lean Startup Co. in 2016. We have a new series of smaller, subject-specific Lean Startup Labs, starting with an enterprise summit in February in New York City, in addition to our flagship Lean Startup Conference in the Fall in San Francisco.

Written by Rachel Balik, contributor for Lean Startup Co.

How to Intentionally Design a Lean Startup Culture

Editor’s Note: It’s two weeks after our annual Lean Startup Conference, and we’ll be digging deeper into some of our favorite talks. For a full re-cap, check out our Lean Startup Conference 2015 playlist. The first set of videos is up, and in true Lean Startup fashion, we’ll be uploading them in small batches as they are edited. We hope you enjoy the videos! – Melissa Moore


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Photo by The Lean Startup Conference/Jakub Mosur and Erin Lubin

Long before everyone was taking selfies, people strove to have a “Kodak moment,” a perfect experience captured on film. But today, Kodak has lost its aspirational glow and became a warning tale of what happens when an industry leader fails to innovate.

Kodak went from a being an industry leader to declaring bankruptcy in 2012. One might consider their downfall an inevitable sign of the times. But according to Alex Osterwalder, author and founder at Strategyzer.com, big companies can avoid their “Kodak moment” if they’re ready, willing and most importantly – able – to go from being a company that maintains the status quo to one that enables innovation.

The key to making that leap is a fundamental shift in organization culture, Alex explained in his talk at The Lean Startup Conference 2015. Kodak had an R&D program just like most big companies, but it wasn’t enough to keep them relevant when faced with competition from smaller, more nimble technology companies. That’s because their innovation was only on the periphery. In order to stay relevant, a Lean Startup culture needs to be built and integrated into the whole company.

Big companies focus on improving, executing and forecasting. Innovative companies focus on inventing, searching and experimenting. This is for good reason; big companies often have business plans they need to present to stakeholders or board members. For them, failure is not an option. That’s why Alex advocates for putting certain people in charge of innovation, and others in charge of execution.

Just like when basketball star Michael Jordan had a harder time transitioning to baseball, the people who are in charge of keeping the company moving forward on an even keel might not be the same people who will excel at innovation. Innovation can’t happen on command, it can only happen when it’s nurtured and supported in the context of the right business culture.

That culture of innovation also has to be supported by the people who are tasked with execution. Alex spoke about a tendency to see innovators as “pirates.” Not only does this make it harder for innovators to get their ideas into play, it also de-incentivizes the role of innovator at a big company. In fact, at most big companies, there’s not a lot of prestige for innovators; in some situations, it’s even “career suicide,” says Alex. If you’re relegated to a small team or a labs division, you’re not working on things that are mission-critical to the organization.

Ironically, as we can see from examples of companies like Kodak or Nokia, innovation is indeed mission-critical, and must be treated as such. This may require a shift in organizational culture. In his talk, Alex provided a simple, but critical overview for how companies can approach and execute this shift, and begin consciously designing a Lean Startup Culture.

1) Map it out. In phase one, the whole team should begin to think about which elements of their process and operations support an innovative culture, and which ones don’t. Label them as either “enablers” or “blockers.”

2) Gather your team. Once the team has started to think about enablers and blockers, the whole group should gather to map out and discuss the as-is culture. Aim for ultimate transparency and realism so everyone shares the same concept of the current business culture.

3) Design a workshop. Once the team has agreed on enablers and blockers and mapped out the current culture, it’s time for a workshop (at least half a day long) where a plan is put in place to shift the culture from what it is to what the team wants it to be.

Not everyone will go through all three phases right away. In fact, it might be helpful for teams to identify just one blocker and start to chip away at the problem. If you truly want to design an intentional culture, though, you have to go all the way. In some respects, the process may seem simple, but it’s essential for helping teams to see the big picture.

So often, people try to make culture changes at the tactical level (new HR software, a ping pong table, happy hours after work.) However, if those tactical changes don’t ladder up to a higher goal, the culture of the business will never change.

It’s important to make the distinction that culture is not about being friendly with coworkers or having fun after work. It’s about getting people engaged in the actual work they are doing. Alex notes that on average, seven out of 10 employees are disengaged, which is not only bad for employees but truly limits a company’s potential for success. Culture needs to be “explicit,” and start with day-to-day management and operations.

As Alex says, “the ping pong table is not going to cut it.”


Written by Rachel Balik, contributor for Lean Startup Co.

Continue learning with Lean Startup Co. in 2016. We have a new series of smaller, subject-specific Lean Startup Labs, starting with an enterprise summit in February in New York City, in addition to our flagship Lean Startup Conference in the Fall in San Francisco.

The 50/50 Pledge to Get More Women Speakers at Tech Conferences

Photo by The Lean Startup Conference/Jakub Mosur and Erin Lubin
Photo by The Lean Startup Conference/Jakub Mosur and Erin Lubin

When you look at a typical tech conference program, how many of the speakers are female? The leaders invited to present, mentor, and spark discussions in front of hundreds or thousands of industry peers can skew predominantly male. This is despite the fact that women are heading up advances in tech in organizations around the world.

But a very cool new initiative by Oakland, CA’s Sandi MacPherson, the 50/50 Pledge, aims to create gender parity among speakers and presenters at major tech events.

MacPherson is the founder of Quibb, the news sharing community for professionals. She says through Quibb, she saw accomplished women in tech applying for membership, sharing articles, and writing insightful comments. And yet event producers were constantly coming to her for names of women who could speak at their conferences or be on their podcasts — which was especially challenging as she didn’t have a great way to search her databases by gender. As a female founder, she was also repeatedly being asked for her perspective on women in tech, and to encourage more women to found companies of their own. “I felt that answering [these] questions again and again was not a good use of my time,” she says. “I didn’t know if it was actually changing anyone’s opinions, moving the needle in any way.” She realized that she could instead spend her free time “working on a project that has a much bigger impact than me talking to one person at a time.”

And so on May 30th of this year, she tested out the idea of creating a database for women in tech, in a very Lean Startup sort of way. “I sent out a random tweet late on a Saturday afternoon,” she says, “and got lots of positive feedback.” After asking followers to “please add yourself and share!! I’m starting a directory of women in tech to speak at events,” it only took a few weeks for 1,000 women to register with the 50/50 Pledge.

“I realized there was a real demand for this,” she says. “At the same time, many event organizers reached out, all wanting access to this list.”

The 50/50 Pledge now boasts a database of close to 2,300 female leaders, according to MacPherson. These women work at large tech companies (GoPro, Facebook, Dropbox, Uber, Cisco), and smaller startups (Keen.io, Intercom, DocuSign, Yik Yak), or they hold tech roles in more traditional industries and companies (PS, Disney, GE, Neiman Marcus). Their titles range from founders to VCs, partners, data scientists, heads of engineering, and beyond. Anyone who identifies as a woman can sign up with the 50/50 Pledge database.

MacPherson makes a note of the new women being added to her list, and when opportunities arise, she pings the appropriate people for speaking events. Organizers are starting to reach out too. We worked with her for our recent Lean Startup Conference, and we’re committing to the 50/50 Pledge again for our 2016 flagship conference and inaugural Lean Startup Labs series. MacPherson’s other partners include Nir Eyal for the upcoming Habit Summit and the folks at CMX West Summit.

MacPherson is selective about the conferences with which she partners. She first speaks with the organizers to understand the event and the audience as well as the group’s history with gender parity. If the hosts are invested in taking the pledge, she emails organizers suggestions for speakers. She then emails the chosen candidates, and if the women are interested, she connects the two parties. “It kinda works like a professional double opt-in intro,” she says.

Keep in mind that MacPherson is working on this initiative as a side project to the company she started. “I could be doing a lot more and moving faster,” she says, “but I’m still in the learning stage … It’s still really early. I’m excited to see where it will go and how it will grow.”

For now, she says her focus is on the tech industry — since it’s the world she knows best and where her networks are the strongest — and she’s targeting conferences because that’s where she believes she can make the most impact.

“You literally are giving a woman a stage with an audience of hundreds or thousands of people, where she is an expert, given immediate clout, seen as role model,” she says. “The ripple effect of a conference is very large,” she adds, noting the word of mouth and press that happens around speakers at prestigious events.

Even as an initiative in progress, the 50/50 Pledge is an important step in creating gender parity at high profile events. MacPherson says that although she isn’t a conference organizer herself, in talking to producers she’s learned that these sorts of gatherings are naturally biased towards male speakers because they’re based on men’s networks, a habit she’s working hard to correct.

“A list with a third party is an easy way to look outside your network,” she says, “with gender diversity as your explicit goal.”

For more information about the 50/50 Pledge, check out the website for the initiativeLearn more about the 2016 Lean Startup Conference and Labs series here 


Written by Jennifer Maerz, Contributing Editor of Lean Startup Co.