Is your product an Ice Cream Glove or a Snuggie?

At each of the lean startup master classes, we’ve turned to a special expert on entrepreneurship to provide us with special insight;  Ali G teaches us about two enduring kinds of failed products: the Ice Cream Glove and the Hoverboard.

A segment of his show is below (warning: brief uses of strong language):

For those that haven’t watched it, I’ll give a brief recap. Ali G meets with business leaders and investors on Wall Street to learn how to create a new company around a new product idea. After some general lessons, he then proposes his first product idea, complete with flip charts, business plan, and marketing plan. His idea? The Ice Cream Glove, a special glove you can carry around with you so that, if you happen to eat ice cream, you can prevent your hands from getting sticky. After failing to persuade most of the investors to back him in that venture, he then tries to sell a second idea: a Hoverboard, “like from Back to the Future.” After all, they must have made at least one of them for the movie, right?

Both of these ideas for companies are terrible, and the show is funny because he manages to keep on selling them with a straight face. But there are also important lessons baked into the humor. Take the example of the Hoverboard. If you look at the typical startup, you will see the vast majority of their energy and time invested in building new technology. We act as if the biggest risk to startup success is that the technology won’t work. But in reality, most products fail because they are the Ice Cream Glove, that is, because there are no customers who will buy them.

Why is the Ice Cream Glove a bad idea? After all, it does solve a real problem. As Ali G says, the target market is people who like ice cream combined with people who have hands. It’s a terrible idea because it doesn’t solve a very important problem. Startups make this mistake all the time, sometimes inventing dramatic new technology that can’t find early adopters, because it doesn’t really make anyone’s life better.

And yet, before we leave the subject of products that don’t solve a very important problem, let’s consider one last video:

The Snuggie is another common type of product. When I first saw this infomercial, I was convinced it was another joke. Yet the Snuggie is no joke: it’s a product that has sold millions of units. So why is the Snuggie any different from the Ice Cream Glove? It sounds like yet another product that doesn’t solve a very important problem. Aren’t blankets good enough for keeping warm on the couch? I believe if you had pitched both ideas to me as an investor, I would have found both equally laughable. Yet only one is actually a joke.

So how can you tell the difference between an Ice Cream Glove and a Snuggie? You can’t.  Only your customers can. There is literally no exercise at the whiteboard you can use to find this out ahead of time. A lot of startups - and a lot of technologists - make this mistake. You cannot figure out what products create value for customers at the whiteboard, where all you have to draw on are opinions. To operate with facts is the essence of something called Customer Development, one of the core lean startup tenets. It is a methodology for getting “out of the building” and testing ideas against reality, to find out what creates value for customers before spending all of our resources building it. Since the biggest source of waste in product development is building something that nobody wants, customer development can help us make better use of all the human energy we pour into new products.

The Snuggie and the Ice Cream Glove may not sound like a very important products in the grand scheme of things.  But I hope you’ll remember them as cautionary tales. Most entrepreneurs, when they are pitching their products to investors, to potential partners, and even to future employees, sound just like Ali G pitching the Ice Cream Glove: in love with their own thinking, the amazing product features they are going to build - and utterly out of touch with reality. Don’t let that happen to you.

Continuous deployment in 5 easy steps

One of the lean startup techniques I’ll be discussing at this week’s session at the Web 2.0 Expo is called continuous deployment. It’s a process whereby all code that is written for an application is immediately deployed into production. The result is a dramatic lowering of cycle time and freeing up of individual initiative. It has enabled companies I’ve worked with to deploy new code to production as often as fifty times every day.

Continuous deployment is controversial. Most people, when they first hear about continuous deployment, think I’m advocating low-quality code or an undisciplined cowboy-coding development process. On the contrary, I believe that continuous deployment requires tremendous discipline and can greatly enhance software quality, by applying a rigorous set of standards to every change to prevent regressions, outages, or harm to key business metrics. (This criticism is a variation of the “time, quality, money - pick two” fallacy)

Another common reaction I hear to continuous deployment is that it’s too complicated, time-consuming, or hard to prioritize. It’s this latter fear that I’d like to address head-on in this post. While it is true that the full system we use to support deploying fifty times a day at IMVU is elaborate, it certainly didn’t start that way. By making a few simple investments and process changes, any development team can be on their way to continuous deployment. It's the journey, not the destination, that counts. Here's the why and how, in five steps.

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How to build companies that matter

Eric Ries, a serial entrepreneur, most recently was co-founder and Chief Technology Officer of IMVU, his third startup. He's the author of the blog Lessons Learned, co-author of several books including The Black Art of Java Game Programming (Waite Group Press, 1996), and a Venture Advisor at Kleiner Perkins Caufield & Byers. He. In 2007, BusinessWeek named Ries one of the Best Young Entrepreneurs of Tech. He'll be presenting on "The Lean Startup: a Disciplined Approach to Imagining, Designing, and Building New Products" at Web 2.0 Expo.

We're living in a time of renewed possibility for startups. Major trends - from the pain of the economic crisis to the disruption of web 2.0 - are breaking the old models and paving the way for a new breed of company. I call it the Lean Startup.

The Lean Startup is a disciplined approach to building companies that matter. It's designed to dramatically reduce the risk associated with bringing a new product to market by building the company from the ground up for rapid iteration and learning. It requires dramatically less capital than older models, and can find profitability sooner. Most importantly, it breaks down the artificial dichotomy between pursuing the company’s vision and creating profitable value. Instead, it harnesses the power of the market in support of the company’s long-term mission.

Tim O'Reilly has recently been advocating that as an industry we focus on building stuff that matters. In response, I want to try and present a way of building startups that can realize that dream. In particular, he as articulated three principles:

(1) Work on something that matters to you more than money, (2) Create more value than you capture, and (3) Take the long view.

Given the hype and easy credit that has been the hallmark of technology startups the past few years, it's been too easy for them to be unclear about whether they are really creating more value or just spending money to create the appearance of success. The lean startup approach tackles this problem from the very beginning of a startup's life. My experience is that startups need to be built from the ground up for learning about customers and what they will pay for. That means an obsessive focus on finding out "is our company vision really the path to a brave new world, or just a delusion?"

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