Build Measure and Learn…

The classical Venture Capitalist model has deeply changed in the last years; the ecosystem is increasingly fragmented and many funds have encountered difficulties to follow the new course of investment. Indeed traditional funds are structured to deal with big investments in return of huge exits, while start-up economical needs, particularly in the web area, have become smaller. In addition number and speed of the investments have substantially increased, challenging the traditional rules.

Organizations like Accelerators, Business Angels and Seed funds have grown quickly to fill the gap that Venture funds have left free. These “new” players are reactive, agile, ready to be involved in small investments and they have the primary role of filtering the “deal flow”.

At the same time, most of the people have understood that start-ups require economical parameters quite different from those common in consolidated business. A start-up is first of all an experiment, it is a human institution designed to deliver a new product or service under conditions of extreme uncertainty (From Lessons Learned blog By Eric Ries): for these reasons entrepreneurs have to develop a new set of metrics in order to evaluate their work.
This is the contrast between classical “Business School” and the so called “Entrepreneurship School” that many people are still waiting for, between business plan and business model, between market reports and the fieldwork in search of the right customer/market for the product (customer development).

Lean Start-up

So the Lean Start-up is an approach that entrepreneurs should test and adapt to their needs, combining Agile Software Development and Customer Development, and not a strict list of practices to follow in a passive way.

Lean Start-up teaches us to:

• combine customer development and product development
• run an iterative process to validate the customer value proposition
• maintain an agile structure in order to be ready to change deeply the strategy but stay grounded in what you learned (pivot).

Talking about Lean Start-up two names have to be fixed in mind:
Eric Ries: blogger (Lessons Learned) and “serial-entrepreneur”.
Steve Blank: ”serial-entrepreneur”, blogger, academic professor and author of Four Steps to the Epiphany, practically the manual for the lean start-up.

Concepts behind Lean Start-up are recent and their impact on our country (ITALY) could be extremely important. In the United States of America the Venture culture is spread and well known, but this is not the same in Italy where entrepreneurs have started to deal regularly with “pitches” and term sheets only in recent years. But this lack could become an advantage in learning and adopting an approach that is concrete like no others.