Do More Faster India, 2nd Edition

Chapter 38Progress Equals Validated Learning

Eric Ries

Eric is the founder and CEO of Long-Term Stock Exchange. He previously was the cofounder and CTO of IMVU. Eric is also the creator of The Lean Startup methodology and the author of several books, including The Lean Startup and The Startup Way.

I am an advocate of charging customers for your product from day one and I regularly counsel entrepreneurs to focus on revenue. Those who refuse to listen to my advice get themselves into trouble by running out of time—and money! But I now believe that revenue alone is not a sufficient goal for an early-stage startup and that focusing on it exclusively can lead to failure as surely as ignoring it altogether.

The revenue problem brings up the following question. Would you rather have $30,000 or $1,000,000 in revenues for your startup? Sounds like a no-brainer, but I’d like to convince you that it’s not. To start convincing you, I want to share with you an example of two startups with vastly different revenues and different approaches to learning about customers.

Consider Company A, with a million dollars of revenue and growth quarter after quarter. Despite those revenues and growth, their investors are frustrated because the metrics of success change at every board meeting. And the product definition fluctuates wildly—one month, it’s a dessert topping; the next, it’s a floor wax. Their product development team is hard at work on a next-generation product platform, designed to offer ...