Drew Houston, Dropbox founder spent 10 years applying the Lean Startup mentality . By doing so he turned his MIT science project into a company worth $20B. Here is what he did, and what you can do to go fromzero to heroin under a decade.
Dropbox was founded in 2007, by MIT students Drew Houston and Arash Ferdowsi, as a startup company, with initial funding from seed acceleratorY Combinator. Last week the company went public through an initial public offering. At market close, the startup was valued at $20B.
Y Combinator exposed and ingrained into the Dropbox Founders a deep belief in the philosophy that eventually became known as the Lean Startup Method, a systematic path to startup success originally created by Stanford professor and serial entrepreneurSteve Blank. Formalized by Eric Reis (a student of Blank's) the Lean Startup methodology is a practice for developing products and businesses based on a 'validated learning' model predicated on getting customer feedback quickly and often. The goal of this method is to minimize the impact of uncertainty in the product development process Reis iterated Blank's Customer Development theories into the Lean Startup, a book read by millions. Reis coined the Lean Startup Feedback Loop as the key tool for developing a startup in the 21st Century. His BUILD > MEASURE > LEARN philosophy has driven success to thousands of new ventures, including Dropbox. Like Reis,Ash Mayura stood on the shoulders of those that came before him, and evolved the Business Model Canvas (a tool created by Alexander Osterwalder a few years earlier) to create the Lean Startup Canvas --which has become the 21st century business plan. The Lean Startup Canvas (or just rthe Lean Canvas)
Here's how to apply it to your venture:
Steve Blank, Silicon Valley professor and grandfather to the lean startup movement reminds founders that no answers lie inside your office. All the answers lie with your future costumers. So before building, before coding, before even incorporating, founders need to get out in front of potential early adopters.
Test Everything. Eric Reis, author the Lean Startup book teaches us not to rely on gut feelings and assumptions. Instead lean startup pundits encourage founders to run learning experiments with customers. Validating each business model assumption with quantifiable results.
According David Cohen (a co-founder of Techstars, which runs lean startup programs in more than 20 cities across the world) tells his invests, that done today, beats perfect tomorrow. Meaning getting to market with an MVP (i.e. Minimum Viable Product, e.g. a bare bones prototype.).
A minimum viable product helps founders learn as quickly as possible. By definition an MVP is the least sophisticated (least complicated) version of your solution that can be used for learning.
Dropbox did just that, launching with a youtube explainer video instead of working prototype. Doing so validated the project, when 75,000 early adopters signed up after viewing the video MVP.
" Business Plans are dead. Business Planning is not ." says legendary venture capitalist, Brad Feld (whose exits include: Fitbit, Guitar Hero & Makerbot). Today a static 45 page business plan is wrong on the day it gets printed. Instead, modern founders use a one page business model summary, called a Lean Canvas. This tool helps founders dynamically and systemically turn their assumptions into a viable, sustainable, scalable business model.
Drew Houston, turned his MIT class project into a business worth $20B. He did so using cutting edge Lean Startup methods. Now you can use those today at your business. Just start today and GET OUT OF THE BUILDING.