Thinking of launching your own startup but not sure where to start?
This article explores how savvy entrepreneurs can use the lean startup business model to get started on their new venture. You’ll learn how the lean startup method differs from traditional startup approaches, the pros and cons of each, as well as common challenges of the lean startup model and how to overcome them. Then, you can read about other successful startups that have used this method to launch and scale their businesses, to inspire your own success.
Before we dive in, here are a few important definitions to understand.
Is there a difference between startups and small businesses?
A startup is commonly understood as:
- a business or project at the beginning stage of operations
- usually financed by their entrepreneurial founders
- scalable.
In comparison, regardless of their development stage, service or product, small businesses can be defined by their consistent focus on serving a local market.
While big tech startups like Facebook, Amazon and Netflix are the most well-known (ex)startup companies, other non-tech examples include BrewDog, Lululemon, and The Honest Company. The common factor between these companies is their focus on innovation. Appropriately labelled as 'disruptors', they challenge traditional ways of thinking by creating new ways of conducting business and aim to improve or provide variations on existing products or services.
What is the lean startup method?
Originally developed by Eric Ries, the lean methodology aims to streamline the startup process by focusing on experimentation and iterative learning rather than elaborate planning. One way to do this is by developing a minimal viable product (MVP). MVP is a version of the product with just enough features to be usable by early adopters. The benefit of this, as the lean startup method states, is that you avoid unnecessary planning and work by further developing the product based on customer feedback early on. This is highlighted in the ‘learn feedback loop’, a main principle of the lean startup method.
Let’s explore these principles now in more detail.
5 principles of the lean startup method
1. Entrepreneurs are everywhere
“You don’t have to work in a garage to be in a startup.”
– Eric Ries
The movies stereotype of an underdog team working tirelessly in their garage to develop an innovative new product is misleading. Ries defines the concept of a startup as a human institution designed to create new products and services under conditions of extreme uncertainty. This means entrepreneurs and developers can be situated in a company of any size, established or not, and in any industry. Thankfully, the lean startup method can be utilised in any of these scenarios.
There’s a common misconception that entrepreneurs are born, not made. I learned if you develop certain skills, learn methodology and work hard, anyone can become an entrepreneur.
2. Entrepreneurship is management
Like any business venture, entrepreneurship needs solid management. But a startup won’t necessarily benefit from traditional management processes. Leading your own startup, you’ll need to manage and organise your enterprise or business to effectively handle risks, investors and product experimentation. Just remember: whatever management style you implement should specifically respond to the needs and direction of the business.
“I believe ‘entrepreneur’ should be considered a job title in all modern companies that depend on innovation for their future growth.”
– Eric Ries
3. Validated learning
Validated learning is at the core of the lean startup process. This process of learning and developing as a startup must be validated by gathering quantifiable data, such as revenue and user engagement. To be successful, a lean startup uses this information to facilitate genuine improvements and eventually become sustainable.
4. Build – measure – learn
Also known as the feedback loop, ‘build measure learn’ is one of the central principles of the lean startup method. It highlights a sound way to establish and continually improve on a product idea within the early stages of development, while saving time and resources.
Put into practice, the model involves a cycle of creating and testing to gain customer feedback. The cycle doesn’t end when the product is released. This principle aims to continuously develop and improve an offering by listening to your customers and delivering exactly what they want.
5. Innovation accounting
Accountability is key. As much as you love the fun stuff (coming up with new ideas), to be successful, you also need to focus on the boring stuff: how to measure progress, milestones and performance indicators, and how to prioritise work. A standard accounting model won’t work in these instances – you’ll need to use a new accounting model for startups and people who will hold you accountable.
Lean startup vs traditional startup approaches
The main differences between the lean startup method and more traditional startup methods are:
- Traditional startups launch a fully developed product, while lean startups launch with an MVP to test and adjust quickly.
- Customers are involved early and often in the lean startup process, while they’re only involved after product launch in traditional startups through marketing and sales.
- Traditional startups make decisions about their product or service based on business plans, forecasts and market research. In lean startups, decisions are made through experimentation and validated learning.
There are pros and cons to both approaches, but the main benefits of using the lean startup method include:
- getting into the market faster
- reduced risk of failure thanks to early customer feedback
- creating products or services that address real problems
- opportunity to foster loyal, long-term relationships with early adopters.
Common challenges of the lean startup model and how to overcome them
No methodology is perfect. Here are some common challenges you may encounter when using the lean startup method and practical solutions to address them:
- Challenge: Misinterpreting customer feedback or jumping to conclusions based on anecdotal comments rather than more reliable, consistent feedback patterns.
Solution: Use structured methods of collecting feedback such as customer interviews, surveys and usability tests, prioritising action based on trends across multiple data points. - Challenge: Knowing when to pull the trigger and launch the MVP. Many entrepreneurs will need to fight the urge to perfect their product or service before launching.
Solution: Be clear about what feedback you want to collect and launch with only what is necessary to start the feedback process. - Challenge: Struggling to pivot based on feedback received due to preconceived ideas about how the product or service should be or attachment to the MVP.
Solution: Remember the purpose of pivoting to address feedback will increase your chances of success by producing a service or product customers want. It can also help to establish clear goals before getting started and documenting all feedback, decisions and trials so each iteration is clear. - Challenge: The speed of the lean startup model can lead to confusion or miscommunication in a team if not managed well.
Solution: Again, documentation helps ensure everyone is across the latest stage of the process, but it is also helpful to hold regular meetings. Other digital tools that can be helpful include visualisation boards and project management tools.
How to use the lean startup model: a case study
Some of the well-known companies that have utilised the lean startup principles for growth include Airbnb, the online accommodation marketplace, Dropbox, the file hosting and sharing service, and Zappos, the online clothing and shoe retailer.
For instance, released in 2008, Dropbox started as a minimal viable product with a YouTube demo video illustrating key features and functionalities of the service before a single line of code was written. This allowed them to test the demand for their product and gain valuable customer feedback that led to further experimentation.
In just 4 years, the innovative tech service gained 100 million registered users and now, as of 2025, has 2.3 billion users with almost 18.6 million paid users. Dropbox’s success, and that of many other startup companies, highlights the importance of using the 5 lean startup principles and methodology.
Key takeaways
- The lean startup method helps entrepreneurs launch faster with reduced risk.
- The method can be applied in any industry to any innovative idea, product or service.
- Common challenges of the method can be addressed by setting clear goals, having clear communication and trusting the process.
Enhance your innovation and entrepreneurial capabilities
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