Be the Unicorn by William Vanderbloemen – Summary and Analysis

I. Executive Summary

“Be the Unicorn” by William Vanderbloemen presents a data-driven manual for achieving unusual success and becoming “mythically valuable, successful, and irreplaceable.” Based on over thirty thousand long-format interviews conducted by Vanderbloemen Search Group, the book identifies twelve “teachable habits” practiced by the most successful individuals, referred to as “Unicorns.” The core premise is that while some aspects of success are innate, there are clear, actionable ingredients that can be learned and cultivated. The author, drawing on his unique background in divinity and executive search, emphasizes the importance of “human skills” over solely technical or algorithmic prowess.

This briefing will focus on several key habits detailed in the provided excerpts: The Fast, The Solver, The Anticipator, The Prepared, The Self-Aware, The Curious, The Connected, The Likable, The Productive, and The Purpose-Driven.

II. Core Concepts and Themes

The overarching theme is that “Unicorns” are individuals who possess a unique combination of teachable human skills that allow them to stand out and achieve exceptional success. These skills are not merely theoretical but are backed by extensive data from real-world observations and interviews.

Key Themes:

  • Data-Driven Approach: The book’s insights are derived from “hard data” collected over 30,000+ long-format interviews, identifying commonalities among top-tier talent.
  • Teachable Habits: Success is not just about innate talent; it’s about cultivating specific, learnable habits. The foreword states, “William Vanderbloemen has not only studied successful people, he has unlocked the teachable habits they practice that make them successful.”
  • Human Skills over Technical Skills: The author argues that “It’s human skills that make the difference, not the formulas and algorithms that can be programmed.” His background as a pastor, rather than an MBA, is presented as an asset in understanding people.
  • Irreplaceability: Cultivating these habits allows individuals to become “uniquely valuable” and “irreplaceable.”
  • Mindset and Action: Many of the habits require a shift in mindset (e.g., solution-focused, curious, humble) coupled with disciplined action.

III. Detailed Review of Key “Unicorn” Habits

The excerpts detail several of the twelve habits. Here’s a breakdown of the most important ideas and facts for each:

1. The Fast

  • Definition: Being able to respond quickly and discern what needs an immediate response versus what does not. It’s about decisiveness, not saying “yes” to everything.
  • Key Idea: “Acting fast isn’t always in our nature, especially when we’re afraid.” Our brains are wired for caution and procrastination due to evolutionary reasons (limbic system winning over prefrontal cortex).
  • Important Fact: The word “procrastinate” comes from the Latin “crastina,” meaning “tomorrow.”
  • Cultivation:Making quick response time a company value and incentivizing it.
  • Setting quick, achievable deadlines.
  • Discerning between “distractions” and “opportunities” (e.g., an opportunity “gets you closer to your goals” and “Your whole brain agrees on it”).
  • Avoiding overthinking: “Overthinking makes you safer, right? You’re more likely to get the right answer or work out all the possible scenarios if you overthink. ‘Thinking’ is valuable. Overthinking is not.”
  • Example: Blake Mycoskie (Toms shoes founder) who “let speed guide him, propelling him from one opportunity to the next.” Lin-Manuel Miranda, who “doesn’t appear to overthink things. Rather, he trusts himself to do what’s right or what will work and then he does it.”
  • Testimony: Patrice M. states, “Make a decision! Quickly gather the information necessary to make a decision, knowing that we will never have all; we’ll never know everything. Be decisive. Commit and move forward.”

2. The Solver

  • Definition: Individuals who focus on finding solutions rather than dwelling on problems or complaining.
  • Key Idea: “People are either on the problem side of the equation, or they are on the solution side.” Solving is better when done with a group. “Never use I when you could use we.”
  • Important Fact: Dale Carnegie’s first rule of winning friends and influencing people is “Don’t criticize, condemn, or complain.”
  • Cultivation:“Come with a solution”: When presenting a problem, also offer a potential solution (even if not perfect or feasible). “The solution doesn’t have to be perfect.”
  • Recognize if a problem “really needs to be solved.” Not everything does.
  • Encourage humility and lifelong learning.
  • Rebrand “problems” as “possibilities.”
  • Example: Kevin Plank (Under Armour founder) who “decided to solve the problem” of uncomfortable cotton athletic wear. Jennifer Garner, who “has always projected a cheery, collaborative image” in co-parenting.
  • Testimony: Hanna S. says, “Complaining and stressing never help a situation… I try to focus on the next step or the solution to get things done.” Dustin L. adds, “If I see a problem, I need to come up with a solution.”

3. The Anticipator

  • Definition: Individuals who can “see around the corner” and predict future outcomes by thinking ahead and studying patterns.
  • Key Idea: “If you want to know the future, just study the past. Humans are incredibly cyclical.” Our brains are naturally wired for prediction to ensure survival.
  • Cultivation:Practice solving with the end in mind.
  • Encourage reading and learning history.
  • Coach “thinking things through.”
  • Example: Chess grandmasters who think many moves ahead, and Aaron Rodgers, who “doesn’t look for the open player when he makes a pass… He thinks about the desired outcome.”

4. The Prepared

  • Definition: Being in a “state of readiness in mind and body to do your duty” by thinking things out beforehand.
  • Key Idea: “Better to be overprepared than underprepared.”
  • Important Fact: The Scouts’ motto “Be Prepared” emphasizes readiness and foresight.
  • Cultivation: Continuously preparing and learning, even from unexpected sources like video games.

5. The Self-Aware

  • Definition: Knowing one’s own weaknesses and strengths, understanding one’s position in a conversation, and adjusting accordingly.
  • Key Idea: “Knowing your strengths will allow you to position yourself for the win.” Self-awareness also serves to help individuals know what environments or roles are a good fit for them.
  • Cultivation:Humility: “When you’re vulnerable and humble, you’re opening yourself up to the possibility that maybe you don’t have it all figured out. This is a good thing.”
  • Trust others and ask for feedback about blind spots: “The fastest way to achieve better self-awareness is also the hardest. You have to trust others to tell you your blind spots.”
  • Know your limits and “know when to push them.”
  • Example: Lynsi Snyder (CEO of In-N-Out Burger), whose self-awareness helped her navigate personal and business challenges. Mariano Rivera, who knew he could “protect the Yankees’ lead” as a closer. Eric, the pastor, who was self-aware enough to define the ideal circumstances for his next role.
  • Testimony: Scott W. explains that knowing his tendency to overanalyze helps him “push myself to action long before I feel fully educated on the subject.”

6. The Curious

  • Definition: Having an innate desire to learn and understand, asking questions, and listening with genuine interest.
  • Key Idea: “A person without curiosity may as well be dead.” Curiosity “breeds empathy and humility.”
  • Cultivation:Ask questions: “The important thing is not to stop questioning.”
  • Listen actively and empathetically, striving to understand “why they hold it” if someone has a different view.
  • “Stay humble”: “You need humility if you’re going to be curious.”
  • Example: Bill Rosenzweig (founder of The Republic of Tea), who combined various disciplines driven by his curiosity about “the psychology of experience.” President Bill Clinton, who “insisted on turning the conversation back to me” to show curiosity about the author.
  • Testimony: Tim S. views curiosity as “both a choice and a skill that requires practice,” helping him be “less defensive and combative.”

7. The Connected

  • Definition: Individuals who build and nurture relationships, give more than they take, and use their influence to help others.
  • Key Idea: “A true network of connected people is not a hierarchy; it’s a web.” Trust and respect are foundational to strong connections.
  • Cultivation:“Give more than you take, and follow through”: “If you develop a reputation for being a taker, you’ll soon have no connections.”
  • “Pay it forward”: Use connections to help others further their goals.
  • “Always begin with the end in mind. Develop your vision and work backward.”
  • Example: Keith Ferrazzi, a networking expert who transformed relationships into a science. Michael J. Fox, who built a vast network to advance Parkinson’s research.

8. The Likable

  • Definition: Being perceived as approachable, trustworthy, and pleasant, stemming from confidence rather than people-pleasing.
  • Key Idea: “Likability trumps competency almost every time.” Being likable “builds a goodwill bank that allows you to make mistakes with less risk.”
  • Important Distinction: Popularity (“social dominance, influence, and aggression”) is different from likability (“emotionally well-adjusted and less aggressive”).
  • Cultivation:“Stop talking. Listening will get you further.”
  • “Remember that a person’s name is, to that person, the sweetest and most important sound in any language.”
  • Treating everyone with kindness and respect, especially those in service roles (“waiter test”). “I don’t trust anyone who’s nice to me but rude to the waiter. Because they would treat me the same way if I were in that position.” (Muhammad Ali quote)
  • “Knowing when not to talk is just as important as knowing when to talk.”
  • Using “secondhand compliments” to amplify good feelings.
  • “Stay humble”: “When I walk into a room, it’s never about me; it’s about others. It should never be ‘Here I am!’ Instead, it’s ‘There you are!’”
  • Ask open-ended questions and show genuine interest.
  • “Do the work” by investing time in learning about others and remembering details.
  • Avoid appearing desperate to be liked; “be yourself but a little bit better.”
  • Example: Jamie Kern Lima (IT Cosmetics founder), whose vulnerability and relatability connected her with viewers. Keanu Reeves, known for his consistent kindness, generosity, and humility.
  • Testimony: Kristopher B. states, “If you get results but blow all your goodwill on the way, the second you make a mistake (and we all do!) people will pounce on you. Likability builds a goodwill bank.”

9. The Productive

  • Definition: Consistently producing products, services, or businesses, focusing on outputs and leveraging systems for efficiency.
  • Key Idea: “It’s not what you do once in a while that changes your life. It’s what you do consistently.”
  • Cultivation:Focus on consistency and output.
  • Utilize systems and tools (e.g., to-do lists, energy management).
  • Example: Sir Richard Branson, who “never stopped being productive, even when he could have,” creating over four hundred companies. Martha Stewart, known for her prolific output across various ventures.

10. The Purpose-Driven

  • Definition: Individuals whose actions are guided by a clear “why” or mission, often driven by a desire to help others.
  • Key Idea: “If there is not a why or a purpose, all is meaningless. True fulfillment is in the why.” “Purpose comes from within.”
  • Cultivation:“Ask the why question over and over again for every decision.”
  • “Check in with your purpose regularly” to re-center goals.
  • “Let your purpose do the work”: allow purpose to guide decisions and actions, leading to unified teams and thriving organizations.
  • Observe others who model purpose-driven lives.
  • Example: Reshma Saujani (Girls Who Code founder), driven by a mission to address gender inequality in tech. Leymah Gbowee, who led nonviolent peace movements in Liberia through her deep purpose.
  • Testimony: Rudy L. shared that discovering and intentionally living his purpose “magnified” his results. William B. emphasizes: “We need to know why we exist—why we are, why we are here, what our purpose is—and then we need to organize and work together to accomplish our why.”

IV. Conclusion

“Be the Unicorn” provides a compelling argument that exceptional success is attainable through the intentional cultivation of specific “human skills” and habits. By focusing on responsiveness, solution-oriented thinking, foresight, preparedness, self-awareness, curiosity, building genuine connections, likability, consistent productivity, and a strong sense of purpose, individuals can distinguish themselves and achieve remarkable outcomes in their careers and lives. The book positions these habits not as abstract ideals, but as concrete, data-backed pathways to becoming “mythically valuable.”

Be the Unicorn: A Study Guide to Data-Driven Habits

Quiz: Short-Answer Questions

  1. What is the core premise of William Vanderbloemen’s “Be the Unicorn” regarding success? The core premise is that while some keys to success are unteachable, there are specific, data-driven habits practiced by unusually successful individuals (Unicorns) that can be learned. This book aims to be a manual for readers to cultivate these teachable habits and become irreplaceable.
  2. How did William Vanderbloemen gather the data for this book? William Vanderbloemen gathered data from over thirty thousand long-format interviews conducted during executive talent searches performed by his company, Vanderbloemen. His team analyzed these interviews to identify commonalities among the most successful candidates.
  3. What does “The Fast” habit entail, and what is a common challenge to practicing it? “The Fast” habit means being responsive and discerning quickly what needs an immediate response. A common challenge is fear, as acting fast often involves being first, which comes with risks and uncertainty, something our brains are wired to avoid for safety.
  4. Explain the distinction between a “distraction” and an “opportunity” as presented in the context of being “The Fast.” A distraction doesn’t get you closer to your goals and takes more time/money/resources than it’s worth, often getting a “heck yes” from the limbic system. An opportunity, conversely, moves you closer to your goals, has the whole brain’s agreement, and yields results worth the sacrifices.
  5. What is the essence of “The Solver” habit, and why is collaboration often preferred for it? “The Solver” habit involves focusing on finding solutions to problems rather than dwelling on the problems themselves. Collaboration is preferred because, despite a higher risk of error, solving is generally more effective and comprehensive when done with a group, leveraging diverse perspectives.
  6. How does the book suggest cultivating a “Solver mentality” in a team setting? To cultivate a Solver mentality, the book suggests encouraging humility and lifelong learning, celebrating Solver victories, and asking staff to bring solutions (even imperfect ones) to every meeting. It also advises rebranding “problems” as “possibilities” to shift mindset.
  7. Describe “The Self-Aware” habit and how it benefits individuals in their careers. “The Self-Aware” habit involves knowing one’s strengths, weaknesses, and how one is perceived by others. This benefits individuals by allowing them to position themselves for success, make better career choices, and understand how to overcome personal tendencies like procrastination.
  8. What is the “fastest way to achieve better self-awareness,” according to the text? The fastest, albeit hardest, way to achieve better self-awareness is to trust others to tell you your blind spots. This involves actively seeking feedback and being open to adjusting based on that input, even if it’s not always easy to hear.
  9. What is the key difference between “popularity” and “likability” as defined in the book? Popularity is associated with social dominance, influence, and aggression, where popular people “push and shove.” Likability, however, is linked to emotional well-adjustment and less aggression, with likable people tending to “welcome and unify.”
  10. Why does the book emphasize the importance of “stopping talking” and “listening” in cultivating likability? Stopping talking and listening are emphasized for likability because genuinely listening makes others feel important and heard, building relational capital. It allows for deeper understanding, fostering trust, loyalty, and grace, and demonstrating respect for the other person’s perspective.

Quiz Answer Key

  1. What is the core premise of William Vanderbloemen’s “Be the Unicorn” regarding success? The core premise is that while some keys to success are unteachable, there are specific, data-driven habits practiced by unusually successful individuals (Unicorns) that can be learned. This book aims to be a manual for readers to cultivate these teachable habits and become irreplaceable.
  2. How did William Vanderbloemen gather the data for this book? William Vanderbloemen gathered data from over thirty thousand long-format interviews conducted during executive talent searches performed by his company, Vanderbloemen. His team analyzed these interviews to identify commonalities among the most successful candidates.
  3. What does “The Fast” habit entail, and what is a common challenge to practicing it? “The Fast” habit means being responsive and discerning quickly what needs an immediate response. A common challenge is fear, as acting fast often involves being first, which comes with risks and uncertainty, something our brains are wired to avoid for safety.
  4. Explain the distinction between a “distraction” and an “opportunity” as presented in the context of being “The Fast.” A distraction doesn’t get you closer to your goals and takes more time/money/resources than it’s worth, often getting a “heck yes” from the limbic system. An opportunity, conversely, moves you closer to your goals, has the whole brain’s agreement, and yields results worth the sacrifices.
  5. What is the essence of “The Solver” habit, and why is collaboration often preferred for it? “The Solver” habit involves focusing on finding solutions to problems rather than dwelling on the problems themselves. Collaboration is preferred because, despite a higher risk of error, solving is generally more effective and comprehensive when done with a group, leveraging diverse perspectives.
  6. How does the book suggest cultivating a “Solver mentality” in a team setting? To cultivate a Solver mentality, the book suggests encouraging humility and lifelong learning, celebrating Solver victories, and asking staff to bring solutions (even imperfect ones) to every meeting. It also advises rebranding “problems” as “possibilities” to shift mindset.
  7. Describe “The Self-Aware” habit and how it benefits individuals in their careers. “The Self-Aware” habit involves knowing one’s strengths, weaknesses, and how one is perceived by others. This benefits individuals by allowing them to position themselves for success, make better career choices, and understand how to overcome personal tendencies like procrastination.
  8. What is the “fastest way to achieve better self-awareness,” according to the text? The fastest, albeit hardest, way to achieve better self-awareness is to trust others to tell you your blind spots. This involves actively seeking feedback and being open to adjusting based on that input, even if it’s not always easy to hear.
  9. What is the key difference between “popularity” and “likability” as defined in the book? Popularity is associated with social dominance, influence, and aggression, where popular people “push and shove.” Likability, however, is linked to emotional well-adjustment and less aggression, with likable people tending to “welcome and unify.”
  10. Why does the book emphasize the importance of “stopping talking” and “listening” in cultivating likability? Stopping talking and listening are emphasized for likability because genuinely listening makes others feel important and heard, building relational capital. It allows for deeper understanding, fostering trust, loyalty, and grace, and demonstrating respect for the other person’s perspective.

Essay Format Questions

  1. “Be the Unicorn” argues that certain habits are “teachable keys to success.” Discuss how the author uses a combination of real-world case studies (e.g., Blake Mycoskie, Kevin Plank, Jamie Kern Lima) and data-driven observations from his executive searches to support this claim. Analyze the effectiveness of this dual approach in persuading the reader that these habits are indeed cultivable.
  2. The concept of “Unicorns” implies individuals who are “mythically valuable” and “irreplaceable.” Select three of the habits discussed in the excerpts (e.g., The Fast, The Solver, The Self-Aware, The Curious, The Likable) and explain how cultivating each of these specific habits contributes to an individual becoming “irreplaceable” in a professional setting. Provide examples from the text for each habit chosen.
  3. The book frequently touches upon the interplay between human nature (e.g., brain’s evolution, limbic system) and the cultivation of “Unicorn” habits. Analyze how William Vanderbloemen addresses the psychological barriers to adopting habits like “The Fast” or “The Solver.” What strategies does he suggest to overcome these innate tendencies?
  4. “Likability” is presented as a crucial “Unicorn” trait, with the author stating, “likability trumps competency almost every time.” Discuss the various facets of likability as presented in the text, including the distinction between likability and people-pleasing or popularity. How does the book suggest one can authentically cultivate likability, and what are the stated benefits of doing so in both personal and professional contexts?
  5. Humility is a recurring theme across several “Unicorn” habits, including Self-Awareness and Curiosity. Discuss the role of humility in developing at least two different Unicorn traits. How does the author illustrate the importance of humility in fostering growth, learning, and stronger relationships, and what are the potential pitfalls of a lack of humility in these areas?

Glossary of Key Terms

  • Unicorn: In the context of this book, an unusually successful, mythically valuable, and irreplaceable individual who stands out from their peers. The term refers to people exhibiting specific, data-driven habits.
  • The Fast: A Unicorn habit characterized by responsiveness, quick decision-making, and discerning what requires immediate action. It emphasizes speed without sacrificing discernment.
  • The Solver: A Unicorn habit focused on identifying and implementing solutions to problems rather than dwelling on complaints or the problems themselves. It often encourages a “we” mentality and collaboration.
  • The Anticipator: A Unicorn habit involving the ability to foresee future outcomes by studying patterns, history, and understanding potential consequences. It’s about thinking ahead and planning with the end in mind.
  • The Prepared: A Unicorn habit signifying a state of readiness in mind and body, having thought out situations beforehand to know the right thing to do at the right moment. It involves anticipating potential challenges and having plans in place.
  • The Self-Aware: A Unicorn habit denoting a deep understanding of one’s own strengths, weaknesses, motivations, and impact on others. It involves humility, seeking feedback, and knowing personal limits.
  • The Curious: A Unicorn habit characterized by a thirst for knowledge, asking questions, and listening with genuine interest to understand different perspectives and ideas. It fosters empathy and humility.
  • The Connected: A Unicorn habit centered on building and nurturing strong, reciprocal relationships and networks. It emphasizes giving more than taking and leveraging connections to help others and further collective goals.
  • The Likable: A Unicorn habit defined by qualities that make an individual appealing, easy to get along with, and trusted by others. It is distinct from popularity or people-pleasing and is built on authenticity, humility, and genuine interest in others.
  • The Productive: A Unicorn habit characterized by consistently producing valuable output, managing energy, and effectively prioritizing tasks to achieve significant results. It emphasizes tangible outcomes over mere activity.
  • The Purpose-Driven: A Unicorn habit involving a clear understanding of one’s fundamental “why” or mission, which guides decisions, actions, and overall direction. It provides meaning and motivation, often leading to a magnified impact.
  • Limbic System: The “pleasure center” of the brain, often referenced in the text as a reason for procrastination, as it tends to win over the prefrontal cortex (the planning part).
  • Prefrontal Cortex: The “planning part” of the brain, which often struggles against the limbic system, particularly in the context of instant gratification and procrastination.
  • Secondhand Compliments: A powerful tool for cultivating likability, involving telling someone something positive that another person said about them. This amplifies good feelings and builds relational equity.
  • “Waiter Test”: A social litmus test, mentioned in the context of likability, where how a person treats service staff (e.g., a waiter) is indicative of their true character and how they might treat others in less powerful positions.

Contact Factoring Specialist, Chris Lehnes

The Lean Startup by Eric Ries

Eric Ries’s “The Lean Startup,” explores a new methodology for creating and managing startups and innovative products within larger companies. It emphasizes validated learning through a continuous Build-Measure-Learn feedback loop, advocating for rapid experimentation and focusing on customer behavior rather than just opinions. The text highlights the importance of identifying and testing leap-of-faith assumptions and using innovation accounting to measure true progress. Real-world examples like IMVU, Zappos, and Intuit demonstrate the practical application of concepts such as minimum viable products (MVPs), small batches, and deciding whether to pivot or persevere based on empirical data. The overarching goal is to reduce waste and increase the success rate of new ventures in uncertain environments.

Eric Ries’s “The Lean Startup.” The book proposes a scientific approach to building and managing startups, emphasizing validated learning and iterative development over traditional business planning and execution.

I. Core Philosophy: Entrepreneurship as Management Under Extreme Uncertainty

The fundamental premise of “The Lean Startup” is that building a new product or service under conditions of extreme uncertainty requires a fundamentally different approach than traditional management. Ries defines a startup as “a human institution designed to create a new product or service under conditions of extreme uncertainty.” This definition is intentionally broad, encompassing ventures of all sizes, industries, and organizational structures, from garage startups to internal corporate innovation teams. The key differentiator is the high degree of unknown factors surrounding the product, target market, and business model.

Key Ideas and Facts: The Lean Startup

  • Traditional management tools are ill-suited for startups: Standard forecasts, detailed business plans, and product milestones, while effective for stable businesses, are based on assumptions that are likely to be flawed in a startup context.
  • The future is unpredictable: Startups operate in environments where customer needs, market dynamics, and competitive landscapes are constantly shifting.
  • Innovation is not a “black box”: Ries challenges the notion that innovation is a mysterious process that happens behind closed doors. The Lean Startup provides a methodology for navigating and managing this process.
  • Vision as the “true north”: While the path is uncertain, a startup needs a clear long-term vision – “creating a thriving and world-changing business.” This vision provides direction amidst the experimentation.

II. The Build-Measure-Learn Feedback Loop: The Engine of a Lean Startup

At the heart of the Lean Startup methodology is the Build-Measure-Learn feedback loop. This iterative process is the engine that drives validated learning and allows startups to make progress under uncertainty.

Key Ideas and Facts: The Lean Startup

  • Validated Learning: The primary goal of a startup’s efforts should be validated learning, which is defined as “demonstrating empirical progress of a startup in the pursuit of a sustainable business.” This is distinct from simply building and shipping a product and seeing what happens.
  • Scientific Experimentation: Startups should treat every new version of a product, feature, or marketing program as an experiment designed to test specific hypotheses about the business.
  • Analogs and Antilogs: Understanding comparable successful ventures (analogs) and failed ventures (antilogs) can help entrepreneurs identify critical assumptions, or “leaps of faith,” that need to be tested. Randy Komisar’s framework of analogs and antilogs is highlighted as a way to plot strategy by considering what has worked and what hasn’t in similar situations.
  • Genchi Gembutsu (“Go and See for Yourself”): Borrowing from the Toyota Production System, Ries emphasizes the importance of firsthand understanding of customers and their needs. This involves directly observing and interacting with potential users rather than relying solely on market analysis.

III. The Minimum Viable Product (MVP): Starting Small to Learn Quickly

The Minimum Viable Product (MVP) is a core concept in the Lean Startup. It is the smallest possible version of a product that can be built to begin the process of validated learning with real customers.

Key Ideas and Facts: The Lean Startup

  • MVP as a learning tool, not a perfect product: The MVP is not intended to be a polished or feature-complete product. Its purpose is to test the most critical assumptions with minimal effort and resources.
  • Deciding on MVP complexity requires judgment: There’s no formula for determining the ideal complexity of an MVP. Entrepreneurs should err on the side of simplicity.
  • Testing with real customers: The MVP is shipped to real customers, even if it’s “terrible, full of bugs and crash-your-computer-yes-really stability problems,” as was the case with IMVU’s first product.
  • “Pay No Attention to the Eight People Behind the Curtain”: This section illustrates how an MVP can function by initially relying on human effort behind the scenes to simulate a functioning product, allowing the startup to test core assumptions before building a complex system. Aardvark’s initial human-powered search service is a prime example.
  • Addressing MVP Speed Bumps: Ries acknowledges potential risks associated with launching an early product, including legal issues (especially related to patents), fears about competitors, branding risks, and the impact on team morale. Strategies are offered to mitigate these risks, such as launching under a different brand name for experimentation.

IV. Innovation Accounting: Measuring What Matters

Traditional accounting metrics are insufficient for evaluating the progress of a startup. Innovation Accounting provides a framework for measuring progress and making informed decisions based on validated learning.

Key Ideas and Facts: The Lean Startup

  • Vanity Metrics are misleading: Metrics like total registered users or gross revenue can be misleading, creating the illusion of progress when the underlying engine of growth is stagnant. Ries refers to these as vanity metrics because “they give the rosiest possible picture.”
  • Actionable Metrics provide clear cause and effect: The alternative to vanity metrics are actionable metrics, which “demonstrate clear cause and effect.” These metrics allow startups to understand how their actions impact customer behavior and make data-driven decisions.
  • Cohort Analysis is crucial: Instead of looking at aggregate numbers, cohort analysis tracks the behavior of specific groups of customers over time. This allows startups to understand how their product changes impact the retention and engagement of new user groups.
  • Split-testing (A/B testing) for cause and effect: This technique, borrowed from direct marketing, involves showing different versions of a product or feature to different groups of customers simultaneously. By comparing the behavior of these groups, startups can isolate the impact of specific changes. Grockit’s adoption of split-testing is a key example.
  • Establishing a Baseline: Startups should establish baseline metrics for key assumptions with their initial MVP to provide a starting point for measuring future progress.
  • Metrics determine which assumptions are riskiest: By measuring different aspects of the business, startups can identify which assumptions are the most uncertain and prioritize experiments to test those assumptions.

V. The Engines of Growth: Understanding Sustainable Business Models

Sustainable growth in a startup is driven by the actions of past customers. Ries identifies four primary engines of growth, each representing a different feedback loop that fuels expansion.

Key Ideas and Facts:

  • New customers come from past customers: This is the fundamental rule of sustainable growth.
  • Four primary engines:Word of mouth: Satisfied customers organically spread awareness and encourage others to use the product (e.g., TiVo).
  • Side effect of product usage: The product itself drives awareness through its visibility or the nature of its use (e.g., luxury goods, viral products like Facebook or PayPal).
  • Funded advertising: Acquiring new customers through paid marketing channels (e.g., retail chains expanding locations).
  • Repeat purchase or use: Customers repeatedly buy or use the product (e.g., subscriptions, groceries).
  • Quantifying growth engines: Each engine of growth has specific metrics that determine its speed and effectiveness. The viral engine, for example, is powered by the viral loop and measured by the viral coefficient.
  • Customer Lifetime Value (LTV) and Cost Per Acquisition (CPA): For businesses relying on funded advertising, sustainable growth depends on the Customer Lifetime Value (LTV) being greater than the Cost Per Acquisition (CPA).

VI. The Pivot: Changing Direction to Achieve the Vision

A pivot is a structured course correction designed to test a new fundamental hypothesis about the product, strategy, and engine of growth. It is a necessary part of the Lean Startup process when validated learning indicates that the current path is not leading to a sustainable business.

Key Ideas and Facts:

  • Pivot or Persevere: Based on the validated learning gained through experimentation, a startup must decide whether to pivot (change direction) or persevere (continue on the current path).
  • The Pivot is not failure: A pivot is a strategic shift, not an admission of failure. It is an opportunity to learn and adapt.
  • Examples of Pivots: The text mentions the “instant messaging add-on” strategy as an example of a flawed assumption that led to a pivot at IMVU. David’s voter registration service experiment illustrates a series of pivots based on discouraging metrics.
  • Value Capture Pivot: This specific type of pivot involves changing the way a company generates revenue or captures value from its customers.

VII. Adapt and Innovate: Building a Learning Organization

The Lean Startup principles extend beyond the initial stages of a startup’s life. Building a learning organization is crucial for sustained innovation and growth, even within larger companies.

Key Ideas and Facts:

  • Continuous Deployment in Small Batches: Inspired by lean manufacturing, Ries advocates for releasing new features and product versions in small batches frequently. This minimizes waste and allows for rapid feedback and iteration. IMVU’s practice of making dozens of changes daily is a striking example.
  • Kanban for Workflow Management: The Kanban system, another concept from lean manufacturing, can be used to manage the flow of work in a startup. By setting limits on the number of projects in different stages (backlog, building, done, validated), Kanban encourages teams to focus on getting validated learning before starting new work.
  • The Five Whys: Identifying Root Causes: This technique, borrowed from the Toyota Production System, involves repeatedly asking “why” to uncover the underlying human problem behind a technical issue. This helps prevent the same problems from recurring.
  • Appointing a Five Whys Master: Having a dedicated individual to facilitate Five Whys meetings and ensure follow-through on preventative actions is recommended.
  • Empowered Cross-Functional Teams: Building innovation teams that are cross-functional and empowered to build, market, and deploy experiments within a defined sandbox is key to fostering a culture of experimentation.
  • The “Sandbox” for Safe Experimentation: A sandbox is a controlled environment within an organization where innovation teams can experiment without negatively impacting the core business or brand. This allows for bold exploration with limited risk.
  • Organizational Superpowers: Embracing Lean Startup principles can equip individuals within organizations with the ability to identify and test fundamental hypotheses, leading to more effective innovation.

In conclusion, “The Lean Startup” presents a compelling case for a new approach to entrepreneurship and innovation. By focusing on validated learning, iterative development through the Build-Measure-Learn loop, building Minimum Viable Products, utilizing innovation accounting with actionable metrics, understanding the engines of growth, and being willing to pivot when necessary, startups can significantly increase their odds of building a sustainable and successful business in today’s rapidly changing world. The principles can also be applied within larger organizations to foster a more innovative and adaptive culture.

Contact Factoring Specialist, Chris Lehnes

This compilation of excerpts, primarily from Eric Ries’s “The Lean Startup,” explores a new methodology for creating and managing startups and innovative products within larger companies. It emphasizes validated learning through a continuous Build-Measure-Learn feedback loop, advocating for rapid experimentation and focusing on customer behavior rather than just opinions. The text highlights the importance of identifying and testing leap-of-faith assumptions and using innovation accounting to measure true progress. Real-world examples like IMVU, Zappos, and Intuit demonstrate the practical application of concepts such as minimum viable products (MVPs)small batches, and deciding whether to pivot or persevere based on empirical data. The overarching goal is to reduce waste and increase the success rate of new ventures in uncertain environments.keepQuiz

  1. According to the text, what is the primary difference between a traditional small business and a startup?
  2. What is “validated learning,” and why is it important for startups?
  3. Explain the concept of “achieved failure” as described in the text.
  4. What are “analogs” and “antilogs” in the context of developing a startup strategy?
  5. What is a Minimum Viable Product (MVP)?
  6. What is “genchi gembutsu,” and how does it apply to startups?
  7. Explain the difference between “vanity metrics” and “actionable metrics.”
  8. What is “cohort analysis,” and why is it a valuable tool for startups?
  9. Describe the “Five Whys” technique and its purpose in the Lean Startup model.
  10. What are the four primary ways past customers drive sustainable growth?

Quiz Answer Key

  1. The text states that a startup is a human institution designed to create a new product or service under conditions of extreme uncertainty, while a traditional small business often operates with a known business model, pricing, and target customer, where success is primarily dependent on execution and can be modeled with high accuracy.
  2. Validated learning is the process of demonstrating empirically that a startup is making real progress by discovering what customers want and are willing to pay for. It is important because it provides a more accurate measure of progress than traditional metrics and helps startups avoid building products nobody wants.
  3. Achieved failure is when a company successfully and rigorously executes a plan that turns out to be fundamentally flawed, leading to a negative outcome despite strong execution.
  4. Analogs are companies or products that faced and solved similar fundamental problems to the one your startup is facing, providing insights or validated assumptions. Antilogs are examples of companies or products that failed because they made assumptions that proved incorrect, highlighting potential leaps of faith to be avoided.
  5. A Minimum Viable Product (MVP) is the version of a new product that allows a team to collect the maximum amount of validated learning about customers with the least amount of effort. It is an early product with just enough features to satisfy early customers and provide feedback for future product development.
  6. Genchi gembutsu is a Japanese term from the Toyota Production System that means “go and see for yourself.” In the context of startups, it emphasizes the importance of strategic decisions being based on a deep, firsthand understanding of customers obtained through direct observation and interaction.
  7. Vanity metrics are measurements that look good on paper but do not accurately reflect the underlying health or progress of a business (e.g., total registered users). Actionable metrics, on the other hand, are those that demonstrate clear cause and effect, allowing teams to learn from their actions and make informed decisions about future improvements.
  8. Cohort analysis is a tool used in startup analytics that tracks the behavior of specific groups of customers (cohorts) who come into contact with the product at the same time (e.g., signed up in the same month) independently of other groups. This helps to identify whether changes to the product or strategy are actually improving customer engagement and retention over time.
  9. The Five Whys is a systematic problem-solving technique developed by Taiichi Ohno of the Toyota Production System. It involves repeatedly asking “Why?” five times to drill down and identify the root cause of a problem, which is often human-related rather than purely technical. It helps startups avoid fixing only the symptoms of a problem.
  10. According to the text, the four primary ways past customers drive sustainable growth are: word of mouth, as a side effect of product usage, through funded advertising, and through repeat purchase or use.

Essay Questions

  1. Discuss the challenges startups face when using traditional management tools and metrics, and explain how the Lean Startup methodology offers an alternative approach.
  2. Analyze the importance of testing assumptions in the early stages of a startup. Use examples from the text (like IMVU or Village Laundry Services) to illustrate the consequences of untested assumptions and the benefits of empirical testing.
  3. Compare and contrast the concept of the “engine of growth” in a startup with the feedback loop inside an internal combustion engine as described in the introduction. How does understanding these engines inform a startup’s strategy?
  4. Explain the role of small batches and continuous deployment in the Lean Startup model. How do these concepts, borrowed from manufacturing, contribute to a startup’s ability to learn and adapt quickly?
  5. Describe the three main engines of growth discussed in the text (sticky, viral, and paid). Explain how each engine works and how it impacts a startup’s strategy and the metrics it should focus on.

Glossary of Key Terms

  • Achieved Failure: Successfully, faithfully, and rigorously executing a plan that turns out to have been utterly flawed.
  • Actionable Metrics: Metrics that demonstrate clear cause and effect, allowing teams to learn from their actions and make informed decisions.
  • Analogs: Existing companies or products that faced and solved similar fundamental problems as a startup, serving as a source of insight and validated assumptions.
  • Antilogs: Examples of companies or products that failed because they made incorrect assumptions, highlighting potential risks and leaps of faith for a startup to avoid.
  • Cohort Analysis: A method of analyzing startup metrics by tracking the behavior of groups of customers (cohorts) who signed up or started using the product at a specific time, independent of other groups.
  • Cost Per Acquisition (CPA): The cost incurred to acquire a single new customer through a specific channel or marketing effort.
  • Customer Development: A methodology (pioneered by Steve Blank) that emphasizes the importance of business and marketing functions in a startup and provides a rigorous method for guiding them, complementing engineering and product development.
  • Engine of Growth: Feedback loops powered by past customers that drive sustainable growth for a startup (word of mouth, side effects of product usage, funded advertising, repeat purchase/use).
  • Five Whys: A systematic problem-solving technique that involves asking “Why?” five times to uncover the root cause of a problem.
  • Funded Advertising Engine: An engine of growth powered by reinvesting profits from existing customers into acquiring more customers through paid marketing channels.
  • Genchi Gembutsu: A Japanese term meaning “go and see for yourself,” emphasizing the importance of basing strategic decisions on deep, firsthand knowledge of customers.
  • Innovation Accounting: A method for evaluating progress in startups and other organizations that are creating innovation, using actionable metrics and learning milestones rather than traditional financial forecasts.
  • Kanban: A principle from lean manufacturing that involves limiting the amount of work in progress (WIP) in each stage of development to improve workflow and identify bottlenecks.
  • Leaps of Faith: The crucial assumptions that a startup’s strategy is based upon, which are untested and can significantly impact the business’s success or failure.
  • Lean Manufacturing: A production system (originated by Toyota) that focuses on minimizing waste, optimizing workflow, and continuously improving processes.
  • Lifetime Value (LTV): The total revenue or value a customer is expected to generate for a company over the entire duration of their relationship.
  • Minimum Viable Product (MVP): The smallest possible version of a new product that can be built to begin the process of validated learning from customers with the least amount of effort.
  • Pivot: A structured course correction designed to test a new fundamental hypothesis about a startup’s product, business model, or engine of growth.
  • Product/Market Fit: The moment when a startup has found a large group of real potential customers who resonate with its product and are purchasing or using it in significant numbers.
  • Sandbox: A restricted environment (e.g., certain product features, customer segments, or geographic areas) where a startup or innovation team can run experiments without affecting the entire customer base or core business.
  • Shusa: The term used in the Toyota Production System for the chief engineer or manager in charge of developing a new vehicle, who has final authority over all aspects of its development.
  • Split-test (A/B test): An experiment in which different versions of a product, feature, or marketing message are presented to different groups of customers simultaneously to measure their impact on behavior.
  • Startup: A human institution designed to create a new product or service under conditions of extreme uncertainty.
  • Sticky Engine of Growth: An engine of growth driven by retaining existing customers through high retention rates and strategies that encourage repeat usage or purchase.
  • Sustainable Growth: Growth characterized by new customers coming from the actions of past customers.
  • Validated Learning: The process of demonstrating empirical progress by discovering what customers want and are willing to pay for, measured by actionable metrics rather than vanity metrics.
  • Value Capture Pivot: A change in the way a company captures value (monetization or revenue model) based on new learning about customer behavior and willingness to pay.
  • Vanity Metrics: Measurements that appear impressive but do not reflect true business progress or provide actionable insights (e.g., total website hits, gross number of users without accounting for engagement).
  • Viral Coefficient: A mathematical term that quantifies the speed of the viral engine of growth, measuring how many new customers, on average, each existing customer recruits.
  • Viral Engine of Growth: An engine of growth driven by existing customers recruiting new customers through word of mouth or inherent product usage that exposes others to the product.
  • Vision: A startup’s true north, its ultimate destination or goal of creating a thriving and world-changing business.
  • Work-in-Progress (WIP) Inventory: The amount of unfinished work or inventory within a production or development system.

Start-ups – New Podcast: Factoring – A Funding Source

New Podcast Episode: Factoring – A Funding Source for Start-ups.

Questions about what you’ve heard? Contact Chris Lehnes | 203-664-1535 | clehnes@chrislehnes.com | www.chrislehnes.com

https://www.youtube.com/watch?v=pApeFoi8m_M

Key Concepts Review Factoring: A financial transaction where a business sells its accounts receivable (invoices) to a third party (a factor) at a discount to receive immediate cash. Accounts Receivable: Money owed to a company by its customers for goods or services provided on credit. Working Capital: The capital available to a company for day-to-day operations. Calculated as current assets minus current liabilities. Start-ups: A new business venture, typically characterized by high uncertainty and rapid growth potential. Invoice: A commercial document that itemizes and records a transaction between a buyer and a seller. Glossary of Key Terms Accounts Receivable: Money owed to a company by its customers for goods or services provided on credit. Represented by invoices. Factoring: A financial transaction where a business sells its accounts receivable (invoices) to a third party (a factor) at a discount to receive immediate cash. The factor takes on the responsibility of collecting payment from the customer. Invoice: A commercial document that itemizes and records a transaction between a buyer and a seller. It specifies the goods or services provided, the quantity, the agreed-upon price, and payment terms. Startup: A new business venture, typically characterized by high uncertainty and rapid growth potential. Often faces challenges in securing traditional financing due to a limited track record. Working Capital: The capital available to a company for day-to-day operations. Calculated as current assets minus current liabilities. Adequate working capital is essential for a business to meet its short-term obligations and fund its growth. Business Development Officer: A professional who focuses on generating new leads, nurturing relationships with prospective clients, and promoting business growth. Startups are often overlooked for traditional financing: Lehnes directly addresses the common misconception that startups are not suitable candidates for factoring. He states, “a lot of people don’t consider [startups] as a potential candidate for factoring.” This highlights a gap in financing options for new businesses that might not qualify for conventional loans. Factoring provides immediate working capital: The core benefit of factoring is the immediate cash flow it provides. Lehnes explains, “what our client gets is immediate access to the working capital to build this client relationship, hopefully bring on new clients and become a much stronger business.” This allows startups to cover expenses like payroll and supplier costs, supporting operations and growth. Example Scenario: Seafood Startup: Lehnes presents a specific example of a seafood startup that wants to fulfill a large order from a grocery store chain with 30-day payment terms. Factoring allows the startup to accept the order by bridging the cash flow gap between delivery and payment. “Our client makes a delivery to this customer, invoices, we factor the invoice, purchase it, advance them 75% of the cash immediately, and they can use that cash to pay their employees, pay their suppliers, and keep the wheels in motion.” Focus on Customer Creditworthiness: Versant Funding prioritizes the financial stability of the start-up’s customers over the startup’s own history. As Lehnes emphasizes, “we will do a deal for a company that’s brand new… for us, what’s important is that that one customer be strong.” This is a crucial distinction, as it opens up financing opportunities for startups with strong customer relationships. Cost of Factoring: Lehnes mentions a typical factoring fee of approximately 2.5% per month. He states, “…taking out a fee which in a case like this is usually about 2 and a half % per month.” While this is a cost to the startup, it is presented as worthwhile for the access to immediate capital and growth opportunities. Important Facts/Details: Advance Rate: Versant Funding typically advances 75% of the invoice amount upfront. Fee Structure: The factoring fee is around 2.5% per month. Versant Funding’s Target Client: Start-ups with creditworthy customers, even those with limited operating history. Quotes for Emphasis: “Start-ups are welcome.” “what our client gets is immediate access to the working capital” “for us what’s important is that that one customer be strong” factoring as a valuable financial tool for startups that are seeking to grow but may be excluded from traditional lending options. By focusing on the creditworthiness of the startup’s customers, Versant Funding can provide much-needed working capital, enabling startups to fulfill large orders and expand their businesses. The 2.5% monthly fee is framed as a worthwhile investment for the benefits of immediate cash flow and accelerated growth.

Contact Factoring Specialist, Chris Lehnes – 203-664-1535 | clehnes@chrislehnes.com