A couple of years ago, when I started reading about “lean startup“, the entrepreneurship methodology by Eric Ries, I remembered a story from my school days that may serve to illustrate the basic features of this methodology.
When I was ten, Santa Claus never brought me my Scalextric car racing game, instead gave me a useful stapler. When we were in class and an assignment needed to be stapled, we used to ask the teacher to do it for us with his own stapler. So with my new gift, my classmate and I decided to make several small writing notebooks that would serve to help us remember our assignments.
The only materials at our disposal were typical of schoolchildren in the 80s: a case with a pencil, an eraser, a pen of two colours and a ruler. We also had a notebook, whose pages we would use to make our precious mini-notebooks.
We manufactured our first mini-notebook by cutting by hand a previously folded piece of paper. Then we stacked it and stapled on one side. We did half a dozen mini-notebooks, we started to use them and we saw that indeed it fulfilled its mission: daily tasks could be pointed in our notebooks writing with a small font. We showed them to classmates who were sitting closest to us. Our product got considerable interest, many kids wanted to have one like ours. They wanted to buy one from us. But they said they were no real mini-notebooks. The real notebooks had the staple in the centre, like the comics, and not on the side as we had put on ours. In any case we checked how many classmates wanted to buy a notebook from us when we had finished. They were seven kids.
In response to their suggestions we returned to make new mini-notebooks. Moreover we had learned a lot from our first series of notebooks: how many small pages we could get by dividing each sheet and what was the minimum number of pages that a mini-notebook should have to be acceptable. We did not want to exhaust our notebook pages, so we took advantage of the whole page. We brought scissors from home to cut the pages to manufacture the next series of mini-notebooks. So we improved the result significantly.
After this second test we obtained a new series of mini-notebooks which were very cool. We were so happy with the result that we came up with a name. We called it “JoJaJo”, a name derived from ours: Jose Javier and Jokin. We wrote our brand JoJaJo in teeny letters in a corner of the cover of each mini-notebook and we went back to show them to the kids who were previously interested and we asked them how much they would pay. Some began to offer 5 pesetas for each mini-notebook (a loaf bread cost 15 pesetas in 1980). We found that it was a more than reasonable price! A new big notebook cost 50 pesetas. We had soon sold 15 mini-notebooks. We also found additional uses for our product: several classmates wanted one for writing their diary, others wanted to record weekly results of their soccer league on each page. Some even wanted to buy several notebooks from us. We were surprised at our success! We had money left over to buy a big squared notebook again and we had plenty of money to buy more staples when we ran out of them. It was also a great deal: a new book had 80 sheets. We produced one mini notebook with each sheet. It was a very profitable business.
We thought about adding cardboard front and back covers, but we resigned because it was more expensive, it was more complicated and especially because no one had asked it!
The following day during our recess time, José Javier and I were in class making dozens of mini-notebooks. When our classmates returned to class, we started to sell them our mini-notebooks. The main social network then was “word of mouth” and it worked very well. Then buyers from other classes came to us and at the end of the day we had sold 50 JoJaJo mini-notebooks.
There was an attempt to imitate by another kid, but despite lowering the price he just sold two or three notebooks. We had created a brand and he could not compete with the real JoJaJo.
At the request of several schoolmates, the next day in addition to our first successful model we also manufactured other models of mini-notebooks: one slightly larger, another with millimetre graph paper, another with white sheets, etc. And all of them were accepted, so we continued increasing our sales. Our company was booming!
Before telling the end of the story, I would like to show you the parallels with the Lean Startup methodology.
Actually we did not intend initially to do business. It was after making a first prototype, when we saw the opportunity. But ignoring this aspect there are many parallels:
- We started with an idea or hypothesis to be validated in the market: the students need mini-notebooks to record what “duties” they had to do each day.
- We created a prototype or minimum viable product (MVP): our first prototype had only the basic characteristic of being small. We put aside non fundamental and costly characteristics, like the possibility of putting a cardboard cover. In biology, lean refers to the proportion of muscle to excess fat. So JoJaJo was “lean” because it focused on the basic characteristics, in the muscle, which allows one to be strong and agile and avoid fat.
- We launched our prototype to the market as soon as possible, without waiting to have it completely finished: we showed our product to the closest classmates in the same classroom, without waiting for the recess. And we showed it to them before we had it completely finished: we cut the pages manually instead of using scissors, they lacked the marks on the cover and they had few pages.
- We measured sales results: we checked how many items they wanted to buy from us, which features they liked and which they did not, what uses they would give to our product, if the price seemed right, etc.
- We learned from the market in each iteration cycle to optimize the product and persevere: every time we made a series of mini-notebooks we learned both the manufacturing process and the interaction with our schoolmates customers. And we modified our mini-notebooks from what we had learned.
Note: If our mini-notebooks had not been successful, the lean start-up method would have recommended that we pivot or change our strategy to address the market. Fortunately it was not the case and now it is unknown if we would have pivoted or if we would have thrown in the towel.
Startup Lean Pill
– Learning cycle into three phases: Build (a prototype or MVP) – Measure – Learn
– Experimenting with short development cycles, quickly.
– Persevere or pivot: experiments serve to show when to persevere in the successful areas and when to pivot the business model by changing some of its basic characteristics.
Epilogue. The end of the story:
On the third day of sales, when we had sold more than 100 mini-notebooks, we ended our “lean startup”. We stop making our JoJaJo and we even refunded the money to the last buyers, whose sales we remembered. The reason: we had a guilty conscience, we thought it was wrong to charge our schoolmates, get rich so quickly and with such relatively little effort. In retrospect our final behaviour may seem absurd. But the culture of entrepreneurship in Spain in the 80s was not just low, it was even negative. It was a pity … but I could learned from it.