Lean is hard and (generally) good for you
I see so much crap being written for and against Lean Startups that I thought it was worth setting my simple thoughts down on what lean means to me. Concepts to be valid need to be used with some form of rigor and consistency. I am not attempting to rewrite Eric Ries but rather to give a layman’s view of lean as an applicable set of principles.
In the real world, most companies do too much development and spend too much money too early (usually to hit some pre-defined plan that is nothing more than a fantasy and / or is not where they need to go to succeed) and find themselves with an impossible task of raising money at uprounds around Series B. So founders get screwed and everyone ends up with a bad taste in their mouth. That’s fundamentally why early stage capital efficiency should matter to you, and why you should at least understand lean concepts.
Lean is a hard and disciplined method
Lean forces you to get customer feedback early and continuously. It pushes founders and engineers outside of their zone of comfort, and outside of the building. It is not an intellectually lazy copout to an absence of strategy, quite the contrary. It essentially forces you to be very intimate with your customer.
Lean posits ignorance, but that should not be confused with an absence of strategy
Lean says: I have a set of hypotheses and assumptions (that’s code name for a well defined strategy) but rather than assume I know I am right, I will test my insights against market feedback early and continuously. I will pursue my vision with vigor, but be data informed throughout that process.
A Pivot is a well thought-out shift in strategy
When you dump your model because it did not work (say Odeo / Twitter) thats not called a pivot. that’s a “fail & restart” with the same team. Pivots is defined as a shift in one important aspect of your business (say go to market or pricing model) based on market feedback and validated learning.
Don’t confuse pivot and iteration
Lean by nature treat most business processes as fast iteration experiments. These are not pivots. Or maybe they’re nano-pivots :-)
Lean Startups are fundamentally designed to be capital efficient (and hence angel friendly)
With such a strong focus on doing more with less and a strong framework for getting your team and your investors to be aligned around how you build your company, Lean can be though of as the best toolbox for the capital efficient generation.
Lean Startups make me comfortable as an investor
Rather than try to convince me that you know exactly what your business model is out of the gate, we’re entering into a partnership where we go out to market REALLY fast and usually monetize early. You’re admitting to me what part of the business is unproven and I am welcoming that, rather than locking you into some kind of trajectory that only exists in our collective mind. And you’re not going to scale your spend and resources until we have really strong evidence we’ve cracked some kind of code. I love it, and so should you !
Lean Startups can/should/do scale and go big
There is a notion out there that Lean is only good for ramen entrepreneurs with a sad excuse for a business model and small problem companies. I disagree with that. You can raise $50M and keep operating as a lean company, meaning evidence based, aware of market needs, and driven by fast iteration processes. As I have argued before, knowing when to scale is generally hard. Most VC’s and entrepreneurs are schizophrenic about capital for that reason.
Lean Startup is not new. Agreed and so what ? It’s an attempt at codifying efficient startup behavior into a set of vocabulary that can be taught at university and helps entrepreneurs and investors communicate effectively around the concepts of product / market fit, MVP and so on. I have been in venture for over 10 years and I admit the concepts have helped me move my craft along. Thank you SG Blank, thank you Eric Ries.
Lean Startup is a Cult. Yes, can we please drop the capital L and be more humble. If Eric Ries annoys you for making a living out of Lean (BTW he’s a very thoughtful and rigorous person with real startup experience), that’s no reason to throw the baby out with the bathwater. Get over it: when concepts go mainstream, they get repeated ad nauseam to the point of being emptied of their substance.
Lean methods won’t deliver the next Apple. Probably not. If you’re Steve Jobs you can transcend data. Lean is not for everything.
Normative Advice Sucks. Amen to that. I hate normative advice. There is no right and wrong way to do much of anything in startups, it’s all about the alchemy of the people involved, luck, market timing and serendipity. But that’s part of the point of lean thinking too: don’t assume you’re right just because you are brilliant. Test yourself against reality every day. Continuous innovation, baby.
Haters are gonna hate, but I have found Lean to be the single most useful advance in how to build early-stage business in a capital efficient manner. Contrary to much of the chatter, it takes a lot more discipline, consistency and perseverance to run a lean business than to just go out there and raise cash and build what you think the market wants. Lean is for marathon athletes and rowers. That’s typically how I prefer my entrepreneurs to be.
PS before it goes behind the paywall enjoy this video interview of Eric Ries from our brilliant friend Andrew Warner at Mixergy.