Why You Shouldn’t Follow The Lean Startup Methodology?
I was at work when I heard that Steve Jobs died. Vivi, our layout manager, told me her husband (who worked at Apple) called to let her know.
I felt sad. I’d only met Steve once, and the encounter was brief.
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Blossom, Avery and I were getting smoothies at Whole Foods in Palo Alto. Avery was maybe two years old, and she was running around amusing herself.
I looked up from watching Avery, and I saw Steve Jobs staring right at us. He smiled at Blossom and me and mouthed, “She’s cute.”
Jobs got his smoothie and walked away.
Today, Blossom sent me a video that included Jobs’ famous Stanford University commencement speech. The bit that was included was Jobs’ reference to thinking different.
And that brings me to two important topics: Lean Startups and Minimum Viable Products.
The concept of the lean startup has really always been part of the startup vocabulary. Long before it was made popular and the book was written, many entrepreneurs were following the basic concepts of the lean startup.
Let me quote from Wikipedia:
"The central hypothesis of the lean startup methodology is that if startup companies invest their time into iteratively building products or services to meet the needs of early customers, they can reduce the market risks and sidestep the need for large amounts of initial project funding and expensive product launches and failures."
The concept is simple and logical to follow:
Essentially, you just:
Develop the simplest version of your product that you can think of.
This is your Minimum Viable Product (MVP). Then…
Listen to what the market is telling you and gather feedback.
Then…
Make whatever adjustments you need to make to your MVP for the next version of the product based on market feedback. You could even pivot away from your original idea to a new idea. Then…
Go through steps A through C for the rest of the life of the company again and again.
You’re saying, “What’s the problem? The lean startup model sounds like a great way to start a company.”
You’re right. The framework of the lean startup is a good framework, but…
Too many entrepreneurs are following the Lean Startup methodology and failing. Why is that?
I remember after Steve Jobs died there were stories of all these wanna-be Steve Jobs that kept popping up. I remember one particular story of this wanna-be Jobs who started wearing black mock turtlenecks (like the ones Jobs wore) after Jobs died.
What was this fellow thinking? Did this CEO truly think the magic was in the turtleneck?
Be Different.
The magic in following the lean startup formula (or any other formula for that matter) isn’t in blindly following the formula. The magic is the creativity that you put on top of the formula that allows you to win.
I’ve seen way too many companies blindly follow the lean startup methodology. The companies release their MVPs only to get no traction.
The failures are all similar. There was nothing or not enough different about their product versus the competition.
Remember your MVP needs to be off the charts better than what’s available!
Think about it.
You need to stand out:
- You need to be 10X to 100X better than your competitors. And…
- That means your MVP has to be 10X to 100X better than your competitors.
Clayton Christenson’s masterpiece, The Innovator's Dilemma dramatizes how MVPs can work:
- Usually the first generation product has a flaw(s) versus the competition, but…
- That flaw is not that important to an emerging market segment, so…
- Your product can gain traction in the emerging segment, while…
- Making improvements in the imperfections, until…
- You dominate the whole market!
Think Different.
For example, consider the original iPhone.
Let’s go back to Jobs.
The iPhone was seriously flawed versus the incumbent Blackberry. The keyboard and security was barely good enough. But…
The user experience was off the charts better. And Jobs brilliantly focused on the consumer market that Blackberry didn’t care about.
Combine a brilliant plan with a complacent competitor (Blackberry), and the new entrant (Apple) ends up dominating the mobile phone market.
Clearly Apple had lots of money to spend on development of the iPhone. But that’s not the point.
The point is your company and it’s products or services need to be different in a meaningful way.
Differentiation can come in many different ways, shapes and forms. For example, you can:
- Have a differentiated product like the iPhone versus the Blackberry, or…
- You can have a differentiated market focus like the iPhone focusing on the consumer market versus the Blackberry focusing on the business market. Or…
- You can have a differentiated manufacturing model where your product costs significantly less to produce or deliver to your customers. And you can then pass on the savings to your customers.
But you have to be different in way that is meaningful to your customers.
How can you use the lean startup formula and win.
Every situation is different, and I don't like having a one size fits all approach to things. That being said, there are general rules you should always follow as a cash-strapped startup:
- Conserve your cash
- Don't spend on lavish parties
- Buy second hand furniture
- As CEO, sign every check
Focus on being appropriately frugal.
A philosophy of being appropriately frugal means you:
A. Save money where you can.
You don’t need fancy office furniture, a chef, or a bunch of schwag. So save money where you can. Not only will you extend your runway, you set an example for your team of not wasting. But…
B. You need to spend on what’s important.
And the most important thing to spend money on (usually) is your team. So don’t scrimp on hiring a great team that fits your culture. And…
C. Make sure your MVP is differentiated.
An MVP that isn’t differentiated in a meaningful is worthless. You’ve wasted time and money if you develop an undifferentiated MVP.
Spend the money (in team and resources) you need to develop a truly differentiated MVP. Then you will get to market as inexpensively as possible with a truly unique product.
Conclusion:
I remember meeting with one of our investors. Gill was telling me that some of his portfolio company CEOs felt that secret to startup success was:
- Wearing hoodies
- Having blowout parties
I could tell by the tone in his voice and the look in his eyes that he did not approve. Gill said to me:
“Mark Zuckerberg is successful because, well, he's Mark Zuckerberg, not because he wears hoodies.
"Steve Jobs was successful because he was Steve Jobs, not because he wore black turtlenecks.”
People sometimes put style over substance. Without substance, style doesn't matter.
Developing a successful MVP is part art and part science. The science is the easy part because you just need to know the market you are going after.
The art is the skill Steve Jobs had; the ability to interpret what the market was really saying. Did the market feedback indicate that the market wanted a phone with true internet browsing capability?
Probably not. The market feedback Apple most likely had was, “Give us an improved keyboard versus the Blackberry.”
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For more, read: What Is The Real Truth About Creating Killer Products?