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Is the Lean Startup Dead?

• jph 8y ago
  Key points: 1. The Lean Startup isn’t dead. 2. For most organizations, Lean is now essential to deliver innovation at speed, and the Innovation Pipeline is more relevant than ever. 3. But when capital is readily available at scale, it makes more sense to go big, fast, and make mistakes than it does to search for product/market fit.
• 1ba9115454 8y ago
  For every Startup raising $X million in funding there are probably a thousand solo entrepreneurs bootstrapping their way into profitability. The spotlight only shines on "Startup X raises millions in new round". Side projects are the new Lean startup.
  • edanm 8y ago
    Solo entrepreneurs are not starting a startup, not as I (and most people) understand the term. After all, those thousands of "solo entrepreneurs" are starting things like coffee-shops, restaurants, garages, etc. They're examples of entrepreneurship, sure, but not startups. Startups are specifically organizations that are trying to grow very big, or that are looking to try a new business model. The reason the spotlight shines on them is because starting something new is interesting (from a "news" perspective, at least). Getting big is interesting. Starting a new restaurant - not really interesting, except for people who live in that area.
    • 1ba9115454 8y ago
      This is a difficult argument to counter, the term Startup doesn't have a definitive definition that I'm aware of. So we could be arguing semantics. But fair enough, exclude the coffee shops, restaurants if you like. But you're still left with a lot of people building something they hope gets bigger. That fits your definition.
      • edanm 8y ago
        > But you're still left with a lot of people building something they hope gets bigger. That fits your definition. Like you said, this is just arguing semantics. That's why I like Steve Blank's definition, which is not about growth (see my other comment on this thread for more). I would say that "hoping it gets bigger" is not enough - every business owner hopes their business gets bigger. Most of them don't realistically hope it will become the next Amazon, nor do they strive to make that happen, and so many ideas/lessons from the startup world don't really apply to them (while others do still apply, of course).
        • 1ba9115454 8y ago
          > and so many ideas/lessons from the startup world don't really apply to them I'm interested, which wouldn't apply? I mean just a couple of examples.
          • edanm 8y ago
            Well the obvious example is anything related to VC fundraising. Almost all startups (as per Steve Blank / pg) will at some point require venture capital. Most other businesses have no way of raising venture capital, instead having to to rely on other means of fundraising, like a bank loan. Other things are more domain-specific - I know lots of lessons in my own field (professional services), some of which apply equally to startups, some of which don't at all.
    • TekMol 8y ago
      By that definition many unicorns that are seen as prototypes of successful startups would never have been startups. I think you have been tricked by YC and other VCs to accept this definition of 'built from the start for hyper-growth'. That's how they get their share of young promising companies. To me and most people I know, a startup is a project or company in the growth phase.
      • v_lisivka 8y ago
        It looks like you are mismatching popular meaning of the word with it meaning in professional slang. Yes, for most people I know, a "startup" is just new word for a new company, or even new pizzeria or barbershop. For entrepreneur I know, startup is "built from the start for hyper-growth", as he explained it for me.
      • edanm 8y ago
        > By that definition many unicorns that are seen as prototypes of successful startups would never have been startups. I don't think that's true? Which unicorns are not companies that were pursuing high-growth, or that were trying to build a unique product<>business model? > I think you have been tricked by YC and other VCs to accept this definition of 'built from the start for hyper-growth'. I haven't been tricked into anything. We are commenting on an article written by Steve Blank, one of the "founders" of the lean startup movement. His definition of a startup is "a startup is an organization formed to search for a repeatable and scalable business model." [1] Of course this is all just semantics, so feel free to use the word in a different way. Where I disagree with you is this: > To me and most people I know, a startup is a project or company in the growth phase. I simply don't think that's true. I think most people would not consider e.g. a new law office to be a startup, definitely not in the context of talking about things like the "lean startup" movement. That's why I love Steve Blank's definition - I think it does what every good definition does - it gives more understanding. It helps give a simple answer to "when does a company stop being a 'startup' and become a regular company". The answer is - when it has found a scalable business model, and is now executing on that. For the record, I'm a big fan of bootstrapping, I ran a successful bootstrapped development agency in the past (which was acquired), and am now back to running a (bootstrapped) consultancy. I just don't think that people would include my company when thinking of startups - and that's fine! Entrepreneurship takes many forms. [1] https://steveblank.com/2010/01/25/whats-a-startup-first-principles/ https://steveblank.com/2010/01/25/whats-a-startup-first-prin...
    • sharemywin 8y ago
      There are lots of examples of bootstrapped startups. Which are a cross between the too.
    • eli 8y ago
      This is a weird argument. Lots of people raise big money to start a restaurant. And lots of people don't raise any money to start a SaaS.
      • edanm 8y ago
        Which is why raising money isn't the defining feature of a startup. And being a SaaS is likewise not a defining feature of a startup, necessarily.
      • briandear 8y ago
        It’s not the amount of money, it’s the amount of money, relative to costs. A restaurant buildout can cost $1 million pretty easily, so raising $1.5 million isn’t really “big” money in that context. But for a SaaS, $1.5 is “big” relative to the startup cost. Thus more of that $1.5 goes towards growth rather than just opening the door for business. “Big” money is relative to the costs of getting the business started.
    • codingdave 8y ago
      I think it is clear that "startup" is a word defined differently by different people. Sure, there is the YC/SV/VC definition that it is about grow big and fast or fail. And maybe that is the crowd you run with, which is why you think most people define it that way. But to many other people, including most of my community, it is about starting something new, whether that is a slow bootstrap or a fast funding, and whether or not it is interesting.
    • mason55 8y ago
      Pretty interesting how much argument there is against this view on HN. I guess most people coming here now are not familiar with Paul Graham's essay (maybe most HN posters don't even know who Paul Graham is any more) http://www.paulgraham.com/growth.html http://www.paulgraham.com/growth.html > A startup is a company designed to grow fast. Being newly founded does not in itself make a company a startup. Nor is it necessary for a startup to work on technology, or take venture funding, or have some sort of "exit." The only essential thing is growth. Everything else we associate with startups follows from growth.
      • brazzy 8y ago
        Interesting how you assume that because Paul Graham wrote that, it is true, and that everyone who thinks differently must not be familiar with what he wrote because surely nobody could disagree with him!
        • v_lisivka 8y ago
          What wrong with that? Are you think that random reporter in random journal you read is way better expert on startups?
        • skrebbel 8y ago
          He's not assuming that. He's assuming a large fraction of the HN community agrees with Graham's definition. This certainly used to be the case a few years ago, hence his point.
      • icedchai 8y ago
        It's possible for a solo entrepreneur company to have significant growth.
      • dragonwriter 8y ago
        The term “startup” was in wide use long before the PG essay, and not consistently restricted to the use PG makes of it either before or after. Aside from stating what PG means when he uses the term (which is important!), that part of the essay has no real weight.
    • mindcrime 8y ago
      Solo entrepreneurs are not starting a startup, not as I (and most people) understand the term. After all, those thousands of "solo entrepreneurs" are starting things like coffee-shops, restaurants, garages, etc. They're examples of entrepreneurship, sure, but not startups. Solo entrepreneurs absolutely start things besides coffee shops, restaurants, garages, etc. There is nothing inherent in the definition of "startup" that precludes solo founders. Especially when you think in terms of "you're solo until you aren't". Just like "you're bootstrapped, until you aren't". Taking on co-founders, raising external capital, etc., are all things you do when you get to the point that they are necessary.
      • edanm 8y ago
        I absolutely didn't mean to single out solo entrepreneurs here - the comment I was replying to talked about solo etnrepreneurs starting thousands of businesses, I was just making the point that most of these are not "startups" the way I think of them (as per the rest of the discussion). I may have given the mistaken impression that I was bumping on the solo founders bit, but that has nothing to do with it - I just reused the phrase.
    • wpietri 8y ago
      I think you're mixing some things. To me, entrepreneurs are people starting new businesses. Some new businesses are trying out new business models or other major innovations; we call those startups. I agree that somebody making another burger joint or corner store is an entrepreneur, but is not doing a startup. But that doesn't mean that solo entrepreneurs can't do something new. It doesn't have to be big, just exploratory.
  • jstandard 8y ago
    You may have misunderstood the article and the Lean methodology. From the article: "Still, unless your startup has access to large pools of capital or have a brand name like Katzenberg, Lean still makes sense." Side projects, solo entrepreneurship are not mutually exclusive and can actually be complementary. Lean is a methodology to validate demand for a product. Solo entrepreneurs can and do benefit greatly from employing it.
    • 1ba9115454 8y ago
      My take was the article left the reading feeling most startups are raising large amounts of capital. When actually, most probaly are not. But this is almost impossible to measure as who can survey everyone with a side project.
      • dmix 8y ago
        I believe Steve is talking about traditional startups (high growth entities with full teams, capital, boards/advisors, etc). Solo entrepreneurs, side-projects, 'lifestyle businesses', ISVs, and other small businesses in tech don't really fit into that category. Although while many of them still call themselves startups (which is fine) the distinction is quite clear. Lean Startups has fundamental business advice that is good for any company. But Steve's analysis here is clearly targeted as a specific group of traditional high-growth startups which angels/VCs invest in, from which the original idea for Lean was spawned and designed for (and later found wider applications outside of startups - for better or worse).
• akuji1993 8y ago
  $1 billion for a video streaming service?? Are these people actually insane? I don't see any way they will make back that much money with a service in a completely oversaturated part of the internet where YouTube, Netflix and other streaming services are pretty much meeting every desire any customer would have. I mean, power to the people that have invested, but this looks like an investment graveyard.
  • sharemywin 8y ago
    youtube leaves a lot to be desired from a quality stand point.
    • bobmarley1 8y ago
      Yet it still has a massive first mover advantage.
      • rmah 8y ago
        Youtube wasn't even close to first -- it started in 2005. They were more like third or fourth. Youtube (and later google) got the formula and right -- they learned from the mistake the first movers made. Sort of like Facebook, Dropbox, Salesforce, Instagram, Google, etc. None of them were first. Being first is dangerous.
      • normo12 8y ago
        The advantage it had was a cavalier approach to piracy iirc. Didn't they use that to bootstrap before going legit?
    • 1ba9115454 8y ago
      Funny, as I'm starting to use it more and more. If I want windsurfing, snowboarding or skateboarding tips the quality can be excellent. There are some great SEO channels and stuff for CSS Grid. Even with my son, we can get short lectures on the stuff he is studying at school.
    • rawrmaan 8y ago
• jbg_ 8y ago
  Betteridge's law.
  • boffinism 8y ago
    Scrolls to bottom of article: > Lessons Learned...The Lean Startup isn’t dead Ah yes, there you go.
  • tome 8y ago
    tome's law: In any discussion about an article whose title is a question, Betteridge's law is mentioned with probability 1. https://news.ycombinator.com/item?id=16292371 https://news.ycombinator.com/item?id=16292371
• deleted 8y ago
  [deleted]
• geetfun 8y ago
  As a bootstrapper, I see the point of what this article is trying to say. It's been increasingly difficult to create products that can find product market fit/validation and reach a scale where the income justifies the effort. And to top it off, the MVPs are becoming much more full product than simple landing page MVPs of years past -- and all of this requires a lot of capital (time, money, connections, volunteers, etc). As more entrepreneurs enter the space, competition will only become more fierce. Even selling the tools to the gold rush has become commoditized with the choices available.
  • nradov 8y ago
    Why is it increasingly difficult? Has something really changed in the past few years?
    • tonyedgecombe 8y ago
      I'd guess the shift from Desktop to SaaS, the demands of keeping a service running 24/7 are quite high compared to just offering a download.
      • nradov 8y ago
        I was delivering reliable SaaS applications in 1999, and by that time I was already behind the pioneers by 5+ years. So that's not anything new, and on balance I don't think the demands are any higher. Some things have become harder, others easier.
    • deleted 8y ago
      [deleted]
  • 1ba9115454 8y ago
    > MVPs are becoming much more full product than simple landing page MVPs of years past -- and all of this requires a lot of capital It depends. If you're a developer then it's just your time.
    • 8y ago
• lkrubner 8y ago
  This needs to be balanced: "All this is driven by corporate funds, sovereign funds and even VC funds with capital pools of tens of billions of dollars dwarfing any of the dollars in the first Dot Com bubble – and all looking for the next Tesla, Uber, Airbnb, or Alibaba." Yes, but this is the other reality of today, from Calculated Risk: "CR Note: Currently the target range for the federal funds rate is 1.75% to 2%. With inflation running close to 2% by most measures, the real Fed Funds rate is still negative." In other words, investors still can't find enough investment opportunities that they find attractive, so they are still willing to give huge amounts of money to the government for free. Some of this can possibly be attributed to the Great Stagnation, the slowdown in innovation, growth, productivity and technology which began in 1973. Some of this can certainly be attributed to rising pools of savings all over the world. But it remains a fact that there are not enough software startups (nor enough manufacturing startups, nor enough legal startups, nor enough medical startups, nor enough of any kind of startup) to absorb enough capital to bring the world's capital markets back to "normal", if we can agree that "normal" means most investors expect to make at least a small profit on their investments, including their bond investments.
  • wavefunction 8y ago
    I thought the wealthy were job creators, captains of innovation, stewards of the future... We'd be better off taxing these folks who can't find anything to invest in and redistributing the funds to the worst-off. The economic activity would inevitably be captured by these same ineffectual investors but at least the material situation of the poorest among us would be slightly better.
    • ameliaquining 8y ago
      That sounds like it'd be solving a different problem.
    • ryandrake 8y ago
      This problem is not new, but arguably getting worse. So much capital out there, in the hands of so few people, and they have no idea how to deploy it productively. Their trillions could be used to start whole industries, build critical infrastructure, and pull millions out of joblessness. Instead, they unimaginarively loan it to the government or a bank for a negative real return. The rich of the past built the modern world. Today’s rich seem to just sit on their wealth while inflation and missed opportunity erode all the value away.
• eli 8y ago
  Someone should make a site or project to highlight bootstrapped startups. There are plenty of very successful ones but you just don't hear about them as often.
  • postsantum 8y ago
    https://www.indiehackers.com/ https://www.indiehackers.com/
• haikyuu 8y ago
  > the amount of customer discovery and product-market fit you need to find is inversely proportional to the amount and availability of risk capital businesses and risk capital are not related. Proof: businesses existed long before risk capital.
• deleted 8y ago
  [deleted]
• swalsh 8y ago
  One of the interesting differences between Jeff Katzenberg's new startup, and the type of startup's that existed when the Lean Startup was invented is the number of variables which are unknown. This new media startup isn't starting at an unknown. In fact, virtually everything about this business model has been tested before somewhere. Lean is about experimentally approaching hypothesis about business models. Then scaling up when you find something that works. Short videos targeting mobile isn't new. If I allowed him too, my son would watch dumb youtube videos all day on my phone. This is a gamble that consumers might want better quality content. Not a huge gamble :\
• jillesvangurp 8y ago
  Yes and no. IMHO Lean has generated a lot of startups that had too much of a narrow focus and optimized away all the potentially interesting parts of their products because they were focusing on a MVP that turned out to be lacking in the V part because they were focusing on the M part. There's this great presentation by Don Reinertsen "Second Generation Lean Product Development Flow": https://www.youtube.com/watch?v=L6v6W7jkwok&index=55&list=LL6P7ZzM6GT554-6xA_3lvjg&t=0s https://www.youtube.com/watch?v=L6v6W7jkwok&index=55&list=LL... Which is a perfectly valid way to fix some of the worst offenses of the original Lean movement, which were to throw out the baby with the bathwater by focusing on only doing things that had low option value and low risk. Sort of the opposite of what you need to do in a startup, which is to do something genuinely new and creating value while taking calculated risks. Don does a great job of providing some nice economic rationalizations of how deal with things that are risky but valuable, planning and estimating these things, etc. He also makes a great argument for shipping value fast, which is to maximize the economic life span of your product and prioritize getting revenue earlier vs. getting revenue later with a potentially better product. Many tech startups get sucked into building the perfect thing and missing their window of opportunity for both raising funding and monetizing their product. Unless of course your startup is not about the tech, in which case definitely avoid taking risks on the tech front and focus on shipping a product fast. If you are building a market place, the last thing you want to do is reinventing how those work. You instead want to focus on whatever the hell it is you are selling. Lean was always popular with those type of startups. I tend to think of them as no-tech startups. You get a bunch of MBAs, marketing and other non techies and then bring in the full stack hipsters to copy paste a bunch of crappy js files together to fake it until you can afford to hire a proper team.
  • edoceo 8y ago
    ""the baby with the bathwater by focusing on only doing things that had low option value and low risk. "" That's not what the Lean Startup says. Lean is about reducing risk but that doesn't box one into only doing low risk/value activity
    • dmix 8y ago
      What Lean says and how people commonly used it are distinct, which is what the OP is talking about. Some people took some parts of Lean too far and didn't focus enough on delivering a high level of value. That takes risk and vision, but you build better products. As opposed to obsessing over managing risk and keeping things lean, without properly investing in the hypothesis to really test them out. Which means in practice a bunch of small half-hearted plays that get abandoned too early - or were inherently a minor incremental value proposition that wasn't valuable enough to build a sustainable business around.
• awvcs 8y ago
  I wish it wasn't so but I do think to the degree you can declare something dead the lean startup is. The problem is that lean startups requires a number of things that aren't accessible anymore. A) Maybe the most important is time. You need time in a good environment to actually develop something. Which has become a lot more costly. B) Large companies are controlling more areas than ever. People often wary of regulation as a barrier, but as time goes by the market participants creates their own barriers. Many areas are just harder to have an impact in than it used to be. C) And then there is just competition, especially for things like talent. I guess it isn't the lean startup that is dead so much as the environment for it. You can say the same thing about co-operatives, non-profits, community establishments and a lot of other things that are good ideas (probably more so than ever) but not able to flourish because of other interests.
  • beat 8y ago
    B is really important. For all the lovely American paranoia about oppressive government killing business opportunity, the power of massive but still fast-moving companies in the same industry is far harder on innovation.
  • simias 8y ago
    >A) Maybe the most important is time. You need time in a good environment to actually develop something. Which has become a lot more costly. Why do you think that is? I'm not sure what you're referring to exactly. >B) Large companies are controlling more areas than ever. People often wary of regulation as a barrier, but as time goes by the market participants creates their own barriers. Many areas are just harder to have an impact in than it used to be. That one definitely sounds true to me, the complexity of modern software definitely makes it harder to be competitive with big shops. You can be the smartest coder on earth, if you want to write a complex application today (say, video editing software, smartphone interface, a kernel, a web browser etc...) you're looking at man-years of work if you want to start from scratch. And if you don't start from scratch it'll be harder to differentiate yourself from the competition and "disrupt" the status quo. I'm always amused when I read stories from the 70's and 80's about lone hackers writing a cool hack for a computer or application of the time and managing to sell it for a lot of money. Like this story I remember reading on HN of the hacker who managed to write a task switching application for some Apple computer of the time and managed to sell it to Steve Jobs (I don't remember all the details and I can't find the article at the moment). It was a clever and completely non-portable use of the hardware resources, in the end it was probably a few kilobytes of (very clever) code. It's hard to imagine something like that today.
• siruncledrew 8y ago
  I think it's cyclical: there are periods of lots of funding available and less of funding available. There's still market economics at play. So the Lean Startup is not permanently dead simply because we see articles of startups getting $XX million funding or have $X billion valuations. A company that is restricted on cash and "lean" is more inclined to be risk-averse and calculated in their business model decisions because they have to 'do more with less'. Whereas a company pumped full of cash has a greater 'trial and error' risk-tolerance because their goal is to overpower a target market to become the dominant player as quickly as possible. Investors still want to see a pleasing return either way.
• normo12 8y ago
  How much equity do you need to give away to get VC money for an unproven business idea? Is there a ballpark figure? I heard like $100k for 20% or something but I guess that's more like angel investing? What's the minimum amount of work you need to do before getting money with no track record as a founder?
  • 1337biz 8y ago
    Upvoted just because I want to see where this is going...
  • Liron 8y ago
    A common approach is to have friends and family invest $50-250k using a SAFE note with a ~$2M cap (e.g. five $10k checks)
    • dpeck 8y ago
      calling early investors "friends and family" does so much to keep out and alienate potential founders who don't come from wealth.
      • pjlegato 8y ago
        It's not some sort of goal-oriented nefarious plot to keep poor people out of the rich people's club by alienating them through language choice. It's a realist description of how early stage startups actually work empirically, irrespective of whether we approve of the nature of this socioeconomic phenomenon. When you have no proof at all that your concept can actually become a profitable business, no commercial investors will touch it. It's far too risky compared to their many other options. The only people who get investment in such an extremely high risk scenario are those who happen to have rich friends and family. These investors will take a punt on them just because they like them personally and they can afford to lose the money, which is overwhelmingly likely.
      • pofilat 8y ago
        It's not the name that gatekeeps, it's the necessity of having the network in order to access capital. The name is honest. These days, at least you can try kickstarter.
• dpeck 8y ago
  So Blanks thesis seems to be go lean when money is hard to come by, otherwise take the cash and go big because there is more out there if you fail. I’m not sure this is much different than what has been talked about for a while, but it puts a nice point in what most people just talk around. The capital is there, there’s a very good chance you’re going to fail anyway, you might as well fail while eating something other than ramen.
• gregpilling 8y ago
  "It’s a response to scarce capital, and when that constraint is loosened, it’s worth considering whether other approaches are superior. With enough cash in the bank, Katzenberg can afford to create content, sign distribution deals, and see if consumers watch." There are two main thoughts from this that occurred to me: 1. There are very few Katzenbergs out there, so him personally raising that money is not surprising. If Spielberg or Lucas wanted to create a short form video company I am certain that they would be able to raise similar amounts. I am not him; therefore the lean rules still apply to me 2. the times that I have had enough money to buy my way out of problems has not yielded the best results. In my 30 years of doing this the clever answers have always come when my resources have been restricted, with often the best results from the most constriction. Extra money can bring bad results sometimes, the beauty is in the restraints. TL;DR You are not Katzenberg. Neither am I.
  • F3Life 8y ago
    Lol: you are not Katzenberg. Neither am I. Good points. Good post.
• yumraj 8y ago
  Meg Whitman as the CEO on NewTV, $2 Billion in total funding, unproven market hypothesis. I wish there was a way to short a startup...
  • chosenbreed 8y ago
    :-)
  • F3Life 8y ago
    Right? It's born a unicorn. But could also be a eunuch.
• oneshoe 8y ago
  Lean Startup may or may not be dead but my Boss is going to continue to misuse the term MVP regardless. It pains me to think that this term isn't going away. I believe it will be used by managers for a long time to make developers forgo good development practices in lieu of getting that minimal ~viable~ product out.
  • secfirstmd 8y ago
    Its become such an overblown annoying cult. The core idea is good but even the book itself was trying to stretch an academic paper further than it needed to go.
• AndrewWarner 8y ago
  The problem I see with the Lean Startup is that Eric Ries isn’t actively promoting, defending and explaining it. On Mixergy, I interview founders who try to make their bones or get attention for their messages by disagreeing with the Lean approach. Eric doesn’t debate, correct or engage with them. So they get to make statements without anyone credible taking them on. Listen to my latest interview it’s Rand Fishkin and you’ll see what I mean. He’s not anti-Lean, but he’s disagreeing with it his book to make get attention for his message. With a bit of pushback from me, he admits as much. Each one of these mini-attacks from accomplished entrepreneurs hurts Lean’s credibility. Only Eric has the credibility and social grace to disagree and explain in a way that builds up The Lean Startup. I’d love to see him step into the conversation more. He and pg defined how to run a successful startup more than any two people I know. We need to hear more from both of them.
  • ilamont 8y ago
    A related issue are some of the other high-profile proponents of Lean are unwilling to acknowledge Lean faults or limitations. Good frameworks are flexible, but a dogmatic approach turns potential converts away.
  • dasil003 8y ago
    This is a common pattern with all good ideas. You start with some hard-won ideas and principles that make a lot of sense. The ideas resonate and so they get picked up by a broader and broader set of people. Before long you have second and third tier advocates who are heavy on the Dunning-Kruger effect and short on actual insight. Now you have tons of straw-men for wannabe thought-leaders to rip apart mercilessly. I don't blame Eric Ries for staying out of this fray, there's little to be gained by battling the tidal wave diluting the core idea.
    • pjlegato 8y ago
      There should be a name for this pattern, so we can easily refer to it in the future. As you say, it's quite common in business. The Diluted Insight Effect?
• fixermark 8y ago
  To what extent does user trust factor into how lean a startup can be? A small company can't afford to spend a lot of resources on data integrity and protection, encryption and retention best practices, keeping up with laws like the GDPR, and they're that much closer to going bankrupt and having the data they've collected become part of asset liquidation and auction. It seems like these days, the discerning consumer ought to put more trust in a larger company's offerings in a given space than a smaller company, and even be wary of a smaller company that's offering something truly novel if that novelty isn't worth the price of private data being at-risk.
  • JohnnyConatus 8y ago
    Theoretically you're right. In practice not enough customers think about that risk for it to have a material impact on the startup's financial viability.
• startupdiscuss 8y ago
  I thought the whole idea of the "lean" methodology is not to waste the dollars you raise. Even if you have raised $2 billion, shouldn't you know if people want short form content? Actually, isn't it more important to know if people want it if you have a lot of money you spend? Can't you still launch an MVP quickly, and iterate up and then pour on the rocket fuel? This idea that scarce capital is what made lean startup important seems contrary to the original premise of the lean startup.
  • dmix 8y ago
    > Even if you have raised $2 billion, shouldn't you know if people want short form content? This has already been proven with Youtube. The bigger question is whether there is a ~$100 billion market for a Netflix style service selling 10min videos, which justify a $1-2 billion investment. And whether this company can recruit the talent in a sustainable business model, where they can produce enough good content to keep users happy. Even if there is a $100 million dollar business here, that would be a failure scenario for this startup right out of the gate. As it won't return the investor money anytime soon.
    • startupdiscuss 8y ago
      I don't disagree with most of what you said, I was using "short form content" as shorthand for the business model, however: But Hollywood has remained skeptical in the year since he announced his venture. Several executives have argued that there is little evidence to support the notion that viewers are craving short programming. And beyond the initial hype, Mr. Katzenberg has been short on specifics. and Higher production values will distinguish NewTV’s programming from the majority of video shorts that gain traction on YouTube, Mr. Katzenberg said. And he trusts that viewers will appreciate the difference. from: https://www.nytimes.com/2018/08/07/business/media/katzenberg-streaming-video.html https://www.nytimes.com/2018/08/07/business/media/katzenberg...
• startupdiscuss 8y ago
  I should also point out why the "Lean Startup" is more relevant than ever: Theranos. (The other story trending in hacker news). After reading Bad Blood, I am not convinced that Holmes (at least initially) intended to perpetrate a fraud. She may have believed it was possible to produce the machine she dreamed off, and it was a question of putting in the R&D. (It still might be possible). If this is the case, the "lean" methodology would have saved her if she had just started out small and focused on developing the tech first. Saved in the sense of convincing her it did not work and that it was best to return the rest of the money. There was a time when the distribution deals were signed and the tech wasn't read and the deals were used to raise cash that really must have felt like things have gone too far.
  • village-idiot 8y ago
    An interesting theory. I don’t know what to think about Holmes. At this point she thinks she just did what every other (male) startup founder did, and that she’s getting singled out for punishment when plenty of other startups over promised and under delivered. She doesn’t seem to grasp that flopping on some shitty social media site is far lower stakes than lying about medical issues, which makes me question her ethics and grasp on reality.
    • startupdiscuss 8y ago
      I have not seen her current response to the situation. Does she hold out examples? I don't know of any under delivery of this magnitude. (I think even webvan peaked at $4.8 Billion in value. It eventually had peak sales of $178million).
      • village-idiot 8y ago
        I don’t have the exact quote in front of me, I’m recalling this from Preet Bharara’s podcast. You’d have to inflation adjust those numbers to be fair, but I suspect that you’re right in calling this one of the biggest under deliveries in a while.
  • mediaman 8y ago
• arrty88 8y ago
  Why don't they just give Dave Chapelle 1B and his own live streaming app? Dude is the best short content creator out there.
• rdlecler1 8y ago
  The low hanging fruit has been picked and we’re waiting for the next technology trigger. My friend said to me recently, not only are all the good ideas taken, but so are all the bad ideas.
  • GFischer 8y ago
    I don't believe that at all. Maybe the low hanging fruit in San Francisco has been taken, but the future is not evenly distributed... opportunities everywhere (read a headline about a Nigerian startup getting funded, that's the kind of stuff I'm talking about).
• hnisgroupthink 8y ago
  Lean startup was a stupid cult idea pushed by people with no imagination. Like agile.
• deleted 8y ago
  [deleted]
• garganzol 8y ago
  Tangentially related, but the real gold is well hidden and secretly traded. The schlock is through the roof everywhere and in large excess. A piece of an adequate analysis: https://hackernoon.com/the-rise-and-fall-of-yplan-is-the-most-boring-tech-story-ever-4280cebf9f1f https://hackernoon.com/the-rise-and-fall-of-yplan-is-the-mos...
• amirathi 8y ago
  > It (Lean) is a response to scarce capital, and when that constraint is loosened, it’s worth considering whether other approaches are superior Definitely worth looking at both approaches objectively. 1. Lean Approach: Stay lean, build MVPs, find PMF, then go big. 2. Big bang approach: Have conviction in your idea, use capital to launch big from get go. Given capital is not a constraint, the next most important thing is time i.e. which approach would help us build a thriving business fastest. Big bangs take up extra time/energy in ancillary tasks like hiring, PR and so on. Pivots take time, even to communicate internally. Lean let's you operate the whole thing as a series of cheap experiments to validate your assumptions. Pivots are natural and cheap. Big bang would be beneficial over lean only when your first set of assumptions were on the mark and the company required almost no major pivots. That's rare, maybe Katzenberg can pull it off.
  • WhompingWindows 8y ago
    Maybe Big Bang is more effective for iterative companies, those whose business model and PMF is well established. like a second wave of ride-share businesses who copy the Uber/Lyft paradigm but with enough of a personalized twist to secure substantial capital upfront.
• dgudkov 8y ago
  I'm not sure I understand this. You can't skip finding product/market fit. No matter how much money you have, if you have no product/market fit you're toast. If you're not desperate to find product/market fit (as Lean startups are) because you have tons of money -- you may never find it. To me, Lean startup is not about money. It's about building the most efficient process of finding product/market fit. Once you've found something that really works, then it's time to look for big money and scale up. In most cases, what you need in the beginning is $50K-500K which can come from savings/FFF/consulting/seed round. Too much money in the world now. A result of the decade of near-zero interest rates.
  • jerrre 8y ago
    FFF = Friends, Family, and Fsomething?
    • girmad 8y ago
      I think the saying is Friends, Family, Fools.
    • bitwize 8y ago
      Friends, Family, and Fucking for cash? Don't knock it. It's helped launch many an Instagram influencer's career, I bet it's gotten a few startups off the ground as well.
  • nicodjimenez 8y ago
    You can definitely skip product market fit. It takes some startups years to find true product market fit. The price of admission of product market fit is a great product and a great team. Hard to do these things on a budget, especially as the space of "cheap" startups that can be built with a few 100k becomes more crowded.
    • dgudkov 8y ago
      >It takes some startups years to find true product market fit. I can think of only 3 reasons (not mutually exclusive) why it happened: 1. They had too much money which made their PMF search process inefficient. 2. They had to educate themselves about the market from scratch. Which means that the original idea was a wrong/uneducated guess. 3. They didn't find product/market fit. The same team had to restart with another idea (possibly several times) and it took them much less time than several years to find PMF.
• pnenp 8y ago
  Calling a popular term "dead" is certainly a good way to attract clicks. And sure, when money is cheap and you have $2B to spend, you can afford to throw much bigger Spaghetti at the wall. But Lean defines a startup as a project under extreme uncertainty. Commercial video streaming sites exist, the only thing that seems to be new about the example in the article is the video length. I would not consider this an environment of extreme uncertainty. So imho, while cheap money does change the equation, 99% of the article's punch lies in its clickbaity headline.
  • kesor 8y ago
    You do realize that Steve practically invented the term, right?
    • pnenp 8y ago
      That's evident from the article. And it does not change the fact that the headline is clickbait, a promise which the article fails to deliver on.
    • owens99 8y ago
      Eric invented the term for Lean. Steve invented Customer Development. Both have different definitions of what a startup is. Extreme uncertainty is part of Eric's definition, not Steve's.
• monksy 8y ago
  It has always been dead or near dead. That's the point of a lean startup. It's a recession business operating in a surplus market. They're trying to make it successful despite market evaluation. (Can be a good thing or a bad thing.. mostly it's a bad thing for the long term economy, bad for customer value and solving customer needs)
• jedberg 8y ago
  As an aside to the discussion about lean, I don't understand why these guys got 2 billion, even if it is Katzenberg. Netflix already has short content specific to mobile. They're subtle about it, but if you browse on mobile you'll get presented with shorter bits of content in your recommendations. I guess the idea is that they are starting a studio to create short content, and hope to make billions selling the content?
• aidenn0 8y ago
  TLDR: There is too much money chasing too few good companies, so even marginal companies can get funding.
• DrNuke 8y ago
  For what I see, it seems to me that hard STEM startups tackling industrial problems can’t work through the lean paradigm, that’s why too much too often their projects are shut down or internalized as soon as a nice acqui-hiring happens. In other words, bigger firms just scoop applied r&d teams in their field before they actually become a commercial threat.
• salt-licker 8y ago
  Overfunding is an existential risk for startups. Scaling a team before finding PMF seems like a blunder in most circumstances. Instead of setting your best engineers to work creating the best product, they're busy recruiting and dealing with company growing pains from the get-go. The mythical man-month and scarcity of great people combine to diminish your returns on this hiring. Furthermore, battleships don't turn on a dime, and you may be hiring a lot of irrelevant expertise if you have to pivot later. This is why Stripe took 6 months to hire its first 2 people. Furthermore, huge funding means investors are looking for a huge returns. A $1b sale is now failure?? My gut says this "go big or go bankrupt" pressure encourages tunnel vision among leadership rather than innovation. Essential Products was overfunded in late 2015 and is already up for sale. I think Magic Leap and Desktop Metal will end up as similar cautionary tales. I see good arguments for overfunding if (1) there's huge capital costs for development and high probability of large exit regardless of technology success (e.g. biotech) or (2) you're trying to capture a market with a strong network effect. The second case seems dangerous though, e.g. is Uber's popularity really a moat? What if they had spent their billions on developing a product with a real technological advantage instead of scaling to the world first? As a huge fan of his book, I'm sad to see Steve Blank largely ignore these ideas in his article.
  • vkou 8y ago
    > Furthermore, huge funding means investors are looking for a huge returns. A $1b sale is now failure?? My gut says this "go big or go bankrupt" pressure encourages tunnel vision among leadership rather than innovation. If you don't take the money, they will go to your competitor, and give it to them instead. If you're in a space where you can be killed by your competitor selling $1 for 90 cents, that will kill you just as dead. It doesn't matter if Uber's popularity is a 'real' moat or not, as long as its a moat big enough to drown you. Sure, a few years later, said competitor will make an announcement on their website about the conclusion of their 'magical journey', but that's not going to matter to you, is it?
    • salt-licker 8y ago
      Good point, I forgot to mention that "race to IPO and cash out" is a viable business strategy, though a sad product strategy. See A123 Systems, Desktop Metal's founder's previous company that went bankrupt. Also the Energous story: https://liesandstartuppr.blogspot.com/2016/04/those-other-guys-pt-ii.html https://liesandstartuppr.blogspot.com/2016/04/those-other-gu...
• Tloewald 8y ago
  Is there a single example in business of someone taking a huge amount of money, and plopping a famous CEO in charge of a dozen people and saying "go" and generating a successful business? (Let's set aside investment funds, obviously. I guess Meg Whitman could just hire some iconoclastic traders and tell them to manage the $2B while her 10 staff clone YouTube.) There are quasi-legendary cases in history (think Spartan and Byzantine super-soldiers) of a tiny band with no resources executing ludicrously successful military campaigns, so I guess it's not completely impossible.
  • pjlegato 8y ago
    Fairchild Semiconductor, or Intel?
• ben_jones 8y ago
  You don't have to follow SV stereotypes The lean startup is alive in well in most entrepreneurial ventures. Starting a food truck? Grocery store? Custom t-shirts? Indie video game? Small focused SaaS? The echo chamber is real. "I looked outside and saw no lean startups, its dead!"
  • pjlegato 8y ago
    The article (and most of HN) refer to the local Silicon Valley jargon definiton of the word "startup": a company that is meant to grow extremely fast through the use of new technology. It's not a synonym for any entreprenurial venture. What you're talking about is locally called a "lifestyle business" (not a "startup") -- a small business that can provide a comfortable living for the founder and a few employees, but which has essentially zero longer term growth prospects. This point seems to be the source of much confusion in the comments here.
    • pofilat 8y ago
      Those aren't "lean" either! "Lean" means starting your business before you have a product, marketing-driven development, and fumbling around chasing customers until you find something they want to buy, and then building it. https://en.wikipedia.org/wiki/The_Lean_Startup https://en.wikipedia.org/wiki/The_Lean_Startup
• bborud 8y ago
  A movement fueled by a book promoter with no notable track record of success for what he is preaching? Yeah, it was a fad. To be fair, Ries stole a lot of nice bits from different schools of thought. There's stuff his books that actually works. But you would have to be soft in the head to think that his book represented wisdom. In fact, wisdom does not come from a book – it comes from reading a lot of books, making a lot of mistakes, working with a lot of people, building a lot of stuff, and still understanding that this does not necessarily represent something that can be distilled into bullet proof heuristics. There's always unseen and uncounted factors that you will miss. In contact with large, established organisations this book tends to produce cargo cults. Simplistic management self-help literature combined with institutional mediocrity, stupidity, fear of change, and hard-shelled delusion is a horrible mix. The good thing is that these cargo cults tend to die after a few years. The bad thing is that anything associated with them then gets tainted. The Lean Startup was a management fad and it didn't make people any smarter. It just gave them different ceremonies to perform in order to feel good about themselves. And as all fads, it has now passed. It is okay to move around the cabin and think for yourself again. I would recommend "Functional Stupidity" by Mats Alvesson as a form of inocculation against this type of self-pleasuring heuristic-seeking.
  • enjayz 8y ago
    damn.
  • sizzle 8y ago
    "In contact with large, established organisations this book tends to produce cargo cults. Simplistic management self-help literature combined with institutional mediocrity, stupidity, fear of change, and hard-shelled delusion is a horrible mix." This has been my experience as well with lean in the enterprise SaaS world. We are currently toying with "design sprints" from Google [1] which is basically a faster version of lean to get to an MVP. I feel that design sprints are tangible and can get a group of people to creatively solve a problem in a short amount of time, however it seems you run into the local maxima hill climbing problem. 1. http://www.gv.com/sprint/ http://www.gv.com/sprint/
  • sologoub 8y ago
• mvpu 8y ago
  Investors aren't stupid - they won't fund millions of dollars (series A and above) unless they see a working product that customers are raving about, a large market opportunity, and a clear go-to-market - general indications of product-market-fit (although the definition of PMF depends on the space and product). We have seen rare cases of outsized seed rounds w/o a product, but they are extremely rare (even today). So this notion of "go big or go home" isn't vaporware - most founders cannot get that kind of investments, and few that can (reputed, second time founders for example) think 100 times before they jump in.
• nostrademons 8y ago
  I think the problem with Lean today is that everybody knows about it. Starting a startup in 2002-2005 was hard, just the mechanics of it. Incorporating took several thousand dollars of lawyer time; there was no Clerky, and online LLC-generators were largely unknown. Accepting payments meant getting a merchant account with a CC; no Stripe, Square, or other payment processors. Payroll meant dealing with ADP or PayChex; benefits meant hiring a person to manage those relationships. There was no YC, generally no seed funding ecosystem other than angels, no AngelList, no gigantic startup blogging scene where everybody gives advice on everything. As a result, there were plenty of unfilled pain points, and potential customers were overjoyed when someone would actually come talk to them about it rather than assuming they knew what was best, a la big companies or massively VC-funded startups. Now, everybody and their brother is founding startups, which means that if you do happen across a genuine pain point, there are already 2 dozen startups working on it. Customers get weary of even talking to prospective entrepreneurs because they've had that conversation so many times before. I've done the Lean Startup methodology, and have several friends that have tried it; the most likely outcome today is that you'll talk to a 100 customers (after trying to talk to several hundred more who don't respond), and then discover that there's no actual market need addressable with current technology and you should keep your day job. Like most knowledge related to markets, once everyone believes it's true, it ceases to be true.
  • abraham_lincoln 8y ago
    So, it seems the methodolgy worked, right? It prevented you from wasting time on a product that has no market.
    • nostrademons 8y ago
      Yep, you could argue that finding out after 2 months that an idea won't work is preferable to wasting 2 years on it. 'Course, then I went and repeated the process 8 more times, then decided that if there are no untapped market areas that can be filled by existing technology, it's time to spend 2 years inventing new technology. It remains to be seen whether that's a waste or not. At some point you also have to apply the same logic to methodologies that you apply to ideas, though. The point of the Lean Startup methodology is to avoid wasting time implementing ideas that won't work so you can find a scalable, sustainable business model quicker. If your goal is to found a startup and all experience is that the Lean Startup methodology, in 2018, does not provide a scalable, sustainable way to do that, then you should ditch the methodology. Chances are you'll have to do your own methodology invention, though, because once a scalable, sustainable way to get rich becomes commonly known, it ceases to be sustainable. (See also Bitcoin, which was a great way to get rich when nobody considered it a way to get rich, and then became a great way to become poor when everybody was certain it would make them rich.)
• Dowwie 8y ago
  It's a collection of ideas and tools. Osterwalder's business model canvas lives on in its original form and variations of it. Use it to organize important ideas on paper. Get "out of the office" early in the process and speak with prospective customers. Create a product that does the minimum required to achieve your goals. How could these ideas possibly be dead? Maybe "Lean Startup" as a turn-key solution to entrepreneurship has died and it has become more difficult for the Ries and Blank to monetize. However, they promoted many valuable ideas and practices that live on.
• subdane 8y ago
  This Startup School lecture posted today about how to find product market fit is literally all lean methodology https://www.startupschool.org/videos/38 https://www.startupschool.org/videos/38
• docker_up 8y ago
  Uber changed the game by growing globally at an breakneck pace. Now, if you have a successful product, you need to globalize as quickly as possible otherwise people in Europe, China, India, Indonesia, Brazil, etc will all copy your idea and you will be left flat-footed.
• lwhi 8y ago
  If you don't test your idea before you spend a lot of money implementing it .. you stand to lose a lot of money. It's common sense. And that's how I'd summarise much of the philosophy involved in the lean startup. -- And conversely; if you invest a lot of money in an idea without testing it, you're gambling.
• danschumann 8y ago
  I think it's saturated. Lean goes best with the easy to execute ideas--where a viable product is possible in days or months. Take an animation software program designed for professional artists: it's not possible with only a few features, because it wouldn't be competitive with existing products. You need such a large array of polished features to have any staying power. Let's also say you want to make a product with better core functionality which can't be done with 3rd party add-ons or working with existing software. There's still a lot of opportunity for people willing to work on something for several years before releasing, as long as they aren't taking gambles with their primary value proposition. (Would hate to be wrong after spending that much time) There are still untapped niches where lean works, though, I bet, if that's your calling. My backup, if I'm making a product that people don't use, is to be my own customer, and open an animation shop which uses the software to make animations to sell to people. So if you're not going lean, go for a product you will use (and obviously a product that is useable by only one person[not a social network]) to make money, if people don't buy the product itself. (Ie, if you're making software that makes it easier to host websites, make sure it's software that you would personally use in the case that you can't sell the software, but can still sell the hosting)
• brlewis 8y ago
  Katzenberg's business idea cannot be explored without lots of capital. I bet you could find startups like it (i.e. raising lots of money before product-market fit) even when investment money is scarce, just fewer of them.
• mark_l_watson 8y ago
  The idea for short subject videos is actually pretty good but here is what I don’t like: Netflix, HBO, and Amazon rock because they spend a ton of money making their own material. I don’t see getting the same quality by farming out production to contractors. Regarding the main point of the article: I always liked the idea of lean and sometimes bootstrapped startups. The current trend of mega financing perhaps comes from all of the money slushing around in markets looking for investments. Part of the effect of increasing wealth disparity is the the very rich have much more capital than they need to live and want to invest.
• owens99 8y ago
  If there's no product/market fit, too much capital is a death sentence. If they don't go out of business in a giant explosion, NewTV surely won't build anything innovative or disrupt anyone. Too much pressure and too many expectations at the wrong time/place.
  • conductr 8y ago
    Product is all that matters. And I'm not talking about the app. If they spend that cash generating quality video content, it is proven people will talk about it and will pay a subscription. So I think this investment speaks to the confidence that this guy can execute on this vision and that the market is receptive to this format, which it will be if done right. Also, if modestly successful there are plenty of Big's who would acquire. Knowing nothing of the players and how they execute, this actually passes the sniff test more than most and I'd say it sounds like it could be a winner.