Is The Lean Startup a Stupid Way to Start a Company?
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Is The Lean Startup a Stupid Way to Start a Company?

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Originally published on Medium — January 25th, 2017

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This semester, I’ve had the opportunity to work as a co-instructor in an instructional psychology & technology class focused on EdTech startups. The class is broken up into three parts, (1) intro to creativity and innovation, (2) design thinking workshop, and (3) lean startup bootcamp. I teach the third part. At the beginning of one of our first classes, I had some casual small talk with the students transition into an assault on most of what I’ve spent the last 3 years learning.

“I’m anti-lean startup. I think it’s stupid, and business schools are stupid for teaching it. They should focus on accounting and finance.”

This was an 8 AM class; I didn’t come prepared for a boxing match. Now, as we all know, the learning environment is supposed to be a safe place. A place of open discourse. A place to challenge your beliefs.

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But for reals, everyone is welcome to their opinion. Even Peter Thiel throws down on lean startups in his book ‘Zero to One.’

“All companies [are told they] must be ‘lean,’ which is code for ‘unplanned.’ You should not know what your business will do; planning is arrogant and inflexible. Instead you should try things out, ‘iterate,’ and treat entrepreneurship as agnostic experimentation.”

“Would-be entrepreneurs are told that nothing can be known in advance: we’re supposed to listen to what customers say they want, make nothing more than a “minimum viable product,” and iterate our way to success. But leanness is a methodology, not a goal. Making small changes to things that already exist might lead you to a local maximum, but it won’t help you find the global maximum. You could build the best version of an app that lets people order toilet paper from their iPhone. But iteration without a bold plan won’t take you from 0 to 1.” More on this later.

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The original title was “the anti-lean startup method”

The person in my class was pulling her experience from having worked to edit a book called “The User Method” by Jeff Schwarting. Gauntlet thrown down, I immediately bought the book with Amazon 1-click and started this post.

Right from the get-go, Schwarting starts out talking about a group of people starting businesses — some failed, others succeeded. “My business school classes would have taught that the successful founders conducted more customer interviews, or had better strategy, or more effectively employed some arbitrary marketing framework or complex financial model. But none of that was true. In fact, many of the unsuccessful teams had more talented founders, worked longer hours, and generally did things “right” more often than those that succeeded.”

I read The User Method through, looking for the smoking gun. Was I an idiot for teaching classes where I focused on empathetic user interviews, MVP development, rapid iteration? Schwarting would say “hecka yes.”

“It wasn’t the strategy, or the work ethic, or the process that decided success and failure — it was the product idea.”

For the most part, that’s the whole book. Said in lots of different ways with lots of different examples, but his point is — “don’t ideate, don’t iterate, don’t interview. Just build something you want, and tell people about it.” I think I may have summed it up better than the Amazon description page.

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My personal rule is when a word is repeated three times, I NEVER click “read more.” It’s sort of a Beetlejuice thing.

Schwarting talks a lot about empathy vs. intuition. Empathy is what he refers to as the “making-things-you-think-other-people-want approach” which he says is “slower, more cumbersome, and requires too much luck.” He focuses on intuition. Zuckerberg knows what Facebook needs. Jobs knew what Apple needed. And this feels right to a lot of the wanna-be entrepreneurs of the world. Everybody wants to be the Steve Jobs, the Mark Zuckerberg, and if those guys operated on intuition with zero customer interaction, that’s what I’m gonna do too! “Brian Chesky of Airbnb made a profound observation: ‘If you are an ordinary person, you actually represent millions of people.’” So yes, if you build something you want to exist, odds are there are other people that also want that thing.

“Similarly, the user method founders (people who look like they’ve used Schwarting’s process) used their own opinions* and wants as the guiding star for their efforts. “I wanted it,” (Mark Zuckerberg, Facebook). “I’m going to fix this for myself,” (Drew Houston, Dropbox) “I did it because I wanted it for myself,” (Steve Wozniak, Apple).”

*Side note, if every tech company was using the “I wanted it, so I built it” approach, we would have a huge problem seeing as over 60% of the tech industry is white dudes. Not a lot of women or minorities are gonna get what they want/need built.

“Steve Wozniak, for example, who designed and made the first Apple computers, said, ‘I had wanted my own computer my whole life… So I was happy once I had that Apple I computer. I was happy for life.’” That’s great that Wozniak experienced the “user method” of building something he wanted himself. But if it wasn’t for Steve Jobs, Apple would have been a hippie-esque open-source Gen 1 project instead of a $640B company. So obviously, building something you want isn’t always enough.

The Click-bait of Business Books

I didn’t hate The User Method, but I think Schwarting is trying to throw around some massive click-bait-esque claims to garner more attention. The Amazon description page for the book lists 16 startups that are products of the user method, one such claimed example is Dropbox. When I saw that, I thought, ‘that doesn’t sound right.’ So I googled “lean startup case study dropbox” and guess what I found?

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It’s a whole video, 23 minutes long, of Drew Houston talking about how revolutionary the lean startup method was for his now $10B+ business.

There are some great lessons to take away from Schwarting’s User Method, but first I want to emphasize that when he says “forget everything you’ve learned about creating new businesses. Forget market research. Forget customer interviews. Forget about gaining user empathy, or validating hypotheses,” he’s working like click-bait, not like sound business advice.

The User Method offers some unique value in how to think about your idea, how to think about building your product. But the kind of people who are buying this are trying to get their hands on anything that might give them an edge. And guess what else they bought? Other books you’ve never heard of that promise magic ways of setting yourself and your business apart. It’s the click-bait of the business book world.

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There are a ton of business who have had groundbreaking experience with the lean startup method, and in many cases, with little or no evidence of Schwarting’s user method.

Businesses that DIDN’T follow the User Method

Example of Olay — Graham Wulff, an ex-Unilever chemist created Oil of Olay in 1952. Olay, which now accounts for an estimated $2.8 billion of P&G’s $79 billion in revenue, started out as a pink fluid in the hands of a very masculine man.

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If this guy doesn’t moisturize, I don’t know who does

So did Wulff just see something he wanted and go create it? No. But he made a billion dollar brand.

Example of Walmart —After losing his first store to a bad lease agreement, Sam Walton started Walton’s Five & Dime to support his wife and children, and his only work experience was as a clerk at J.C. Penny. When that store was successful, he decided to open another. “Maybe it was just my itch to do more business,” Walton later said, “And maybe, too, I didn’t want all my eggs in one basket.” Sometimes a business is the result of needing money, and seeing something work out.

Example of Amazon — “Bezos first got the idea to start an Internet enterprise in 1994. While surfing the Internet in search of new ventures for D.E. Shaw & Co. to invest in, he came across the statistic that World Wide Web usage was growing by 2,300 percent a month. Bezos immediately recognized the expansive possibilities of selling online and began exploring the entrepreneurial possibilities of developing an Internet business. He drew up a list of 20 potential products he thought might sell well via the Internet, including software, CDs and books. After reviewing the list, books were the obvious choice, primarily because of the sheer number of titles in existence.” Bezos wasn’t sitting in his Wall Street penthouse thinking, “if only I could get the internet to send me the books I so desperately want.” He recognized the potential of the internet, and ideated.

Example of PayPal — Eric Jackson wrote a book about PayPal and recalled a motivational speech Peter Thiel gave early on: “We’re definitely onto something big. The need PayPal answers is monumental. Everyone in the world needs money — to get paid, to trade, to live. Paper money is an ancient technology and an inconvenient means of payment. You can run out of it. It wears out. It can get lost or stolen. In the twenty-first century, people need a form of money that can be accessed from anywhere with an Internet connection.” Their original idea was transferring money via PalmPilots, and nobody wanted it. But they had a core belief: people needed a way to transfer money digitally and so (Schwarting, cover your ears) they iterated.

So what was good about ‘The User Method?’

“In 2012, the Kauffman Foundation of Entrepreneurship published a study which analyzed data from ‘4,928 U.S. firms founded in 2004,’ and found that ‘46.6 percent of innovative startups founded in the United States that survive to age five are founded by users.’” It is 100% true that people who are users of their own product will most commonly be successful.

I could have sworn I heard somewhere on a podcast or in an article that Andreessen Horowitz loves to invest in “user founders.” I couldn’t find that quote anywhere so I guess I coined it. Congratulations to me. As an investor, I would want to support a user founder more than a “build-it-for-somebody-somewhere” founder. Marc Andreessen has said that as he meets with founders, often when he says, “I’m not sure I would ever use your product myself” it means “So long!”’

Seth Miller at Rapchat said, “It’s important that you use your product naturally as if you just discovered it on the web or in the app store and don’t force yourself to use it for testing or because you built it. If you can’t find yourself wanting to naturally use it then head back to the drawing board and figure out why.”

When that person in my class said they were “anti-lean startup,” they were picturing the build-measure-learn loop as the way people START a business. And it may be true that the lean startup method is meant to iterate an idea, not create one. Hence, my rather click-baitey title for this article. Back to Thiel’s ‘Zero to One,’ he points out that “leanness is a methodology, not a goal. Making small changes to things that already exist might lead you to a local maximum, but it won’t help you find the global maximum. Iteration without a bold plan won’t take you from 0 to 1.” But Thiel isn’t saying don’t iterate, don’t interview customers. He’s saying those processes might be great as a process, but if you’re talking about inventing the future, it isn’t enough to make small incremental improvements. You have to dream boldly. And those dreams are more easily dreamed if you’re dreaming about what you yourself want out of the future.

Schwarting also spends a decent amount of time talking about why you should make your own product. And you absolutely should! So many founders get stuck in this trap of “I have an idea and I need a coder to build it for me.” I agree with Schwarting; that’s a bad idea. If you’re the ‘user founder,’ then you’ll FIND a way to build the thing you want, and that’s a good thing! “Being both the user and the maker not only enabled the founders to know exactly what to build, but also allowed them to make their products very good very quickly.”

Why ‘The User Method’ doesn’t invalidate the Lean Startup Method

Schwarting tells the story of a friend who thought he’d found a gold-mine with an idea to create an online wedding platform to host pictures, send e-invitations, everything! “He didn’t know what features it should include. He didn’t know how it should look. He didn’t know what would and wouldn’t be important to an engaged couple sending announcements. He thought he did. But in the end, it was clear he had been wrong.” As someone who has gotten married, and has sent invitations, I know that it is not a great experience, and it’s embarrassingly expensive. So couldn’t something like this exist? Maybe (Schwarting, cover your ears) he could have ASKED a customer.

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The build-measure-learn loop is at the center of the lean startup. The whole idea behind the lean startup is to develop a scientific approach to creating new businesses.

Eric Ries summarizes it like this: “Too many startups begin with an idea for a product that they think people want. They then spend months, sometimes years, perfecting that product without ever showing the product, even in a very rudimentary form, to the prospective customer. When they fail to reach broad uptake from customers, it is often because they never spoke to prospective customers and determined whether or not the product was interesting.”

The build-measure-learn loop focuses you on learning valuable insights. Even if you are inventing the future, once you’ve developed an idea, using this process is an effective means of getting at some solid answers.

Harvard Professor and ‘Innovator’s Dilemma-er’ Clayton Christensen sells this question-focused approach in his “jobs-to-be-done” philosophy. Basically, we all hire products to do a job for us.

The important takeaway is that the job YOU think the user is trying to hire the product for may not always be the job most people are trying to get done. If you follow the user method, true, you will have insight into that problem that you may not be able to get from an interview, and you’ll be more successful for it. But what if you’re designing MRI machines for children who are terrified of loud noises and tight spaces? Ain’t no user method gonna figure that out for you. The user method is a tool, just like lean startup is a tool. Design thinking, validated learning, prototypes, empathy interviews, all of these are tools. If you’re creating anything, but especially a business, you would be wise to familiarize yourself with the tools that are out there.

  • *If you support the toolkit approach to startups, and you liked what you read, give that little green heart a click. Tell the world.
  • If you’re interested in Jeff Schwarting’s even-longer-than-this-post response, you can see it here.
  • If you’re interested in my significantly shorter response to his response, you can see it here.