Misinterpreting the lean startup theory can actually lead you to failure.
By Rebecca Goberstein (CEO & Co-Founder, OneDay.io)
If you’re in the startup world, it’s nearly impossible to not have heard of Eric Ries’ Lean Startup and Steve Blank’s customer development approach. If you haven’t, stop reading this and start reading the Lean Startup and the Four Steps to Epiphany!
There are great lessons in these theories. Like many profound philosophies, though, their teachings are often misapplied. And, like any gospel taken too literally, misinterpretations of their teachings can be dangerous and, sometimes, fatal.
As CEO and Cofounder of OneDay.io, which helps you curate, save and share visual itineraries with a click, I’ve heard a wide range of advice. Most has been incredibly useful, while some, I now realize, was actually (well-intentioned) misinterpretation of the Lean Startup approach.
Here are two of the most common examples:
- Don’t actually build anything until you know you’re on the right track.
- (Related) You know you’re on the right track if you get X signups / Y dollars from paying customers.
This advice is partly good and partly bad — and therein lies the danger. If followed blindly, you’ll lead yourself down an aimless path.
Let’s parse out the applicable from the less applicable:
The Applicable: Build Quickly and Validate to Test Your Solution
The lean startup approach encourages you to find creative ways to quickly test whether the hypothetical solution to the problem you’re passionate about fixing is on the right track.
For example, when we were testing the concept behind OneDay.io, we sketched out mockups by hand and put them in front of potential users. Then, we made changes based on their feedback and mocked the next version up in Balsamiq. We then put those mockups in front of potential users… and so on.
The Less Applicable: Using Quantitative Metrics to “Prove” Your Idea is a Winner
“You know you’re on the right track if you get X” tells entrepreneurs to not move forward unless they can get, say, 1,000 signups (a number frequently thrown around). But why is 1,000 good? In what time frame did you get these signups? Who are these 1,000? How do you know they’re the right users or customers? How much money did you spend to get all of these emails?
“Find paying customers first” isn’t always the right form of validation, either. Just because users sign up on a landing page with a price point doesn’t actually mean they’ll convert. And what if you’re making a platform play, like Yelp, Twitter or Facebook? People generally don’t pay to use a platform service and no company will spend ad dollars on a product with few users.
If the Yelp founders had waited for someone to promise to pay them before building something, there would be no Yelp. While the company has certainly had their own recent PR issues, they have obviously been doing something right:
Snapshot of Yelp’s stock growth over 5 years:
To illustrate how misinterpreting lean methodology can send entrepreneurs wandering, look no further than this conversation on Twitter:
As Eric Ries clarified, the lean startup approach doesn’t take the mystery out of entrepreneurship. There’s no way around it: At some point, you’re going to have to actually spend many months heads-down, building a real product, even if it’s just a couple months to get to a buggy MVP.
Three key takeaways to keep in mind as you apply the lean startup method:
1. Lean Startup Should be a Tool, Not a Crutch
Use the lean startup to help you find the best way to solve the problem that keeps you up at night, not to “prove” your idea or vision.
Ries constantly stresses to examine real data and avoid the very vanity metrics, like “get 1,000 signups,” that some encourage. Hunting for an easy win that shows only a mirage of promise is a waste of time. There is a scientific method to test whether your execution is working, but it’s much harder to quantitatively “prove” whether your vision is a sure winner, without executing it.
2. Define What You Mean By “Validation”
Validating your idea is critical, but you have to define what validation means for you and your business – and this doesn’t always come from quantitative metrics in the early stages.
I’ve found the most valuable insights at the early stage of a startup comes from qualitative metrics, supported by quantitative data. At the very beginning, you simply don’t have enough volume to get substantive, quantitative learnings.
TALK to people in your target audience and listen to their pain points. These IDIs (in-depth interviews) are something marketers have conducted for decades to help uncover the key insight that informs your strategy. This method is much more likely to help you confirm whether the problem you want to solve has potential.
3. Stop Looking for Easy Wins
There are no easy wins.
There’s almost always a long, steadily rising start to growth that no one likes to talk about, before it turns into that “up and to the right” hockey stick that gets all the glory. Hopefully, these lean startup principles can help you, a persistent entrepreneur, stay on the path that will eventually lead to that exponential growth.