Lean Startups fail for these 3 reasons, but they didn’t tell you in the book

https://medium.com/what-i-learned-building/16f6de3b7512

by daegloe • 13 years ago

113 39 13 years ago

Comparatively speaking, it's easy to find a genuine need in a marketplace. It's much harder to build the right solution to that need. A certain class of startups fails because they builds hammers, and then goes looking for nails. But others fail because they find a nail, then build a screwdriver.

danthewireman• 13 years ago

Building a popular solution seems to be even harder than building a right one, and that seems to be the real goal, in terms of financial success.

jonnathanson2• 13 years ago

With respect, I think we're saying the same thing here and just getting a little caught up on the semantics. It's hard to become a "popular solution" without being a "right solution" for a significant number of people. Right x scale = popular.

While it's possible to become popular without being right, that's not sustainable. So, for all intents and purposes, I'm equating "right" with "popular" in this case.

Of course, there's a whole lot that goes into making a "right" idea a popular idea, and that's nontrivial. Did not mean to gloss over that. But my broader point was about how coming up with a right-fitting solution is much harder than identifying a need in the first place.

taskstrike• 13 years ago

Team matters so much more than anything else. You can apply lean startup perfectly and have a team that just can't execute.

I am wary of methodology driven startups vs a great team tackling a general idea/market.

progx• 13 years ago

It is a mix of many things, a good team is a prerequisite for building a successful business. You need a good idea / product / service, a good implementation, communication, money, contacts, attention, and many more. But all this things have one thing in common: hard work of the founder(s).

We can always speculate why one business fail and another win, i think it depend only on the founder and their decisions (right time, right place).

mindcrime4• 13 years ago

I am wary of methodology driven startups vs a great team tackling a general idea/market.

Those aren't mutually exclusive. How about a great team, employing a great methodology, pursuing a general idea?

saraid2162• 13 years ago

Perfection is always ideal, but if you find a great team player who just doesn't believe in your methodology, which do you pick?

parasubvert2• 13 years ago

This felt like a Broscience article targeted at Startups instead of bodybuilders.

Tl;dr 1. the founder(s) quits too early due to lack of conviction ; 2. the founder(s) don't understand how to fundraise or company-build; 3. The venture capital market is in a period of risk aversion. And some stuff about how amazing Sean Parker is.

His controversial line is "Startups do not fail because they build products that nobody wants". And he is using his own taste as a barometer of "want". Sorry , it doesn't work that way.

seiji• 13 years ago

This felt like a Broscience article targeted at Startups instead of bodybuilders.

That's the best way to put it. It would make a great "Startup GQ" or "Startup Vanity Fair" article.

If you're not currently trying to raise a multi-million dollar round: skip this article and keep building good things. It's written for a very narrow group of people going through a very specific point in the startup lifecycle—don't waste your precious waking time reading about or comparing yourself to things not relevant. (The voice of the post makes me feel inadequate for not playing The Game (startup edition) because other people are hustling/cheating/ruining themselves to be hip to the scene and I'm still not an acquihire failed-product millionaire.)

I wanted to like the post, but it comes off as a personal "rich man has to deal with kids, thinks most people aren't being dangerous enough, wants people to risk more of their lives instead of playing it safe." It's about 6500 words of slightly incoherent rambling of personal bro anecdotes after the first three points.

krmmalik4• 13 years ago

That's the second time i've read the term "BroScience" today but i still don't understand what it means? Can you share some insight?

dasil003• 13 years ago

I'd never heard the term, but I immediately understood it in context. It's the presentation of an opinion as being based on logic when in fact it is based on a masculine over-confidence and projection of power.

saraid2162• 13 years ago

http://www.urbandictionary.com/define.php?term=broscience

I am vaguely bothered that such a term was necessary.

filip012• 13 years ago

Agree. He seems to struggle with how to interpret the "want" part of of "make something people want". The point of this sentence as I've learned the hard way through sales, pain points etc is that "want" and "should want" are not the same things.

Even though Francis Pedraza's intuition says that people should want something, it's not certain that they actually do (and will pay for it). For example, my intuition tells me it'll be really difficult to build a business around his Everest app but if there's something to learn from Lean it's that intuition rarely is sufficient. (And I'm sure the Everest team proves my intuition wrong with good growth and feedback).

Though, in general, I love visionary startups and founders but I don't think that a grand vision should be an excuse for not validating the value and growth hypothesis.

And of course he has a good point in that startups often need many iterations to find the exact product that their customers want and since these iterations can be painful it's very helpful, if not necessary, for founders to be vision driven.

savories• 13 years ago

Thanks for summarizing this. It was painful to read so I stopped and was hoping for a tldr in the comments.

Medium is already becoming riddled with linkbait.

pbreit• 13 years ago

A lot of good observations and passages but ultimately difficult to digest. There is certainly plenty of room for lean startups but thank goodness for Uber, et al.

badclient• 13 years ago

You know lean start up has serious flaws at least in how it's being taught when you see two companies attacking the same market/product only to see one company die with the conclusion that there isn't product/market fit.

Lean is big on experiments and sounds great in theory but as a complete system it is very lacking.

mindcrime4• 13 years ago

There's definitely a disconnect somewhere, because half (or more) of the people writing about Lean Startups, Customer Development, etc., clearly don't get it at all. I'm almost at a point where I'm not going to bother reading any post that mentions "lean startup" or "customer development" in the title unless the domain is steveblank.com.

I think part of the problem is that the "lean startup" approach inherits a lot of (or all of) Steve Blank's "Customer Development Methodology", and CD is not a quick and easy thing to learn. I mean, the basic gist of it can be taught in 5 minutes, but the actual methodology is very elaborate and detailed. But if all you read is the "Lean Startup" book, or a few blogs on the topic, and don't actually sit down and read The Four Steps To The Epiphany (or The Startup Owner's Manual) directly - and probably a few times - you probably don't know enough about the topic to really use it, or comment on it.

For perspective, I'll offer this: I first read TFSTTE about 2 years ago, and have been incorporating the approach into what we do at Fogbeam Labs ever since. I've also read the Eric Ries book, and several other titles on the topic, and a ton of blog posts on the topic. I've also attended Lean Startup Circle meetings and follow the LSC mailing list. And I'll still quickly admit that I have a lot to learn. I think I could teach the basics to somebody else right now, based on what I know, but I'm not even close to being a real expert on this. And I've been at ground-level, actually implementing this (albeit not full-time) for two years or so..

It's a bit like Agile Development in a way... "Lean Startup" and "Agile Development" have both become trending buzzwords that are often flaunted by people who don't really understand all the depth and nuance of the topic, which results in an inevitable backlash (also by people who don't really understand the topic in any depth).

lazyBilly• 13 years ago

There wasn't as much "lean startup" in this article as I would have assumed via the title. I don't know that I necessarily agree with the final assertion that the "lean startup" is dead. I honestly see, rightly or wrongly, a lot of VC's, YC included, moving towards a more lean and mean, revenue-centric model as capital markets get more conservative. Which is strikingly similar to a lean startup. Then the question becomes, if you're profitable, can the acceleration provided by VC capital push you over the top? Lean B2B plays aren't necessarily the kind of internet land-grabs we've recently seen out of the valley.

rburhum• 13 years ago

Thank you for the article. It was a great read.

About other comments, don't worry too much about them. Everybody that doesn't run their own company is an expert in startups these days.

phr4ts3• 13 years ago

The author of the article was attacking someone or something that people believe. It's expected he'd be attacked in return.

My bet is that the author of that article has either not read the book "lean startup" or he flipped quickly through the book like i did his article.

mindcrime4• 13 years ago

The entire Lean Startup school of thought is based on the premise that most startups fail because they build products that nobody wants.

That's not even really right. It's more of a folksy and over-generalized statement about the Lean Startup approach. You can fail in any number of other ways: developing a product that people do want, but not knowing how to reach the customers to let them know it exists; developing a product that people want but not at a price point that people are willing to pay; developing a product that people do want, but that isn't sufficiently differentiated from the competition (including its substitutes, or the status-quo); etc. If you read The Four Steps To The Epiphany - one of the seminal works that the Lean Startup approach is rooted in - you'll see that there are steps in there for dealing with all of these "other" issues: pricing, distribution, marketing, etc... This definitely goes beyond a simplistic "you built something nobody wanted" scenario.

vgoklani• 13 years ago

This article is too damn wordy, I kept scrolling, and it just kept going on and on ...

phr4ts3• 13 years ago

The guy should focus on novels. He's not using his talent properly.

krmmalik4• 13 years ago

I've worked with a fair number of Start-Ups as well. My observations have been very different to the article - not that i read it all; it was rather incoherent.

Not every Start-Up i've worked with has had the same issue, but these are my general observations.

1. Founder doesn't release product early enough due to an inherent fear of vulnerability 2. Too much focus on getting investment instead of gaining traction. 3. Too busy building systems instead of solving customer problems 4. Dysfunctional Team or poor working culture.

rdudekul• 13 years ago

Your points do ring true.

Here are a few more mistakes founders make:

1. Resistant to talk to target market

2. Focused on adding more/better features

3. Involved in pleasing one or two early customers

4. Taking nay sayers seriously

5. Losing steam at later stages when growth does not happen as planned

krmmalik4• 13 years ago

Could you elaborate on the 'taking nay sayers' seriously?

vlokshin• 13 years ago

Yes, the article was lengthy and a bit all over the place -- but the general negativity towards it in these comments is a bit much.

My assumption is that the author is not a hardcore engineer by trade, but it's apparent that he's got a decent understanding on the inner-workings of an industry we're all a part of (or trying to be a part of).

Engineers need to pair with thinkers like Francis. To me, he seems like an amazing compliment to a conservative engineer.

Lengthy read? yes. A bit incoherent? Maybe. "A Broscience article targeted at Startups instead of bodybuilders"? No. That's plain "'ignant".

phr4ts3• 13 years ago

"Yes, the article was lengthy and a bit all over the place" - Very true.

"author is not a hardcore engineer by trade" - you don't have to be an engineer to value objective reasoning.

The lean system is simply the application of basic scientific principles to business.

The principles are:

1. Formulate Hypothesis

2. Test Hypothesis

3. Pivot

In the book adapt - why success begins from failure, you would get why the word "lean" was chosen.

It's because of survival. If you bet the whole farm and your bet is wrong. It's game over. That's why the lean system admonishes that start-ups try small experiments.

parasubvert2• 13 years ago

Francis claimed he knew the three reasons why Startups really fail and claimed that Startups almost never fail due to "not building something people want". Thats rejecting product/market fit. This contradicts years of advice from people who have been there: Blank, pmarca, Ries, even pg, etc. This requires a heck of a lot more evidence than an incoherent essay for a magazine. Hence, broscience.

I also spoke as someone who helped lead a startup past Series B prior to an epic crater. Product/market fit was mistake #1. I could argue Francis' reason #2 played a role in not keeping the corpse animated - we had serious company-building problems, for example.

I don't know Francis and don't mean to be cruel, but I had to tell it like it is: I had a flashback to my days reading long screeds on bodybuilding.com. The article was well-intended and had some glimmers of good writing. It just felt like a let down for such a provocative headline, length (time commitment), and that someone with clearly good observational skills seems to miss key gaps in his world view.

As Orwell would say, "To see what is in front of one's nose is a constant struggle." We all have that struggle, But not all of us write for online magazines :-)

antitrust• 13 years ago

It seems to me that startups fail for one or more of these two basic reasons:

(1) The product can't make money. (Corollary: at first, the product only needs to convince investors it can make money, and then it can be sold to large web firms for great profit.)

(2) The firm can't complete the product.

I have seen all combinations of the two above.

I think the tendency on a lot of self-help websites is to try to give advice for accomplishing a product according to what has worked for other people.

However, any startup is a business, and the principles of the two rules above still apply: find something that you can sell, and then find a way to accomplish at least a 1.0 version of it.

liquidise• 13 years ago

It has been many years since i have taken latin, but i am still struggling to understand his usage of "a priori". Am i reading this paragraph wrong?

stephanerangaya• 13 years ago

TL;DR of this article:

Startups fail for three very different reasons:

- The founder is not playing a big enough game, does not have enough conviction, is not confident enough in how BIG his idea is, and is not aggressive enough in execution, ends up quitting too early because he doesn’t have enough money to pay rent and groceries. Needs a Sean Parker.

- The founder does not understand how to do company building and fundraising. Needs a Matt Cohler.

- There is a capital markets problem (opportunity!) and there is not enough risk capital available.

jheriko2• 13 years ago

this brushes over the most obvious reason and its evidence almost immediately.

i've always felt that taking other people's money, i.e. venture capital, before you have a viable (i.e. running and profitable) business is almost certainly a bad idea and its indicative of desperation. its a massive and risky shortcut in many cases.

nobody i know who was successful in business even entertained the idea, let alone did it. they saved money, scraped it or just poured their spare time in to succeed. starting out e.g. £100k in debt but with £100k in the bank just sounds dangerous... in my experience people are terrible with money, especially if its not their own in any way...

if you start properly without taking other people's money in the form of loans, credit or venture capital then failing is exceptionally difficult regardless as to anything else...

jheriko2• 13 years ago

(although actually there are many examples where the prerequisite money is needed - this is where you should realise you are not equipped to start your business and learn how to make money before trying to - you aren't automagically entitled to a chance to fulfil your dreams - you need to earn it and it might actually be impossible, deal with it)

freework• 13 years ago

I think to be a successful startup, you need to exist somewhere between 'grand visionary' and 'lean'. The startup I work for now could be described as a 'grand visionary' company. Our CEO is a very wealthy non-technical guy who is self-financing his 'vision' of what he thinks a travel website should be. The company is definitely going to fail (as do 99% of all startups), mostly because this 'vision' is extremely complicated, muddy and at times incoherent.

On the other hand, some companies are the opposite. They are some companies that are completely driven by A+B testing. They 'pivot' to a completely new idea every other week. These companies all end up doing some kind of project with the word 'analytics' somewhere in it. These projects are almost always crap, and their success is mainly tied to how aggressive their sales/marketing people were.

Being 'lean driven' is a bad idea, but abandoning all lean ideals is worse.

Lean Startups fail for these 3 reasons, but they didn’t tell you in the book

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