Entrepreneur

6 things wrong with the ‘Lean Startup’ model (and what to do about it)

Above: Eric Ries, founder of the Lean Startup movement

Image Credit: betsyweber/Flickr

I’m sick and tired of hearing about “lean startups.”

No offense to Eric Ries, who’s coined some very corporate Bingo-worthy phrases now enmeshed in Silicon Valley culture (such as pivot, minimally viable product, and continuous innovation), but there are a whole lot of things I think are wrong — dead wrong — with the entire concept. Here are a few of the problems:

The Lean Startup model encourages features vs. whole products

Silicon Valley is obsessed with companies that are built around a single feature, which appeals to a small number of acquiring companies. Think Mertado’s social shopping app acquired by Groupon or Summify’s social network summaries acquired by Twitter. It’s an epidemic. But customers, as opposed to acquiring companies, need whole products to solve their problems.

And at the same time, it seems that many entrepreneurs have interpreted the Lean Startup model as an excuse to rush incomplete or fractional products to market. The result? Lots and lots of companies built around a handful of features that matter to almost no one, least of all customers.

It prematurely burns out our team

The pace of continuous innovation required by an MVP model is daunting to say the least. Look at Intuit’s SnapTax, which is testing 500 innovations during the two-and-a-half-month tax period. If you didn’t do the math already, that works out to 11 tests per day! This pace is frenetic and sure to burn out your team.

Plus, it strikes me as a waste of a rockstar developer’s time. After all, A/B testing, or its near cousin multi-variant testing, is a known animal these days. In practice here at Bislr, we find that about 70 percent of the things we want to test are ultimately not going to make a big difference to the business. True entrepreneurship is about figuring out what the big levers are and developing a smaller number of meaningful tests around those levers.

These are hard products to love

Customers should be up in arms when their favorite app gets discontinued, yet there is a lot less grumbling than you might think. Lean products are by their very definition not deep. These are products that are not easy to love, which is why we find companies acquiring them only to almost immediately discontinue the product or service.

Perhaps tech guru Guy Kawasaki summed it best, when asked recently about his golden touch with products:

“A great product is deep. It doesn’t run out of features and functionality after a few weeks of use. As your demands get more sophisticated, you discover that you don’t need a different product.”

It devalues architecture

Companies that focus on MVP tend to skimp on architecture, which just makes sense. If you don’t have time to build a whole product you also won’t make the time to invest in architecture. Sadly, no decision about architecture is a decision, one that will determine your success or failure as a company.

Lots and lots of companies competed with Evernote in its early days. Some like Catch even came complete with a colorful user interface. But Catch is gone now. Why? In a word: architecture. Evernote built a whole product around enabling people to capture, store, and retrieve their Internet memories. Architecturally, the product was built to scale into multiple products and into a vibrant ecosystem that targets independent software vendors to build on top of its platform through a program Evernote calls “Trunk.”

It leads to the wrong discussion with your investors

I’m all for building companies that have multiple exit strategies. The IPO route is not right for every company. But building a company around a handful of features specifically so it can get acquired strikes me as just plain wrong.

If you are a founder, then selling out early can be a path to extraordinary returns, sure. But it’s incredibly unfair to the executives, managers, and individual contributors you brought in for the specific purpose of building the company to greatness.

It distorts the Valley’s hiring model in weird ways

I’m thinking here of course of Nick D’Aloisio, the 17-year-old founder of Summly that was recently acquired by Yahoo. Personally I don’t know anything about Nick, but I do know that $30 million is a sh*tload of money to pay for a 17-year-old as an acqui-hire.

Nick may well be the most talented developer on the planet (even if his frontal lobe isn’t fully developed yet), but how are we going to get the next Dropbox or Evernote if we take talent like Nick’s out of circulation prematurely? I think both Nick and his company would have benefited from more time as an independent company to grow into greatness.

So what is the Alternative?

Take the MVP model with a grain of salt. Most of the time, it fits in the earliest phase of the company’s lifecycle when money is tight and time to market is everything. Keep iterating, but not in a way that subjects your team to the risk of burnout. Build your business to last, not to flip to the first company that comes calling.

And when approached by a larger company interested in “acqui-hiring” you and your team, ask yourself if it’s really worth it. These are deals that won’t build value and have the potential to destroy it.

Michael Sharkey is cofounder and CEO of Bislr. He started his first business to impress girls. Instead, he unknowingly ignited a career in business that has spawned numerous successful companies. While still in his teens in Australia, he developed two businesses: a tradesman directory and an ordering system for the mining industry. During this time, Michael helped his brother, Chris, market his holiday accommodation startup, Stayz. Similar to HomeAway in the United States, Stayz later sold to Fairfax Digital for $12.7 million. Together Michael and Chris cofounded Sharkey Media, a marketing technology agency designed to help other businesses develop successful sales and marketing automation technologies. In 2011, Michael cofounded Bislr, which offers an intelligent marketing OS. Michael has been featured on TechCrunch, Wall Street Journal, CRM Magazine, Reuters, Sydney Morning Herald, and ABC News.


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