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...
:-)
Is the Lean Startup Dead?
71–80 of 246 posts
Re: Is the Lean Startup Dead?
#72As 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, e…
> 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.
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Re: Is the Lean Startup Dead?
#73I 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 regulat…
>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…
A more concrete example is MS-DOS which wasn't written by Gates+Allen. It was purchased for $75,000 in 1981 ($207,925.74 in 2018) and a job.
Re: Is the Lean Startup Dead?
#74I 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.
Re: Is the Lean Startup Dead?
#75The 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 an…
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.
Re: Is the Lean Startup Dead?
#76Earlier quoted context omitted.
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.
> 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 int…
Which unicorns are not companies that were pursuing high-growth, or that were trying to build a unique productbusiness model?
Apple? HP? Pretty much every Silicon Valley company that started with one or two guys in in a garage?
The definitions of "startup" and "unicorn" seem to be forever evolving. But at one time, both Apple and HP would qualify.
Re: Is the Lean Startup Dead?
#77To 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 o…
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.
Re: Is the Lean Startup Dead?
#78How 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?
Until a startup is obviously a billion-dollar entity (reasonably on track towards $100M+ ARR), it varies greatly based upon;
- Growth metrics (MoM, YoY)
- Following, absolute metrics
- How these metrics compare to others in your vertical
- Business thesis
- Total market size (needs to be gigantic)
- Strength of vision, ability to execute
- Ability to convince others of said vision
- Ability to attract, recruit and retain talent (investors, employees)
- Many more magical and unspoken factors that influence an investor's perception of you, individually
There are many, many different ways to optimize any specific signal here but realistically you're going to have to throw half of 'em away. With the exception being you can't really budge on market size or you're not VC-fundable. Some of the factors can be leveraged off of one another to improve the other. (Strength of vision -> ability to recruit, etc.)
$100k for 20% is a nightmarish Shark Tank deal for a lifestyle business that's generating sustainable revenue. As another poster mentioned, you're looking at $5k - $50k checks in the Angel stage. If you're on to something, with a product in market a reasonable hypothesis as to how it becomes a $B company, you're looking at starting to raise on SAFEs at a ~$4M Cap. At least, AFAIK, that's pretty standard absolute lower bound out of an accelerator or incubator (which will give you some credibility -- I might optimize towards that path first). Meaning you're assuming pre-money capitalization at a priced round of $4M or greater. You can go lower if investors really want to deal chase or it'll get the right person in. So, if you raise $500k on SAFEs and pull in $1M in total investment for a seed round at a $4M pre-money valuation (+$500k from a MicroVC or small VC check), you get diluted 20% in exchange for $1M (post-money of $5M).
Edit: should mention, YC's standard deal is $120k for 7% [1]. Other accelerators are more aggressive on the capital they provide / equity they ask for in exchange. I've skipped a step here and assumed you've been through an accelerator to raise at a $4M+ Cap, though it's not absolutely necessary to have gone through one -- but the accelerator deals are more in line with what you're asking about.
Re: Is the Lean Startup Dead?
#79I 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.
Re: Is the Lean Startup Dead?
#80Earlier quoted context omitted.
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 emp…
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.
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).