Lean Startups

Why Startup Fails and What makes them succeed?

  • Its not the idea which makes one successful or unsuccessful.

  • The separating element is “pivot”.

  • Within every bad idea, there is a kernel of a good idea waiting to come out.

  • When an idea fails, you got to keep one foot rooted on the failed idea and put second foot into a new direction, which means, keeping the lessons learned from bad idea and looking for new directions to correct and improve on that.

  • Now - that forms a zig-zag pattern in which old ideas give birth to new ideas but at the same time, new ideas are slightly different (in approach, in form, in direction) than the first one.

  • Here is where the crux lies, if you are able to create those “ZIG-ZAGs” quickly, you are able to improve on your ideas quickly and before we run out of money!



Example

Startup #1

A good plan?

  • Starting a company with compelling long term vision

  • Rise plenty of capital

  • Hire the absolute best and the brightest

  • Hire and experienced management team with tons of startup experience

  • Focus on quality

  • Build a world-class technology platform

  • Build Buzz in the press and blogosphere

Reality!!!

  • Starting a company with compelling long term vision

  • Rise plenty of capital

  • Hire the absolute best and the brightest

  • Hire and experienced management team with tons of startup experience

  • Focus on quality

  • Build a world-class technology platform

  • Build Buzz in the press and blogosphere

Results

  • $40 Millions Dollars Lost!

Reason of Failure?

  • Concealed by “shadow beliefs” that destroyed the effort of all those smart people! These beliefs were

    • We know what customers want.Proven False! Entrepreneurs have reality distortion field which makes them think what they are building is what is actually desired and needed by users.

    • We can accurately predict the future.Proven False! Entrepreneurs had believed that system will be highly demanded and there will be millions of users looking to use it. Thus they created super-strong infrastructure which was never used and worse, it was too bulky to be changed if a change was needed.

    • Advancing on the “plan” is progress.Proven False! Enterpreneures end to focus and exert their energies in achieving the milestones and meeting deadlines well without looking at the plan was taking them in right direction.

Startup #2

IMVU - Plan that worked

  • Shipping in 6 months and the product included

    • 3D

    • Instant Messaging

    • Social Networking

    • Virtual Currency

    • User Generated Content

    • Blogging

    • Photo-Galleries

    • and everything in working condition!

  • Charged from day one

  • Shipped product multiple times a day (IMUV was shipped upto 50 times a day using Continuous Dode Deployment approach)

  • Outcome

    • Product Sucked! not just in the eye of customers but also in the eyes of developers  - but - even then it worked as compared to first startup which in developers understanding was gone well but factually flopped miserably.



This is where we have another question - WHY? Why did the first product which was built well flopped and miserably so but the second project which in developers understanding sucked but was able to generate a cycle and a beginning.

 

Is there something hidden? A pattern of success which existed in both projects and which in both cases was responsible for the failure and later a success?

 

The common thread, the theory behind this success is termed as “Lean Startups”


So what is Lean anyway?

Here are the golden principle of Lean

  • Lean uses commodity technology stack (free, open sources)

  • Customer Development(ability to discover what customers want before it is too late)

  • Agile Product Development (but tuned to Startup Condition)


Reference for Customer Development: Four Steps to Epiphany by Steven Gary Blank.

Reference to Lean Startups:  http://theleanstartup.com/book

 More to follow soon.