Those who run in #LeanStartup circles know too well the problems encountered with language. Eric Ries, Steve Blank and others are criticized for choosing terms and phrases — lean, customer development, MVP, fail fast, etc. — which unintentionally lure would be startup entrepreneurs into thinking about things Wrong and then doing them Wrong. Lean means don’t take money, “don’t you really mean market development, not customer development,” minimum viable product should be minimum desirable product, one doesn’t really want to fail fast, that causes entrepreneurs to screw their investors or not persevere.
While the critics make cogent arguments, there’s an implicit assumption that different words would not be subject to similar critique from a different angle. It’s generally not helpful to remove phrases from their context and critique them standing on their own. Doesn’t “viable” contain “desirable?”
I tell you all this, however, because I’m about to do the same thing.
Don’t Think Big
“Thinking Big” is used as panacea to the menace of “feature” startups, who are merely “copycat” companies that often embrace the leanstartup “formula” that forces them to have “small ideas” and seek to “flip,” thereby leaving their investors in the lurch. Thing is, markets determine the size potential of the business and many startup entrepreneurs mistakenly believe “think big” means go for a big market. Tragically, a small idea attracts a small market no matter how big the market is you go after. Thinking big doesn’t change a small idea into a big market.
Do you see what I did right there?
Truthfully, people who exclaim “Think Big” mean go for big ideas. But do you know why the “startup curve” leads with the TechCrunch bump? Because the founders were “thinking big” regardless of the size of their idea. Do you know why a few startups survive the bump? The sage Fred Wilson says:
It turns out, like most success stories, the answer [for success] was simplifying the service. Taking features out. Reducing the value proposition to a clear and simple use case. This was not done in a vacuum. This was done by releasing a less than perfect product to the market, finding a few customers who wanted a less than perfect product, and then listening carefully to those customers to get to the ideal product.
That’s right, they succeed by thinking small. Product-market fit happens first in sub-segments. Understanding the core value proposition for hyper-sub-segmented markets is where you’ll find strong market signals. You can’t go big without winning small first. It’s impossible. The top of the funnel is not filled in as quickly as the bottom no matter how fast you pour the water.
Sean Ellis writes: “[S]tart by focusing the majority of your energy trying to create at least one must have use case.”
To understand a “use case” you must properly and even obsessively segment your market.
Think Disruptive
What critics of me-too startups (criticism that I think is unwarranted, btw) really mean is: Think Disruptive. Don’t be sustaining innovation. Change the world. I’m all for that, though all startups have their place in the ecosystem. (If we grow the bottom of the startup pyramid, we’ll get more disruption at the top.) When you have thousands of new startups, the fact that most founders focus on problems they experience shouldn’t be surprising. What would be surprising is if it were true that if they simply thought a little harder, they’d be able to come up with ideas that are truly disruptive.
Most truly disruptive innovations come out of scientific or engineering disciplines and though they’re not very visible to the startup community, tens of thousands of people are working on them. If Universities had better lab to market programs (e.g., where they’re taught doing rather than merely writing business plans, or licensing technology to dinosaurs), we would see more disruptive activity. Investors focusing on hugely promising technology is a good thing, too.
Disruption is often stumbled upon. Experimentation is a good way to lead to lucrative stumbles.
Like other startup people who hear a lot of pitches, I do tire of hearing similar pitches and the mobile app equivalent of a bridge to nowhere. But hey, if any of them happen to succeed, it will likely be because they nailed the value prop for a market segment that eventually proved big enough.
I think if we start a jar and stick a dollar for every pitch that product pitch that targets “everyone” we’d have a hell of a pizza party.
ain’t that the truth!
Language is coarse, easily misunderstood, and readily co-opted.
It might be better for us to draw pictures, then at least you’d force the critics to look at something other than a catch-phrase on which to base their critiques.
“Thing Big” –> “Big Impact” –> “On people” –> “Leading to fame, wealth, world peace, etc.”
“Think Small” –> “Focus” –> “On people” –> “Leading to nailing a problem” –> “Leading to thinking Bigger” –> (repeat until…) –> “Think Big”
Dave: I really like this idea of using drawings and pictures to describe new markets and early stage business models. I worry that the old 13 slide VC pitch deck (with the obligatory hockey stick growth curve) has morphed into the 10 box Osterwald model with a 3 column Kanban table. Do you have some examples of sketches you found helpful in describing early business models?
We did a refinement of the crossing the chasm model where we represented the far side of the chasm as a set of circles of different sizes and color that ranged from white to dark red. The size of the circle represents the rough size of the market and the degree of red the amount of pain (or dissatisfaction with status quo). See http://www.skmurphy.com/blog/2007/05/01/crossing-the-chasm-look-for-a-niche-in-a-lot-of-pain/
I also like your “Luck = Preparation x Opportunity” in http://blog.usermood.com/post/13613637613/extending-agile-applying-customer-development-to Have you thought about combining it with Jasons Roberts “Luck Surface Area” model Luck = Telling x Doing http://www.codusoperandi.com/posts/increasing-your-luck-surface-area (I mention this because he illustrates it with a thought provoking picture).
I like that chart.
Interesting. Yes, I like the Luck Surface Area concept – reflects my own experience. And I do think that pictures aren’t just nice illustrations, but wind up being fundamental to deep understanding.
Sean,
We have used Lego for the same reason. See my recent blog articles on the subject http://blog.scurri.com/2012/02/25/building-a-lean-startup-using-lego/ and http://blog.scurri.com/2012/03/22/the-lego-lean-startup/ We found it really helped us get in a bit deeper!
Serious question: are you into “visual thinking?”
Brant, yes, I am.
Even a brief look at the current lean startup concepts (or Agile concepts before that), shows how quickly words can be morphed into whatever the speaker wants them to mean.
It’s much harder to do that with pictures. And pictures with a few words bring the right and left brain together. No coincidence ideas like “Crossing the Chasm” gained popularity – a core image that’s easy to grasp and remember, along with some labels.
Check out the book “Blah, Blah, Blah” by Dan Roam – it’s a great introduction to the topic. (And actually replaces his earlier books, Back of the Napkin, etc.).
Just a few days ago we were discussing with a colleague whether one should go for the really “Big” ideas or just “medium” ones. We concluded that big ideas are a better choice, on the grounds that they may be harder to accomplish than the medium ideas, but not proportionally so.
In other words, the expected value (probablity x payoff) of a big idea is higher than the expected value of a medium idea. That was the theory, at least…
Anyway, I fully agree that the path to the fruition of a big idea must be discovered through smaller ideas and niches. It’s less about building a business and more about discovering one, right?
P.S. caught your talk at scanagile 2012, and it was a good one, thanks 🙂
Thanks, Ville. Question is, by big idea do you mean big market or big disruption?
Well said. I can’t stand all the “go big or go home” chatter in the startup space. It’s a myth that’s perpetuated constantly.
Even Facebook started out as one web app for one school. What it is today didn’t happen overnight. They just kept moving their targets to something they could hit every quarter. Small for them. 🙂
KickoffLabs (my company) started with a simple idea that’s now growing bigger in a way I know we can sustain the growth. (http://www.kickofflabs.com)
josh ledgard
Founder – KickoffLabs
Having learned the truth of your post through experience it rings painfully clear. However there is one thing that stands out for me more than anything.
I became a start up entrepreneur by accident, having a good idea, getting funding, working it through for 3 years, opening many doors but getting no revenue, all outside the loop of the start up community. In my analysis of what went wrong I began to find out about Lean Start Up, Customer Development methodologies etc. I also began to research the concept of Open Innovation in the UK, particularly how high tech spin out companies from university research labs are at the cutting edge of new commercial opportunities.
There are a growing number of businesses providing consulting into the open innovation space, but the large majority concentrate on strategy, the planning, the ‘jamming’, the idea generation, very few (none in fact that I have found) concentrate on the actual action required to research a new market, develop early stage customers, and grow early revenue.
Much of the analysis into barriers for open innovation (Government papers etc) highlight problems associated with the slow pace with which new technologies developed by research labs are matched with needs. There are many knowledge transfer networks set up to provide the framework for the match but still a disconnect between the idea, gathering early stage partners, identifying potential customers segments, and ‘getting out of the building’.
I’m in the process of starting a company to address this problem using (as you can see from my freshly minted blog), yes, you guessed it, a CustDev and Lean Start Up approach to move this forward. If you have any contacts in the UK who would be interested in collaborating on this I’d much appreciate the intro. Or indeed if there is any specific research that I can build into my approach that you would find interesting I’d be pleased to discuss.
I know CustDev and Lean Start Up is moving rapidly into the realm of the intrapreneur (as you plan to explore in your new book with Patrick, the Lean Entrepreneur http://custdev.com/the-lean-entrepreneur/) and therefore more accepted by the mainstream, so I’m guardedly excited about the potential for these techniques in the open innovation space.
Hmm. The notion of marketing to a narrow niche audience to spur growth and gain traction is largely a fallacy. Barwise and Ehrenberg, Waterman, Sabavala and Morrison have authored academic research that suggests that companies that hyper-segment face DOUBLE JEOPARDY. Not only do they have an inherent economic handicap due to a smaller pool of customers/users, but research proves that smaller niche audiences are less loyal, less appreciative, and more fickle when it comes to brand loyalty. I realize this research has been overlooked by a few recently acclaimed pop-culture authors. Ahem. But if you think about this contrarian research, it actually makes good common sense. Facebook only grew when they shifted their focus from one college to the general market. Neither Flickr nor Instagram focused on the narrow niche of “photographers.” Google targeted “the world.” What these companies DID do – they focused on creating real value, delivering great customer service, addressing a real market need. Prove it before you promote it – yes. But niche marketing doesnt always work; it can actually prevent you from achieving enough momentum to become lucrative or sustainable.
On a final note…disruptive thinking 100% of the time can be equally self-limiting. Simplification, reinvention, leveraging under-utilized resources, and incremental, continuous improvements can produce innovative solutions. Successful companies manage incremental and bold, disruptive initiatives simultaneously.
Have fun during this weekend’s Lean Startup event!
Hi Kirsten,
I think you’re missing a few key points —
>Hmm. The notion of marketing to a narrow niche audience to spur >growth and gain traction is largely a fallacy.
Brant was referring to simply “marketing to” narrow niche — but rather targeting and learning from an early adopter (as defined by Steve Blank) segment and leveraging that learning to cross the chasm, once it has been validated. Also, the context of this is a startup — which is radically different than large well-established companies with known business models.
>Not only do they have an inherent economic handicap due to a smaller >pool of customers/users, but research proves that smaller niche >audiences are less loyal, less appreciative, and more fickle when it >comes to brand loyalty.
Can you define “economic handicap”?
>I realize this research has been overlooked by a few recently >acclaimed pop-culture authors. Ahem.
>But if you think about this contrarian research, it actually makes >good common sense. Facebook only grew when they shifted their focus >from one college to the general market.
Facebook very successfully crossed the chasm — on that, I think we agree. They did so after they nailed the social networking value prop & use-cases.
>Neither Flickr nor Instagram focused on the narrow niche of >“photographers.”
>Google targeted “the world.”
I don’t you are correctly defining the segments that any of these former startups targeted either explicitly or implicitly.
>What these companies DID do – they focused on creating real value, >delivering great customer service, addressing a real market need.
Yes, on real value FOR A CERTAIN GROUP OF PEOPLE.
WRT customer service, I don’t know that any of the aforementioned are known for that.
WRT market need — definitely.
>Prove it before you promote it – yes. But niche marketing doesnt >always work; it can actually prevent you from achieving enough >momentum to become lucrative or sustainable.
As I mentioned earlier — niche marketing is not the same as finding a segment to validate a business model.
Interesting and provocative post because it made me think. I had two different interpretations of what you were saying:
The second one which I got from Patrick’s comments–that you’re saying the same thing as Steve Blank, and I paraphrase: focus on a narrow segment to understand customers as a preface to scaling later.
My second interpretation is based on the statistical and definitional reality that thinking really big in hopes of being BIG is a rarity. You have to have the “right stuff” at the right nexus of time and place. Even the genius requires “the occasion”.
But there sure are lots of startups with big hopes…I’d like to think that “thinking small” might be a way for more people, more startups to pave a way to success?
In either case, laser focus on the creation of the “must have use case” for a specific customer group which you work at intimately understanding–a “think small” proposition, the road to which may be paved with many curious, even nice-to-have “use cases”.
Or as Steve Blank said, you want to here the following: “Aha, if you could do that, my problems would be solved.”
I don’t know what the landscape ends up looking like. If big businesses swoop up lean startups who have successfully unlocked one or more beachhead market segments, they can’t kill the innovation or roll it up into bloatware without creating a new startup opportunity. Similarly, is it possible for one SaaS or mobile product to solve similar productivity problems for a mass of varied segments?
I came across your site while looking for some Lean Startup Presentations… you have some great stuff up on your site…
For me the lean start-up method makes a lot of sense, but only when it is used intelligently. With a pivot/ re-pivot mentality companies can easily take the beauty out of their products and make something “everyone likes”. The logic is simple a tweak here and tweak there and we’ll get something everyone likes.
It is my personal opinion almost all successful products polarize people. That means some people will love it and other will hate it. A product everyone likes is usually one that no one will love…
Make sure when you are thinking disruptive, make sure someone hates your product and don’t try to please everyone…
Hi Patrick — your response to my comment is hard to follow due to your odd formatting. Alas, your site didn’t notify me that you had responded to my comment.
Regardless, numerous academic research studies have proven that niche marketing is not the path to profitable success — neither for corporations nor startups. The existence of “exploitable niches” is rare in today’s market. When niches do exist, sharks will sense the opportunity and rush to join you. A blood bath ensues.
The key to success is a startup is not niche marketing — it’s solving a big world-changing problem, demonstrating traction, and great execution. You need to transition quickly from a specific niche to mainstream appeal if you want to scale.
I won’t get started on my take on Lean Entrepreneur’s nonsense MVP tenants or Eric Ries’ overhyped 366 pages of obvious. Having helped numerous startups achieve profitable exits, I know first hand that the concept of “minimum viable product” is death by a thousand papercuts and the practice shows complete disregard for what truly makes a product scale: customer delight (even in tiny measures).
Best to you always.
K.O.