Is the lean startup dead?


The “lean startup” could be turning into a passing fad, according to one Montreal startup founder.

Last week we reported on Hopper, which was also recently named one of Apple’s best apps of 2015. The startup, led by CEO Frédéric Lalonde, took about six years before it released its travel app, which seems to be the talk of the town lately.

It took a lot of time, effort and money. In fact, Lalonde told us they spent close to $12 million preparing what would be their Apple-best, mobile-only platform for travellers to find the best prices for travel. It certainly helps to have sufficient funding, but Lalonde didn’t buy too much into the lean startup when the team started building Hopper in 2008.

“Back then everything was all about the lean startup, and a little bit of that has died down. The novelty of it has gone away and people realize that building a startup takes a decade now,” Lalonde told MTLinTech.

In Dispatches from the Future, Dan Kaplan talks about how the lean startup methodology was formed by Silicon Valley serial-entrepreneur and academician Steve Blank. It roughly goes as follows:

  • Come up with concept for a product
  • List out all of their core assumptions about the market for it
  • Go into the market to test those assumptions by talking to potential customers, suppliers, vendors, and technologists.
  • Take what they learn and pivot their concept until it resembles something the market wants, keeping lines of communication with customers going at all times.
  • Build a minimum viable product
  • Get the MVP into customers’ hands as quickly as possible.

Build a product fast and fail fast. Repeat.

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But well-known Silicon Valley venture capitalist and future-thinker Peter Thiel wrote in his book Zero to One that lean is “code for unplanned.” He equates the Lean methodology to “making small changes to things that already exist.”

To that, Kaplan argued that, in fact,  Lean methodology is brilliant. If more entrepreneurs understood it and applied it rigorously, fewer startups would fail. He even interviewed Blank, who had this to say about Thiel’s assertions:

“The goal of a Lean Startup is to minimize resources, time, and dollars, and maximize impact. I don’t know how you could disagree with that, but the best I can fathom is that Thiel has a visceral dislike of the word Lean.”

Could lean methodology simply be a recipe for certain types of limited-impact startups? One well-known Montreal startup founder said that lean methodology has always been great for developing “feature” startups, which, at first, do one thing only, followed by A/B testing towards other features.

“This method is hard to adopt if you are developing a startup that necessitates a large initial investment to get going, like hardware startups, certain big data projects and enterprise software startups,” said the founder.

Indeed, entrepreneur Michael Sharkey forcefully argued in VentureBeat that Lean methodology encourages “features” rather than whole products.

Another Canadian founder argued that Lean methodology is so prevalent that there’s increasing pressure on the part of the Silicon Valley venture capitalist culture, “Even if it’s not the best way for your business.” In this way lean is often taken out of context: businesses can’t simply be placed into a cookie cutter and expect to be successful.

“It’s almost like people lose their common sense and just follow the heard of startup life. Founders need to take the info, process it, and do what’s best for their specific business at the stage that they’re at,” said the founder, who noted there are obvious strengths to take away from lean methodology. Still, “people need to plan. And think further down the line then the next immediate milestone.”

Vincenzo Pallotta, a Professor of ICT, Project Management and Entrepreneurship at the UBIS University in Geneva, Switzerland, argued that Lean methodology actually “negates the importance of a business plan,” among other myths he attempts to dispel.

Whether lean methodology is ultimately an effective startup ethos or a fad blindly followed by the herd is too hard to know for certain: any simply google search will reveal countless arguments for and against it, to the depths of the Internet’s deep reaches.

Our question to Montreal founders is simple: how do you feel about Lean methodology? Tell us how it helped or hindered your company in the comments section below.

2 Comments

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  1. 1
    Frederic Moreau

    The question whether the lean startup is relevant or not is not the right one in my perspective. Because it is a methodology, not a recipe for success. Processing a business framework – the lean startup, the business model generation, etc – is like processing ASP.Net or Ruby on Rails. If you don’t learn it and practice it, you won’t be able to use it properly. Choosing a business planning appoach for an entrepreneur is indeed a dire necessity. And, Yes indeed, YOU NEED TO PLAN because building a startup takes time, like any business, much more than what we initially believe.

    Consider 2 key criteria to select your business planning tool:
    – the complexity of your valuable MVP. Doing your ‘customer development’ will take a very different approach if you want to build a rocket to the moon or a facebook add-on, right?
    – the personality & skills of the entrepreneur(s). You have to feel confortable using your business framework.

    You should also consider than you will change business framework along the road… and that’s fine. The more business savvy you become, the more sophisticated frameworks you can use to sharpen your competitive advantage. But I would say that in most cases, the lean startup approach is perfect to start off something. Also review the business model generation model , or if your startup is more mature (generates revenues) visit the agile methodology I designed and use with established businesses http://bit.ly/1OhK8CU. It’s free to use anyways.

  2. 2
    Stu

    People forget that Toyota spent two decades honing Lean product development and production to build a reliable car. No, they didn’t invent the car – they invented the idea that a car didn’t need to come with a mechanic.

    Like with anything, Lean isn’t the only method. But it is a hubris limiting process – it puts learning at the centre of your organization. You dont know everything about the market or your product and need to learn.

    Now, Lean isn’t about the genesis of truly brand new technology or science – that’s usually pure research and experimentation. Lean might help you identify that you NEED this new tech for your product, and might help you make it implementable as a team, but no process replaces human insight and ingenuity. At the same time, nothing is more common than dumping piles of time and effort into pure R&D that is never monetized. Customer Development and Lean is about building a BUSINESS on that new idea or new tech.

    Also most investors WILL NOT find startups that require basic research unless they’re in something like biotech.

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