

Lean - cwan
http://www.avc.com/a_vc/2011/09/lean.html

======
spenrose
Is it just me, or does the timing sound like the tech boom/bust cycle which
could be expected to affect the results of all VCs, fat or lean?

"In the first two or three years of Flatiron, it was basically just me and
Jerry. We were deeply engaged in all of our investments and we had one or two
employees other than ourselves. We did very well in that period. In mid 1999,
we went on a binge, raised a huge fund ($350mm), moved into a massive office,
hired a staff of 25, made investments we weren't engaged in, and got fat. We
did poorly in that period. We shuttered Flatiron in 2001 and I took over the
entire portfolio with the help of Jerry and Bob. It was basically back to the
early model. We did very well in that period."

~~~
larrys
Exactly. But even if that weren't the case business is about risk taking. They
did poorly because the market tanked and/or they made bad bets. Had neither of
those two things occurred the offices and the people would have been fine. (A
rising tide and all of that.)

What he is really saying is that there is less risk with less people since he
can more carefully manage the risk when he doesn't have a hand in so many
pots. And that works in that type of a business. It's certainly not what the
investors of groupon want.

That being said if Fred didn't spend time writing a blog he would have more
time to manage more investments. I'm sure he devotes many hours per day to
that blog. But he has decided he is happy with the amount of deals and
activity he is doing right now and the other benefits he gets from blogging
(attracting better deals and potential celebrity).

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jonmc12
Something amused me about this post - its a bit like a diet guru flying to
Somalia and extolling the virtues of a low-carb diet.

Innovation is born from constraint. Entrepreneurs are relentlessly resourceful
because they have to be - not because they can be.

When a VC firm runs on a minimal team, its because it is the preferred model
out of many choices. When a startup runs on minimal resources, its because
they have no other choice.

The point of lean startup is to focus on learning about customers, and use
every conceivable resource to evolve the product team's understanding of how
to deliver a great user experience. Things change when the organization
becomes well resourced - its not about saving up your pennies anymore to
figure out how to learn - its about allocating the resources you have most
efficiently to achieve a goal (Occam's razor).

Fred writes awesome posts, but being lean out of necessity will always create
a different culture than being lean as a choice and the article did not make
this very meaningful distinction.

~~~
wpietri
I think being lean out of choice is substantially superior. If you're lean
only out of necessity, then you're in deep trouble when necessity vanishes.

Even in a startup where you're lean by necessity, there are plenty of
opportunities to be more efficient still. That's especially true when you're
talking about long-term efficiencies. Being lean in a considered way means
you're more able to avoid the sort of penny-wise, pound-foolish decisions that
a low bank balance can encourage.

~~~
jonmc12
I didn't mean constraint in the sense of not having capital - more in the
sense of not having enough resources (people, connections, knowledge, skills,
time, capital, etc) to overcome the external obstacles your perceive on the
way to accomplishing the goal of the company.

You can have plenty of money in the bank and still be in a business where you
need to capture a huge market that is cost prohibitive before the company is
sustainable. Or perhaps fend off a competitor with more resources at their
disposal. That is constraint, that is necessity vs choice - this kind of lean
culture requires throwing everything you have at the problem plus getting
clever to make up for the resources you lack.

------
wpietri
For fellow developers worried that "Lean" is just a buzzword, I've got two
books to recommend:

"Lean Software Development" by Mary Poppendieck. Talks about what Lean
Manufacturing principles look like when applied to software development:
<http://www.amazon.com/dp/0321150783>

"Toyota Kata" by Mike Rother. Nominally about Toyota's personnel management.
Actually about the philosophy behind Lean, and how most American companies
trying Lean are missing the deeper point.
<http://www.amazon.com/dp/0071635238>

To me, Lean is what you get when engineers think sufficiently hard about the
nature of business. It is deeply different than the MBA dogma that passes for
business thinking in the US.

~~~
igouy
Why are a couple of books any kind of evidence that "Lean" is more than a
buzzword?

Airport book stores have many buzzword books for sale :-)

~~~
wpietri
This may come as a surprise, but if you open a book you will find it has
contents. You can even read them if you want. It is the contents of those
books I was referring people to.

~~~
igouy
Perhaps you find the idea of clarifying your comment surprising and that's why
you respond with sarcasm.

Why do you think - _fellow developers worried that "Lean" is just a buzzword_
\- would be willing to invest their time reading books about something they
are already worried is just a buzzword?

~~~
wpietri
Because some people know the difference between leaping to a conclusion and
learning a little something before they make up their mind. And because many
developers would sincerely like to improve the way they work, giving the
motivation to seek out new approaches.

~~~
igouy
We have limited time. There are more new approaches than we have time to
evaluate. Should choose which approaches to evaluate based on whether
someone's selling a book and a training course?

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betterlabs
Great post and something that is necessary to make sure that the "lean
movement" is not perceived as something brand new that was not known to any of
us earlier. Eric and Steve have done a stellar stellar job of "teaching lean"
and making it easy to understand. But lean has existed in product development,
engineering, operations and other functional areas for a long time and the
successful people have done these exact things for a long time. But it was
never before as well defined and given a name - which Steve and Eric done so
brilliantly.

------
iradik
I feel like you can substitute the word "better" for all occurrences of "lean"
in the article and no meaning is lost.

------
NY_Entrepreneur
Lean versus fat is not the question. The question is smart versus foolish.

Just how to write software and how to do an information technology (IT)
startup have evolved over the past 10-20 years due to (1) much more capable
computers for much less money, (2) great progress in 'infrastructure'
software, (3) the Internet, and (4) the broad idea of the 'social Web'.

So, it's possible to have a rough, maybe 'social', 'business idea', write some
prototype code, see how well users like it, revise, iterate, etc.

However the old approach can remain an opportunity: Pick a big problem where a
much better solution would be very valuable; find a good solution, even if
implemented in software, possibly based mostly not just on routine software,
wrap the solution in whatever user interface is needed, and present the result
to the people who wanted the problem solved. Here are not really 'in search of
a problem users would like to have solved or a business model' and, instead,
did pick a good problem to begin with. Here 'lean' with lots of 'pivots' and
'iterations' is not very appropriate, and the 'lean' movement doesn't bring
much that is new and good.

