
Is the Lean Startup Dead? - axelfontaine
https://steveblank.com/2018/09/05/is-the-lean-startup-dead/
======
salt-licker
Overfunding is an existential risk for startups. Scaling a team before finding
PMF seems like a blunder in most circumstances.

Instead of setting your best engineers to work creating the best product,
they're busy recruiting and dealing with company growing pains from the get-
go. The mythical man-month and scarcity of great people combine to diminish
your returns on this hiring. Furthermore, battleships don't turn on a dime,
and you may be hiring a lot of irrelevant expertise if you have to pivot
later. This is why Stripe took 6 months to hire its first 2 people.

Furthermore, huge funding means investors are looking for a huge returns. A
$1b sale is now failure?? My gut says this "go big or go bankrupt" pressure
encourages tunnel vision among leadership rather than innovation.

Essential Products was overfunded in late 2015 and is already up for sale. I
think Magic Leap and Desktop Metal will end up as similar cautionary tales.

I see good arguments for overfunding if (1) there's huge capital costs for
development and high probability of large exit regardless of technology
success (e.g. biotech) or (2) you're trying to capture a market with a strong
network effect. The second case seems dangerous though, e.g. is Uber's
popularity really a moat? What if they had spent their billions on developing
a product with a real technological advantage instead of scaling to the world
first?

As a huge fan of his book, I'm sad to see Steve Blank largely ignore these
ideas in his article.

~~~
vkou
> Furthermore, huge funding means investors are looking for a huge returns. A
> $1b sale is now failure?? My gut says this "go big or go bankrupt" pressure
> encourages tunnel vision among leadership rather than innovation.

If you don't take the money, they will go to your competitor, and give it to
them instead.

If you're in a space where you can be killed by your competitor selling $1 for
90 cents, that will kill you just as dead.

It doesn't matter if Uber's popularity is a 'real' moat or not, as long as its
a moat big enough to drown _you_.

Sure, a few years later, said competitor will make an announcement on their
website about the conclusion of their 'magical journey', but that's not going
to matter to you, is it?

~~~
salt-licker
Good point, I forgot to mention that "race to IPO and cash out" is a viable
business strategy, though a sad product strategy. See A123 Systems, Desktop
Metal's founder's previous company that went bankrupt. Also the Energous
story: [https://liesandstartuppr.blogspot.com/2016/04/those-other-
gu...](https://liesandstartuppr.blogspot.com/2016/04/those-other-guys-pt-
ii.html)

------
awvcs
I 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
regulation as a barrier, but as time goes by the market participants creates
their own barriers. Many areas are just harder to have an impact in than it
used to be.

C) And then there is just competition, especially for things like talent.

I guess it isn't the lean startup that is dead so much as the environment for
it. You can say the same thing about co-operatives, non-profits, community
establishments and a lot of other things that are good ideas (probably more so
than ever) but not able to flourish because of other interests.

~~~
simias
>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 have an impact in than it
used to be.

That one definitely sounds true to me, the complexity of modern software
definitely makes it harder to be competitive with big shops. You can be the
smartest coder on earth, if you want to write a complex application today
(say, video editing software, smartphone interface, a kernel, a web browser
etc...) you're looking at man-years of work if you want to start from scratch.
And if you don't start from scratch it'll be harder to differentiate yourself
from the competition and "disrupt" the status quo.

I'm always amused when I read stories from the 70's and 80's about lone
hackers writing a cool hack for a computer or application of the time and
managing to sell it for a lot of money. Like this story I remember reading on
HN of the hacker who managed to write a task switching application for some
Apple computer of the time and managed to sell it to Steve Jobs (I don't
remember all the details and I can't find the article at the moment). It was a
clever and completely non-portable use of the hardware resources, in the end
it was probably a few kilobytes of (very clever) code. It's hard to imagine
something like that today.

~~~
ryandrake
> That one definitely sounds true to me, the complexity of modern software
> definitely makes it harder to be competitive with big shops.

As software professionals, this is a problem of our own making. Nobody is
asking for software to be complex. Users don’t want complexity. Development
companies don’t want costly complexity. Software developers don’t even want
complexity. Who has sat down at the start of a project and said, “you know,
this software needs to be as complex as possible!”

Yet we keep building complex software. Layer after layer of libraries and
APIs. Frameworks and more frameworks. Containers. Multiple languages. Front
end and back end. Machine learning. Problems that used to be solved on a PC
now require a 150 node cluster.

It’s fashionable to throw huge teams, hardware and middleware at problems
these days.

There is still opportunity for the lone coder and the lean startup. You need
the competence to stop writing all these bullshit layers and code _simply_.

~~~
cle
In many companies, big complex software _is_ desirable, because of poor
incentive structures. I've seen many projects ballon into vastly over-complex
nightmares, because engineers are often rewarded for solving "hard" and
"complex" problems. So with complicit management (who are also rewarded when
their engineers are promoted), they invent complexity and then "solve" it.

~~~
jondubois
Venture capital has corrupted the tech industry to its core.

The VC cash machine has brought us nothing except short term thinking, get-
rich-quick schemes, social manipulation, herd mentality, idol-worship, media
corruption and corporate growth.

I look forward to the next tech bubble. I hope they all get wiped out.

~~~
WalterSear
Ill winds blow no-one any good

~~~
jondubois
If they all get wiped out, it will be very good for me personally.

Firstly, I will enjoy watching them fail. It will make me happy intrinsically.
If I lose my software engineer job and have to work as a janitor for a while,
it would be totally worth it.

Secondly, the subsequent failure of their portfolio companies will free up a
huge amount of marketshare in many industries; some of which I will be able to
capture with my own side project until I can afford quit my janitor day job.

------
bborud
A movement fueled by a book promoter with no notable track record of success
for what he is preaching? Yeah, it was a fad.

To be fair, Ries stole a lot of nice bits from different schools of thought.
There's stuff his books that actually works.

But you would have to be soft in the head to think that his book represented
wisdom. In fact, wisdom does not come from a book – it comes from reading a
lot of books, making a lot of mistakes, working with a lot of people, building
a lot of stuff, and still understanding that this does not necessarily
represent something that can be distilled into bullet proof heuristics.
There's always unseen and uncounted factors that you will miss.

In contact with large, established organisations this book tends to produce
cargo cults. Simplistic management self-help literature combined with
institutional mediocrity, stupidity, fear of change, and hard-shelled delusion
is a horrible mix.

The good thing is that these cargo cults tend to die after a few years. The
bad thing is that anything associated with them then gets tainted.

The Lean Startup was a management fad and it didn't make people any smarter.
It just gave them different ceremonies to perform in order to feel good about
themselves. And as all fads, it has now passed. It is okay to move around the
cabin and think for yourself again.

I would recommend "Functional Stupidity" by Mats Alvesson as a form of
inocculation against this type of self-pleasuring heuristic-seeking.

~~~
owens99
Eric Ries was Co-Founder and CTO of IMVU which had 4 million active users and
$40M in annual revenue at one point.

I assume you knew that and just felt like bashing him without adding any
nuance to your point. That's a bad habit and you shouldn't do it.

~~~
bborud
I'm well aware of that and, to be quite honest, it isn't particularly
impressive.

But there is a piece of perspective that is perhaps missing. I've seen him
preach to companies that have orders of magnitude more active users and orders
of magnitude as much profit as he had revenue. And making people there believe
that he somehow knows something about what it takes to make a company
successful. To make a successful product.

I've seen companies who had brilliant people who built more business for their
company than this guy ever built for himself be told that "why can't you be
more like that". Because it is always more attractive for some types of
companies to listen to some outside hack than to actually pay attention to
unglamorous people with far more potential. It is easier to admire something
that comes with a book, ceremonies and eloquent salesmanship. And sadly, it is
easier to take what they say seriously.

I've worked on products that had an order of magnitude more users (products
you might well have used) and wondered "why am I doing this again?" because at
the company I was working, that wasn't really numbers indicative of a
successful product.

IMVU is 23 people. It is the equivalent of a mom and pop shop in this context.
I'm sure his story is compelling to someone hacking together a product in
their spare time and dreaming of doing a startup. But you do need to
understand that he has very little to offer to the kinds of companies this
cult does real damage to.

Using the numbers you quote (they tend to vary) IMVU has an order of magnitude
fewer users than MySpace. MySpace. The graveyard. That's 4 users for every
copy of "The Lean Startup" book sold (well, probably fewer since I haven't
kept up with his book sales).

IMVU has fewer users than people who've seen Ries talk - live or online.

IMVU is not a notable success.

He is a successful seller of self help books. No doubt about that.

------
1ba9115454
For every Startup raising $X million in funding there are probably a thousand
solo entrepreneurs bootstrapping their way into profitability.

The spotlight only shines on "Startup X raises millions in new round".

Side projects are the new Lean startup.

~~~
edanm
Solo entrepreneurs are not starting a startup, not as I (and most people)
understand the term. After all, those thousands of "solo entrepreneurs" are
starting things like coffee-shops, restaurants, garages, etc. They're examples
of entrepreneurship, sure, but _not_ startups.

Startups are specifically organizations that are trying to grow very big, or
that are looking to try a new business model. The reason the spotlight shines
on them is because starting something new is interesting (from a "news"
perspective, at least). Getting big is interesting. Starting a new restaurant
- not really interesting, except for people who live in that area.

~~~
mason55
Pretty interesting how much argument there is against this view on HN. I guess
most people coming here now are not familiar with Paul Graham's essay (maybe
most HN posters don't even know who Paul Graham is any more)

[http://www.paulgraham.com/growth.html](http://www.paulgraham.com/growth.html)

> _A startup is a company designed to grow fast. Being newly founded does not
> in itself make a company a startup. Nor is it necessary for a startup to
> work on technology, or take venture funding, or have some sort of "exit."
> The only essential thing is growth. Everything else we associate with
> startups follows from growth._

~~~
brazzy
Interesting how you assume that because Paul Graham wrote that, it is true,
and that everyone who thinks differently must not be familiar with what he
wrote because _surely_ nobody could disagree with him!

~~~
skrebbel
He's not assuming that. He's assuming a large fraction of the HN community
agrees with Graham's definition. This certainly used to be the case a few
years ago, hence his point.

------
jillesvangurp
Yes and no. IMHO Lean has generated a lot of startups that had too much of a
narrow focus and optimized away all the potentially interesting parts of their
products because they were focusing on a MVP that turned out to be lacking in
the V part because they were focusing on the M part.

There's this great presentation by Don Reinertsen "Second Generation Lean
Product Development Flow":
[https://www.youtube.com/watch?v=L6v6W7jkwok&index=55&list=LL...](https://www.youtube.com/watch?v=L6v6W7jkwok&index=55&list=LL6P7ZzM6GT554-6xA_3lvjg&t=0s)

Which is a perfectly valid way to fix some of the worst offenses of the
original Lean movement, which were to throw out the baby with the bathwater by
focusing on only doing things that had low option value and low risk. Sort of
the opposite of what you need to do in a startup, which is to do something
genuinely new and creating value while taking calculated risks.

Don does a great job of providing some nice economic rationalizations of how
deal with things that are risky but valuable, planning and estimating these
things, etc. He also makes a great argument for shipping value fast, which is
to maximize the economic life span of your product and prioritize getting
revenue earlier vs. getting revenue later with a potentially better product.
Many tech startups get sucked into building the perfect thing and missing
their window of opportunity for both raising funding and monetizing their
product.

Unless of course your startup is not about the tech, in which case definitely
avoid taking risks on the tech front and focus on shipping a product fast. If
you are building a market place, the last thing you want to do is reinventing
how those work. You instead want to focus on whatever the hell it is you are
selling. Lean was always popular with those type of startups. I tend to think
of them as no-tech startups. You get a bunch of MBAs, marketing and other non
techies and then bring in the full stack hipsters to copy paste a bunch of
crappy js files together to fake it until you can afford to hire a proper
team.

~~~
edoceo
""the baby with the bathwater by focusing on only doing things that had low
option value and low risk. ""

That's not what the Lean Startup says.

Lean is about reducing risk but that doesn't box one into only doing low
risk/value activity

~~~
dmix
What Lean says and how people commonly used it are distinct, which is what the
OP is talking about. Some people took some parts of Lean too far and didn't
focus enough on delivering a high level of value. That takes risk and vision,
but you build better products.

As opposed to obsessing over managing risk and keeping things lean, without
properly investing in the hypothesis to really test them out. Which means in
practice a bunch of small half-hearted plays that get abandoned too early - or
were inherently a minor incremental value proposition that wasn't valuable
enough to build a sustainable business around.

~~~
Jtsummers
This is the same problem suffered by most Capital-N Named Things (Lean, Agile,
etc.). By becoming capitalized, they become specific practices. Some of the
practices are good, some are good in context, some are bad out of context. But
people fail to make the proper value judgements about what's worth it and
what's not, and often pick which practices to do by the visibility of the
practice.

Is a kanban board useful? Immensely. Is it useful if you don't know what it
represents? Nope. But it's highly visible so people adopt it. They may get
some value, but only limited, if they fail to comprehend it. Or, worse, they
get negative value because it becomes a set-in-stone "process" "(We can only
handle 4 of X at a time! Scrap everything over that." "Wait, why was it 4?"
"Oh, because we had half the staff before. I guess we can actually handle 6
now."). If that question isn't asked, it's fixed in time and the organization
isn't a learning organization, it's actually dying but hasn't realized it yet.

------
AndrewWarner
The 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 and you’ll see what I mean.
He’s not anti-Lean, but he’s disagreeing with it his book to make get
attention for his message. With a bit of pushback from me, he admits as much.

Each one of these mini-attacks from accomplished entrepreneurs hurts Lean’s
credibility.

Only Eric has the credibility and social grace to disagree and explain in a
way that builds up The Lean Startup.

I’d love to see him step into the conversation more. He and pg defined how to
run a successful startup more than any two people I know.

We need to hear more from both of them.

~~~
wpietri
I think the core problem here is (lack of) consulting dollars.

The Agile movement got huge in part because a lot of its proponents could make
good money promoting it. E.g., the MLM scheme that is Scrum certification. Or
the many consultants, some good and some bad, who made bank teaching it to
people. (I did that for a while.) This was also the death of what I think of
as "real Agile" because the great bulk of consulting money on offer was
selling watered-down Scrum to giant companies who wanted the feeling of change
without hard work or actual change.

But there's no money in startup consulting. Startups don't have much money,
and startup founders a) think they know things better than everybody else, and
b) think they can ignore most of what matters to other businesses. (I'm a
former startup founder, so that's not knocking anybody; it's just what's
required by circumstance.) I know people who have started great startup-
focused consulting businesses, and they've all gone elsewhere because it's
impossible to make a living doing it.

From what I know of Ries's consulting it was at places like GE [1]. GE is
definitely not a startup, but really wanted to be innovative and presumably
paid him a bundle. And now he's moved on to the Long Term Stock Exchange. [2]
This all strikes me as reasonable. He did his bit and set the ideas free into
the world. Although I'd love it if he spent more time promoting the Lean
Startup approach, I totally get why he's focused on doing what he wants, not
what I want.

As an aside, for those still interested in discussing the topic, Lean Startup
Circle still exists and still has an active mailing list. I'd love to see more
people there: [https://groups.google.com/forum/#!forum/lean-startup-
circle](https://groups.google.com/forum/#!forum/lean-startup-circle)

[1] [https://www.ge.com/reports/digital-magic-eric-ries-
brought-s...](https://www.ge.com/reports/digital-magic-eric-ries-brought-
startup-way-ge/)

[2] [https://ltse.com/team](https://ltse.com/team)

~~~
owens99
Hey William. I also think one of the big mistakes is that Eric trademarked
Lean Startup. Check out the book, Starfish and the Spider. The way to kill a
grassroots movement is to centralize the power and then it dies with the
center.

~~~
wpietri
Hi, Trevor!

I get that concern. But the Agile movement didn't trademark anything and came
to regret it as the word got more and more watered down. All things
considered, I prefer this outcome; at least the term still has meaning. If I
had to pick next time, though, it would be making the trademark but building
up enough of a community to carry the flame and then handing over the
trademark.

------
jph
Key points:

1\. The Lean Startup isn’t dead.

2\. For most organizations, Lean is now essential to deliver innovation at
speed, and the Innovation Pipeline is more relevant than ever.

3\. But when capital is readily available at scale, it makes more sense to go
big, fast, and make mistakes than it does to search for product/market fit.

------
lkrubner
This needs to be balanced:

" _All this is driven by corporate funds, sovereign funds and even VC funds
with capital pools of tens of billions of dollars dwarfing any of the dollars
in the first Dot Com bubble – and all looking for the next Tesla, Uber,
Airbnb, or Alibaba._ "

Yes, but this is the other reality of today, from Calculated Risk:

" _CR Note: Currently the target range for the federal funds rate is 1.75% to
2%. With inflation running close to 2% by most measures, the real Fed Funds
rate is still negative._ "

In other words, investors still can't find enough investment opportunities
that they find attractive, so they are still willing to give huge amounts of
money to the government for free. Some of this can possibly be attributed to
the Great Stagnation, the slowdown in innovation, growth, productivity and
technology which began in 1973. Some of this can certainly be attributed to
rising pools of savings all over the world. But it remains a fact that there
are not enough software startups (nor enough manufacturing startups, nor
enough legal startups, nor enough medical startups, nor enough of any kind of
startup) to absorb enough capital to bring the world's capital markets back to
"normal", if we can agree that "normal" means most investors expect to make at
least a small profit on their investments, including their bond investments.

~~~
wavefunction
I thought the wealthy were job creators, captains of innovation, stewards of
the future...

We'd be better off taxing these folks who can't find anything to invest in and
redistributing the funds to the worst-off. The economic activity would
inevitably be captured by these same ineffectual investors but at least the
material situation of the poorest among us would be slightly better.

~~~
ryandrake
This problem is not new, but arguably getting worse. So much capital out
there, in the hands of so few people, and they have no idea how to deploy it
productively. Their trillions could be used to start whole industries, build
critical infrastructure, and pull millions out of joblessness. Instead, they
unimaginarively loan it to the government or a bank for a negative real
return.

The rich of the past built the modern world. Today’s rich seem to just sit on
their wealth while inflation and missed opportunity erode all the value away.

------
akuji1993
$1 billion for a video streaming service?? Are these people actually insane? I
don't see any way they will make back that much money with a service in a
completely oversaturated part of the internet where YouTube, Netflix and other
streaming services are pretty much meeting every desire any customer would
have.

I mean, power to the people that have invested, but this looks like an
investment graveyard.

~~~
sharemywin
youtube leaves a lot to be desired from a quality stand point.

~~~
bobmarley1
Yet it still has a massive first mover advantage.

~~~
rmah
Youtube wasn't even close to first -- it started in 2005. They were more like
third or fourth. Youtube (and later google) got the formula and right -- they
learned from the mistake the first movers made.

Sort of like Facebook, Dropbox, Salesforce, Instagram, Google, etc. None of
them were first. Being first is dangerous.

------
dgudkov
I'm not sure I understand this. You can't skip finding product/market fit. No
matter how much money you have, if you have no product/market fit you're
toast. If you're not desperate to find product/market fit (as Lean startups
are) because you have tons of money -- you may never find it.

To me, Lean startup is not about money. It's about building the most efficient
process of finding product/market fit. Once you've found something that really
works, _then_ it's time to look for big money and scale up. In most cases,
what you need in the beginning is $50K-500K which can come from
savings/FFF/consulting/seed round.

Too much money in the world now. A result of the decade of near-zero interest
rates.

~~~
jerrre
FFF = Friends, Family, and Fsomething?

~~~
girmad
I think the saying is Friends, Family, Fools.

------
normo12
How 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?

~~~
keithwhor
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.

[1] [https://www.ycombinator.com/deal/](https://www.ycombinator.com/deal/)

~~~
normo12
That's really helpful, thanks.

------
amirathi
> It (Lean) is a response to scarce capital, and when that constraint is
> loosened, it’s worth considering whether other approaches are superior

Definitely worth looking at both approaches objectively.

1\. Lean Approach: Stay lean, build MVPs, find PMF, then go big.

2\. Big bang approach: Have conviction in your idea, use capital to launch big
from get go.

Given capital is not a constraint, the next most important thing is time i.e.
which approach would help us build a thriving business _fastest_.

Big bangs take up extra time/energy in ancillary tasks like hiring, PR and so
on. Pivots take time, even to communicate internally. Lean let's you operate
the whole thing as a series of cheap experiments to validate your assumptions.
Pivots are natural and cheap.

Big bang would be beneficial over lean only when your first set of assumptions
were on the mark and the company required almost no major pivots. That's rare,
maybe Katzenberg can pull it off.

~~~
WhompingWindows
Maybe Big Bang is more effective for iterative companies, those whose business
model and PMF is well established. like a second wave of ride-share businesses
who copy the Uber/Lyft paradigm but with enough of a personalized twist to
secure substantial capital upfront.

------
startupdiscuss
I 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.

~~~
dmix
> Even if you have raised $2 billion, shouldn't you know if people want short
> form content?

This has already been proven with Youtube.

The bigger question is whether there is a ~$100 billion market for a Netflix
style service selling 10min videos, which justify a $1-2 billion investment.
And whether this company can recruit the talent in a sustainable business
model, where they can produce enough _good_ content to keep users happy.

Even if there is a $100 million dollar business here, that would be a failure
scenario for this startup right out of the gate. As it won't return the
investor money anytime soon.

~~~
startupdiscuss
I don't disagree with most of what you said, I was using "short form content"
as shorthand for the business model, however:

 _But Hollywood has remained skeptical in the year since he announced his
venture. Several executives have argued that there is little evidence to
support the notion that viewers are craving short programming. And beyond the
initial hype, Mr. Katzenberg has been short on specifics._

and

 _Higher production values will distinguish NewTV’s programming from the
majority of video shorts that gain traction on YouTube, Mr. Katzenberg said.
And he trusts that viewers will appreciate the difference._

from:

[https://www.nytimes.com/2018/08/07/business/media/katzenberg...](https://www.nytimes.com/2018/08/07/business/media/katzenberg-
streaming-video.html)

------
swalsh
One of the interesting differences between Jeff Katzenberg's new startup, and
the type of startup's that existed when the Lean Startup was invented is the
number of variables which are unknown. This new media startup isn't starting
at an unknown. In fact, virtually everything about this business model has
been tested before somewhere.

Lean is about experimentally approaching hypothesis about business models.
Then scaling up when you find something that works. Short videos targeting
mobile isn't new. If I allowed him too, my son would watch dumb youtube videos
all day on my phone. This is a gamble that consumers might want better quality
content. Not a huge gamble :\

------
pnenp
Calling a popular term "dead" is certainly a good way to attract clicks. And
sure, when money is cheap and you have $2B to spend, you can afford to throw
much bigger Spaghetti at the wall. But Lean defines a startup as a project
under extreme uncertainty. Commercial video streaming sites exist, the only
thing that seems to be new about the example in the article is the video
length. I would not consider this an environment of extreme uncertainty. So
imho, while cheap money does change the equation, 99% of the article's punch
lies in its clickbaity headline.

~~~
kesor
You do realize that Steve practically invented the term, right?

~~~
pnenp
That's evident from the article. And it does not change the fact that the
headline is clickbait, a promise which the article fails to deliver on.

------
dpeck
So Blanks thesis seems to be go lean when money is hard to come by, otherwise
take the cash and go big because there is more out there if you fail. I’m not
sure this is much different than what has been talked about for a while, but
it puts a nice point in what most people just talk around.

The capital is there, there’s a very good chance you’re going to fail anyway,
you might as well fail while eating something other than ramen.

------
garganzol
Tangentially related, but the real gold is well hidden and secretly traded.
The schlock is through the roof everywhere and in large excess.

A piece of an adequate analysis: [https://hackernoon.com/the-rise-and-fall-of-
yplan-is-the-mos...](https://hackernoon.com/the-rise-and-fall-of-yplan-is-the-
most-boring-tech-story-ever-4280cebf9f1f)

------
geetfun
As 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, etc).

As more entrepreneurs enter the space, competition will only become more
fierce. Even selling the tools to the gold rush has become commoditized with
the choices available.

~~~
1ba9115454
> 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.

~~~
icedchai
You still need to pay for marketing, sales, some administrative work
(accounting, legal...) Maybe you need help outside of your expertise (graphic
design, UX...) There is a lot that goes into a startup on top of just building
the product.

------
danschumann
I think it's saturated. Lean goes best with the easy to execute ideas--where a
viable product is possible in days or months. Take an animation software
program designed for professional artists: it's not possible with only a few
features, because it wouldn't be competitive with existing products. You need
such a large array of polished features to have any staying power. Let's also
say you want to make a product with better core functionality which can't be
done with 3rd party add-ons or working with existing software. There's still a
lot of opportunity for people willing to work on something for several years
before releasing, as long as they aren't taking gambles with their primary
value proposition. (Would hate to be wrong after spending that much time)
There are still untapped niches where lean works, though, I bet, if that's
your calling. My backup, if I'm making a product that people don't use, is to
be my own customer, and open an animation shop which uses the software to make
animations to sell to people. So if you're not going lean, go for a product
you will use (and obviously a product that is useable by only one person[not a
social network]) to make money, if people don't buy the product itself. (Ie,
if you're making software that makes it easier to host websites, make sure
it's software that you would personally use in the case that you can't sell
the software, but can still sell the hosting)

------
yumraj
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...

~~~
F3Life
Right? It's born a unicorn. But could also be a eunuch.

------
Dowwie
It's a collection of ideas and tools.

Osterwalder's business model canvas lives on in its original form and
variations of it. Use it to organize important ideas on paper.

Get "out of the office" early in the process and speak with prospective
customers.

Create a product that does the minimum required to achieve your goals.

How could these ideas possibly be dead? Maybe "Lean Startup" as a turn-key
solution to entrepreneurship has died and it has become more difficult for the
Ries and Blank to monetize. However, they promoted many valuable ideas and
practices that live on.

------
gregpilling
"It’s a response to scarce capital, and when that constraint is loosened, it’s
worth considering whether other approaches are superior. With enough cash in
the bank, Katzenberg can afford to create content, sign distribution deals,
and see if consumers watch."

There are two main thoughts from this that occurred to me: 1\. There are very
few Katzenbergs out there, so him personally raising that money is not
surprising. If Spielberg or Lucas wanted to create a short form video company
I am certain that they would be able to raise similar amounts. I am not him;
therefore the lean rules still apply to me

2\. the times that I have had enough money to buy my way out of problems has
not yielded the best results. In my 30 years of doing this the clever answers
have always come when my resources have been restricted, with often the best
results from the most constriction. Extra money can bring bad results
sometimes, the beauty is in the restraints.

TL;DR You are not Katzenberg. Neither am I.

~~~
F3Life
Lol: you are not Katzenberg. Neither am I.

Good points. Good post.

------
DrNuke
For what I see, it seems to me that hard STEM startups tackling industrial
problems can’t work through the lean paradigm, that’s why too much too often
their projects are shut down or internalized as soon as a nice acqui-hiring
happens. In other words, bigger firms just scoop applied r&d teams in their
field before they actually become a commercial threat.

------
siruncledrew
I think it's cyclical: there are periods of lots of funding available and less
of funding available. There's still market economics at play. So the Lean
Startup is not permanently dead simply because we see articles of startups
getting $XX million funding or have $X billion valuations.

A company that is restricted on cash and "lean" is more inclined to be risk-
averse and calculated in their business model decisions because they have to
'do more with less'. Whereas a company pumped full of cash has a greater
'trial and error' risk-tolerance because their goal is to overpower a target
market to become the dominant player as quickly as possible. Investors still
want to see a pleasing return either way.

------
fixermark
To 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 ought to put more trust in a larger
company's offerings in a given space than a smaller company, and even be wary
of a smaller company that's offering something truly novel if that novelty
isn't worth the price of private data being at-risk.

~~~
JohnnyConatus
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.

------
mvpu
Investors aren't stupid - they won't fund millions of dollars (series A and
above) unless they see a working product that customers are raving about, a
large market opportunity, and a clear go-to-market - general indications of
product-market-fit (although the definition of PMF depends on the space and
product). We have seen rare cases of outsized seed rounds w/o a product, but
they are extremely rare (even today). So this notion of "go big or go home"
isn't vaporware - most founders cannot get that kind of investments, and few
that can (reputed, second time founders for example) think 100 times before
they jump in.

------
mark_l_watson
The idea for short subject videos is actually pretty good but here is what I
don’t like: Netflix, HBO, and Amazon rock because they spend a ton of money
making their own material. I don’t see getting the same quality by farming out
production to contractors.

Regarding the main point of the article: I always liked the idea of lean and
sometimes bootstrapped startups. The current trend of mega financing perhaps
comes from all of the money slushing around in markets looking for
investments. Part of the effect of increasing wealth disparity is the the very
rich have much more capital than they need to live and want to invest.

------
nostrademons
I think the problem with Lean today is that everybody knows about it.

Starting a startup in 2002-2005 was _hard_ , just the mechanics of it.
Incorporating took several thousand dollars of lawyer time; there was no
Clerky, and online LLC-generators were largely unknown. Accepting payments
meant getting a merchant account with a CC; no Stripe, Square, or other
payment processors. Payroll meant dealing with ADP or PayChex; benefits meant
hiring a person to manage those relationships. There was no YC, generally no
seed funding ecosystem other than angels, no AngelList, no gigantic startup
blogging scene where everybody gives advice on everything.

As a result, there were plenty of unfilled pain points, and potential
customers were overjoyed when someone would actually come talk to them about
it rather than assuming they knew what was best, a la big companies or
massively VC-funded startups.

Now, everybody and their brother is founding startups, which means that if you
_do_ happen across a genuine pain point, there are already 2 dozen startups
working on it. Customers get weary of even talking to prospective
entrepreneurs because they've had that conversation so many times before. I've
done the Lean Startup methodology, and have several friends that have tried
it; the most likely outcome today is that you'll talk to a 100 customers
(after trying to talk to several hundred more who don't respond), and then
discover that there's no actual market need addressable with current
technology and you should keep your day job.

Like most knowledge related to markets, once everyone believes it's true, it
ceases to be true.

~~~
abraham_lincoln
So, it seems the methodolgy worked, right?

It prevented you from wasting time on a product that has no market.

~~~
nostrademons
Yep, you could argue that finding out after 2 months that an idea won't work
is preferable to wasting 2 years on it. 'Course, then I went and repeated the
process 8 more times, then decided that if there are no untapped market areas
that can be filled by existing technology, it's time to spend 2 years
inventing new technology. It remains to be seen whether that's a waste or not.

At some point you also have to apply the same logic to methodologies that you
apply to ideas, though. The point of the Lean Startup methodology is to avoid
wasting time implementing ideas that won't work so you can find a scalable,
sustainable business model quicker. If your goal is to found a startup and all
experience is that the Lean Startup methodology, in 2018, does not provide a
scalable, sustainable way to do that, then you should ditch the methodology.
Chances are you'll have to do your own methodology invention, though, because
once a scalable, sustainable way to get rich becomes commonly known, it ceases
to be sustainable.

(See also Bitcoin, which was a great way to get rich when nobody considered it
a way to get rich, and then became a great way to become poor when everybody
was certain it would make them rich.)

------
Tloewald
Is there a single example in business of someone taking a huge amount of
money, and plopping a famous CEO in charge of a dozen people and saying "go"
and generating a successful business? (Let's set aside investment funds,
obviously. I guess Meg Whitman could just hire some iconoclastic traders and
tell them to manage the $2B while her 10 staff clone YouTube.)

There are quasi-legendary cases in history (think Spartan and Byzantine super-
soldiers) of a tiny band with no resources executing ludicrously successful
military campaigns, so I guess it's not completely impossible.

~~~
pjlegato
Fairchild Semiconductor, or Intel?

------
rdlecler1
The low hanging fruit has been picked and we’re waiting for the next
technology trigger. My friend said to me recently, not only are all the good
ideas taken, but so are all the bad ideas.

~~~
GFischer
I don't believe that at all. Maybe the low hanging fruit in San Francisco has
been taken, but the future is not evenly distributed... opportunities
everywhere (read a headline about a Nigerian startup getting funded, that's
the kind of stuff I'm talking about).

------
jedberg
As an aside to the discussion about lean, I don't understand why these guys
got 2 billion, even if it is Katzenberg. Netflix already has short content
specific to mobile. They're subtle about it, but if you browse on mobile
you'll get presented with shorter bits of content in your recommendations.

I guess the idea is that they are starting a studio to create short content,
and hope to make billions selling the content?

------
eli
Someone should make a site or project to highlight bootstrapped startups.

There are plenty of very successful ones but you just don't hear about them as
often.

~~~
postsantum
[https://www.indiehackers.com/](https://www.indiehackers.com/)

------
monksy
It has always been dead or near dead. That's the point of a lean startup. It's
a recession business operating in a surplus market. They're trying to make it
successful despite market evaluation. (Can be a good thing or a bad thing..
mostly it's a bad thing for the long term economy, bad for customer value and
solving customer needs)

------
oneshoe
Lean Startup may or may not be dead but my Boss is going to continue to misuse
the term MVP regardless. It pains me to think that this term isn't going away.
I believe it will be used by managers for a long time to make developers forgo
good development practices in lieu of getting that minimal ~viable~ product
out.

~~~
secfirstmd
Its become such an overblown annoying cult.

The core idea is good but even the book itself was trying to stretch an
academic paper further than it needed to go.

------
owens99
If there's no product/market fit, too much capital is a death sentence. If
they don't go out of business in a giant explosion, NewTV surely won't build
anything innovative or disrupt anyone. Too much pressure and too many
expectations at the wrong time/place.

~~~
conductr
Product is all that matters. And I'm not talking about the app. If they spend
that cash generating quality video content, it is proven people will talk
about it and will pay a subscription. So I think this investment speaks to the
confidence that this guy can execute on this vision and that the market is
receptive to this format, which it will be if done right. Also, if modestly
successful there are plenty of Big's who would acquire. Knowing nothing of the
players and how they execute, this actually passes the sniff test more than
most and I'd say it sounds like it could be a winner.

------
lwhi
If you don't test your idea before you spend a lot of money implementing it ..
you stand to lose a lot of money.

It's common sense. And that's how I'd summarise much of the philosophy
involved in the lean startup.

\--

And conversely; if you invest a lot of money in an idea without testing it,
you're gambling.

------
docker_up
Uber changed the game by growing globally at an breakneck pace. Now, if you
have a successful product, you need to globalize as quickly as possible
otherwise people in Europe, China, India, Indonesia, Brazil, etc will all copy
your idea and you will be left flat-footed.

------
ben_jones
_You don 't have to follow SV stereotypes_

The lean startup is alive in well in most entrepreneurial ventures. Starting a
food truck? Grocery store? Custom t-shirts? Indie video game? Small focused
SaaS?

The echo chamber is real. "I looked outside and saw no lean startups, its
dead!"

~~~
pjlegato
The article (and most of HN) refer to the local Silicon Valley jargon
definiton of the word "startup": a company that is meant to grow extremely
fast through the use of new technology. It's not a synonym for any
entreprenurial venture.

What you're talking about is locally called a "lifestyle business" (not a
"startup") -- a small business that can provide a comfortable living for the
founder and a few employees, but which has essentially zero longer term growth
prospects.

This point seems to be the source of much confusion in the comments here.

~~~
pofilat
Those aren't "lean" either! "Lean" means starting your business before you
have a product, marketing-driven development, and fumbling around chasing
customers until you find something they want to buy, and _then_ building it.

[https://en.wikipedia.org/wiki/The_Lean_Startup](https://en.wikipedia.org/wiki/The_Lean_Startup)

------
subdane
This Startup School lecture posted today about how to find product market fit
is literally all lean methodology
[https://www.startupschool.org/videos/38](https://www.startupschool.org/videos/38)

------
brlewis
Katzenberg's business idea cannot be explored without lots of capital. I bet
you could find startups like it (i.e. raising lots of money before product-
market fit) even when investment money is scarce, just fewer of them.

------
haikyuu
> the amount of customer discovery and product-market fit you need to find is
> inversely proportional to the amount and availability of risk capital

businesses and risk capital are not related. Proof: businesses existed long
before risk capital.

------
arrty88
Why don't they just give Dave Chapelle 1B and his own live streaming app? Dude
is the best short content creator out there.

------
aidenn0
TLDR: There is too much money chasing too few good companies, so even marginal
companies can get funding.

------
startupdiscuss
I 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.

~~~
mediaman
Theranos's problem seems to be that they (especially Holmes) would not bend on
technical issues that would have allowed them to build a functioning product.

It sounds like if they had allowed the machine to be a little bigger, and if
they had compromised on being able to take a little more blood (instead of the
one drop they had been marketing), they could have had a real machine that
would produce reliable results.

Then they could have iterated and continued the push to miniaturize what they
already had commercialized.

Instead, Holmes insisted on a sample size that technically they couldn't
achieve reliable results with, and when faced with the decision of
compromising on spec to get something to work, or release something that
didn't work and then lie about it, she chose the latter.

If anything, a "lean" approach (to the extent possible with medical testing
hardware) would have benefited them.

~~~
startupdiscuss
That is a good point on the size of the machine.

It would be crazy -- I mean in a cosmic way, not talking about any particular
person -- if it were possible to get a decent MVP if it were slightly larger
and took in slightly more blood.

The book implied this might have been possible, but it was not clear to me.

------
jbg_
Betteridge's law.

~~~
boffinism
Scrolls to bottom of article:

> Lessons Learned...The Lean Startup isn’t dead

Ah yes, there you go.

