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The R&D costs are still the same.

Sure, today you can develop prototype or MVP at fraction of the costs in 1998, but it's only 10% of total costs. The 90% is maintenance and support - and today it's not cheaper than then.

It can only be cheaper if founders willing to work for free. But this doesn't scale - sooner or later you need to hire employees, which will be demanding market priced salaries.

So, why then angels and VCs pushing entrepreneurs to do lean startups? The answer is simple: it allows them to reduce the risks, at the expense of entrepreneurs.




The interesting phenomenon is that these days you need a lot more "venture labor" in proportion to your "venture capital", so the labor — the founders and early employees — can extract a better deal relative to the capitalists.

It's true that eventually a growing business will take on people who demand nothing more than market-priced salaries, but the people you need to get off the ground won't be satisfied with that.




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