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Summary:

The Lean Startup has become somewhat of a bible for Silicon Valley entrepreneurs, but famed investor Marc Andreessen notes that sometimes founders misappropriate the ideas or don’t apply them correctly, resulting in some common problems he outlined Monday in San Francisco.

Marc Andreessen

The Lean Startup philosophy and Marc Andreessen are themselves two institutions in Silicon Valley, so when one weighs in on the other, it’s good to take note. The famed investor spoke Monday about his three pet peeves in investor pitches, most of which are related to entrepreneurs misappropriating or misusing the Lean Startup approach, an approach that encourages quick scaling to achieve success.

“I feel like we’ve discovered the theory of relativity,” Andreessen joked on the Lean Startup approach, noting seriously that he admires Eric Ries’ now-ubiquitous approach to building startups. Ries’ model, which encourages quick iteration and inexpensive prototyping before investing big money, has become somewhat of a guiding principle for many companies in Silicon Valley.

But Andreessen, speaking with Ries Monday at the Lean Startup conference in San Francisco, noted that there are three ways entrepreneurs can run astray:

Not all startups can be Lean Startups

Andreessen noted that as popular as the theory can be, there are still some areas where it can’t really apply.

“I would serve this as a challenge for the Lean Startup community. Especially the ones with the really audacious goals. Sometimes they start audacious because otherwise the product will never get to market. The Macintosh, that product had to exist in its entirety for people to wrap their heads around it,” he said, pointing to modern entrepreneurs like Elon Musk’s ventures as ones that can’t be done on a small scale at first. “You got to get the rocket into space.”

And Andreessen noted that investors should be careful not to take the theory so far as to reject companies that have ambitious aspirations.

“I don’t think the Lean Startup idea, as brilliant as it is, and as widely applicable as it is, should halt us from investing in these big ideas right out of the gate,” he said.

Don’t use the Lean Startup as an excuse to skimp on sales and marketing

While focusing on the product and getting it right before hiring on lots of employees is a good idea, Andreessen said he’s seen companies use it as an excuse not to care at all about sales and marketing, when in fact they do need to think about those when growing a business.

“We see Lean Startup methodology being used inappropriately as an excuse to not take sales and marketing seriously,” he said. “Founders tell us that all that matters is product, and sales and market will happen automatically. The ‘if they build it it will come,’” mantra, which he noted is not always an acceptable approach for those looking to grow.

And for those hoping their product will speak for itself and grow virally?

“I’m totally in favor of viral, but it’s really hard to find a real-world example for someone who gets the money without taking this stuff seriously,” he said.

Don’t develop a “fetish for failure”

Part of what makes Silicon Valley special — or especially insane — is a general willingness among the startup community to fail and fail often. But Andreessen noted that sometimes, founders take this too far, and use it as an excuse to not keep trying.

“The pivot. It used to be called, ‘the fuck-up.’ Taking the stigma out of failure is very exciting,” he said. “But we see founders who give up too quickly. It’s permission to give up very fast. Are they really going to do the heavy lifting over time?”

Andreessen said it’s certainly okay to fail, as long as those lessons from failure lead you down the path to success — not just another series of failures.

“We joke around the office that the worst is the fetish for failure,” he said. “You want to preserve the good of the idea when it comes to pivoting, but you don’t want people to be intentionally encouraged to fail. Maybe it’s time to add a bit more stigma. The entrepreneurs I admire, I admire the ones who pivot but I really admire the ones who have persisted.”

  1. Yes, but when VCs, who are wrong more often than they are right, refuse to fund your start-up, you don’t have any other option but running lean.

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    1. Running lean is not about about being cheap. People don’t run lean because they don’t have money, they run lean because they want to make sure that they have determined the right market fit, before they spend the money.

      Some business are capital intensive, you’ll need money to grow. However, the question is, at what stage do you spend the money.

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      1. I didn’t say anything about being cheap.

        And speaking from experience, every start-up I have been involved with has been under-financed and run lean. I’m not saying they wouldn’t have run lean if the money was available, but sometimes you don’t have a choice.

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  2. on the point – “You got to get the rocket into space.” if you view the rocket as the product then yes it cannot be done at small scale. – but – if you use some other metrics that inches towards progress incrementally then it can be done on small scale. This is the key learning from Lean startup OR for that matter from Lean in general and Agile

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    1. Well, the point is that in some products (like rockets) there is 0 value unless and until you get all the components together – you can make incremental progess, but you can’t get to market to really validate the idea until you’re already put in 90% of the work.

      For some products/needs, lean works and you can get useful results with 10% of the “end goal” – but not for all of them.

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      1. OK – But , is the incremental value created by Dropbox over its life really different than the incremental value by a rocket company. The Value curve overtime for Dropbox was probably as non-linear and hockey like as that of a rocket company. To a traditional investor , Dropbox was not taken seriously taken until they had a big userbase. Before they got to this point , it was the insight of YCombinator that kept them going

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  3. Douglas Crets Monday, December 3, 2012

    Also, Lean Startup is just a framework, mostly buoyed by savvy marketing speak. It’s all about execution, studying, and making something for someone else.

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  4. We’ve seen so many products coming through our shop at Twin Engine Labs that don’t consider marketing that it’s now one of the first things I preach to a budding entrepreneur. Social marketing opportunities *should* be built in from the ground up, interwoven into the DNA of the product. Viral Loops should feel natural.

    But cold-starting your business in a sea of harsh competition requires *money*. Yes, fail cheaply, fail fast, learn from your mistakes; but eventually, you’re going to have to actually test, measure, and execute on a marketing plan to get your startup in others’ hands.

    I’ve heard lots of figures in general, but mostly I’ve heard $20,000/month for an app. This would include paid advertising and PR. While *we* don’t spend that much for our PR, we certainly do spend thousands per month, and have many different techniques that we experiment with for lead generation.

    So, I couldn’t agree more. Posting something to Reddit or HN is an awesome way to get quick feedback, and see what works and doesn’t. But it takes way more than that to keep a business that actually earns revenue from consumers.

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  5. Spell checker ??

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  6. I totally agree! Especially when the startup is a hardware company and have invested so much already. You can’t afford to lose focus.

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  7. Vinod Shintre Monday, December 3, 2012

    well again depends on the golden Q. Do you want to become rich or be wealthy? , quick schemes can get you rich while conviction & determination can make you wealthy if it happens.
    take your pick.

    http://www.attribo.com

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  8. Matt K Gelgota Monday, December 3, 2012

    An “If we build it they will come” mentality completely misses the point of the customer development process. I hardly think it can be cited as a legitimate example of Lean Startup gone wrong. Same goes for the Fetish for Failure argument.

    If the Lean Startup is being routinely misunderstood in these ways, I suppose they’re not straw men and are worth mentioning but I’d place the blame for those particular misunderstandings squarely on the founders in question rather than Eric Ries, Steve Blank et al.

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  9. Srikrishnan Ganesan Tuesday, December 4, 2012

    Well, on similar lines, “fail cheap” is also sometimes taken so much to heart that the only outcome of that kind of execution on certain products would be to fail fast and cheap. P(success)=0. Might as well not try!

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  10. Love it! The “Not all startups can be Lean Startups” section is sage wisdom: some projects are just too ambitious for the Lean methodology to be applied wholesale, especially at the beginning. Still, I think it can always be applied piecewise, and every startup can be, at least partially, “Lean”.

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