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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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  11. I so agree on what Marc is saying. If your gone pivot based on all the feedback in a lean start-up proces than you can end up loosing the vision that was there. The gut feeling of what you had that you want to see in the world.

    I´m doing the oposite of a lean start-up now with wonderloop.me so I guess we will see soon on what “the oposite” of a lean start-up looks like… (and if that works even though resources/non-funded says you should do the lean one)

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  12. phd guy, PhDguy Tuesday, December 4, 2012

    Great article – the recognition of not everything is cookie cutter – sometimes bootstrapping is called for with organic growth while other times getting to scale quickly is critical – sometime lean won’t get you to proof of concept as liquidity or fairly significant awareness/trial is needed early – if things can’t be done incrementally, it is difficult to succeed as a “lean” startup and needs a lot of rocket fuel.

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  13. anonymous phil Tuesday, December 4, 2012

    i liked the lean startup book. but in our country (the philippines), lean was introduced not by a book but by the business environment itself. tech incubators here put only about 100-150k USD and already get 15-25% of equity. with that much money you’ll have to figure out how to come out with something uber awesome with very limited resources. it even gets to the point that founders put their own skin in the game with their own money and that puts a hella lot of pressure to perform while keeping costs as low as possible.

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  14. Love this post and completely agree. There are some great lessons from the lean startup methodology but in large and difficult markets to disrupt, almost nothing beats persistence. The added benefit is that because it is not the easiest route, most people give up. That means when you win, the persistence leads to barriers that can create a huge moat around your business.
    Jeff Booth
    CEO
    BuildDirect.com

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  15. Asif Khan Mandozai Tuesday, December 4, 2012

    On the point of motivation:

    A founder who has had intrinsic motivations to be in the industry prior or has been conditioned & educated over time within the market they’re creating the business may very well be a higher bet than one who stumbled across the market with just pure experimentation with lower industry knowledge or lower intrinsic motivators.

    Maybe we’re not paying attention to the right answers when founders are asked “why” they are in this industry in the first place or “why” they believe they are the right person to execute.

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  16. There’s an implicit point that Andreesen is making here with his Macintosh example about Lean Startups and it’s dependence on minimal viable product (MVP) methodology. Ries writes that the MVP approach works when targeted to early adopters. Once a product is ready is ready for mainstream, or if it needs to be judged by the mainstream from the outset, then it will need to be more fully-baked.

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  17. Very nice blog.

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  18. Edward Woodcock Thursday, December 6, 2012

    Where did “if they build it it will come” as an analogy come from?

    Lean is precisely the inverse of this. It’s “go and find them, and build what they need”.

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  19. To me the Lean Startup approach is about reducing wasted effort, and not about quick scaling. I know my startup will be capital intensive in order to really grow, but the first task is to validate and learn as much as possible.

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  20. “Lean Startup approach, an approach that encourages quick scaling to achieve success.”

    It’s actually almost the opposite….Lean encourages customer development and fast iteration before attempting to scale. Finding the right thing to build before building it.

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    1. Martin Grohman Director of Sustainability GAF Thursday, December 6, 2012

      The whole thing is kind of comical to me. Minimum Viable Product would never work in building products.

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  21. There are investors and there are people doing it. I hope I can have the success Andreesen had, but reading this reminds me of having read every other worthless advice column from every other investor who is trying to tell the world that he wasn’t just lucky. Guess what, there’s only one rule: every story is different. Start a company that makes sense to you, and run your company the way that makes sense to you. If you are a lean person, run it lean. If you don’t have an instinctual idea of how you want to proceed — if you are always reading these kinds of articles and changing your ideas — that is the surest way to fail.

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    1. Awesome

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  22. “Lean” is a classic case of where the meta-narrative becomes the narrative and folks follow a method for its own sake. The technique is really a method to acquire insight as cheaply as possible, and seemingly for those who lack insight in the first place. The results of the method will always be shallow. It is more of a method of triage for treating failure than a way to produce great products.

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  23. Matthew Wanderer Saturday, December 8, 2012

    Andreessen’s views are timely. I think “lean” and “fail” have been hijacked of late. this is true for some of us, but not all of us, as a few in the comments have pointed out nicely.

    I started my first venture a long time ago with a borrowed $1k. Lean meant something concrete to me. Fail – while always a possibility – was anathema. I refused to go back to the corporate world.

    Now, many years later, I’m working on Tweakable.com with the same financial constraints. Lean hasn’t changed, for the most part. Fail, also, hasn’t changed much for me after all theses years. Both hold treasure troves of experience and knowledge I wouldn’t trade for having had it “easier”.

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  24. There’s a lot of value in testing out a set of hypothesized problems PRIIOR to even creating an MVP to test a solution. Through problem interviews with early adopters, we can discover whether or not our hypotheses’ resonate. Some people have latent needs but the structure of the interview should help to identify a hint of unmet needs- ours or new one’s not yet considered. We can also use validated learning to test out different segments. A pivot does not have to be a bad thing. It could be as simple as a change in our assumptions about target segments or what problems exist in the marketplace.

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  25. Great point about not all startups being lean startups. It goes beyond the “launching rockets” idea and extends all the way down to the “main street” type of business that really needs to be up and running to figure out if it’s going to work or not. Sure, small businesses can do some form of MVP testing and make sure to talk to potential customers, but it’s much harder to put “lean” practices in place when you’re dealing with physical storefronts instead of code and inexpensive servers from AWS.

    Totally agree on the points regarding sales and marketing, too. I’m seeing too many entrepreneurs who are following the lean startup methodology fail to explore what it’s going to take to acquire customers. Here’s where some old-fashioned planning and modeling is required to determine if a reasonable cost-per-acquisition can be attained so that the business can be viable. Entrepreneurs tend to significantly underestimate these costs and end up with a business model that is not sustainable.

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  26. All great reasons from Marc but fetish for failure is the most important. A lot of start ups would have gone a lot further if a) they believed in their mission and had a good story to tell and b) had an implementable strategy that gives them direction so they don’t iterate too soon. It’s so much easier to persist when you have both.

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  27. Hm… maybe for that reason we don’t have too many rockets built by startups, and most technologically complicated hardware products are developed by wealthy companies that have their own risk capital to spare on R&D? and maybe this is the way it should be?

    For me “lean startup” is exactly focusing on market before the product – and i’m still convinced that this is fairly universal. Lo-fi MVP is meant to see if there is a market (product2market fit, early interest, traction, dynamics, etc) before u spend a dime on technology. I seem to be out of sync w/ Marc when he sais that “lean” is used as an excuse to skimp on marketing/sales.

    One thing i do agree = lean approach doesn’t cover technology/execution risks until much later. It seems to be much better suited for technologically banal ideas that rely on a premise that “if we have traction and fit, with cash infusion we’ll indeed find a way to implement it”. Or when you’ve got a proven technologically advanced product for free from your previous job

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