by Giff on March 16, 2010
I side with Mark Suster on the need to retire the phrase “fail fast”.* I understand both sides, and the differences are hardly surprising since VCs live at the macro level (company fails) and entrepreneurs are immersed at the micro level (assumption fails). But it’s still a dumb phrase because it gets misinterpreted too easily.
Take this quote from Umair Haque who wrote: “Failure, not features: Next-gen products and services are built to fail, fast and cheap — instead of just offering tons of features.”
The quote hits upon good trends of simplification, prioritization, and validation-before-spending, but it is easy for anyone outside of the lean startup circle to get the wrong message. Indeed, Umair’s quote led one venture capitalist to ask whether Web startups were turning into disposable razors: essentially, try something and if it’s not a hit, move on to the next thing.**
I hate this concept of “disposable” ideas. It leads to small thinking and weak tenacity.
This mentality adds fuel to the accusation that too many Web startups are “features” not companies. It can be seductive to outsiders because it makes startups feel like lower risk (”oh, it’s only a few weeks and maybe I’ll make the new Twitter!“), but the reality is that startups are a long, hard, unfunded, unfamous haul. You try to solve a big hairy problem and beat down the roadblocks with a two-by-four, taking your lumps in the process.***
I think that serious lean startup entrepreneurs are trying to do something of substance, not two-week stints coding gimmick apps that could become the flavor of the day. Hopefully this is more of a messaging problem than a substance problem. Yes, we all pivot, but our startups are not about cheap and disposable. Them’s fighting words.
Notes
* If I had to pick a phrase, it would be “validate early”. and often. and intelligently.
** this feeds into my mixed feelings about the new religion of “landing page” smoke tests
*** not all startups have to solve a problem — they can instead entertain.
by Giff on March 15, 2010
One of the most annoying things for an entrepreneur to hear, and one of the hardest things for a venture capitalist to navigate, is the “past is prologue” doubt. By that I mean: “your idea failed before, so why will it work this time around?”
Given that most Web 2.0 ideas were conceptualized, attempted, and failed, during Web 1.0, this is a common question. So if you are thinking about raising money, it is worth spending some time on a compelling answer to “why now?”
Here are a few categories and examples with which to examine the question:
- Culture & behavior: have people changed how they think about or use a particular technology? Examples: privacy and sharing concerns; willingness to use a payment processing method online; media and entertainment consumption habits; shopping habits; etc. Your answers in this category are backed up by customer development and data from the next category.
- Adoption levels: has the “addressable market” significantly changed since previous attempts, either for a behavior or key platform? Examples: broadband penetration; phones with *good* mobile browsers; Paypal users; number of webmail accounts; active Twitterers; SAP’s installed base; etc.
- Technology: have technology advances significantly changed the feasibility and economics of the business? Examples: PC or mobile processor speeds; hard drive size/cost; the LAMP stack; cloud services; Facebook Connect; GPS in phones; open sourcing of a key infrastructure pieces; etc.
- Execution: this is sometimes the most relevant, but I’ve found that VCs dismiss it a little too easily, especially if they were not operators themselves. Still, you want to understand why previous teams failed: wrong features; terrible marketing tactics; wrong initial customer segments; poorly capitalized; wasted cash before product-market fit; etc. Just don’t make anything up.
Obviously you’ll prioritize your list rather than bludgeon a potential investor with every data point, but you want to take the time to understand the past and present. If an investor wants to drill in further, you want substance.
Of course, with many investors, the only true way to effectively de-risk the “past is prologue” objection is to prove your case through traction. Hence the reality that for better or worse, “seed capital” for Web startups has shifted to later in the process, at least for companies started by founders without big exits already under their belt.
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