Lean Startup Inc.

Y2K was a banner year for behavioral scientists. In the years leading up to the Internet bubble bust, most investors reported on their profiles that their risk tolerance was ‘high’. At that time, they assumed that the risk meant that they can get an even higher return on their speculative investments than they have hoped for in their greedy minds. Then came Y2K and the realization that ‘risk’ is a double-edged sword, and both sides are very, very sharp. Many investors got so burnt that for more than a decade they reacted to the stock market the way Bela Lugosi reacted to garlic (now Bauhaus told me in my youth that Bela Lugosi’s dead, but there will never be another Dracula for me but Bela).

The Lean Startup movement I already mentioned in one of my previous posts is meant first and foremost for actual startups. It applies perfectly to a couple of founders, a few first employees rapidly burning through Angel Investors’ money, walking around with starry eyes, dreams of becoming ‘the next Facebook’ and drawing a short list of islands they will buy once that happens. It is a mad race for getting to the business end of the ‘hockey stick’ chart – the part where revenue takes off to actually finance the business (or, in the case of Snapchat, becomes greater than zero). The challenge is to reach this point before venture capital runs out and the repo men cometh.

An expansive aspect of the methodology is that it can be applied to any new effort amid extreme uncertainty, even in huge multinationals or governments. Any corporate team attempting to start a version 1.0 of a product or a service is effectively a startup. Instead of VCs, there are executive sponsors, and instead of actual money, there is headcount – number of people working on the project until business declares that time’s up.

I am a big fan of Michael Lopp and his alter ego Rands. I followed his blog for years, an even bought his book Being Geek. In the chapter called ‘A Deliberate Career’, he cited a ‘third option’, apart from a startup and an established company:

There’s a constant threat in a start-up, and that’s the threat of failure. You can ignore it when you’re busily working three weekends straight, but it’s always there: “We could fail.” The larger company’s success has hidden this threat under a guise of predictability, domesticity, and sheer momentum.
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Still, you can find the same [start-up] attributes in a large company in a specific group that has been tasked with the new and sexy.

It appears that working on an exciting new project in an established company is a win-win situation – all the fun of a startup but no risk. But there is a bug here. Fear is a powerful motivator. Remove it, and everything slows down, because if the cheque clears like clockwork, what’s the hurry?

In my recent post on client side frameworks, I kept mentioning Angular.js. On the surface, it seems to fit the description of the ‘best of both worlds’ project – Open Source exposure backed by security of Google. Then you have to remember that Google uses spaghetti approach to their services – throw a plateful towards the wall, and see which one will stick. So Angular.js is great, unless your team works on Closure or GWT or Dart, and you know that at any point in time the axe can fall and people will be leaving flowers for it in the graveyard of Google Services. That’s enough fear for me, thank you.

A friend from my youth went to spend some time in Greece. He didn’t have a lot of money and the beautiful island of Santorini was not exactly cheap, so he had to do all kinds of jobs to support himself. He told me and my wife something that stuck:

Not knowing where your next meal will come from does wonders to focus your mind.

Since lack of fear means lack of alertness, sense of urgency and get-go, teams working on new projects in large companies often lose sight of the possibility that the project may not result in an actual product. Your mind is playing tricks with you, similar to the DotCom investors who had ‘high risk tolerance’. Large companies don’t fail, you say. And you are right – not in the way startups do. With no buffer and no sheer mass to amortize the blow, any kind of snag can knock you down if you are a startup. Still, in a big company you can fail to see your vision through to completion, and see the joy of customers actually finding your product useful. You may still have your job, but unless you are in it just for the paycheque and your true passion lies elsewhere, that’s got to hurt a bit. And if your heart is not in it, what exactly are you doing all day? Checking Facebook? Laughing at Doge pictures?

A much healthier approach for you if you want to continue to be on the bleeding edge is to accept that all startups can fail, even those in big companies (in their own soft way). The fact that in the latter case the salary keeps landing in your bank account already puts you at an advantage over most of Silicon Valley. Accept both sides of risk, not just the good one, accept that ‘extreme uncertainty’ is a serious business (unlike extreme ironing), and act accordingly.

Oh, and read The Lean Startup book carefully. You will find plenty of examples of tactical failures along the way – failures to accurately predict customer base, feature set, the essence of the product value add, customer interest. While pivots are a normal part of the startup experience, they can be truly unsettling to a corporate developer used to stability and predictability.

Even in a big corporation, you cannot have it both ways. Either be truly lean, agile and ready for all kinds of curve balls, ready to turn on a dime, or move to a more established project already shipping products or services, where incremental innovation is more important than starting from scratch for the third time. In both real and corporate startups, if you are not afraid, it’s not a real startup.

© Dejan Glozic, 2013