Insights

The Fatal Flaw in the Lean Startup Model. And How to Fix It.

The Problem With Reality

Human beings don’t like reality much.   It’s awkward.   It’s messy.   It gets in the way of our plans.  It’s unpredictable, organic and dense in ways we’d rather not acknowledge.  We know we live in it, but we really like to pretend that we don’t.

We avoid difficult facts, we shade our thinking, and we use language to obscure what’s going on (“we’re looking forward to right-sizing our organization”).  We listen to music, watch TV, make up stories, and put a huge amount of effort into creating technologies that take us as far away from the irritating rub of the real as we can: drugs, screens, headphones, streaming, wireless and the Oculus Rift. 

This problem hasn’t escaped the notice of thinkers through the ages, who have left us their advice:

Life is a series of natural and spontaneous changes. Don’t resist them – that only creates sorrow. Let reality be reality. Let things flow naturally forward in whatever way they like.

  — Lao Tzu

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Startups and Reality – A Troubled Relationship

From the very beginning of my work in startups I have been fascinated by the relationship between startup organizations and reality.  It is, I would say, troubled.

A startup needs reality.  In the end, somebody has to buy the product for more money than it takes to produce (obvious?   you’d be surprised).   Reality has to accommodate the changes that a startup is banking (literally) on making.   So you would think that people running startups with have some respect for reality, listen to what she was saying, take her into account.

But very often, reality is deeply disrespected.   Startup leaders make assumptions, take her for granted and believe that she is on their side.   Indeed, they believe that reality has a side to take, rather than just being.

Startup leaders make statements about reality, like:

  • “it’s going to ship in October!” (independent of number of engineers, technical feasibility, rate of progress)
  • “we’re guaranteeing $2M in the first year!” (independent of market size, pricing variability, customer acceptance)
  • customers love the new version” (based on a couple of chats with customers in a social setting)

If you’ve spent any time in startups, you can provide your own.

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Reality Always Wins.

Isn’t it wonderful that reality always wins?  

 — Deb Burkmann, Yoga Teacher

If you don’t have enough engineers, or the technical work is too daunting, you won’t ship in October.   If there is no addressable market, you won’t make $2M in the first year.  If performance is limited by some fundamental constant, well, then it’s a problem.

But before completely give up our agency, and decide there’s nothing we can do,  let’s consider the other, opposing force.  To begin a startup, you must have, to some degree, the idea that reality is malleable – after all, your goal is to build something that didn’t exist before, and have many (hopefully) millions of people change their lives by using it.  So you must start with the notion that you can, in fact, change reality.   Or at least add to it.

And that’s a large part of the buzz of doing a startup!   We can shrug off the irritating framework we’re stuck with and make something better, different – alter the world around us a bit.  Given how troublesome reality is, it’s no wonder that changing it can seem so exciting.

Reality is wrong. Dreams are for real.

 — Tupac Shakur

So a startup needs a healthy relationship with reality.  After all, we are trying to change her, nudge her along a little bit, make her a little less chaotic, lean a little more in our favor.

In which case, it might be a good idea to have a little respect.  Listen to what she’s saying. 

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Tools to Square the Circle: The Lean Startup

Not to correct Tupac (really, one shouldn’t), but in a successful startup reality is for real.  And so are dreams.

The magic of the Lean Startup approach is that it gives us a set of tools to square the circle – to continuously align our desire to create change with reality as it is.   

Running a Lean Startup is a process of articulating our dreams, carefully and accurately, in ways that they can be measured against Reality As It Is.  We look at the implications of our hopes, break them down into measurable pieces, and then ask reality if we are on the right track.   

We end up treating reality with care and respect – a healthy relationship.  Sounds good.

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The Flaw In the Lean Startup Model

But there’s a problem, actually a fundamental problem, in the Lean Startup Model.

As the risk of repeating my thesis word for word: we humans don’t like reality much.  It’s awkward. etc etc.   See the flaw yet?

Right!  For the Lean Startup Model to work, humans have to face the stark facts that the methodology presents to them.   They have to think carefully, set up the process honestly, and really, really listen to the results!   And humans are sneaky.  Even to themselves.

So this is the kind of thing that happens:

  • I talk to an entrepreneur about her project.  I ask her if she’s using the Lean Startup model.  “Of course!” she says.  I ask her what testing she has done.  “ We don’t need to test!” she says. “I’ve talked to a bunch of people about it!”.
  • a startup sets up a series of experiments to test the acceptability of a new feature.  It happens to be a feature that the CEO is fond of.   The results come back: users find it too complicated to use.   There is a meeting.   The CEO says “you weren’t talking to the right users”.
  • a startup does a bounce-test to check the potential ROI of their new product.   The ROI comes back negative.   They proceed anyway.   “We can optimize the advertising later” they agree.  “That’ll bring it up to an acceptable number”.

You may be able to provide your own.

An uncharitable reading might be that these are just not very successful entrepreneurs.  I think we should be more forgiving.  This stuff is hard.  And I have seen tremendously successful entrepreneurs be completely blind to reality and fail as a result (and so have you).

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What’s Going On Here?  A Basic Human Problem

We have the impression we are rational actors.   But we are not.  We are chemical, emotional, variable, swayed by desire and ego and things we just believe to be true and the day of the week and the temperature in the room. 

Our thinking brain is a tremendously subtle tools for modeling the world around us, allowing us to plan and create.   But our thinking brain is also endlessly derailed by the messy power of what we feel. 

Daniel Khaneman’s terrific book “Thinking Fast and Slow” enumerated dozens of ways our rational mind is swayed by our emotional systems (this is a good introduction).

What we see, what we listen to, what we hear, is filtered through a gauze of sensations, emotions, dreams and visions.  If you’re feeling good, in love, positive about life in general, you’re much more likely to green-light a decision.   If you start a discussion about your revenue projects with a big number, your judgements about your revenue will be biased towards that big number (“$100M in five years!   No problem!!”).

It’s tough to see through that gauze. It’s tough to hear that the feature you love isn’t going to work in the marketplace.   It’s rough to see a spreadsheet that says if you get 1% of your users to upgrade at $X, you don’t have a viable business.

Dreams are so beautiful.   Reality is so… messy.   It’s easier not to see.

Our comforting conviction that the world makes sense rests on a secure foundation: our almost unlimited ability to ignore our ignorance

― Daniel Kahneman, Thinking, Fast and Slow

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The Stakes

In a startup, what we feel is often a potent brew of hope and fear.  The hopes are a high-stakes mix of personal and professional: we want to create something great, we want our team to be successful, we want to be recognized by our peers – and on and on.   There is often a lot of money involved – for us, for our team, for our investors. 

And the fears are the flip-side of all that.   What if we fail?   Years lost.  Investors disappointed.  Team disbanded.

The stakes increase the intensity of the emotions, particularly fear of loss (Kahneman tells us that fear of loss is one of the most powerful filters to decision making).  Intensity of emotion thickens the gauze between us and what is really occurring, what is really possible.

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Fixing the Bug: Mindfulness

Mindfulness is a practice that dates back some 2,500 years.   It has recently been popularized as a means to relax at work, engage more closely with your colleagues, understand yourself more completely, and generally live a healthier life. 

All of that is true, and good and useful.   

But it goes deeper than that.   The tradition associated with Mindfulness is Vipassana, a practice who’s purpose is to gain insight into the true nature of reality.  (What that nature actually might be is, of course, the subject of thousands of years of conjecture).   

Mindfulness practice exists to help us see more clearly – to allow us to have  a healthier relationship with reality, to reduce the essential suffering that our immersion with reality brings us.

Looking into something with clarity and precision, seeing each component as distinct and separate, and piercing all the way through so as to perceive the most fundamental reality of that thing  

  — Henepola Gunaratana, describing Vipassana.

By regularly sitting and observing our thoughts and feelings and the sensations of our body, we start to recognize where our thoughts are entangled with fantasy and emotion.  Our thinking brains are tremendously subtle tools for modeling the world around us.  As we recognize the tangles around our thoughts, we can start to gently unravel them, separating our clear and useful thinking from the mesh of sensations, emotions, dreams and visions.

  • If we are able to see our intense attachment to the wonderful feature we came up with, we are more likely to really hear a customer when they tell us it isn’t useful.
  • If we can be unattached to the idea that our product will absolutely, definitely sell for $99, we can work much more carefully with evidence that suggests the right price is $20.
  • If we can listen to a potential customer carefully and fully, including facial expressions, body language and tone, without imposing our preconceptions on their views, we are more likely to come away with an idea of a product they actually need, rather than one we want to build.

Leadership is the capacity to translate vision into reality.

 — Warren Bennis

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So What Am I Suggesting?

The first rule is to keep an untroubled spirit. The second is to look things in the face and know them for what they are  

 — Marcus Aerelius.   CEO of Rome.

The Lean Startup approach is a technique for aligning the hopes and dreams of your startup with what reality might allow.

But building a Lean Startup still requires that you “look things in the face” – that you and reality have a healthy relationship based on give and take.  Because reality will always win. 

In order the “look things in the face” you have to have a clear and open mind.  And because the stakes in a startup are often significant, emotions run high.

I am suggesting that a regular Mindfulness practice compliments your Lean Startup approach.   Mindfulness is a tool for the emotional mind, the Lean Startup a tool for the thinking mind.

There are plenty of great ways to dip your toe in.   “Search Inside Yourself” is a great overview for a business setting.  “Meditation for Beginners” is a great general introduction (and anything by Jack Kornfield will help you).  Try meditating a few minutes a day for a couple of weeks.   Try having a minute of quiet reflection before you review the results of your next experiment.  Next time you talk to a customer, sit quietly for ten seconds before you begin (they won’t mind. Really).

Reality is merely an illusion, albeit a very persistent one.

 — Albert Einstein

Listen carefully.   See clearly.   It’s easier if you look.   Reality right there, willing to work with you, if you really pay attention.

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