Why "Lean Startup" model is already dead

Many people embraces the book "Lean Startup".  It is a book that formalizes an approach to entrepreneurship and innovation.  Basically the four steps outlined are:

1. Identify a problem, think of a solution;

2. Make an MVP to address the problem;

3. Test the MVP to the audience;

4. Improve it.

The author is clearly trying to make a movement out of this book.  It is an "agile" innovation model suitable for solopreneurs and perhaps small organizations.   It is very appealing to young people, who are most likely without jobs, without experience, without management maturity, and without too much detailed skills outside of coding websites and APPs.  Now, this is good for letting a lot of young people get involved.  But it is also missing on many important points.

Point One: Solving a problem and offer the solution model is dead

If a customer has three problems, and you solve his/her number two problem, the customer would not care.  If you go around offering things like charity to complete strangers through social network - I know it will not work.  There are ALWAYS exceptions.  Amazon is started by one person.  ExciteHackers is started by one person, and so on.  This "get rich quick" scheme is very fulfilling good news in bad times, I understand.

Point Two: The "Make it and they will come" model is dead

The world really has everything.  If it does not have something, you need to make it in a heart beat through a factory, not in your "garage".  The only way to startup a business in the future is to have experience in the market and understand the problem completely, and offer a solution that will both disrupt and benefit the entire ecosystem.  This way you can be accepted by the customer and the network.

Point Three: All ideas are good, only a few can penetrate to the market.  Startup success is based on two important factors - whether sales will fall and whether the network allows you to access the audience.  This is what kills the majority of startup ideas

The "lean startup" book will bring a lot of people out of the woodwork and start to tinker and trying to "ask for opinions".  These group of people will be very disappointed in the end.  Although experience is priceless and it is always to have some experience, many young people would be missing the important timing to learn through jobs and excel at "boring work" first.  In the end they will not be able to recover.

So be careful.  "Lean startups" is a good book, but it emphasize a "guess and projecting" scheme and a "get rich quick" fantasy.  The worst, is that this has a lot of following - the serious voice in the silicon valley is drowned. 

If you like Lean Startup, treat it as a very very good appetizer.  Read other more serious books that do not go into the "chicken soup" category.  I recommend "Traction" and "Zero to one".  They are written by much more experienced veterans who suffered from the setup of the market acceptance. 

IN THE END, IT IS NOT WHAT OFFER THAT MATTERS.  IT IS WHETHER PEOPLE WANT AND WHETHER THEY HEAR FROM YOU. 

The idea that you can do a customer survey and get opinions is wrong - people will tell you all kinds of feedback and suggestions, and in the end whether they buy it or not, whether they give you the price you want or not, is the unknown left for the very long end of the startup journey.

Straight Talk for Startups: Table of Contents of 100 Rules

The Straight Talk for Startups is a book that veterans can appreciate.  It is so full of wisdom from years of operations.  Unfortunately beginners who are most vulnerable may not appreciate the contribution.  Here is the Table of contents for Straight Talk for Startups.

Cover of Straight Talk for Startups

Straight talk for startups
By Randy Komisar and Jantoon Reigersman

1. Starting a venture has never be easier exceeding has never been harder
2. Try to act normal
3. Aim for an order of magnitude improvement
4. Start small but be ambitious
5. Most failures result from poor execution not unsuccessful innovation
6. The best idea originates from founders who are users
7. Don't scale your technology until it works
8. Manage with maniacal focus
9. Target fast growing dynamic markets
10. Never hire the second-best
11. Conduct your hiring interviews as see if you're an airline pilot
12. A part-time game changer is preferable to a full time seat filler
13. Manager team like a jazz band
14. Instead of a free lunch, provide meaningful work
15. Team of professionals with a common mission makes the most attractive investment
16. Use your financials to tell your story
17. Create to business plans, an execution plan and a aspiration plan
18. Know your financial members and their interdependence by heart
19. Net income is an opinion but cash flow is a fact
20. Unity economics tell you whether you have a business
21. Manage working capital as if it were your only source of funds
22. excellent exercise district its financial discipline
23. Always be frugal
24. To get where you are going you need to know where you are going
25. Measurement comes with pitfalls
26. Operational setbacks require swift and deep cutbacks
27. Safe surprises for birthdays not for your stakeholders
28. Strategic pivots offer silver linings
29. Don't accept money from strangers
30. Incubators are good for finding investors but not for developing business
31. Avoid venture capital unless you absolutely need it
32. If you choose venture capital pick the right type of the investor
33. Conduct detailed due diligence on your investors
34. Personal wealth is not good investing
35. Choose investors who think like operators
36. Deal directly with the decision makers
37. Find stable investors
38. Select investors who can help future financings
39. Investors syndicates needs to be managed
40. Capital intensive ventures required deep financial pockets
41. Strategic investors pose unique challenges
42. Raise capital in stages as you remove risks
43. Minimizing dilutions is not your fund raising objective
44. Don't let a temporary fix become a permanent mistake
45. Pursue the lowest cost capital in light of your circumstances
46. Escape the traps of venture debt
47. Choose one of four approaches to determine how much money to raise
48. Always have your aspirational plans ready
49. More ventures fail from indigestion since from starvation
50. Never stop fundraising
51. Venture capital moves in cycles
52. Fund raising takes more time than you think
53. The pitch must answer the fundamental questions about your venture
54. Make it personal
55. When pitching carefully read the room
56. Use white papers for deep dive follow-ups
57. Prepare your financing document ahead of time
58. Obsessively drive the close
59. Consistent communication is important in convincing investors
60. Milestones can solve irreconcilable valuation differences
61. Liquidation preference will change your outcome safe
62. Do not take rejections personally
63. Boards are deliberation bodies not collection of individuals
64. Conflicts of interest and conflicting interest are elephants in room
65. Your board should be operational rather than administrative
66. Small boards are better than big ones next one
67. Lead investors ask for board seats quantify them first
68. You need a lead director
69. Add independent board members for expertise and objectivity
70. True board diversity is a competitive advantage
71. Each director must commit to spending meaningful time
72. Review director performance regularly
73. Your chief financial officer has a special relationship with your board
74. The founder should choose the best CEO available
75. Find a coach
76. It is the CEOs job to run efficient productive meetings
77. Don't oversell your board
78. Board agenda should look like this
79. Prepare thoroughly for board meetings
80. Use your daily management materials for board meetings
81. Too many unanimous board decisions is a sign of trouble
82. Use a working sessions and committees to reinforce your priorities
83. Your bored should spend time with your team
84. Building companies to last, providing liquidity along the way
85. Who liquidity is not limited to initial public offerings and acquisitions
86. If you go public don't slip and fall
87. Investors and management's interest in liquidity often conflicts
88. Individual needed liquidity too
89. Your evaluation will have a local maximum
90. Ventures aren't just bought they can also be sold
91. Choose an acquisitor, don’t wait to be chosen
92. If you want to sell your business you need to know the decision-makers
93. Determine whether you are a good fit for acquisition before contacting them
94. Know your acquisitor’s acquisition history in detail
95. Make yourself visible
96. Build a relationship with potential acquisitions don't cold call
97. Be ready when they are
98. Success is not linear
99. Prepare for your lucky break
100.  Learn the rules by heart so you know when to break them

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Should Co-founder Be Given Equity?

A lot of startup companies are better off with two people on board.  After all, the name "Company" literally means "more than one person".  When someone invite another person to be a cofounder, what are the points of discussions associated with equity share?

Here are a couple of major points to consider.

(1) Does the cofounder pay cash into the company coffer?
(2) Does the cofounder need to quit current job and forego salary?
(3) Does the cofounder need to take a pay cut from current level or industry standard?
(4) Should the cofounder be given private equity?

Keep in mind that a cofounder is important.  The founder is a status, a position, and a responsibility.  These three goes together.  The status means it is obviously a later badge of honor.  But the cofounder has to earn it with what he/she does for the company.  A cofounder should be a builder in chief - building the product, the sales channel, or something critical.

Later when the team goes to ask for funding from an investor, the investor WILL ASK this question "are both you working full time for the company".  It is important to keep this in mind.  If when you go to investor and one of you have not given up your job, it just looks bad.

A cofounder is not a high level employee.  A cofounder is a founder. 

Cofounder is not a gig.

Veteran Entrepreneur's Top Five Secrets for Making A Startup Business

A veteran entrepreneur is someone who have failed once.  They learned through their failures and direct experiences, and are much more familiar with the entire lifecycle of a startup and the characters of a business.  Veterans knows everything is hard, and they don't have any illusions or prayers of hope.  

Only direct physical experience constitute real learning.

Only learning through failures means you are learning and competing. 

A veteran business entrepreneur think about five elements:
(1) the eventually brand and what the name would represent;
(2) the barrier to prevent others from entering;
(3) the exit of founder and investor;
(4) the quality of the business;
(5) the establishment of channels.

A veteran startup entrepreneur never thinks about the startup.  They think about the business they are starting. 

Dr. Chang Liu in a mold factory in Guangdong Province, China.

 On the other hand, an amateur entrepreneur have no idea about the business and have only vague idea of the startup.  They don't plan the business out because they don't have the information.

If you don't think about the finish, the start itself is not very meaningful.  You have but one chance of deciding the positioning of a business, once you start.

A veteran entrepreneur knows the following three things are hard to get:
(1) Quality is hard;
(2) Profit is hard;
(3) Talent is hard to come by.

Other things that are hard to come by include channels (you must build the channel yourself).   

There is nothing that the world must have.  No one will help you.  You must walk through every single step yourself.

A veteran also does two opposite acts extremely well:
(1) They focus extremely tight on the start;
(2) They design a scaling and growth strategy that allows unlimited growth and ceiling.

In other words, a veteran does not reach the star in one step.

Veterans do two things in their design: Extreme Focus on Start and Long Growth in Subsequent Steps.

The following is a list of videos related to this topic.

The contents and videos are produced by TeenSharks Startup School, in collaboration with Seven Parallel Consulting.  We are veterans passionate about teaching the startup process.