Two weeks ago, at the First Growth Network, we discussed Lean Start Up Methodology – experienced entrepreneurs shared their stories with newer startups to inspire, educate and mentor. Championed by Steven Blank in The Four Steps to the Epiphany, the customer development process gave birth to the lean startup movement over the past year. I have read the books, attended many of the talks and have written about lean before.

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Sitting in the conference room hearing some wild stories about the bubble days, I realized all the companies discussed were enterprise companies – not consumer companies. 

Enterprises demonstrate a structured way of thinking about problems and products to solve problems (see the diagram above):

  1. An enterprise can clearly articulate a problem: My database can’t handle the query volumes of the new business intelligence tool.
  2. An enterprise has a defined budget for solving a problem: The storage budget this year is $5M. We can spend 10 to 20% on new databases, if the database cuts cost elsewhere.
  3. An enterprise will pilot products and iterate with a vendor: Let’s run a 6 month consulting engagement/pilot to evaluate if this new database solves the problem.
  4. Enterprise needs tend to be iterative rather than disruptive.

Successful tech consumer products very rarely demonstrate any of these characteristics, let alone all of them. New forms of communication like Facebook, Skype, Twitter, Posterous, Scribd were built by entrepreneurs who had a vision of the way a consumer ought to do something. This vision may have been defined by consumer feedback but the entrepreneur did not have the benefit of the structured thinking and logical decision making of the enterprise. Moreover, brand, positioning and user experience are much more important to consumers than to enterprises, particularly at the early stages of product development. 

Lean startup methodology is a great way of thinking about iterative product development to satisfy enterprise needs. I am not convinced that the same is true for consumer services. 


8 thoughts on “Does Lean Startup Methodology Apply to Consumer Startups?

  1. An enterprise will pilot products and iterate with a vendor: Let’s run a 6 month consulting engagement/pilot to evaluate if this new database solves the problem.

  2. Thanks for the comment! I agree entirely with your points about preemptive scaling. Cash provides options and should be hoarded until a product resonates in the market.On your point about pilots, though, I disagree. New data stores like Cassandra/Hadoop and platforms like Heroku/Amazon tend to be trialed and piloted before large scale deployment

  3. I think it does work for consumer products, but the validation steps are different. You can test demand by using adwords, or facebook adds. You can prove there is a business model by tracking people who click on the buy button. Tim Ferris used this process when he attempted to come up with the name for his book, the four hour work week. Also there is a pdf floating around on the internet call the “The standford D.school design bootleg” It lays out some solid steps for end user focuses iterative product development. I believe everything else in the book applies (process wise), but the activities in the validation stage are a bit different.

  4. Thanks for the comment. Great to hear your point of view. The validation methods are as you point out, easier and maybe more immediate.But the creation of the concept, the core idea, is very different. In enterprise, incrementality is viable. For consumer services, it is not.

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