Lean

I've been reading Eric's book which I am very much enjoying. And on wednesday night I spoke to the NYC Lean Startup Meetup with the help of Giff who interviewed me.

Eric and his fellow lean advocate Steve Blank have both written at length about the methodologies associated with the lean startup approach. If you have not read their books (Steve's here), I suggest you do.

But the most interesting part of the discussion on wednesday night for me was when Giff asked me about a comment I had made that "you need more than a lean methodology, you need a lean culture."

To me, lean is a state of mind that a founder and his/her team needs to have across all aspects of the business. The specific product and engineering approaches that are at the core of the lean startup movement are paramount for sure. But if you can apply lean to hiring, sales, marketing, customer service, finance, and everything else, you will be rewarded with a fast, nimble company. That's a winning model, especially when things are moving fast in many dimensions as they are right now.

Later on in our conversation on wednesday night, I got a question about lean and venture capital. To me, USV is a lean VC firm. Brad and I set it up that way because we talked about all the things we didn't like about venture capital firms when we were setting USV up in late 2003.

My prior experience at Flatiron was instructive. In the first two or three years of Flatiron, it was basically just me and Jerry. We were deeply engaged in all of our investments and we had one or two employees other than ourselves. We did very well in that period. In mid 1999, we went on a binge, raised a huge fund ($350mm), moved into a massive office, hired a staff of 25, made investments we weren't engaged in, and got fat. We did poorly in that period. We shuttered Flatiron in 2001 and I took over the entire portfolio with the help of Jerry and Bob. It was basically back to the early model. We did very well in that period.

I do not believe that venture capital scales. I believe you need a small team of highly engaged partners and not much else other than great relationships with entrepreneurs. We do have a small team of non-partners at USV. Dorsey runs the office. Christina runs the investment stuff. Gary runs the portfolio engagement stuff. That's it. It works really well. We've kept USV lean and I believe that has allowed us to focus on what matters most, to react quickly to opportunities, and to be focused externally as opposed to internally. And when I look at most of the VC firms I admire, I see similar lean approaches. It's a winning model.

#VC & Technology#Web/Tech

Comments (Archived):

  1. Joe Yevoli

    Just forwarded this to our new engineer. ¬†I love this mind frame, and want this to be a part of the company culture for as long as possible.”Perfection is achieved, not when there is nothing more to add, but when there is nothing left to take away.”

    1. fredwilson

      i love that quote. joshua schachter shared it with me years ago

    2. Rohan

      Nice one.. Let’s thank michaelangelo ūüôā

    3. JamesHRH

      The jeweller who designed our wedding ring set described the difficulty of clean and simple design like this:’when you don’t do much to the metal, its pretty obvious when you screw it up.’The other side of this coin.

    4. Vasudev Ram

      Or maybe, also, “when there is nothing left to do” – check the story about Greek sculptor Phidias, in Peter Drucker’s talk that I linked to below, “My Life as a Knowledge Worker”.

  2. tyronerubin

    Bought the unabridged¬†audiobook last night at audible.http://www.audible.com/pd?a… it.Love it as a compliment to reading Brad Feld’s ‘Venture Deals’.BTW thanks for getting me to finally read ‘Decoded’ loved it!through your tumblr posts on it

  3. William Mougayar

    Absolutely 100%. That allows you to always be “in the know”, so you’re not spending useless time “getting up to speed” on important matters before making decisions.¬†A start-up can turn on a dime, dance on the head of a needle and pick-up speed in sharp turns. That’s the thrill of it, and what makes it fun to be able to beat the big, complacent others.¬†

  4. JamesHRH

    I find the Lean movement to be a yet again not quite complete engineering based approach to business.You have it right – its about a model, an attitude and a commitment to keeping the model & attitude.Lean (and a little mean).

    1. markslater

      its a framework.It requires customization. each company will have its own taxonomy. Its an API for success in start-ups – build on top of it.but its a great framework

      1. JamesHRH

        Mark – I am not hugely into it, but I see it as more of an operational attitude more than a path to startup salvation for all entrepreneurs. It is being hyped as a cure all for all situations, which it is not.I would argue that the traditional VC investment – the around the corner, pass/fail, huge market bet – supports lean as an operational model but not a company builder.When you can put so little capital (in historical terms) in play and still make VC style returns, then there are a lot of companies where lean is a company builder. But they are not the significant ones.No one ever pivoted a really significant company (MS, GOOG, FB). Its a code word for ‘unprepared’, ‘wrong’ or ‘bad idea’.Maybe I am wrong, but Twitter doesn’t seem lean. There is no way that Apple is lean. They have a lean attitude to operations, but not to the company.As a final thought, Fred’s story is about founder-model-market fit and its not really a lean VC story at all. USV was right, right from the start.

        1. markslater

          as i said in another comment. Its a framework on top of which each company builds their own taxonomy. you cant just follow it page by page – you take pieces – customize and apply.

        2. Cam MacRae

          Microsoft began as a compiler business.Google began as a library tool to search academic citations.Facebook began as a way to meet hot chicks ;)Apple was born out of blue boxes.Pivot or not, they all evolved into something quite different.

        3. markslater

          the model only applies to the early stages of a company.once you achieve product market fit – and you prepare for scale – you graduate in large part and you are out in the big wide world.

          1. Pete Griffiths

            I think the ideas have more application than early stage.  Whilst the theory has emphasized early stage the key ideas of close customer contact to learn fast and thereby minimise waste are more generally applicable.

        4. Vasudev Ram

          Nothing can ever be a “path to startup salvation for all entrepreneurs”, or more generally, a “path to salvation for all anyone”. “Different strokes for different folks”, specialize from the general concept as per your needs, go by the spirit of the thing, not the letter, and so on …

  5. mherrick66

    I’m constantly reminded how unfortunate the English meaning of “Lean” is ‚Ķ it really has nothing to do with “small” and everything to do with learning / continuous improvement / and the ruthless elimination of general ass-hattery (waste).

    1. fredwilson

      i think there is a correlation between the two meanings

      1. mherrick66

        Sure, but way too often Lean principles are dismissed as only working in the small which is complete nonsense.

        1. fredwilson

          agreed

      2. Pete Griffiths

        There may be a correlation but that doesn’t mean causation. ¬†It is perfectly possible to have a large lean startup – and a small non-lean startup. ¬†

        1. Vasudev Ram

          +1 => “Correlation does not imply causation”. This quote comes up fairly often on Hacker News, by someone refuting someone else’s statement.Note: It’s a little subtle and possibly misleading to those not trained in logic (of the Boolean / Aristotelian kind – which is actually dead simple, just that people have a knee-jerk reaction to shy away from it as being something “mathematical” or “techie” – which it is, in its uses, but it is also very very common-sense stuff – now try catching a layman saying he doesn’t have common-sense :-).It’s subtle because the statement “Correlation does not imply causation” does NOT mean that when there correlation, there IS no causation – just that there may or may not be.Hope I’ve confused some people enough for today ………

    2. Mark Birch

      I like that term “ass-hattery”, it is a personal favorite of mine…

    3. FAKE GRIMLOCK

      LEAN NOT MEAN SMALL IN ENGLISH.MEAN NOT FAT.VERY LARGE, POWERFUL THING CAN BE NOT FAT.FOR EXAMPLE, GRIMLOCK.

      1. Vasudev Ram

        >LEAN NOT MEAN SMALL IN ENGLISH.>MEAN NOT FAT.>VERY LARGE, POWERFUL THING CAN BE NOT FAT.>FOR EXAMPLE, GRIMLOCK.Hee hee, good one.Overall, roughly what I said, Grimlock. But you said it better.

    4. Alex Murphy

      +1 on this.Lean = speed. ¬†Think about an athlete.I think the academic version of Eric’s book should be called “elimination of general ass-hattery ” that is awesome!

      1. Matt A. Myers

        Decision making allows speed. Having proper decisions made is what is important, but if too bloated then not enough focus can be applied and therefore decision quality will be lessened, and ass-hattery will occur. ūüėČ Agreed on the term.

    5. Vasudev Ram

      I don’t think the generally accepted English meaning of “Lean” is at odds with the Eric Ries / Steve Blank / Toyota meaning of Lean. Lean in English means less fat or lack of fat, “Containing little excess or waste; spare”, etc. Fatter implies slower and also implies more waste, and so on. Old nursery rhyme comes to mind here ūüôā “Jack Sprat could eat no fat, and his wife could eat no lean” …http://en.wikipedia.org/wik…Do a Google search for “define lean” and check a few of the hits (not just one).Tip: DuckDuckGo doesn’t always give the best results, although I like their scrappy (and lean, heh ūüôā spirit, and their results (sometimes), and although I experimentally changed my default browser search to DDG after reading that recent post by Fred. You can easily change the DDG search back to Google by preceding the search term with “!g “, that’s “!g” followed by a space. in the search text box.

  6. Carl Rahn Griffith

    Lean and Clean is the new Lean and Mean.

    1. fredwilson

      clean means what to you?

      1. Carl Rahn Griffith

        Integrity – no bullshit/egos/politics – a desire to ‘do the right thing’ whilst also making a buck/profit – something sustainable. Something one can be proud of.

        1. fredwilson

          i like that a lot

          1. markslater

            Umair Haque – i hear his voice on AVC again. Whats it been 6 years?

          2. fredwilson

            too long. he’s someone who has an important point of view

          3. Donna Brewington White

            Umair is one of my favorite HBR bloggers.

        2. reece

          i had dinner with one of our angels and some of his other portfolio CEO’s the other night… much of our conversation came back to strong valueswithout strong core values in the leadership of a company, you’re in trouble#i’mlookingatyouGroupOn

          1. markslater

            and that hash is quality ūüėČ

        3. LE

          You can only have as much integrity as your particular business or industry tends to have as a whole.For example it’s hard to be an honest body shop or car repair if all of your competitors are gaming the system and you are doing something that is hidden from plain sight or not understood. Consumers and even businesses are easily fooled and tend to go with the lowest price without either looking or being able to discern the total cost of ownership of a product or service.It also depends on what your financial situation is. Companies that have little competition or some great advantage over their competitors canoperate more honestly because they aren’t beingpushed to or need to make as many ethical choices.¬†

          1. Dale Allyn

            I heartily disagree with this comment (no offense intended), although I will concede that one is met with additional challenges if competing in an otherwise corrupt environment. I speak from experience in this, and there is never (NEVER) justification for submitting to the corrupt path led by others. One just needs to work differently (i.e. “disrupt”).

          2. K_Berger

            “You can only have as much integrity as your particularbusiness or industry tends to have as a whole.”I could not disagree with this more.¬† While a ‘dishonest industry’ may be more challenging, integrity is still not optional.¬† And more money presents its own problems, sometimes worse than no money.And, in the long run, usually integrity wins.¬† There is a car dealership that I have purchased from 3 times in the last 3 years.¬† Each time I get an easy, great deal and sometimes wonder if it was so easy maybe they are pulling the wool over my eyes.¬† But I refer people there and almost every time they buy from there because it is easy, low pressure, and the right price.¬† Integrity wins.[Edited to clean up some bad formatting.]

          3. LE

            “integrity is still not optional.”Integrity is analog not digital.It’s not yes you have integrity or no you don’t.Present the same hypothetical situation to the readers of (just) this blog and you will get many different responses. And that’s with the readers not being emotionally invested in the situation.”Each time I get an easy, great deal and sometimes wonder if it was so easy maybe they are pulling the wool over my eyes”Consistent pricing has pretty much been shown inthe auto industry to not work. Some people canand will pay more and some people won’t.With consistent pricing there is not a great wayto get someone to buy a car *today*. That’s whysales and promotions work. Sure not everyonedoes that (Walmart just had to go back toeveryday pricing..) but it’s well proven.Especially with emotional purchases.Even with consistent pricing would it be ethicalfor the salesman to tell you that if youwait two weeks the price is going down? Sure hecould do that to build future trust withyou but what if that doesn’t matter to him?Does Apple tell people when a new model iscoming out? We know in the industry becausewe know they are clearing the channel. Butthe average person doesn’t. Is that ethical anddoes it show integrity on Apple’s part? If you think it iswould you do that to a friend if you workedfor Apple and knew? Probably not. You’dprobably tell the friend to wait for thelower price.So back to my original statement”You can only have as much integrity as your particular business or industry tends to have as a whole”Some industries as a group have the advantageof being more ethical than others. So I amjust saying you have to pick an industry thatlets you be comfortable with your own ethics.

          4. K_Berger

            LE, that’s a very loose definition of integrity.¬† Typically, when someone refers to the integrity of an auto mechanic, it is a situation where they do work you didn’t need or increase the prce because the consumer has no way to know what is necessary.¬† A salesperson warning of an upcoming new model or price break is not the same thing. That would be revealing ‘inside information’ as opposed to purposely overcharging or cheating someone who simply had no way to verify the truth.My apologies to all (honest) auto mechanics for implying they are all, by default, dishonest.

          5. Donna Brewington White

            So you are saying that good guys finish last?

          6. LE

            If you read what I wrote below in response to K_Berger I believe it further clarifies what I have said. And what I have said is not a reflectionon how I might run my life or business.¬† It is an observation based uponmy years in business of the way certain businesses operates.I stand behind my original statement (that seemed to cause a reaction from at least 3 people) which was”You can only have as much integrity as your particular business or industry tends to have as a whole”.Are there exceptions to that? Yes.

          7. Vasudev Ram

            I’m actually replying to LE’s reply to Donna – sort of, really addressed to Disqus, not replying to Donna herself – but due to the Disqus limit on nested replies, I have to “reply” to Donna ¬†…. I guess AVC regulars get the idea:@LE (really @Disqus):>what I wrote belowDammit, I think the default comment sort order on Disqus should be set to “oldest first”. I can understand that “popular first” is popular, but it is misleading, and makes it difficult to tell up/above from down/below, sometimes ūüôā I go cross-eyed trying to figure out whether the replier’s comment is above or below the replyee …. Those who want the thrill of seeing comments in popularity order can always click on the dropdown box at top of comments list and select that option. Hope Disqus is listening and will consider this. Popular can be unpopular at times …

  7. markslater

    one of the tipping points for my CTO decision was the question i asked about how familiar each person was with the lean methodology. the winning response was something like “i am glad you said that – i was hoping you guys were following….”¬†i am making every single person in the company read blanks book. i’ll enforce that for the first 20 or so employees.¬†our 4th hire was for the position we called “merchant development”. the role is self explanatory. The person got the book and did not read it for a week and i asked every morning – the response was “yes i am getting in to it” – i knew he wasn’t.¬†The first day he came in having really dug in – he looked like he had seen a ghost. thats the impact this approach has.¬†my view is simple – its required reading – and required behaviour when working here. Its that important. We follow our version of the process – we win. seriously.

    1. awaldstein

      Consider having this be required reading before they get hired.Reading and understanding. and behaving naturally with that understanding are not always the same thing.

    2. Donna Brewington White

      Of course you are winning.”he looked like he had seen a ghost”If you are creating this type of response in your employees, you are adding value to their lives. ¬†This guy will never forget this moment and will never be the same.

  8. JimHirshfield

    I was expecting some mention of Andy W in this post. Lean, but expanding….in a good way. Congrats on the new band member.

    1. fredwilson

      thanks Jim. we are super excited about Andy.

  9. jim

    I think of this post as the discount rate to apply to yesterday’s post. Job creation is a positive externality of companies, but it *is not* the metric companies, or their VCs, are trying to maximize — in some cases they are seemingly trying to minimize it.Admitting this is a good step in being able to think about the topic of yesterday’s post in a more meaningful manner.

    1. fredwilson

      i thought about that as i was writing this post. i’m not eager to hire.

      1. FAKE GRIMLOCK

        BUSINESS GOAL IS HIRE AS FEW AS NEEDED. COUNTRY GOAL IS HIRE AS MANY AS POSSIBLE.ONLY WAY HAVE BOTH IS MAKE MORE BUSINESS.

        1. Matt A. Myers

          And funny how there’s also efficiency in specialization. More businesses will equal more productive (assuming they are being managed as well as they need to be).

        2. Pete Griffiths

          So the question is Рat this point in our history, with our historical competitive advantages eroding, how many businesses of what kinds can we start that can compete not just domestically but globally and how many people can they absorb?  No a priori reason to assume enough to maintain historic rates of employment.

          1. FAKE GRIMLOCK

            THAT IS ROOT OF PROBLEM.BUSINESSES NOT HIRE GENERIC HUMANS. COUNTRY FULL OF GENERIC HUMANS.

          2. Mark Essel

            Generic beer filled humans…

          3. Pete Griffiths

            v true and¬†it’s going to be a nasty shock. ¬†We’ve seen this before – recently – as post WW2 UK struggled to come to terms with the fact that their world leading status wasn’t god given and the fact that they saw themselves as so fabulous and entitled wasn’t working any more.

          4. Donna Brewington White

            We need a modern-day Sputnik to shake us up.

  10. jeff trudeaux

    be pragmatic.  be cost conscious.  be focused.  always measure.  always question.

    1. Dave Pinsen

      ¬†Apply all that to government, and we’d be a lot better off.

      1. Aaron Klein

        +1

        1. Dave Pinsen

          That’s what the like button is for.

          1. Aaron Klein

            It didn’t feel quite hefty enough for my level of agreement.

          2. Peter Beddows

            I’m with you on that Aaron; sorry Dave.+1

          3. Dave Pinsen

            Perhaps Disqus should add fractional or decimal likes for levels of agreement < 1.Ping me when you have a chance. I thought of an idea for your biz. Something I can’t believe no one in the space has thought of before (or maybe they have, and I’ve never seen it).

          4. Donna Brewington White

            Are you sure you are not 30 years older? Crotchety much?

          5. Dave Pinsen

            I wouldn’t read so much into it. And if I were 30 years older, I’d probably go to bed a lot earlier. ūüôā

          6. RichardF

            Do you think?  I tend not use it explicitly for agreement more for enjoyment of a comment.

          7. Dave Pinsen

            I usually use it for both, but sometimes I’ll like a comment even if I don’t agree with all of it (e.g., Charlie’s 9/11 comment).¬†

      2. Matt A. Myers

        Get elected.

        1. Donna Brewington White

          He would SO have my vote!

      3. Donna Brewington White

        Shoot, you stole my comment!  Well, actually to the main post on leanness.Good word, Pinsen.

  11. awaldstein

    I’m a believer and practitioner.I’m not a believer though in any model that has the company build the product then sit back and try to figure out how to discover the market and community.This I know is not what you are proposing, but the distinction between marketing as an afterthought rather than marketing (and distribution) as part of product design and thinking is not broadly understood.

    1. ShanaC

      How did you get that new tag?

      1. awaldstein

        Looks like we all have it.Honestly…just ignoring them as they are always changing.

        1. fredwilson

          actually, see the comment i just left above to shana. we are on the verge of something really cool in this community

          1. awaldstein

            Got it…and you have my attention!

          2. leigh

            You’ll have to think of something¬†particularly¬†special for Kid and GRIM ūüôā

          3. Donna Brewington White

            In the old days, Kid was the bouncer.

          4. FAKE GRIMLOCK

            ME, GRIMLOCK, NOT ALREADY SUFFICIENTLY SPECIAL?

          5. Donna Brewington White

            on the verge… ?where have you been?

      2. fredwilson

        i now have the ability to create custom ranks and name them. i played around with it this morning and did something wrong. i plan to fix it this afternoon and then blog about it tomorrow and get feedback on the names i chose

        1. Matt A. Myers

          Ideas from my MUD gaming years.. Oh the memories..Looking forward to see what you came up with. ūüôā

        2. Cam MacRae

          While this is still a small community it will probably turn out ok, but as a refugee from Hacker News I’ve seen the negative effects of ranking at scale: Groupthink, hero worship, and plain old immaturity.¬†That said, right now this is a very different place, and although I’ve lurked for many years, I’ve only just started to participate regularly. I shouldn’t have been so surprised that good things are happening here.

      3. Donna Brewington White

        You have one too, my dear.

    2. Matt A. Myers

      Steve Jobs said this same thing, and clearly it was a good theory to follow. (Saddened that RIM doesn’t get it even though they’ve had Apple as an example).Something I follow as well. It allows for too much uncertainty¬†for me¬†otherwise.

      1. awaldstein

        I believe that Apple didn’t solve problems or market products so much as they platformed behaviors.¬†That’s their core genius.¬†Find that connection and platform and you have your market and your channel started. Think about that as part what you are building.

        1. JamesHRH

          ‘Platformed behaviours’ is a cool term.I think lean is leading inexperienced people down the wrong path. Your statement of integrating product design with distribution issues is critical.A great product that can not be effectively distributed (or maybe even constructed) is not vey useful.And, I have yet to see crowd sourced greatness. It is almost always ‘insanely great’ small teams who iterate – not the market.

        2. Peter Beddows

          Perfect explanation of Apple’s secret sauce

    3. leigh

      I might have mentioned this story before but worth repeating – Tobias from Shopify was speaking and completely dismissed marketing as the usual “for products that suck” argument. ¬†About 15 minutes later, he goes into a long story about how they floundered for two years bc they didn’t know who their core target was. ¬†Classic tech marketing Crossing the Chasm bowling alley type mistake.ps. imagine if he was able to ‘operationalize’ his brand too ūüėČ

      1. awaldstein

        Thanks for sharing.I’ve fought against marketing as a service organization since day one and will continue to do so.Of course, it’s easier to make this part of the DNA of the company if you run it or as the chief marketer, you also run channel or sales or cust service or the communities.Regardless, it’s our job to make it so. We have a huge opportunity to take a seat at the round table in this new social and ‘lean’ world order. I relish the opportunity that this presents.And honestly, I get calls often, many of them from companies that have built a product and then call me and say, ‘now what’.¬†We have a significant chance to make some changes and make a difference.

        1. leigh

          this was the comment i was referring too – maybe disqus doesn’t have a bug – maybe I do???

          1. awaldstein

            Yup

        2. Dave Pinsen

          “And honestly, I get calls often, many of them from companies that have built a product and then call me and say, ‘now what’.”Building a better mousetrap isn’t enough; mousetrap buyers need to know about it, and to know why it’s better. That’s where marketing comes in.

          1. Donna Brewington White

            And luring the mice…that’s where advertising comes in.

          2. Dave Pinsen

            That’s actually were peanut butter comes in.¬†

          3. Donna Brewington White

            Whatever it takes…

          4. awaldstein

            Whenever you don’t need to think advertising as the answer you are better off in my opinion.

          5. Donna Brewington White

            @awaldstein:disqus¬†@daveinhackensack:disqus¬†I suppose that if I have to explain that I am being tongue in cheek then I haven’t done a good job of it.I forget that humor has to be more urbane for this crowd.

          6. awaldstein

            Marketing’s job definition has always been to connect customers to your product value in a profitable model.My point of view on community and thinking about the market early in this goal can only be accomplished in scale when the market dynamics are there. The old ‘crossing the chasm’ or ‘when company push becomes market pull’ or now, what I’m thinking about as the platforming of your customers behaviors.Really interesting stuff. Hard but inspiring work.

    4. Peter Beddows

      I love how this issue keeps coming up and needs repeating to make the point that is otherwise so often and easily missed.And just because “marketing (and distribution) as part of product (or service) design and thinking” should be part of the mix does not mean that LEAN no longer applies: Properly approached and incorporated, Marketing can actually enhance the ability of the venture to be, and stay, LEAN.

      1. awaldstein

        I’m with you all the way Peter.Smart marketing is all about strategic execution. Big bang and big spend are rarely the answer. Never, in my personal experience.

    5. leigh

      ok weird – your comment to me disappeared (seems like disqus is having issues today?)I think i linked to my ecosystem pressie on your blog – here’s another one i did on what big brands can learn from start-ups which i posted yesterday here too – i think there are clearly some themes being discussed :)http://www.slideshare.net/l…

      1. Donna Brewington White

        Which is REALLY fantastic. (slideshow) ¬†Funny — I thought about copying Arnold on that tweet where I shared it.

        1. leigh

          thanks D ¬†ūüôā

      2. awaldstein

        I’ll take a look at the deck Leigh. Been out of the loop all afternoon and evening.

    6. Donna Brewington White

      Thank you for continuing to put this out there, Arnold.

      1. awaldstein

        My pleasure. I have little self control around this topic.

  12. Viktor Marohnic

    Totally agree.The Lean Startups and Steve Blank were a great resource for ShoutEm. Four steps to epiphany for us is a MUST todo list of items we need to complete before changing anything in our product.¬†Btw you might want to check the TLS on iPad ūüôā¬†http://itunes.apple.com/us/…

    1. JimHirshfield

      FYI, The Lean Startup mobile apps are powered by ShoutEm, a lean mobile app builder.disclosure: I’m an advisor to ShoutEm.com

  13. reece

    this he blogs as USV adds a new partner…¬†ūüėČ

    1. fredwilson

      no correlation between the two to be honest

  14. Brad

    Pretty simple, if your costs outweigh you revenue you are done. Not too difficult.I remember in my venture class at UC Berkeley my professor said the biggest problem with VC is that the company finds ways to spend the money. I would be in favor of a VC saying here is the money, let’s see how we can not need to fund more rounds. Oh and by the way if you can do it, we will return X% back to the team.Don’t spend more than you need and don’t raise more than you need.

    1. JimHirshfield

      Oh so hard to do that. Funders want to see fast action and their funds at work. So I think there’s a¬†tendency¬†to ask management why they aren’t fully leveraging the capital to grow. I don’t disagree with you, but there is a strong force at play here.

      1. Brad

        A balancing act indeed.

    2. Fernando Gutierrez

      I agree that if you have money in the bank you find things to spend it. But pushing too much about not spending it can cause people to be too cheap and damage the company.

      1. Brad

        Being smart with money does not equate to being cheap. Spending money does not always induce growth. It takes a good balancing act.I have started quite a few companies and the ones that have done well are the ones that respect the capital and do not abuse the capital.Just my opinion…

        1. Fernando Gutierrez

          I know, but what I’m trying to say is that the success of the company should be the only goal. To get that you have to be careful with capital, but there must be an equilibrium and you need to expend or invest when necessary. I don’t want to die if there is cash in the bank that I can use to fight.

          1. Peter Beddows

            The master mantra for the whole crew in any venture should be “We spend no money that does not directly makes us money”!

          2. Donna Brewington White

            Are you in the U.S. or back in Spain?

          3. Fernando Gutierrez

            I came back to Spain last week. Planning on going back there in early October… some things are taking time!

  15. EmilSt

    Lean approach should be used in life too.

    1. fredwilson

      I’m not doing that very well

      1. Peter Beddows

        Along those lines Fred, it might be fun to discuss being “lean” with Brad Feld who regularly regails us all with his tweets about his attempt to lose weight though, no doubt, that is not your issue — unless perhaps Gotham Girl is feeding you to well with her excellent cuisine! ūüôā

      2. EmilSt

        Probably we are all not. We come from slow into a fast world and our emotions have delay over changes and make us stick to something we don’t need. We are changing faster then our emotions can comprehend.I think lean approach could help us here.

        1. Vasudev Ram

          There should be something like “lean comfort food”. An idea for entrepreneurs ….. ??? :-)The fifth taste might help.Google “the fifth taste” / “umami”, those who don’t know it already.

    2. Matt A. Myers

      It’s hard to contemplate that. I think by nature we are all hoarders by either means of hunter or gatherer. And there are natural cycles of gathering and then pruning. I think in order to figure out what you need you need to gather. And then, usually associated with winter, we reflect and prune what is not needed. Society has become very materialistic though – partially due to emotional connections being fairly weak without broad range (in general), and because of businesses wanting profit and tweaking our heart and emotional desires/gaps that need to be filled if not by love with material goods or food, etc..

    3. David Petersen

      i kinda disagree. ¬†the primary purpose of business is to achieve profit and they should be lean. ¬†the purpose of life is to be happy and being lean isn’t necessarily ideal for that.

      1. testtest

        “the purpose of life is to be happy”Is that the purpose of life?

        1. Cam MacRae

          I think so, for some definition of happy.

          1. testtest

            Great art can come from suffering and sacrifice.This isn’t to be happy.

          2. Cam MacRae

            As I said, for some definition of happy.You’ll struggle to convince me the purpose of life is art, however: It’s just a mirror.

          3. FAKE GRIMLOCK

            PURPOSE OF LIFE IS NOT ART. PURPOSE OF ART IS LIFE.

          4. testtest

            As I said, for some definition of happy.¬†You’ll struggle to convince me the purpose of life is art, however: It’s just a mirror.The purpose of life isn’t art. An artist’s life can be an example of living with purpose sans the pursuit of happiness.Has the artist in this case shunned its purpose for living? It can’t.¬†Life is purposive by definition, from single cell to complex¬†organisms; structures of life are created for purpose.

          5. Cam MacRae

            Thus your chosen definition is felicitousness.

          6. testtest

            Thus your chosen definition is felicitousness.As in state of happiness?  I may not fully understand felicitousness, or miscommunicated my point. But no.

        2. JamesHRH

          If happy = life aligned with beliefs, then yes 

          1. testtest

            Where do your beliefs come from?Nature vs nurture, a divine being etc

          2. JamesHRH

            Nature, yes. Experiences, yes. Exposure to systems of thought (nurture), yes.Personal relationship w divine being, no.

        3. leigh

          way better then being unhappy…..

          1. testtest

            Yes. Sometimes, though, discontent can drive such things as creative destruction.

          2. panterosa,

            One of the favorite sayings of my mother is -Unhappiness is the most destructive force in the universe.I believe in creative destruction РShiva style. Creator, Protector, Destroyer. But then as an artist/designer I am happiest with scissors in my hand. 

          3. Vasudev Ram

            Indian here.Replying to¬†@panterosa:disqus¬†(“Shiva style” comment), and I’m not disagreeing with you, just clarifying for possible info of others:Brahma = creatorVishnu = preserverShiva = destroyerAll have a role to play.Also see (literally, the video of) Steve Jobs’ Stanford commencement speech – Google it, the one where he talks about those learnings of his, “you got to find what you love”, his first brush with death, getting fired from his own company Apple, etc.

        4. Vasudev Ram

          For the Ruby/Matz definition of life/happy, anyway, and I agree, though I’m more of a Python guy, though dabbled in / did some work in Ruby.See History section at this link:http://en.wikipedia.org/wik…Link is correct, even though no closing parenthesis.

          1. testtest

            Ruby’s cool. Learning it right now. It’s already my favorite language.

      2. William Pietri

        The Lean approach goes deeper than seeking profit. It seeks to create long-term value as efficiently as possible.I don’t think you can apply the Lean tools in every aspect of one’s life, but they’ve definitely changed how I do and think about a lot more things than business. E.g.: Seeking short feedback loops, testing assumptions, minimizing work in process, working iteratively, improving continuously, and relentlessly reducing waste.

        1. Matt A. Myers

          I see these things developing in myself too. It just makes life easier.

        2. Donna Brewington White

          “The Lean approach goes deeper than seeking profit. It seeks to create long-term value as efficiently as possible.”Oh, that’s good.

      3. FAKE GRIMLOCK

        LEAN = DO WHAT WORKS, NOT WHAT NOT. NOTHING TO DO WITH PROFIT.

        1. Pete Griffiths

          lean = learn how to do what works

          1. FAKE GRIMLOCK

            YES!ME LIKE YOU. YOU SMART.

          2. Pete Griffiths

            :))

          3. Vasudev Ram

            ME LIKE YOU TOO, FG. (Yes, I know you replied to Pete G).You really are on a roll today. 

        2. JamesHRH

          Its operational, not ideational.

      4. EmilSt

        Lean means don’t get stuck in things that don’t work.Try, learn, change or improve. And do it as soon as you knew it.Why not having that approach in life?

      5. Donna Brewington White

        Being lean — in life — is focusing on what matters and that seems to produce more happiness — or at least more fulfillment and meaning.And…in business… more profit.

        1. awaldstein

          Great businesses create value. Profit is the offshoot and a metric.

          1. Donna Brewington White

            Profit as a metric…that’s really good.

      6. EmilSt

        Aristotel said happiness is practicing excellence. When doing that you are rewarded with happiness. Lean approach is all about identifying areas of excellence.

    4. JLM

      Simplicity in life is enervating and liberating!

  16. mkrecny

    Fred –¬†would you invest in an overweight team?

  17. RichardF

    How does Eric’s book compare to the Four Steps?¬† Do they complement each other or are they similar?Also I think there might be an issue with the Disqus labels “Welcome Back Stranger” might be okay for Umair Haque as a label if he were to make an appearance but for the regulars who drink here it’s not exactly customer friendly….

    1. Aaron Klein

      Yes, I must say that I saw this little¬†@Disqus:twitter¬†bug first by JLM’s name. That was an easy “acid test” on its veracity… ūüėČ

      1. mdeboard

        Pretty sure it’s just a bug in one of their new features.

        1. fredwilson

          it’s actually operator error. i messed something up this morning playing around with some new features and then went to a five hour board meeting. just seeing this now. ugh!

          1. Donna Brewington White

            Five hour board meeting!?  Yikes.  Hope you accomplished something extraordinary!

    2. Pete Griffiths

      The underlying key ideas are very similar – they are both about early and constant contact with the customer. ¬†But there are certainly some significant differences in approach, emphasis and vocabulary that make consuming both worthwhile. ¬†Steve’s book as very focused on B2B and to be honest could have used some editing. ¬†Eric’s book is less B2B centric has been refined by a couple of years honing the ideas in the public space.

      1. RichardF

        thanks Pete

        1. Pete Griffiths

          If you want to build a library on these ideas:1) ‘Getting to Plan B: Breaking through to a better Business Model’ by Mullins & Komisar¬†2) “Running Lean’ by Ash Maurya. – this is particularly interesting for its detailed treatment of processes and metrics3) The Entrepreneur’s Guide to Customer Development: A cheat sheet to the Four Steps to the Epiphany. ¬†Vlaskovits & Cooper

    3. fredwilson

      yes, i now have the ability to create custom ranks and name them. i did that this morning and messed something up in the process. welcome back stranger is aimed at people who haven’t been here in a while. i need to figure out what i did wrong and fix it!

      1. falicon

        It appears to just be backwards…all the ‘regulars’ have it and most of the names that I don’t recognize as regulars on avc.com don’t…just a head’s up on the pattern…

        1. Donna Brewington White

          Well, “gang” seems to be a little more frequent than “regular” — don’t you think?

      2. leigh

        “regular” makes me feel like ¬†Norm on Cheers. ¬†Not sure that’s a good or bad thing (i know i know tomorrow’s post )

        1. testtest

          I want to be Frasier

      3. JamesHRH

        I want to be Norm ‘ it is a dog-eat-dog world and I am wearing MilkBone underwear ‘ Petersen.

      4. Vasudev Ram

        This was one of your best posts, Fred, even more than the more serious ones. Had fun and laughed a lot, commented a lot, more than I do usually. Keep it up, stranger!

    4. Donna Brewington White

      At first I thought¬†@disqus:disqus¬† was just flirting with me such as “drink here often, stranger?”, but they quickly got it fixed.Now we are gang-sters. ¬†Or in my case, gang-sta. ¬†

      1. RichardF

        it would seem then that “Kool” maybe more appropriate than “Bartender” for Fred.

        1. fredwilson

          as in Kool and the Gang?

          1. Donna Brewington White

            Well, now it would be Kool and the Devotees — which doesn’t have that certain something.cc:¬†@RichardForster:disqus¬†

        2. Donna Brewington White

          Well, that idea was short lived fellow devotee.  

  18. Brandon Burns

    I wonder if you contradicted yourself a bit re: culture vs. scaling.Not saying anyone has to scale up, but if lean is rooted in your culture and management actively enforces that culture, “scaling up lean” should be possible… and I’ve seen it done*. And it needs to be replicated over and over if Eric’s dream of applying lean methods to large companies and even the government is going to come true.Also, great Talk Wednesday. It was a treat.*See http://www.rga.com for the fruits of a lean, culture obsessed 1000 person company.

  19. Quizotic

    My reading of Ries’ book is that the term “lean” is just an homage to Toyota’s manufacturing system, and a nice by-product of what the book is really suggesting – which is the application of the scientific method to business.Hypothesize … test … evaluate results *within* a cohort, for all assumptions.Fred suggests applying “lean” to everything.¬† I can see that with sales, marketing and customer service.¬† But does it make sense for hiring and finance?¬† I don’t see how.

    1. William Pietri

      “Lean” is more than a homage; a good portion of what Eric advocates is derived from previous work applying Lean Manufacturing thinking to software. E.g., Mary Poppendieck’s work.That approach also makes sense for the whole business, and I think it’s helpful. Lean Accounting is a substantial thing these days. That’s valuable because traditional accounting can lead people in the wrong direction (e.g., treating inventory as an asset, rather than as waste). You can also apply Lean principles and tools to hiring. E.g., we use value chain analysis, waste reduction, one-piece flow, and a kanban board for our hiring.

      1. Peter Beddows

        Interesting; I’ve never heard or thought of using Kanban as a tool for managing hiring.Intriguing idea: How does that apply for you given that kanban is essentially a production process demand pull system?On the other hand, I could well see you using a Kaizen approach to managing process improvement related to value chain analysis, waste reduction, one-piece flow.

    2. Pete Griffiths

      Every department has stakeholders. ¬†Think about them as the department’s custoemrs. ¬†Early contact with such stakeholders to ascertain real needs and thereby avoid waste is just as meaningful in any department.

    3. Peter Beddows

      Even HR and Finance can be LEAN today given the scope and capabilities of current day ERP software ~ and I don’t mean you have to have Oracle or SAP to be able to do that.For example Microsoft Dynamics is a well rounded suite that includes very effective business event alerts and task-flow management features that can help fewer do more very effectively.And at the lowest end of that scale, even QuickBooks Pro has relatively enormous scope and capability built in now and there are even mid-range solutions available now in the Cloud

  20. ShanaC

    weirdly, this is something I struggle with.  What makes for the best approach when you need to be lean (I actually just emailed you about this, very timely)

  21. Tom Labus

    Lean’s good but many times it’s dictated by finance and budgets (lack of). ¬†After the last few years, I won’t mind some “fat” times.

  22. Trevor Owens

    Great post Fred and I’m disappointed I missed your talk with Giff (was on my way to London ¬†for our event this weekend).Interesting to hear your comment about how VC does not scale. Does this also apply to Y-Combinator and TechStars which are clearly scaling?

    1. Cam MacRae

      They’re scaling in breadth not depth, no?

  23. Andrew Korf

    I had the good fortune to tour the Mayo Clinic’s Center for Innovation ( http://centerforinnovation…. ) last weekend and noticed a number of hints at lean thinking and practices as we toured the lab ( http://bit.ly/qacVC5 ). ¬†Eric and Steve have offered a great approach to anyone who wants to think about innovating business models or do design in general. Another reference I have found invaluable is Ash Maurya’s ¬†@ashmaurya:twitter¬†¬†¬†interpretation of lean principles in his book “Running Lean” ( http://www.runningleanhq.com/ )

  24. Carl J. Mistlebauer

    One of the benefits of old economy experience is that you are by nature “lean.” ¬†You know exactly what your product costs and you are constantly evaluating every decision from the perspective of cost and return.When you manufacture, especially something like t shirts you know exactly what an employee is worth; especially if pay is based on piece work.When you work with inventory, you comprehend the importance turning it, of not tying up money.The failings of the old economy is being able to comprehend the difference between a cost and an investment. ¬†It is impossible sometimes to see technology as nothing but an expense.When you go from B2B where you deal with costs as percentages, where chargebacks, allowances, and commission are all percentages to B2C where things like Pay Per Click are stated in dollars per and then you have to calculate how many clicks before a purchase.When you go from selling a product to ideas like customer acquisition or calculations of the value of a customer, and thinking about a lifetime. ¬†Its a different mindset, its a totally different way of dealing with business. ¬†That is why I always look outside my industry for new ideas or different ways of looking at things.If I create a social network, then exactly how to I value that? ¬†What is the value of a community? ¬†What metrics do investors look at to determine a value of an investment? ¬†I have no idea how to deal with something that takes longer than 9 months to derive an income stream; thus the idea of a “burn rate” and multiple layers of funding has been alien to me.

  25. Steve Hallock

    Interesting post to go along with the last couple days’ news of Andy Weissman coming on board and raising a new fund. ¬†While VC may not scale, clearly there is some room for growth. ¬†Do you have a hard rule to determine how much you can handle?What is the real goal of growth like that? ¬†It seems you have a lot going on already and clearly are doing well.

    1. Matt A. Myers

      I imagine that with how much you learn from your previous investments and the amount of incoming ideas/pitches, that you would have a good general view of where the internet is going – and then can adjust your investment thesis to position yourself in companies that will survive longer-term or be more stable/grounded as fundamental pieces; Narrow your focus some, and aging companies will need less work.

  26. Charlie

    “In the first two or three years of Flatiron, it was basically just me and Jerry. We were deeply engaged in all of our investments and we had one or two employees other than ourselves. We did very well in that period. In mid 1999, we went on a binge, raised a huge fund ($350mm), moved into a massive office, hired a staff of 25, made investments we weren’t engaged in, and got fat. We did poorly in that period. We shuttered Flatiron in 2001 and I took over the entire portfolio with the help of Jerry and Bob. It was basically back to the early model. We did very well in that period.”Of course, it might be worth pointing out that the period in which you did poorly included a massive crash, particularly for the tech sector.

  27. baba12

    last post on jobs this post on lean enterprises, how do you balance it. Ironically technology by it’s very nature will remove ¬†inefficiencies in any given processes.If a startup is lean it is possible to be profitable, quick and ready to maneuver ¬†when necessary.Unfortunately not everyone can start a company and if the companies that get formed are lean, then jobs remain scarce. So what is the balancing act that Mr.Wilson and many of those out here who have created wealth and run lean companies think.As John Doerr people forget that a lot of the heavy lifting that allows for the creation lean startups ¬†was done by the government.

    1. Mark Birch

      The companies themselves might be lean, but the new ecosystems they create become the engine for job creation.¬† I talk about this more in a recent post “Don‚Äôt Look to Tech Startups to Fill the Jobs Gap” http://bch.me/ozIuEa

      1. Donna Brewington White

        Great post, Mark!

        1. Mark Birch

          Thanks for that and the tweet of the post!

    2. Dave W Baldwin

      @marksbirch:disqus¬†is right baba as we move through this decade.¬† When we talk jobs and lean in same framework, it is a matter of developing something that is truly disruptive delivering something useful to the bigger market.Hard part is communicating the fact ‘lean’ will beging to take effect in the arena of middlemen which will remove a lot of fat.¬†On the startup side, you can read between the lines via many responses on this page.¬† I do know many Angels get rooked as they apply seed, then find out later investors get sweeter positions.Up the ladder, it isn’t a matter of shunning money, but utilizing funding to achieve the desired goal.¬† Otherwise, you end up with early failures (the founders are living high life) and/or questionable moves toward M&A/IPO based on valuations that are not so much about revenues.¬† At that point, you have someone like me wondering why they need that much funding to do not much more than I’m looking at.

  28. Mark Birch

    Thinking this “Lean” thing has gone a bit overboard, meaning we are talking about principles that many entrepreneurs have been using since the dawn of commerce and trade.Entrepreneurs that get spend like a drunk sailor do not tend to last too long.¬† Those that remain conservative and keep a careful eye on cashflow and expenses keep themselves in the game for the long haul.The same should hold for any business at whatever stage of development, including VC’s and startups.¬† These are not new concepts, they are just business basics.¬† It is unfortunate that we have to relive these lessons every several years…

    1. FAKE GRIMLOCK

      LEAN NOT ABOUT SPEND.LEAN ABOUT HOW TO MAKE DECISIONS.SPEND LESS IS BYPRODUCT, NOT GOAL.

      1. JamesHRH

        Once upon a time in a startup, a crackerjack sales leader said to me:’ we don’t know how to make decisions.’I had never thought about it – I mean, how hard can it be to make a decision?He was, of course, bang on. And the interesting thing about making decisions properly (just the decision that is required today, the right process and then leaving the decision alone until it is no longer working) or poorly, was its impact on morale.

  29. PhilipSugar

    Venture Capital is a “lifestyle business” Ha, I love the irony!The reason why lean is good is that it lets you find and keep the why as Simon Sinek would say.Its so easy with a lean staff.¬† But as soon as you get bigger people naturally want to concentrate on the how and the the what.

    1. Donna Brewington White

      “The reason why lean is good is that it lets you find and keep the why”Great quote.

  30. Bthibault

    I think it can be easy to be wasteful if / when you get VC investment. Try bootstrapping a company, you automatically run lean. 

    1. Matt A. Myers

      I must say it’s the best learning tool/motivator I’ve ever had.

      1. Pete Griffiths

        I certainly understand how you feel Matthew.  My first company had 50 pounds capital not paid up and had to make payroll from day 1.  Focuses the mind.

    2. Pete Griffiths

      Lean isn’t about the level of resources you have access to. ¬†Lean is about processes that maximise learning and thereby minimise waste. ¬†There are plenty of bootstrapped companies that don’t run lean.

      1. FAKE GRIMLOCK

        LEAN IS NOT DO THINGS THAT NOT MATTER. HAVE NO MONEY IS GOOD WAY TO ENFORCE LEAN.

        1. Matt A. Myers

          I’m as lean as you get..

          1. Donna Brewington White

            Stay that way, Matthew.  I only hope that it becomes more of a challenge to do so.

        2. Pete Griffiths

          Fake Grimlock – I bow in your mighty presence but humbly disagree.It is perfectly possible to have no money and still do things that do not matter. ¬†Poverty doesn’t enforce anything. ¬†There are plenty of startups with no money that aren’t running lean.Example: Entrepreneur has day job and is bootstrapping his venture by working evenings building a product. ¬†He has no funding at all. ¬†His day job barely covers his food and bed for the night. ¬†But if he hasn’t talked to customers or done something to find out if anyone is going to want this product he isn’t running lean.

          1. FAKE GRIMLOCK

            NO MONEY NOT GUARANTEE DO THING THAT MATTER.NO MONEY GUARANTEE IF DO THING THAT NOT MATTER, GO OUT OF BUSINESS.

          2. Pete Griffiths

            ūüôā

          3. Donna Brewington White

            I’d just like to have that discipline by choice, not necessity.¬†

  31. markevans99

    I think the lean approach works well for other types of businesses within the tech ecosystem too. I’ve run Converge Labs alone for the past two years producing tech conferences coast to coast, i.e., Geo-Loco and Social-Loco.As the events have grown in size I’ve been able to outsource work to logistics contractors and bring on advisors outside the business making it easier for me to continue to focus on making the program and content the best it can be. Yes, I rely heavily on the community (thank God they’re engaged) to help me choose and curate content, but ultimately the decision is mine and it makes running the business a lot easier; a very lean approach.Not to say I don’t make mistakes, I do, but that helps push me to learn and iterate and try new things.Btw, Fred, you were our first keynote at Geo-Loco conf. Thank you again for taking a chance on an unknown conference at the time.

  32. Sebastian Wain

    But, don’t you think that being Lean is more an Art than a Science?In other words, imagine an exercise where people mark all their ideas in a chart where the x is the time (i.e.: man month and resources involved) to develop the idea and y is the potential, usually they will have a lot of ideas that will require a lot of time/resources, so the trick is how to move your idea towards the 0.It’s like a puzzle with many possible solutions but where you must find how to solve it with less pieces.

  33. testtest

    Techno-economical change occurs at every cluster of technology. Best practices are forged by pioneers, then propagate.Moving from qualitative to quantitative. Quantitative scales.

  34. Sam Haskins

    As Collin Chapman said about performance automobiles, “Simplify, and add lightness”.The idea applies neatly across fields and projects. In software, it ties neatly with the idea that if what you’re writing is complicated, you’re probably writing the wrong thing.

  35. LIAD

    If I were a VC, I’d make entrepreneurs warrant as a key part of due diligence that they have read, pondered and agree with:1. Lean Principles2. Anything Clay Christensen has written3. Purple Cow by Seth GodinSpot quizzes would occur pre-closing.

    1. JLM

      Add Re-work and the Checklist Manifesto.

      1. RichardF

        +1 for Re-Work have to check out the Checklist Manifesto

    2. JamesHRH

      You can piece together all kinds of good stuff – the bottom line is:1) know who you are (founder)2) know what you want to be (company)3) have a philosophy that ties 1 to 24) enforce the philosophy consistently to create a winning culture.Here’s another list of books:1) Understanding how markets evolve:Alchemy of Growth –¬†http://www.amazon.com/Alche…2) Building a lasting organization:What Really Works – http://www.amazon.com/What-…3) Understanding customer PoV22 Immutable laws of Marketing – http://www.amazon.ca/22-Imm…4) Understanding yourself and the culture you want to build9 ways of working –¬†http://www.9waysenneagram.com/

  36. Scott Maxwell

    Fred, in my mind, the principles and practices of lean are independent of team size.¬† Certainly a smaller team makes it much easier to make decisions and take actions, but many small teams don’t practice lean and many large teams do.¬† At OpenView Venture Partners, we are committed to having a large value add team that is available to our portfolio companies.¬† They run on Scrum, a management system originally developed for software development teams which incorporates many of the lean principles.¬† The size of the team is large, but the practices are very much “lean”.That said, I completely agree that executing a strategy with the smallest team possible filled with the best people that work well together is the best operating point.Scott MaxwellOpenView Venture Partners

    1. Donna Brewington White

      Yours is one of the firms I watch from a distance.  Seem to be doing a lot of right things right. I really respect the support that OpenView provides to its portfolio companies, particularly in recruiting. (I own my bias in this regard.)

      1. Scott Maxwell

        Thanks Donna!

  37. Matt A. Myers

    The idea of lean, as Fred mentioned, really comes down to being able to focus enough on everything. This is where prioritizing comes into play.I know where I can spend money. I know if I spend money in Task 50 before Task 10 then the impact will be less towards my goals/objectives – at least in the beginning anyway.I know how much waste will occur if money is put in places it’s not in-the-moment critical either. I know why waste exists. It exists because not enough attention is given to something and therefore isn’t thought through as far as it should have and then needs changes later (whether it’s a process or structural) – so instead of being something that is no longer using resources, it is now draining resources – taking time away from other things needing attention and costing money and resources in fixing/changing.Yes, this will happen a bit, and mistakes happen. I’ve learned this recently with my own projects, though the mistakes weren’t so grave that there’s a big disruption. I’m sure the day will come when everything is as it needs to be – but then boredom may kick-in and will feel like doing the process all over again with another venture..I enjoy slow and steady.. it allows you to experience and notice the subtleties more, allows you to decide what you’re going to do next.. even if it feels like torture at times and impatience is getting the best of you.. It can perhaps allow you a chance to catch your breathe too.. ūüėČ

  38. FAKE GRIMLOCK

    LEAN NOT METHOD OF STARTUP. LEAN IS BETTER DESCRIPTION OF REALITY.

    1. JamesHRH

      BINGO GRIM!You can avoid being lean for so long……..

  39. David Smuts

    Fred- in light of your view that VC doesn’t scale well and your¬†advocacy¬†of the lean process, what do you think of 500Startups? Are they lean? Are they over-extending themselves? Would be interested to know what you think.Personally I think you can be lean and extensive such as 500Startups and I really like what they’re doing to foster innovation in our industry- time will tell if this model is sustainable.

  40. PeterBell

    While I think it’s great to see the adoption of lean processes in a lot of industries, it’s important to ensure that we keep a rigorous sense of what it means. If we don’t, then along with terms like “agile” in the software development space it’ll be a self-promotional, self-identifying moniker with very little real meaning. I often find a huge gulf when presenting to developers between those who would say they follow agile principles and those who work for a company that self identifies as using an agile methodology and am concerned that we’ll see the same with “lean” in the next couple of years.What exactly does it mean to be a lean VC firm? Very few firms would self identify as “un-lean”, “overweight” or “paunchy”. I think it’s important to look at the detailed practices. Don Reinertsens book on principles of product development is probably the best combination of rigorous and accessible although other books from the software world like David Andersons “Kanban” and the Poppendiecks original 2003 book on lean software development outline specific practices that can be adopted to other industries.

  41. giffc

    That was a fun event and I look forward to getting the video up so others can hear what you shared. Thanks again for joining us, Fred!

  42. Michael Lewkowitz

    Lean works because it draws on ‘minimum viability’ which is a core principle of natural systems. It’s also the target of any good design process and when most successful it results in ‘maximum thrivability’ which is the reason for doing something in the first place.¬†Of course, it’s also not a milestone but a journey… a journey that can become increasingly difficult as the complexity of the system grows over time as we can see time and again as companies and people grow older.A couple of other good resources for those that love:Design:¬†Dieter Rams, 10 principles of good design (wikipedia http://bit.ly/DRams10 and video http://youtu.be/HGPIqGi7MWY)¬†Viable Systems: Stafford Beer, Viable System Model http://en.wikipedia.org/wik

    1. Pete Griffiths

      Stafford Beer was quite a character.  One of his key mantras was that control systems only work when they measure the real variables not proxies for them and thereby provide meaningful feedback.  From his cybernetic perspective he saw many of our social solutions as blatantly flawed   For example, the thought seat belts were a terrible idea because they made people feel safe and hence more likely to drive recklessly.  His proposed systems approach solution took a rather different tack Рno safety belt and a large razor sharp spike mounted in the center of the steering wheel directed at the drivers vital organs.  Adoption of this proposal he confidently expected would result in more careful driving.

  43. LE

    I worked for a short time at a companythat Steve Blank was VP of marketing ata long time ago.It was probably 100 million in sales atthe time and had absolutely no spending restraint.Coming from a family business backgroundI was amazed that the company had no guidelinesfor expense accounts and I could essentiallybuy anything I wanted. (They would catch thingssuch as a movie in the room butnot question if you needed some (expensiveat the time) hard drive. They first week onthe job my manager told me to get setup with airline frequent flyer accounts. That’s allhe cared about. And the company liked himbecause “he made his numbers”. He pushed productsinto the channel (and then they backed themout the next quarter).I said to my father at the time “this companyis going to go under I can just tell by theway it’s being run”. His reply along thelines of “what do you know…”.They of course went under.Now I could leave this tale here…… but that’s not why they went under. It wasn’t their spending habits (in my opinion).They went under because the industry changed andthey weren’t prepared for that. So they lost thegolden egg and they would have failed evenif they had been less frivolous in their spending.(And other reasons to numerous for this reply).There are no hard and fast rules withspending money (only in retrospect). Companiesthat spend money (in traditional businesses) onfancy offices get criticized but in certainsituations fancy offices and perks help youkeep good people that help make you money.Corporate jets can be a big benefit.It all depends on the circumstances which iswhy things like this can’t be generalized easilyor taught in school.

    1. jvermes

      You are a wise man (I can tell you’re a man by the handwriting).Convergent Technologies was the RIM of the Hot Unix Box era.What do I win for filling in the name of the company?

  44. Mark MacLeod

    Fred,completely agree. I have 3 partners in our fund. We have 2 staff; 1 back office, 1 front office. I spend essentially all my time with companies. Can’t imagine doing it any other way.¬†I started my career in a professional services firm. Ironically there, the higher up you went, the less time you spent with clients. It was a pyramid structure. All services firms work like this.¬†VC firms should avoid anything other than a flat structure. I love that Sigma as an example has no associates. I personally feel an associate or analyst can bring leverage to a partner, but I know entrepreneurs want to deal with partners. So the less layers the better.I’d much rather see 3 $150M funds than 1 $ 450M fund.

  45. CJ

    I like lean, I think the smaller the amount of people who need to be in complete agreement, the more likely it is that things will get done and done well and the less likely that there will be a company that is going in different directions. ¬†When there are three people who vote and voting means giving your full support and not just your vote it really makes it hard to do things that aren’t supported by the entire company. ¬†That keeps politics to a minimum and productivity high and that’s¬†the key when you’re small. ¬†If you can do that success is imminent. ¬†

    1. Shad Reynolds

      I think this comment misses the whole point of lean. ¬†In a truly “lean” startup, you can all disagree. It’s expected. ¬†It’s the resolution that defines “lean”. ¬†You come to agreement not in an office, but by talking to customers and/or experimenting with users.The product of “lean” is learning. ¬†The key is that all interested parties are learning together.

  46. leigh

    Lean – so believe in it – but have to say, depending upon your business, you have to be careful that lean doesn’t = burning pple out. I’ve had to rapidly scale up two businesses that i worked for before and if not done properly, it can crush you. Quality, creativity, and ultimately culture can be killed if you aren’t walking the fine line that one needs to walk between lean and cut to the bone.ps. A book? ¬†Hell. ¬†Can’t you ask them to write a lean 6 slide presentation?

    1. JamesHRH

      LOL. No kidding!

    2. Alex Murphy

      There are a lot of lean slides and simple methods, start with Eric’s blog and Steve’s too.

  47. matthughes

    Just downloaded Lean Startup – thanks for the tip.Money Ball also seems apropos…http://www.amazon.com/Money

  48. Sam Parker

    Lean takes a major shift in culture to work. Many people who have worked in the industry for years aren’t accustomed to checking their guesses early and often¬†¬†(or calling guesses exactly that).

  49. Dale Allyn

    What’s up with Disqus??? I replied to L.E.’s comment to Carl regarding integrity, stating my strong disagreement with L.E.s comment, and now it’s gone. It’s also gone from my Disqus profile. It was approx. 30 minutes prior to K_Burger’s comment (approx 12:15pm PDT). This type of Disqus bug is really annoying and I’d suggest much more important to fix than working on status tags of visitors.¬†

    1. LE

      Hi – I saw your comment and wrote a reply.Then when I hit “post” it kept saying”can’t do that” (or something like that).So I reloaded the page and the comment was gone.I thought you had deleted it actually.Fred:The other disqus bug is that you can’t reply with more than 10 lines on Firefox 3.6.22. I wrote to Disqus and they said “change your browser”.¬†

      1. Dale Allyn

        Hello LE, Thanks for your reply. I don’t have time to reconstruct the convo. but it’s good to know that I’m not going nuts. ;)re. the browser issue: I use Safari on Mac for reading AVC, but do most of my dev. work in FF 3.6.22 as well. I have other installs of later versions of FF on-board as well for testing, but use 3.6.22 for most of my non-Safari browsing (certain bank sites, etc.). The latest versions of FF and Safari still don’t cooperate with some (fully standards-compliant) sites. I mention this as a data point for Daniel et al at Disqus.¬†

        1. Tyler Hayes

          Very sorry about that Dale. It looks like your comment was falsely marked as spam. I just approved it and we’re looking into why this marked falsely as spam in the first place.Next time this happens don’t hesitate to contact us at http://disqus.com/support and/or http://twitter.com/disqus in addition to mentioning it here, just in case we don’t happen to see your comment. ¬†cc¬†@a3d2a690c882556468add2fdc643018a:disqus¬†

          1. Dale Allyn

            No problem, Tyler. Thanks for looking into it. I’m sure some may feel many of my ideas are spam anyway, so perhaps the Disqus application is just very perceptive. ūüėČ

          2. Donna Brewington White

            Not “liking” as in agreeing with the sentiment — liking the attitude.

          3. Peter Beddows

            Hey @tyler:disqus glad you popped up here: Both Donna Brewington White and I have experienced the same issue today. In our case, it happened respectively to posts we each have made in the Jobs Jobs Job thread. I posted a request for help to the DISQUS support link.

          4. Tyler Hayes

            Thanks Peter. I saw your and¬†@donnawhite:disqus¬†‘s false positive¬†spam comments while looking through the spam filter now and approved your comments and most everything else that looked legit (without going overboard since this is¬†@fredwilson:disqus¬†‘s¬†site not mine). I’ll keep an eye on the spam filter for the time being to approve more if necessary. Sorry about this everybody.Full disclosure: after some of the recent spam issues all across the Internet (affecting us, Youtube, everybody) a couple weeks ago — “I just bought an iPad 2 …” may ring a bell — we’ve been up’ing our game on spam filtering and are still fine tuning the improvements. It’s a tough balance to nail but we’re working hard to make it happen.Since we tend to keep a close eye on things please don’t hesitate to reply to me here directly or at http://disqus.com/support or http://twitter.com/disqus if you see more of this.

          5. Donna Brewington White

            Thanks, Peter.You rock @tyler:disqus !  I sleep better at night knowing that you are on the job!

      2. Tyler Hayes

        I’m not seeing any emails in our support system from the email address you use to post comments. Can you email me [email protected] so we can look into this further? We try to never suggest anyone update their browser unless there’s a known security issue, though we do recommend it from time-to-time if it seems to be the cause of the issue at hand and we can’t reproduce/haven’t received reports of the issue in newer versions of the browser.

        1. Peter Beddows

          Thank you for your prompt help Tyler. Greatly appreciated.

          1. Vasudev Ram

            Though unrelated to the Disqus issues mentioned in this post, just want to mention that I had a separate Disqus issue and tweeted about it with hashtag “Disqus” (not a DM or a reply), and very soon someone ¬†– Twitter handle giannii , IIRC, tweeted back that they would ask the team to look into it. I appreciated that.

        2. LE

          I will forward you the email that I received.I asked:”Disqus comment field on avc.com doesn’t scroll properly in Firefox 3.6.22 on Macintosh”Here is what was said:”This may be due to the older browser version you’re using. We’d recommend updating FireFox in order to correctly browse sites using today’s current web standards.”As you know (and as others have pointed out) there aremany reasons someone might be using an older browser.Also, according to this:http://marketshare.hitslink…Firefox 3.6 has 6.92% vs. Firefox 5 having 7.97% and Safari 5.0 having1.9% and IE 6 having 9.73%So it’s obvious you need to test and make sure disqusworks on any browser with over x% of market share. (I wouldthink 1 or 2% is reasonable.)From a management point of view is anyone reviewingwhat the CSR’s are writing to users or collecting any statisticson the complaints that are received?

          1. Tyler Hayes

            Thanks, got the email. I’ll respond there too so we can reduce clutter here.”From a management point of view is anyone reviewing what the CSR’s are writing to users”Being a CSR myself, and Disqus being a somewhat flat hierarchy, all of us on the Support team try to constantly review each other’s work to help improve personal skills as well as help the team jive better.There are four of us. We’re lean. We hire the best of the best. That said, sometimes we drop the ball. We did that here, and personally I’m very sorry about that.¬†I’ll personally review this case and re-open it so we can figure out what’s happening here.”or collecting any statistics¬†on the complaints that are received?”We — all of us on the entire Disqus team, not just Support — do a lot of work to synthesize what’s going on across the network. We do this on large scales, mostly with custom-built systems that automatically alert us to events (e.g., “What overall trends are happening across our 750,000 sites right now?”) and small scales, mostly completely by-hand and using constant communication with each other throughout the day (e.g., “Of the support inquiries we’ve gotten today, and looking at the load on [server X], are there any noticeable patterns?”).

  50. Donna Brewington White

    Thanks, Fred.

  51. Chris M Neumann

    Good read. Lean is a concept that needs to be applied universally. Permaculture is a fine example of the studies of similar concepts applied towards basic human interaction.

  52. Carl J. Mistlebauer

    Lean is a very simple concept: ¬†In fact I am being quite lean over the next few days. ¬†I am going to Florida to hook up with some coders, engineers, and designers and at the same time I am going to vacation…..There, I believe you could also call that multi tasking…The only problem is that I do not like Florida.

  53. Alex Murphy

    I 100% agree about Lean Culture, but I think that there is a bleeding of other cultural values here that are not necessarily “Lean” in terms of the approach to product development.¬†This adventure of Eric’s started out with the quest of helping startups approach the process of starting a business with more science. ¬†The core point was to stop wasting time building stuff that nobody wants. ¬†Steve Blank’s point about customer development is one core element in that process which is get out of your office and away from your computer and go talk to customers BEFORE building a product. ¬†If you had a chance to watch any of the presentations this week at TC Disrupt, there are still a lot of start ups that are building products because “they” want to rather than because of a clear customer problem.Eric expanded on customer development to say that there is an actual methodology that can be followed where you start with a hypothesis and test it. ¬†Applying this process over and over again as it is related to starting, building, and improving the product is the key to being “lean.” ¬†Focus more on what customers actually do with the product / service that generates real value rather than vanity metrics as an example. ¬†This does not mean it needs to be cheap. ¬†In fact, many of the tools in a Lean environment can be quite expensive, at least in the beginning. ¬†But, they reduce waste in the long run. ¬†And most importantly, they speed up the process of learning.There are other elements that matter in a start up. ¬†Being capital efficient, bootstrapping, being scalable, the size of your market, etc all matter, but these do not necessarily fall inside of what it means to be “lean” in the context of the “lean startup.” ¬†Certainly being Lean has the likely outcome of resulting in some of these things, but that is an outcome, not a component.

  54. Vasudev Ram

    Great post, Fred. Totally agree that Lean is a state of mind. If you (meaning anyone or any org) have that state, you can really figure out or find out the specific techniques to use, by asking, searching, trial and error, whatever. (Of course, training, or knowing what others have done in this area, helps a lot, hence the book recommendation below.)Those reading this post, who would like to know more about this whole Lean thing, might do well to read the book “The Toyota Way” (*). It is similar in spirit, though not in content, to the books “Made in America”, by Sam Walton, founder of Wal-Mart, and “Made in Japan”, by Akio Morita, founder of Sony. They (Toyota) were (probably) the originators of the Lean concept and movement, including related things like Lean, Kaizen (okay, not of Kaizen, maybe, but they were early practitioners of it), muda / muri (forget the exact words / spelling right now, Japanese words meaning “waste”, etc.), “The Five Whys” (my personal favorite – in short, it means digging deeper into root causes of causes of causes of ….(not just stopping at the first superficial cause), so as to figure out the ultimate root cause, and then fixing it, and thereby eliminating all (or most) future occurrences of the same symptoms / problems – a *very* cost-effective measure as compared to ad-hoc fire-fighting (ad nauseam ūüôā which is what most modern companies tend to do instead – I’ve been there, seen that). I read the book a few years ago and it made an impression on me.Just google for “book the Toyota Way” …..(*) Ignore, till you’ve read the book, the recent issues (in the news) with Toyota (recalls, etc.). Any company can lose its way, even after doing extremely well for a long time, and may or may not come back. That does not detract from the merits of what they achieved earlier, for a long, pretty much continuous period.

  55. Vasudev Ram

    Another great read related to this topic is a talk by Peter Drucker, “My Life as a Knowledge Worker”. I had blogged about it (including with many relevant links), on my older blog, jugad’s journal, here:http://jugad.livejournal.co…My blog post has an excerpt of the first three experiences he describes, but there is also a link to the full post on INC. magazine.

    1. Vasudev Ram

      Just saw this:”My Grandfather, Peter Drucker, Died Today”http://novaspivack.typepad….Moving …It’s sort of shocking, in a good way, to see how much influence Peter Drucker had, through his work, on ¬†business, entrepreneurship, and innovation.Nova Spivack seems to be an Internet pioneer himself. I had come across his name earlier, somewhat recently, IIRC, , but hadn’t checked him out in depth at the time. But took a look at his About page after reading his post above, and his own work seems interesting, too:http://www.novaspivack.com/

  56. jvermes

    What are the lean VC firms you admire, Prof. Wilson?

    1. fredwilson

      ah, good questioni can’t go on the record on that. i have relationships i need to manage

      1. jvermes

        That was more street theater than a serious question. I was calling out the boundary between the seemingly personal interaction in venues like this and the need to draw lines.There’s something warm, personal and informative about your pushback.You’re a good man, Fred Wilson ( : at least your virtual persona : )

        1. fredwilson

          i hope people get the same experience in person

  57. offeredlocal

    Good post, key item:”To me, lean is a state of mind that a founder and his/her team needs to have across all aspects of the business.”Our company OfferedLocal.com was a top 3 finalist this summer in Boston’s Lean Startup Challenge.¬† When we started the company at the beginning of the year we actually embraced your point above, however when we competed in the Lean Startup Challenge we embraced the rapid trial and error process of acquiring new beta users and activating them over a 6 week period.¬† Of course that was what the competition was about.¬† Going forward we are back to lean across everything.

  58. Bryan Batten

    Great post and something every business should keep in mind. Thank you for sharing

  59. bussgang

    100% agree, Fred.  I also find a lean VC to be more fun than the alternative Рless politics, less time spent on BS, more time engaging deeply with entrepreneurs in the company-building process.  It turns out, fun is an under-emphasized Рyet critical Рcultural quality in the workplace!

    1. fredwilson

      we should start the lean VC movement Jeff