In Defense Of The Not-So-Lean Startup

Last year, from Silicon Valley to Wall Street, it was impossible to escape the concept of the "Lean Startup"—especially the great ideas espoused by the preeminent thought leader on the topic, Eric Ries.

Hundreds, if not thousands, of entrepreneurs embraced these tenets and joined the "Lean Startup movement." In addition to curbing costs, an entrepreneur would begin by creating their first "minimal viable product" to test that initial business idea. If it failed? No big deal! The strategy of launching quietly held that few people would even know about the product in the first place—and thus wouldn’t have been the wiser to its initial failure. Eventually, the goal was to achieve product/market fit—another Riesian commandment that equates to plowing through "build-measure-learn" feedback loops until one discovers that special (and monetizable) moment when a product and its market interest collide.

But there are also tremendous drawbacks and limits to the Lean Startup cycle of listen/respond/fail/adapt. In life and in business, failure can mean certain death, without a chance for another loop. Indeed, too many startups have died (or are doomed to) by applying this method to their businesses, especially as their investors watch in horror.

So, we’ve got a new idea for the startup world. Entrepreneurs: Ready your Evernote because you’ll want to remember this for years to come.

Be in a Rush to Get Big

"Don’t be in a rush to get big," Ries once said, "be in a rush to have a great product."

I’m here to tell you that it’s not either/or. You can be in a rush to be both big and to have a great product. After all, you only get one shot to make a real splash with a product launch and truly impress the world, right? I don’t believe in the strategy of rushing a product to market as cheaply as possible and hoping for the best. Yes, there are plenty of entrepreneurs who swear it works—and have the good fortune to be able to prove that. But there are a lot more who don’t. It can also seriously hinder growth and limit revenue potential. And when you’re a startup founder, shouldn’t you (and your investors) be all about growing your company, delighting your customers, and bringing in the big bucks?

With the right maneuvers, a company can best use its money to both grow fast and grow smart. Unlike the Lean Startup methods, this enables measurable—and repeatable—success. Don’t just take my word for it—I built four companies from scratch and led two to successful IPOs by following these tenets.

Here are a few proven ways to launch big, not lean: 

Build the Route to Market in Parallel to Building Your Product

Many great products have failed because there were no buyers or users ready. Remember or Webvan? Of course you do—but for entirely the wrong reasons. It’s vital to remember that building a viable sales channel is just as important as building the viable product itself.

The Lean Startup method would have you rush a product to market. Then, you would maybe flounder on initial launch but iterate nonstop—and put what few, loyal customers adopt early through countless revisions, updates, and interface changes. Finally, you might eke out a product worth the mass market’s purchasing dollars. 

But what happens if your product development issues are so vast that it leads to poor word-of-mouth? What happens if you have no other leads in the pipeline ready for your robust, top-of-class final product? Well, then you’ve put in all that effort for zero payoff. It’s terrible to push for so long on a bootstrapped budget and then be stuck saying, "Now what?"

When we first started Marketo, we actually put our first efforts into SEO (and content creation, more on that below)—then began product development in parallel. We knew we needed to find buyers even before our product was ready. We seeded interest very early by talking about the problem we aimed to solve and finding folks who were looking for answers. Five years later, it’s still paying off.

Create Pre-Launch Demand

At Marketo, not only did we have SEO in place even before product development—we also had a blog. We talked about the problems we aimed to solve (the changing buyer-seller relationship)—and which we knew our target audience faced—and we mastered our strategy on approaching them. 

Instead of beta testing a product, we beta tested an idea and integrated the feedback we received from our readers early on in our product development process. This strategy far trumps the Lean Startup method of rushing a product to market. It means a lot to future customers to be in on the ground level and feel as though you’re truly building a product specifically for them and the issues that keep them up at night. 

By using this content strategy, we at Marketo began drumming up interest in our solutions with so much advance notice we had a pipeline of more than 14,000 interested buyers when the product came to market. 

How does that compare to your last product release? Ask your salespeople. You say you don’t have salespeople? Okay. Keep reading. The next bullet is especially for you.

Spend to Sell 

"Invest in your success" is corny but true—and in this case, carries a couple different meanings.

First off, forget about counting every last penny. Yes, the lean startup movement is correct in saying you shouldn’t throw wild parties and give Teslas to all your new employees—but isn’t that just common sense? Where you should make serious spends is in areas that will eventually lead to sales down the road. And yes, naturally, that means investing in some quality salespeople, as well as quality sales and marketing tools to make it happen.

At the first instance you’re able, start shifting funds from R&D into sales. As great as your product is, it won’t sell itself, and you won’t make any money unless you can actually make it move. As you look to expand your senior leadership team, make sure a VP of sales is one of your first hires.

But remember, sales can’t function to its true potential without marketing. Once you have salespeople in place, you need marketers and marketing tools to make sure they’re in touch with the right people at the right time. Buyer-seller relationships aren’t what they used to be—buyers have far more access to information and make more judgments before engaging with sellers than ever before. That means it’s marketing's responsibility to ultimately craft your public message, nurture leads, and monitor their sales readiness. With this intel, your company can pursue the right leads and generate far more sales. Make sure your sales and marketing teams are in lockstep to drive revenue at a more efficient rate. 

It’s a terrible shame that so many entrepreneurs think sales and marketing teams can’t be just as creative or innovative as product teams—don’t be one of them. By bringing the right individuals on board, you enable your company to tell a dynamic story and bring far more context to the solutions your product offers that it might not tell on its own. It’s a crowded world out there, and quality sales and marketing teams will help your company rise above the noise. That investment makes sure the best and boldest executives are accelerating product adoption and the revenue channel. And it lets your product team focus on their main initiatives: future product versions, and thinking about what things your thriving company might try next..

You can’t be a startup forever. And you shouldn’t want to. The lean startup model only offers tools to get you so far. By implementing these tips into your growing business, you’ll be better poised for long-term success down the road, wherever your company chooses to roam. Trade the lean for the green. Revenue and growth are great, great things.

Author Phil Fernandez is President and CEO of Marketo. You can follow him on Twitter at @philf1217.

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[Image: Flickr user sfslim]

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