Startups need to experiment and safely fail, and fail a lot
Three years ago, I embarked on a startup adventure along with three friends of mine. We had everything: a revolutionary idea, feel-good buzzwords (“Cloud! Big Data! Internet of Things!”), and more than two hundred thousand euros of public and private investments.
Of course, this is ironic, and we failed miserably because we had no clients.
We are the main reasons of our failure. We refused to measure our problems and I completely over-engineered our product. Now, I think you could have helped us detect we were aiming at failure. Your experience means much to startuppers and you could improve on the following points.
Five-year business plans harm a much needed flexibility
We have dealt with the French PIB (Public Investment Bank) as well as with PBA (Paris Business Angels), whose name is self-explanatory.
Both asked us for a five-year business plan.
Asking to foresee the future with a business plan is a waste of time. Do you know why? Because startups are not bakery stores.
They deal with enormous uncertainty, so their goal is to iterate fast and fail often. How do you fail fast when you provide a five-year business plan?
Why should we spend countless hours constructing such a BP even though we KNOW it will be obsolete in two months? Sure, it can and should be updated, but why don’t we use a less time-consuming format?
Worse yet: when we make a BP, we impede our capacity to pivot, since we refuse to recognize signs of failure: “Hey, smart people validated my plan, so I’m fine, right?”.
In The Lean Startup, Eric Ries advocates to look at learning accountability. Successful innovative start ups went through many MVPs (Minimum Viable Products) to get where they are. You can measure them through the Lean Canvas. “Product” in MVP has a large sense. It is the minimal amount of work needed to validate business knowledge.
We’re innovators, not accountants, at least at the beginning. Before investing, you should ask us “how do you plan to learn more about your clients?” not ask us to predict the future. You should then help us hire good accountants, not turn us into some.
In my former startup, we have wasted months executing our plan without ever validating it with customers. We have over-engineered our systems betting on a massive growth that never came (where are you, my 20,000 users?).
Focus on our ability to learn with simple experiments. Focus on our capacity to transmit efficiently this learning to you. Focus on the founders team’s mindset.
When when the startup succeeds, it will be the right time to ask for long-term accountability through a Business Plan.
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