“Seems niche. How many people want to tell everyone randomly what they’re doing and how many really want to look at it?”
- My entry for Twitter, as recorded in early 2007.
This entry in my "deal flow" journal records my first, inauspicious impressions of Twitter when I initially heard about it. Today, It is obvious that I totally missed the power of the service, which I now adore and admire. But what is less obvious to me, and therefore I assume many others, is how to distinguish between a Big Idea that simply starts small -- consistent with Lean Startup methodology -- as compared to a Small Idea that will always remain a Small Idea.
This question has been on my mind because recently, when I talk to entrepreneurs, I’m seeing too many Small Ideas. In the last few weeks, I’ve spent time at Techstars, MassChallenge and ER Roundtable. I love the passion the entrepreneurs are exhibiting in all of the venues and the education they’re getting by being a part of these programs. And I love that the toolkit for startups is getting sharper and that techniques like the Lean Start Up methodology and terms like "hypothesis testing" and "MVP" are becoming common place. To be clear, I am a lean startup acolyte. The class I teach at Harvard Business School, Launching Technology Ventures, dedicates a large portion of time applying the lean methodlogy that Eric Riess so ably outlines in his book to start-ups.
Yet, I fear that the success of the Lean Start Up movement risks leading entrepreneurs to pursue Lean Ideas rather than Big Ideas. I'd like to see that trend reversed, by pushing entrepreneurs to distinguish more carefully the differences between Lean Ideas and Lean Start Ups.
First, a few definitions. Lean Start Up methodology teaches that young companies should view the start-up as a laboratory for experiments, where a minimum viable product (MVP) is created to test the most critical initial hypotheses in order to inform the direction of the company, and whether the value proposition will be compelling enough to build a compelling product, and therefore compelling company. A “lean idea” is a concept that is small, niche, incremental. It might be better served as a feature in someone else's product. Or a point solution in someone else's product suite. But it is not substantial enough to form the core of an entire company, never mind start-up nirvana, which is to become a platform on top of which other companies seek to build (see chart below, which should have "Platform" as the rightmost point of nirvana for the inventor).
Today, Facebook is a platform. The Facebook API set is one of the hottest areas of development on the Web and some even equate Facebook with an operating system, in hushed tones of awe that previously were reserved for Microsoft (oh, how the mighty have fallen...). But the initial service that was formed and launched in the Harvard dorm room, coded up in a few weeks, was simply a minimum viable product that allowed students to look each other up.
So as an entrepreneur, never mind an investor, how do you know whether you are working on a lean idea will never be anything more than a feature, or a Lean Idea that will evolve into a Big Idea over time, just as Facebook and Twitter did? I don't have a definitive point of view here, but a few rules of thumb have begun to take shape in my mind:
- Don't Settle For Anything Less Than "The Wow". Declaring something a Big Idea, or a Big Vision, is a lofty moniker. Set the bar high when you consider whether your idea really is as massive, disruptive and game-changing as you think it is. When you bounce the Big Idea off your friends and colleagues, do they nod politely and use words like "interesting", "cool", "neat" as opposed to widening their eyes and declaring, simply, "wow". When I first heard about Square (also a Jack Dorsey production), I thought "wow". Turning every mobile device into a payment acceptance platform - that's game changing. Look for the wow. Don't settle for anything less.
- Swim in the Ocean, Not a Pool. If your company is operating in a massive, massive market area, with plenty of interesting adjacent markets, then you know you are pursuing something that could be really big. DataXu, a Flybridge portfolio company, initially started focused solely on bringing real-time bidding and machine learning techniques to display advertising, at the time a $10 billion market - large, but not wow, particularly because the solution only worked if the advertising inventory was available to bid on through one of the exchanges. So let's call that market pool-sized - or perhaps even lake-sized, but not ocean-sized. The ocean-sized market was the bigger vision that CEO Mike Baker had - that all advertising (display, video, mobile, social) would be addressable through real-time, digital techniques. And that a system could be built that was so fast, that thousands of data points could be poured in to inform the decision as to which ad to put in front of the consumer in real-time. That was the wow that is driving that company to be as successful as it is today.
- Great Teams Find the Wow. For decades, VCs have debated whether to focus on great teams or huge markets. Will great teams operating in a small market outperform mediocre teams operating in a huge market? Although there are case studies that cut both ways, to transform a Lean Idea into a Big Vision, I would submit you need a great team. Benchmark's Andy Rachleff's bias, as reported in a Marc Andreessen post, is that the #1 company-killer is a lack of market. Therefore, he concludes, in the debate between team vs. market, markets rule. That said, I would submit that in order to transform a Lean Idea into a Big Idea, you need both. A great team will find a way to expand that initial MVP into a huge market opportunity.
Company-building is never neat and linear. Did Mark Zuckerburg or Jack Dorsey imagine at the point of creation that Facebook and Twitter could become veritable movements (that most transcendent state for a service - where it is beyond a platform but instead a cultural institution)? Probably not. Sometimes a Big Idea grows organically out of a Lean Idea. But often, that combination of big vision, big market and great team can be seen in the DNA of any idea that morphs into a Big Idea that leads to a Big Platform.
So, when you are formulating your own start-up idea, make sure to distinguish between a Big Vision that begins with a Lean Implementation, and a Lean Implementation that is a reflection of a Lean Idea. As Jordan Cooper recently wrote in his provocative blog post "Rise Strange Thinkers...We Need You", we need more Big Visions, as strange and outlandish as they may initially sound, to drive this ecosystem forward. Just because you want to embrace the Lean methodology, doesn't mean you should settle for a Lean Idea.