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What is “Lean Startup” ?

Ernest Rudyak

“Lean startup” culture is a new thought leadership that is being used to counter attack the staggering numbers of failed start up companies around the world. This idea is based on reducing the risk of failure by understanding the needs of your consumer base, and adopting a mentality that favors flexibility over elaborate and longterm planning. A big contributor to this movement is Steve Blank, co-founder of eight start up companies in the past 20 years. Blank’s first company, E.piphany, was a software startup established in his kitchen in 1996. Blank used this specific experience to write Four Steps to the Epiphany, a book that is considered by many critics as the first introduction to the lean start up ideals. 

This past week, Blank gave a talk at the headquarters of Qualcomm in San Diego, and spoke to the audience about the expansion of lean startup ideologies throughout universities, established organizations and even governmental institutions. Another important point made by Blank is the theory that startups aren’t just younger versions of big companies, but in fact, a completely different animal. CEOs have been told over and over that in order to be successful, startups need to emulate the business models of big companies, however, Steve believes that are a few discrepancies in this thought process. While big companies have spent time and resources understanding their customers, competitors and pricing fluctuation, startups are still in the discovery phases. 

Many startups do not fail because of a lack of better technology, but because they do not have the necessary tools to identify a specific market for their products. Not being able to target the market that fits your product line, is also a failure of understanding and creating a business model that works for your company. During his talk Steve encouraged young companies to learn more about their customers and an find audience that would give constructive feedback regarding their products. The lean startup theory is not meant to grow your business and increase your profit margin, however it can help CEOs understand if they are on the right track and further experiment with different entrepreneurship ideals.