Can we apply lean startup principles to big, audacious ideas?

By Kotaro Sasamoto

Facebook, Twitter, Pinterest, Foursquare… all of these platform businesses started from audacious big ideas and then changed our world through providing solutions to totally hidden customer needs and creating new market. But can we apply the lean startup principles to these big ideas? More specifically, without spending tons of money on marketing, how can we attract initial customers to the platform business that requires huge network effect?

Unlike the tangible and immediate benefits that some ventures (Plastic, OPOWER, or CloudFlare) could offer through addressing the issues in existing markets (3% reduction of current expense, etc.), the potential full-benefits of platform business are difficult to calculate and explain. There is no market out there, no transaction to analyze, and no customer complaints to address, at least at the beginning. This lack of tangible and immediate benefits seems to be a formidable obstacle to overcome, but here are some “lean” tactics to tackle with this problem:

1.    Focus on small benefits
Instead of explaining full but conceptual benefit that your products could potentially offer after scaling, you should focus on small but tangible benefit that your product can now offer to the customers. By doing so, all the communication would be efficient and effective, and thus marketing costs would be lower. Take a look at twitter’s product introduction video as a great example: . Even though Twitter is now enjoying full network effect and leverages it to provide full benefit to its users (trend, who to follow, category search, etc.), the initial introduction was entirely focused on one small benefit: to exchange real-time updates with your close friends. This video also successfully conveyed the benefit along with the consumer’s everyday life context with very concrete manner.

2.    Focus on super-niche customers
Instead of targeting broad range of customers with tons of marketing budget, you should focus on super-niche people who are willing to use your product intensely. By doing so, you can get more useful usage examples, which would be utilized as effective mobilization tools. Early adapters would decide if they join the platform by checking the quality of existing users’ interactions, rather than the quantity of registered users. By focusing resources on improving the satisfaction of super-niche customers, you could efficiently generate contents to show more tangible benefits of your product to potential early adapters.

3.    Start from small venture
Instead of trying to establish the big platform business with big idea, you can start your entrepreneurial career from building small venture with conservative business model. If you successfully exit that small company with decent valuation, you could get tremendous credibility from investors, and this credibility would dramatically increase the chances for your audacious big idea to get funded. You can of course use this big money for aggressive marketing campaign to mobilize initial targets.

Well, the third tactics is tricky and clearly not aligned with the lean startup processes we learned in the class. However, if we define the lean startup process as the methodology to reduce the odds of critical failure through small experiments, this could also be defined as the lean process. By starting from small and conservative venture, you could test your ability, passion and luck in the entrepreneurial environment. And through learning lessons from this experiment or even pivoting your aspiration, you could reduce the odds of critical failure to invest all your life in a reckless, dreamy big idea…

In conclusion, I believe we could apply the lean startup principles to big, audacious ideas. But as the third tactics clearly implies, starting small takes time and taking too much time on experiments might lead to missing precious opportunities. It is really important to keep in mind this tradeoff.


Popular posts from this blog

Quiz Time 129

TCS IT Wiz 2013 Bhubaneswar Prelims

The 5 hour start-up: BrownBagBrain