Does the lean startup methodology apply to global startups?

By Dileepan Silva

Most of the discussion around the lean startup methodology has focused on startups that were started in the United States where both the market and customers are domestic. We've also touched upon startups in other countries - whether innovative homegrown ones or those incubated to capitalize on arbitrage opportunities like Rocket Internet. I can see how the lean startup methodology applies to any startup no matter what country it is in.

But what about startups that seek to operate globally from the outset? More to the point, what if a critical part of the success of the startup required a global presence. For example, I'm an entrepreneur in Estonia and since my home market is so small, not to mention that of my Eastern European neighbors - I've got to think global from day one. Success for the startup could also be predicated on a business model that by its very nature is global. What if your mobile technology startup requires several telecom operators in various countries as partners due to operational scale issues.

Does "lean" work for right out the gate global startups? Not surprisingly, the answer depends. Let's take the principles on minimum viable product (MVP) and the product-market fit. It's going to be hard to iterate early and often if your product has to be tweaked for each separate country market. But this varies on the amount of localization your product requires. If your product is more a platform (Skype) than a product (Lit Motors), it's going to be easier to be global first. Platforms where capturing market share is critical and network effects help may find it easier than products that need to be localized.

Lean may also not apply when product-market fit can't happen in one fell swoop. As much iterating is part and parcel of the MVP, it may also be relevant for product-market fit. For global startups in particular, success in product-market fit may actually come from iteration across countries. What you learn in one market could help you change critical aspects of the product in another market or potentially even consider a pivot. For example, I might learn that a specific feature that customers in one market really want happens to be the feature that customers in another market I launch in actually need.

Or you might learn the opposite - that a critical part of your product doesn't actually work in your 'home' market where you are based but is widely successful in another one. I recently spoke to Eric Paley from Founder Collective and he recounted the story of TechStars-funded startup StepOut. Initially started out as a group-dating site with a primary focus on the US market, the founders soon realized they were getting a lot more traction in India. Why? Going out with a group of friends rather than one-on-one dates is much more socially acceptable - and needed - in a culture where chaperoning is still the norm. StepOut has 5M members in India and less than 100K in the US. Go figure.

Needless to say, while it might seem logical to assume that customer behavior and dynamics are generally similar across markets (especially developed ones like the US and Europe) there are nuances to emerging markets that buck this thinking. But rather than assume that because there are differences - cultural or market-based - a startup should focus on one market first misses the point. Sometimes the learning may come from being in more than one market at a time. Iterating early and often may not just be about product but iterating across multiple markets as well. Maximum Viable Markets anyone?