“ ‘Fail fast and cheap’ is a platitudinous mantra, usually evoked by those whose speaking engagements are anything but cheap.”
Ben and Jacob spent most of May analyzing their business by diving into “lean thinking” methodology. They both took copious notes which they shared; Ben and Jacob’s divergence on the worth of “lean thinking” revealed itself in their documented research, snippets of which appear below.
BEN’s NOTES: A startup focused on cheaply and quickly modifying its core offering until it achieves Product-Market Fit, usually through extensive testing, free software, and quick prototyping.
JACOB’s NOTES: A sophisticated way of describing a startup with no vision, product, or plan, whose only claimed competitive advantage is a rapid ability to completely drop its business at the first misinterpreted sign of failure.
BEN: When a startup discovers a successful product for a particular market niche, usually through quick iteration and success measurement. Measurement of success is usually validated through A/B testing. Once this fit is achieved, a startup can mature its business and grow.
JACOB: When a startup achieves Product-Market Fit, they’ve made something that people want. Instead of validating their products through common sense, most startups inundate themselves with data from A/B tests and validate through whatever interpretation of the data aligns with management’s bias. Though not a startup, Google routinely achieves Product-Market Fit when they advocate particular shades of blue.
BEN: The baseline, simplest version of a product that still allows for rapid testing and deployment. With a Minimum Viable Product, you can rapidly test for Product-Market Fit. For example, we achieved a Minimum Viable Product with the first simplified version of the Tootly app, even though we didn’t know it then.
JACOB: An excuse for startups to release shoddy, untested products instead of using ingenuity, creativity, energy and purpose to build something complete. Kind of like when we released the first version of Tootly.
BEN: The method of collecting extensive feedback from customers using a Minimal Viable Product, through A/B testing and other direct observation. Startups use the Customer Development Process to iterate their Minimal Viable Product until they reach Product-Market Fit. Like focus groups on crack.
JACOB: Like focus groups on crack -- focus groups have, of course, been universally panned as useless. The Customer Development Process appears slightly more “rigorous” in appearance, thanks to the faux-scientific appearance of willy-nilly A/B testing with no central guiding principle.
BEN: When a startup has determined that its Minimal Viable Product has little chance of achieving Product-Market Fit, the startup pivots; which is to say, the startup engages in a new line of business, usually by deciding on a new Minimal Viable Product.
JACOB: A more political way of saying a startup’s central hypothesis failed, and they want to waste investor’s money and patience trying something else; typically the new ideas are as good as throwing shit on a wall to see what sticks. For whatever reason, you can’t say “I’ve pivoted out of my job,” but you can say “I’ve pivoted my startup.”
BEN: The idea that a startup should understand when its core product has little chance of achieving Product-Market Fit; upon reaching that conclusion, the startup should pivot quickly and without much expense.
JACOB: Shouldn’t it be “pivot fast and cheap?” I thought “failing” was a non sequitur.
Additionally, Ben and Jacob attended numerous conferences and summits on lean thinking, typically on the order of a rather non-lean $1,000 per person per conference. Some of the more memorable speeches and panels included:
The conferences were “icing on the shit-cake” for Jacob; in his own words, “I could have learned more about developing engaging products by spending a fraction of our conference costs on Chuck-E-Cheese tokens.” Along with the clear lack of enthusiasm in Jacob’s notes, this sentiment concerned Ben. He hated what he considered an inherent hypocrisy in Jacob’s skepticism. “Don’t get me wrong, I know a lot of ‘lean’ talk is bloviated marketing speak, but the underlying principles make sense. If our product doesn’t work, we change it quickly and test, right? Hell, Jacob and I basically did an internal ‘put shit on the wall and see what sticks’ when we first discovered Tootly, which is exactly what this methodology advocates.”
Jacob was demur in his response. “Yeah, we basically did a single product test with Tootly and got lucky, sure. But the point is, luck or no luck, we discovered a business that was working. We should have kept making new novelty apps -- as opposed to questioning the entire idea behind our business. Sure, the growth stopped, but we already had 800,000 reasons to believe in our business. Why change our entire business just because we reached a threshold of people that will buy our current apps?”
The answer, outside of Ben’s zeal for “lean thinking,” came down to money, of course. Or rather, future potential for money. Tim and Jim had made it abundantly clear that unless Tootly embraced this methodology (mainly by acknowledging the failure of novelty apps) they would block any future attempts at funding (a power they had thanks to Ben and Jacob’s initial negotiation blunder). Jacob cringed when he thought about their position. “I mean, this is a joke, right? The only way we could get more funding was to purposefully fail? Oh, I’m sorry, purposefully pivot.”
Jacob’s protestations transformed into deeper bitterness as Ben began executing on the promise of a lean startup. Ben started by firing half of their employees; Jacob warned Ben about the effect this would have on the group dynamic, but Ben insisted they become a “nimble” organization to improve their “pivot ability.” Soon after, Ben insisted they have company-wide brainstorm sessions. As everyone feared getting the axe, their brainstorms turned into long, awkward silences while Jacob doodled Chuck-E-Cheese logos on the whiteboard. Eventually, the remaining Product Management Pirate found a shred of courage, and suggested that Tootly consider marketing the mobile A/B testing infrastructure they had built for iPhone apps.
Ben latched on to the idea immediately. “We had already built out much of the infrastructure for Tootly, and it was far better than Jacob’s ‘Social Mobile Skeeball’ idea. And plus, can you imagine a better way to show our investors that we took lean startups seriously? We’d be making Customer Development easier for other mobile app makers. My view was: ‘Yo dawg, we heard you liked lean startups, so we put a lean startup in your startup so you could lean while you lean.’ I heard that somewhere and it seemed to apply.”
Jacob played along with the decision to save face publicly; he feared his disagreements with Ben were becoming watercooler gossip and risked damaging an already fragile company culture. But his heart wasn’t really in it. “Before this shift, Tootly had a clear focus: novelty apps for the general public; that’s what our brand represented, that’s how people viewed us. Now we were pushing a product to other businesses, and worse, we didn’t even have a business model! We had a proven method for making money -- stalled as it may have been -- and we were throwing it away to appeal to our investors. I knew we were facing disaster, as much as I knew Social Skeeball would be the biggest electronic hit since Tamagotchis.”
But Ben was determined. They changed the official name of the company from Tootly to Tootly Mobile Solutions, Inc. and spent the next two months setting up an A/B testing product for other startups; including the custom infrastructure needed to A/B test their A/B testing structure. “Everybody at these lean startup conferences wanted to ‘be the platform.’ This movement was huge, and we had this incredible opportunity to be a ‘platform’ to help them test their ‘platforms!’ Nothing this meta fails.”
Meta-failure or not, both Ben and Jacob were at least convinced this would give Tootly leeway with the venture capitalists to obtain a second round of venture capital and keep them alive. Tootly’s Chief Finance Dude had commended them on their cost cutting, but revealed that it wasn’t enough to stem the tide of red ink. They would be out of money in less than two months.
Ben and Jacob were concerned but at least confident (even Jacob, if grudgingly) that their pivot to A/B testing would prove a compelling enough shift to garner a second round of funding. Unfortunately, the Chief Finance Dude was more concerned about his future career, thanks to Ben’s rather rapid firings; he had already told the Chief People Person the financial situation, and they both had independently revealed the precarious state of Tootly’s finances to Tim and Jim. Not completely coincidentally, after Tootly’s impending demise, they both received cushy jobs in TOAD and JOCK’s other portfolio companies.
Despite prior slips, Ben and Jacob remained blindly ignorant to the loose lips of their employees, and met with Tim and Jim for their next board meeting to explain their pivot to A/B testing. They were confident in their presentation, and after seeing the reaction of Tim and Jim their concern momentarily disappeared. After their presentation, the venture capitalist pair seemed equally confident and not at all concerned.
Unbeknownst to Ben and Jacob, Tim and Jim’s calm stemmed from a rather nasty case of information asymmetry. The venture capitalists were about to pull a dutch oven on Tootly.
Slang for pulling a bed cover over someone’s head while farting. Typically unpleasant, and occasionally fatal.
Copyleft MMXIV Josh Cincinnati