• Product Owner

Why nearly half of startups fail without a lean startup

The greatest miss from Silicon Valley is still the Juicero. The Juicero was a juice press that you had to connect to your Wifi to get it to work, and which actually did nothing more than squeeze a pre-filled bag of vulgar juice with a far too large apple-like device. The bitch has since been exposed as one big wet wind, but the crazy thing is that investors (including Google Ventures) were in it for a whopping 120 million. Lean innovation would not have been out of place in this case.

The Value Proposition sounded supreme: ‘The Earth has been perfecting its process to make the most nutritious ingredients for 4.5 billion years. That’s why we designed a way to way to deliver you Earth’s best, just as Earth intended, so you can be your best.’

But seeing the video immediately raises the question: who ever believed this was a good idea? Take a look:

By now, everyone is clear that the Juicero can rank among those 47% of startups.

Validated or not validated?

Validation is the process of using experiments to examine whether hypotheses are correct. Validation means: setting up the right hypotheses, doing the right experiments in the right way, collecting the right data and drawing the right conclusions. Together, they make up the Lean Cycle:

So you could conclude about the Juicero that either it was not validated, or it was not done properly.

But where does it go wrong? Failure to validate is actually out of the question today. With lemmas like Steve Blank’s “Get out of the building,” you can’t escape that anymore. Any investor will also ask and insist on it.

So is the validation not done well? My students asked in lecture last week to what extent scientific research differs from validation in the Lean StartUp. ‘Obviously tremendously,’ was my answer. Because research that is not rational and scientific produces bad data. And that leads to making the wrong choices. And those often cost a lot of money. Where does it go wrong?

Not educated

A major reason is because the people who do this are not trained in scientific research and have no experience in it, but are not aware of it.

Validation Theatre

And in addition, Validation Theatre is often enough for the organization. Work has to be done in a new way, because the customer is central. So panel sessions are done, people are briefly interviewed on the street and everything is captured on video and edited in bold; it all looks very impressive. We are doing a good job! The fact that the outcome is not that reliable doesn’t really seem to matter anymore.

Confirmation bias

A force that also plays a role is the entrepreneur’s natural tendency to be somewhat optimistic. This often leads to false positives and confirmation bias. ‘I think the respondent was really excited about our idea. I saw the twinkle in his eye!’ . The fact that the respondent made no attempt to subsequently obtain the product does not come up.

Back to the Juicero for a moment. You can hardly imagine that respondents to this, looking at the prototype, were ever really enthusiastic, can you? Surely these also all asked, ‘Nice all round, but what’s the advantage over a regular pouring pack? And why Wifi?’

Deliberately not aborting in a timely manner

A final way in which validation does not lead to the right choices is because it is often attractive to push it away, because possibly aborting the operation leads to disastrous consequences. So it’s not just in the experiment that things go wrong, but more importantly in how they are acted upon.

So how do we solve this?

So we want to do validation more rationally and scientifically, no matter how non-Agile and non-Lean startup that may sound on first hearing. But Agile doesn’t mean cutting corners in your experiments. Agile just means that you’re willing to change course when data from careful experiments prompts it. It’s the fastest way to save time, money and energy by avoiding pulling any more dead horses.

The focus is on research methodology, understanding significance and logic. Because the research, interview or experiment is one, but in the Lean Cycle, after that comes the Learn phase. That is where logic is paramount.

Together, let’s avoid spending time on new Juiceros. Let’s make sure we spend our time, our money and our energy on innovations that the world is waiting for.