I’m confused and angry: for heaven’s sake, what’s a startup guy supposed to do?
On the one hand you’ve got Steve Blank proposing his Customer Development startup loop, Eric Ries proposing his Lean Startup development loop, and (one you may not have read about) Alex Osterwalder’s Business Model Generation loop. These three dovetail neatly into a kind of ‘zeitgeisty’ continuously-pivoting startup worldview that says: hey, business plans are for MBA robots, building stuff without a business model and customers is a bozo recipe for failure, so just keep looping and eventually you’ll have learned enough to be pretty sure of not failing.
On the other hand you’ve got 99.9% of angel investors and VCs in the world, who say: why on earth do you think I would open-endedly fund your startup when you tell me right from the start that you have no idea what your market is, who your customers are & what your product will be, and that you have no solid plan moving forward, just a deeply-felt desire to iterate and pivot repeatedly until such time as the process of bouncing ideas/demos/prototypes off your customers helps reveal one to you, at which time you’ll need to raise yet more money from me to actually execute things based on what you’ve already spent so long learning at my expense? Do you honestly expect me to fund your University of Me while you “get real”? Since when was I your parent?
There’s a bit of a conflict here.
Why, then, is it only me that seems to see this kind of funding request for (let’s call it) a “Blank cheque” as somehow genuinely unreasonable from an investor’s point of view? It’s not that I’m an apologist for MBAs, business schools and accountants (far from it!), it’s just that I can’t honestly see how focusing on iterative customer development to the exclusion of everything else helps build any kind of workable middle ground between entrepreneurs and financiers, between (in Blank’s slightly pejorative terminology) the worlds of Billy Durant and Alfred Sloan.
Note that it’s really not that I don’t understand the Blank / Ries / Osterwalder weltanschauung: on the contrary, I think I probably understand it better than most, in that their ideas closely match the ways I’ve actively developed my own company over the last three years. However, there’s a hugely strong case to be made that almost all lean startups may well be intrinsically unfundable. Though making a strength out of a weakness is a great rhetorical exercise (often used in job interviews, of course), I don’t think it translates well into the higher-level arena of funding persuasion – for how is a financier supposed to tell the difference between a “learning startup” and a “know-nothing startup”?
Can somebody please tell me why it only seems to be me who has taken the red pill?