As a keen observer of startups over the last 17 years, one of the most remarkable and welcome developments has been the application of scientific method to building startups. In 1999 when I started in venture capital there were no blogs and very few business books that were useful for entrepreneurs. All founders could do was accumulate wise advisors and rely on their wits and instinct.
If I was to pick a watershed moment in the emergence of ‘entrepreneurship as a science’ it would be the publication of Steve Blank’s Four Steps to the Epiphany in 2005. It’s not the easiest read, but for the first time founders had a playbook they could follow. However, it was also around that time that Brad Feld, Fred Wilson and a number of other wise souls started blogging and startup best practices started to be widely shared.
There were two great things about that. Firstly sharing leads to discussion and discussion leads to iteration, making everybody involved smarter. Thus it was that Eric Ries both extended Blank’s work and made it more accessible with the publication of The Lean Startup in 2011. Secondly, people outside of Silicon Valley were able to join in the conversation and get smarter to a much greater extent than they ever had been before which was a massive boon to other startup ecosystems around the world, including London.
Here at Forward Partners we have worked hard to contribute to this development by publishing The Path Forward – a playbook and set of practical guides for founders in their first year or two.
All this work has, I think, made it easier for founders to climb the learning curve and become masters at running their companies. It’s easier to know about and avoid common pitfalls (e.g. assuming you know what customers think) and to pick up tactics and best practices (e.g. OKRs for managing objectives). Of course, that doesn’t mean it’s now easy to be founder, far from it, but it is easier than it was.
However, building a startup can never be reduced to pure science. Some magic, art and wit is always required. I was talking to the chairman of one of our companies a year or so back (I won’t name him for reasons that are about to become obvious) as he was helping them through a rebuild of their product. The founder is a disciplined practitioner of lean startup principles who had achieved good growth through lots of experimentation and optimisation, but they had got stuck. They had hit a local maxima. The chairman explained how they had over indexed on startup science and ended up with a product that was boring. They needed more soul.
This story has a happy ending; they rebuilt the product and are now growing fast once again, but it is a reminder that there needs to be a balance between the disciplined application of startup best practice and inspiration.
I’m writing this today because whilst reading Are Liberals on the Wrong Side of History in The New Yorker I was struck by the similarity between the recent evolution in startup thinking and the way The Enlightenment impacted western thought in the eighteenth century. I don’t have the deepest grasp of the history of philosophy, but it was during The Enlightenment that thinkers like Descartes, David Hume, Adam Smith, and Immanuel Kant had the great rationalist vs empiricist debate which developed the concept of the scientific method, introduced the idea that everything might be explainable through thought and rules, and then hotly debated the limitations of that approach to understanding the world.
As The New Yorker points out, you can, in fact, trace this debate back to the ancient Greeks with Plato on one side and Aristotle on the other, so the rationalist vs empiricist debate has actually been running for millennia.
When I was an under graduate studying social science in the 1990s I had a good run synthesising the work of the leading thinkers of the time across sociology, political science, social psychology and social anthropology. It worked for me then and I find myself repeating the pattern here. When there is a significant change in society then the pendulum almost always swings too far, whilst what we really need is to find the right balance. During the great debates of The Enlightenment in a sense both sides were right. It is beyond doubt that rationalist thought and the scientific method brought great advances to our understanding of the world and many great things flowed from that, including the liberal-capitalist system which has given us unprecedented individual freedom and prosperity. However, there are still many things that we don’t understand from first principles where all we can do is treat them like a black box developing predictions for what will happen next based on what we’ve seen in the past without understanding the underlying workings – the human brain is one example, and the workings of the economy being another (hence our difficulty understanding the impact of Brexit).
Returning to startups (and this is a bit of a stretch, but bear with me) – Steve Blank and Eric Ries can be likened to Descartes and other early enlightenment thinkers from the rationalist camp who achieved great advances by using scientific method to shine light into areas that had previously relied upon intuition and rules of thumb. The next step is to balance that thinking with the an approach that can be likened to the work of David Hume who pushed back on the rationalists noting that great insights can also be had by drawing on our experiences.
Throughout his career Steve Jobs famously eschewed market research and relied on his intuition to build amazing products. That’s an extreme position which worked for him, but doesn’t work for most of. The balance I’m talking about cultivates that sense of intuition but then finds ways to quickly and cheaply test the resulting ideas with customers. Now that we are in an era where our basic needs are sated MVPs need to be increasingly sophisticated before customers will engage. That means more investment in development before ideas can be tested than was the case ten years ago, increasing the cost of failure (hopefully not too much) and thus making it more important that only good ideas are tested (again, hopefully not too much). Hence the point of balance is shifting. At the margin the value of good intuition is increasing and the value of disciplined application of lean startup principles is decreasing.
The pendulum is starting to swing back the other way.