Eric and his fellow lean advocate Steve Blank have both written at length about the methodologies associated with the lean startup approach. If you have not read their books (Steve’s here), I suggest you do.
But the most interesting part of the discussion on wednesday night for me was when Giff asked me about a comment I had made that “you need more than a lean methodology, you need a lean culture.”
To me, lean is a state of mind that a founder and his/her team needs to have across all aspects of the business. The specific product and engineering approaches that are at the core of the lean startup movement are paramount for sure. But if you can apply lean to hiring, sales, marketing, customer service, finance, and everything else, you will be rewarded with a fast, nimble company. That’s a winning model, especially when things are moving fast in many dimensions as they are right now.
Later on in our conversation on wednesday night, I got a question about lean and venture capital. To me, USV is a lean VC firm. Brad and I set it up that way because we talked about all the things we didn’t like about venture capital firms when we were setting USV up in late 2003.
My prior experience at Flatiron was instructive. In the first two or three years of Flatiron, it was basically just me and Jerry. We were deeply engaged in all of our investments and we had one or two employees other than ourselves. We did very well in that period. In mid 1999, we went on a binge, raised a huge fund ($350mm), moved into a massive office, hired a staff of 25, made investments we weren’t engaged in, and got fat. We did poorly in that period. We shuttered Flatiron in 2001 and I took over the entire portfolio with the help of Jerry and Bob. It was basically back to the early model. We did very well in that period.
I do not believe that venture capital scales. I believe you need a small team of highly engaged partners and not much else other than great relationships with entrepreneurs. We do have a small team of non-partners at USV. Dorsey runs the office. Christina runs the investment stuff. Gary runs the portfolio engagement stuff. That’s it. It works really well. We’ve kept USV lean and I believe that has allowed us to focus on what matters most, to react quickly to opportunities, and to be focused externally as opposed to internally. And when I look at most of the VC firms I admire, I see similar lean approaches. It’s a winning model.
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