The Lean Startup, Anti-lean subsidies, and other ramblings

July 31, 2017

This year’s RudeVC summer reading list post generated an unexpected mini-debate in the comments section (LinkedIn version, can’t figure out how to link to it). The debate did not center on the 5 novels I recommended but rather focused on an afterthought recommendation I made at the end of the post for Eric Ries’ 2011 book, The Lean Startup.

Some entrepreneurs drew attention to — in some cases even singled out — VCs in France who are allegedly ignorant of The Lean Startup concept. Unnecessary gratuitous finger-pointing aside, I do agree that every investor in tech startups, be it VC or angel, should at minimum possess a passing familiarity with the concept.

My hypothesis for the reason that the Lean Startup methodology is not so deeply integrated into the French investing culture can be encapsulated in one word: subsidies. France’s startup ecosystem boasts a long tradition of funding via government subsidies. Unparalleled by almost every other advanced economy, a whole industry of advisers and “subsidy-raisers” working on a commission basis exists in France.

The intentions behind government subsidies are sincere and well-meaning: promote innovation, try to replicate Silicon Valley in France (which I submit is fallacious thinking but that’s another topic), render modest risk-taking more less daunting, etc.

The problem, however, with government subsidies, at least in France, is that in my opinion they are anti-lean. The Lean Startup methodology is about experimentation. It’s about going to market with an MVP — i.e. before you have a product — the very endeavor which informs the definition of the ultimate product to be developed. Subsidies, on the other hand, are generally only granted to extensive technology development efforts.

Incidentally, for a helpful recent explanation on what an MVP (minimum viable product) is and is not, check out this piece from Nacho Bassino.

Here’s a link to the French translation of Eric Ries’ The Lean Startup. I encourage every investor unfamiliar with it to put it on their August to do list.


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posted in venture capital by mark bivens

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