StartUp SF v2.2 – "Give Your Ideas Ex-Lax" with David Weekly

On Wednesday I went to see David Weekly speak at StartUp SF v2.2 – “Give Your Ideas Ex-Lax”. I’d heard a shorter version before at Startup Weekend, but I was glad to see it again and hear the full version. I largely agree with the lean startup ideas behind it, which David shares with Eric Ries, Steve Blank and others, but it does raise a question I wish I had some statistics on.

Does getting ideas out the door faster increase the overall success rate of ideas? Or do you just have more chances at getting it right?

Although I’m following customer development methodology and I have a gut feeling that my odds of success are better for it, I’m a bit surprised that there aren’t any statistical survey’s backing it up. Perhaps there are, and I just don’t know. (In which case, please send a URL over in the comments.) The anecdotal evidence is very strong, but they’re still just anecdotes. It seems as if the Malcolm Gladwell method of argumentation by quirkiness and common sense has become quite pervasive, or perhaps it’s not a new thing. (After all, I’ve been out of the country for a few years.)

So here’s my rational for pressing on (and here’s hoping it’s not a rationalization.) Even if customer development doesn’t give you a better chance of success, it gives you more chances. So hunt with a shotgun and not a sniper rifle.

If you’ve got an idea for a product and it’ll cost you 6 months of your life to get it out the door with a 50% of success and your time is worth $10k a month in opportunity costs in consulting opportunities. So the return better be at least >$120k to be worth doing (return should be > [10k/month x 6 months] / 50%). If you can do a stripped down version of the same product in one month, it’s much better to do so, even if the likelihood of success decreases to 10% (return should be > [10k/month x 1 months] / 10%). Plus, you’ll have five more chances of hitting a really big idea so you can retire to that private island you’ve been shopping for.

Obviously that equation is unrealistically simple, but the principle is the same. I’d rather have 6 lottery tickets than one, and the if you follow a soft launch methodology, odds are that your early adopters won’t care about a few bugs enough for it to sink your idea and the potential return is still the same.

In the end, customer development methodology wins out by virtue of having more chances. Click To Tweet

…but I still wish there were a few more facts available.

Discussion (2 comments)

  1. Greg says:
    08.12.2009.

    You’re right about getting more chances, but I think there are other important effects at work too. Your subsequent ideas build on your first one. PayPal would never have come up with their online payments business without trying unsuccessfully to do encrypted PDA money transfers first. Also, putting the early version out helps you understand value from the customer’s perspective. So let’s say there’s a 50% chance customers think your idea sucks. That 50% chance will be relatively unchanged after one month of work or six, and the longer you wait, the longer you risk expending effort going in the wrong direction.

    All of this stuff is very hard to nail down with statistics. Maybe there’s an opportunity for a few PhDs to be earned working on this stuff some day.

  2. startupsquare says:
    09.12.2009.

    Yes, you’re absolutely right and this is a gross oversimplification, which is presumably why we haven’t seen any great data on it. I am going to see what the Kaufman Institute has to offer on this subject. Maybe they can help.

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