There's nothing wrong with raising venture capital. Many lean startups are ambitious and are able to deploy large amounts of capital. What differentiates them is their disciplined approach to determining when to spend money: after the fundamental elements of the business model have been empirically validated.
A lot of entrepreneurs hate big companies. But if you hate them so much, why are you trying to build a new one? The truth is, as soon as a startup has any kind of success whatsoever, it will face big company problems.
Interpretation
What this quote means
Entrepreneurs often criticize large companies, yet they aim to create successful businesses themselves, ultimately facing similar challenges.
This quote by Eric Ries highlights the paradox within the entrepreneurial community, where there is a disdain for large corporations despite the fact that startups, upon achieving success, encounter the same issues that plague established companies. It suggests that rather than viewing big companies as adversaries, entrepreneurs should recognize that they will inevitably face similar challenges as their own ventures grow. This reflection encourages a deeper understanding and a more constructive approach towards the business landscape.
Themes
In practice
Example use cases
During a business conference, this quote can be shared to inspire new entrepreneurs about the realities of success.
More from Eric Ries
All quotes →Building the right product requires systematically and relentlessly testing that vision to discover which elements of it are brilliant, and which are crazy.
The grim reality is that most start-ups fail. Most new products are not successful. Yet the story of perseverance, creative genius, and hard work persists.
The reality is the Lean Startup method is not about cost, it is about speed. Lean startups waste less money, because they use a disciplined approach to testing new products and ideas.
You get a culture of entrepreneurship after you have successfully changed the accountability system so that people can use a better process. Process drives culture, not the other way around, so you can't just change the culture, you have to change the system.
Learning to see waste and systematically eliminate it has allowed lean companies such as Toyota to dominate entire industries. Lean thinking defines value as 'providing benefit to the customer'; anything else is waste.
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If customer ignorance is a profit centre for you, you're in trouble.
I'll tell you why I like the cigarette business. It cost a penny to make. Sell it for a dollar. It's addictive. And there's a fantastic brand loyalty.
In the final analysis, finding a way to do clean business and not to pay bribes actually improves your bottom line.
If your startup is only in the development or idea stage, there is almost no better predictor of failure - I mean, utter failure, scorched-earth bankruptcy - than raising too much money in the first round.
The most common cause of low prices is pessimism - some times pervasive, some times specific to a company or industry. We want to do business in such an environment, not because we like pessimism but because we like the prices it produces. It's optimism that is the enemy of the rational buyer.
The companies that survive longest are the one's that work out what they uniquely can give to the world-not just growth or money but their excellence, their respect for others, or their ability to make people happy. Some call those things a soul.