The Lean Startup methodology doesn`t work for network effects startups!
In a recent article, Guyi Shen claims that Lean Startups don’t work in case of a requirement for strong network effects (e.g. Airbnb, Facebook, etc.).
The main critique is based on the hypothesis that instead of finding product market fit first and then scale, scaling is needed first and then find product/market fit.
Either you spend a lot of money on user acquisition early on – which many startups can not afford – or you hope to become another Facebook which grew without spending a ton of money on user acquisition according to the author – not very likely ;-).
So how to scale with “no” money and shaky product/market fit (“Lean Scaling”)? How do you scale for free or at a very cheap rate and are still able to test your assumptions?
Guyi recommends to apply the following 3 tactics:
- Segmenting as narrowly as possible (tight geographic and demographic segmenting)
- Building two bridges at once, and hopefully they meet at the middle (simulate one side of a network to test assumptions on the other side of the market)
- Generate buzz (post, generate micro-buzz)
Find the complete article here.