Fail Fast or Win Big
The Start-Up Plan for Starting Now
Author: Bernhard Schroeder
Pub Date: February 2015
Print Edition: $21.95
Print ISBN: 9780814434789
Page Count: 208
e-Book ISBN: 9780814434796
Buy the book:
Why Today's Entrepreneurs Need to Read This Book
Fail Fast or Win Big is not about failing. It's about embracing a new
way of thinking about creating and launching a company. In the startup
world today, you can't spend months writing a complex business
plan that will be out of date before your idea ever comes to market.
There is no time to create the perfect company on paper before testing
it in the real world. And you don't have to, either--not with new
sources of capital, such as crowdfunding, waiting to be exploited.
You still need to acquire a deep understanding of the marketplace
and your customers so that you are more knowledgeable than your
potential competitors, but you also have to beat them to the punch.
You are much better off launching a minimally viable product or service,
one that satisfies your core customers' needs, and adjusting it on
the fly after you see what's attractive about it and what isn't. Fortunately,
the tools are available now to let you get started in 90 days, if
not less; after all, your time is the most important investment you
make. If your product or service doesn't work out, you've saved yourself
plenty to win big with the next idea.
The LeanModel Framework will help you move as fast as you
need to go. It's the culmination of my work with some of the most
talented people in the world during the past 20 years. Some of those
people were fellow professionals in our integrated marketing agency,
CKS|Partners, which grew very fast, accelerated through an initial
public offering (IPO), and then was sold two years later for more than
$300 million. Other people I met through "corporate entrepreneurship"
where, working together, we spun out divisions and/or new
products and services very rapidly. The last group I was in consisted
of entrepreneurs launching start-ups, mostly on the West Coast.
While everyone seems to recognize the end result when companies
become successful, almost no one remembers the lean days that
usually preceded that success. That's when these companies were
started in homes, garages, warehouses, and on college campuses.
Looking back now, I see that almost all these successful companies
embraced a LeanModel Framework: building a solid business model,
utilizing lean resources, rapidly prototyping a minimally viable product,
and then seeking customer feedback. With that feedback, they
then pivoted, evolved, or abandoned the idea.
The philosophy behind the LeanModel Framework is one I
adopted early in my own career and that I now espouse as the Director
of Programs at the Lavin Entrepreneurship Center, San Diego
State University, and as a lecturer for several entrepreneurship
courses. Early marketing work in my career with Fortune 500 companies
convinced me of two things: (1) Large companies move too
slow; and (2) I could not work with slow companies. Instead I looked
for opportunities with companies that had a desire to move fast, as
they were taking advantage of new market opportunities. I moved
away from the General Motors accounts and I embraced the Kellogg's
and Nikon assignments that were rapidly prototyping marketing
strategies to introduce new products or services, and they were grabbing
market share quickly.
When I did work with some automotive companies, I welcomed
the chance to help craft new marketing or customer solutions, for
smaller, nimbler companies at the time like Hyundai, Mitsubishi, and
Mazda. Later, in Silicon Valley, the challenge was to sharpen the education-
marketing focus at Apple and define the online marketing
strategy for a growing company called Nike. Or, it was taking a small
regional craft beer named Widmer and rolling them out nationwide
in bottles for the first time ever.
In choosing to work with nimbler, faster-moving companies, I realized
it was not about me or my ego. I thrived on the notion of seeing
a market opportunity and of moving fast to win big. And I loved
working with people who were not afraid to take measured risks in
an attempt to win big.
I have worked with some great companies, both large and small.
Do you know what made them great, beyond inspirational leadership
and usually an amazing culture? It was a powerful sense that they had
a meaningful purpose and a destiny, but that in order to fulfill that
destiny, they had to move fast. They recognized that moving too
slowly would cost them--in terms of either market share or longterm
survival. In other words, their core belief was that if they did
not move fast, they would ultimately fail.
Let me give you some examples of what the LeanModel Framework
looks like in action. In the early 1990s, I was tasked with helping
lead a team working with a small start-up called McAfee. The company
made anti-virus software, but it was a very small player in a marketplace
dominated by larger software companies. As we reviewed
potential strategies, we noticed that corporate IT managers routinely
looked for additional information or support on bulletin board systems
(BBS). These open computer networks allowed people to connect
and share information and software solutions. Since this start-up
could not afford to package or distribute its software through the traditional
distribution channels, we recommended they upload their
software to the BBS networks, distribute the software for free (for 30
days), then ask the companies to pay for it after it had been used by
their IT employees. This was amazingly successful, and it created a
company with more than $2 billion in revenue today. More important,
the company's business model and method of distribution
changed the way software could be distributed and purchased.
There was another opportunity to help figure out a company's
business model back in the early Internet days. We met with the
Yahoo! founders when they were still on Stanford's campus, running
the early version of Yahoo!'s website on the university's servers. That
was a lean start-up. Honestly, we really could not figure out the business
model at the time (though they were starting to get a lot of website
traffic). One thing we did notice was that the website was not well
designed from a user-interface point of view. Not only was the company's
branding weak, it was almost impossible to find something
quickly, as the website was using way too many links and had poor
Yahoo! did not have much money at the time, and they asked us
if we would help them in exchange for some equity. We did. We redesigned
the user interface and overhauled the website design. During
the next six weeks, we created a more powerful, simpler user
interface that was more logical and better ordered. But then everyone
had an opinion about the new design versus the old design. And
everyone was nervous. We convinced the founders to let the customers
decide. So, alternating website visitors were served up the new
version of the website. Then the next time they visited the website,
they received the old version of the website. They were asked to vote
on which website design was easier to navigate, and more than 50,000
website visitors voted in the first 72 hours. The majority voted for
the new design, much to the founders' dismay. So, we launched the
new website, and Yahoo! took off. We then began refining the Yahoo!
business model by adding the search function and eventually an advertising
This notion of testing products with customers and getting feedback
is critical; I call it customer truth. Customers are not always right,
but they are never wrong.
In the mid-1990s, I had probably my most memorable experience
reflecting the mentality of the LeanModel Framework. The
founder/entrepreneur of a start-up I'd never heard of called our
agency office in Portland, Oregon, in search of a marketing agency
and strategic partner to help him grow the business. He had launched
a somewhat crude website about six months earlier (a minimally viable
product), and it was gaining some traction with customers. So
my creative director and I agreed to go to the meeting, which was
about three hours away. Driving in what turned out to be a downpour,
just terrible weather, I was regretting my decision.
When my creative director and I arrived at the company's location
in a seedy part of Seattle, in a rundown warehouse district, my
instincts were telling me to leave. We entered the warehouse; there
were no real offices, just employees all together in one large room.
Water was dripping from the leaky roof. A dog wandered by. The
desks were doors mounted on two by four's. It sure looked like no
one was spending money on anything. Then we met the founder. He
brought us up to date on the past six months, and told us what he
needed from us. Which was a lot.
The website and daily operations were working. Orders were
coming in every day. They just needed more awareness in their target
marketplace. He then explained his big-picture vision. His strategy
was to acquire a certain number of customers based on selling one
type of product and then, once that happened, sell those same customers
many different kinds of products.
I'm not going to lie to you; initially I did not buy the big-picture
vision. But I was fascinated by how lean the company was being run
and how aggressive it was in trying to improve its business model.
We had an amazing meeting. At the very end, the founder asked us if
we were seriously interested in changing the world. To be honest, I
did not know what that meant. But I knew beyond a shadow of a
doubt that this start-up was going to move fast. I had no idea if it
would win big, but based on the founder's strategy of grabbing customers
quickly, it was either going to win big or fail really fast.
As we drove back to our offices, three hours in more rain, we both
felt we had just been involved in a meeting that was going to define
the usefulness and the potential of the Internet. Win or lose. When
he called the next week, we told Jeff Bezos we would work with him.
If you are ready to fail fast or win big, read on.
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