You always hear lean startup advocates say that it isn’t about saving money. That may be true in a very direct way, but, applied correctly, lean startup SHOULD save a startup money. Lean startup is all about reducing waste during the development phase. Waste can take many forms, including time, manpower, and opportunity cost… all of which have a direct impact on the bottom line.
The True Cost of Unwanted Features
Developing features that customers don’t care about is a surefire way to lose precious development time and money. You have to pay your developers for the time they spend building the unnecessary features. This is especially crucial in bootstrapped startups where salary budgets are tighter or non-existent.
It’s important to make sure that development time is spent on features that are highly-valued as identified by your customer development process. Not only will this make sure that you’re working on the right things, it’ll save you precious money in the short-term. You can never get your feature-set correct 100% of the time, but each pivot or iteration of your product has an associated cost that you need to minimize.
There is also an opportunity cost associated with each pivot. The difference in revenue that you would have earned if you had your product perfectly fitted to your market versus what you actually earned is an opportunity cost. Understanding that lost revenue potential can be an important motivator to continue pushing so that you can find the right fit.
What are your thoughts? Does lean startup actually save a startup money?