USING ERIC RIESES LEAN STARTUP TO CREATE THE BEST APPROXIMATION TO A MONEY-MAKING MACHINE
ERIC RIES WAS LIKE
The author of the bible of today’s startup culture “The Lean Startup” and its follow-ups breaks the world of startup down to this one single thing: Keeping it lean and therefore being able to change things very quickly, whenever reality or the world changes. is key.
WHY KEEPING LEAN MAKES SENSE
The world is becoming more unpredictable every single day. People usually don’t think the big companies of today’s world will run out of business soon. Also, these companies don’t think they will run out of business soon. But remember, there was this giant computer company that made basically the first batch of personal computers? Its name was and still is IBM. But IBM is something different today. And it’s neither Apple nor Microsoft.
WHEN COMPANIES GET TO BIG
They lose at least to some extent the ability to adapt to reality very quickly. And adapting to reality and therefore also the market is something that becomes more and more important in a time when things worldwide get more complex every single day.
WHY IS THIS THE CASE?
There are more people on this earth than ever before. This means there is more accumulated human brainpower than ever before. Assuming the output of a single person is on average, well, average, the more people you have, the more absolute work there will be.
MORE MINDS, MORE IDEAS
But also a greater absolute number of people with minds above average. This is kind of tricky. Because actually there aren’t more people with above-average minds these days if we use these days population as the denominator. The IQ for example isn’t an absolute standard, but a relative one. Always related to the average. Meaning: an IQ of 120 is simply something above average, but only up to the point where an IQ of 120 is still above average. Because if it was the average then you would need an IQ significantly higher than the “absolute” 120 from before.
THIS MEANS NEVERTHELESS
That the more people there are, the higher the likelihood of people with exceptional minds. At least if we look at it in terms of historical comparison and somehow create an absolute standard for the brain’s processing power. When Einstein was born the world population didn’t even reach 2 billion people yet. Yet today were are heading towards 8 billion. Simply said:
4X MORE PEOPLE, 4X MORE EINSTEINS
Therefore and due to many other variables, human civilization is advancing way faster than ever before. And this process is still accelerating with every unit of time we move forward. The internet has made it possible for the last few decades to share information worldwide more efficiently than ever before. Basically linking all those minds better than ever before.
CREATING A GIANT CONNECTED HUMAN INTELLIGENCE
assisted more and more by the tools this intelligence or human civilization has developed and is still developing. The financial market is a pretty good example when it comes to all these interdependencies and the shier unpredictability of today’s world.
BASICALLY NO ONE CAN REALLY PREDICT IT
And the same is true for our climate. We simply haven’t reached the point where our models are good enough to predict reality up to the threshold where they become useful. At least when it comes to complicated and complex issues like the world’s temperature.
BUT ENOUGH ABOUT HUMAN INTELLIGENCE
There are also events no model will ever be able to predict. Because they simply didn’t occur before. These events are called “Black Swan events”, a phrase coined by Nassim Taleb, the author of “The Black Swan – The Impact of the highly Improbable”.
APPLIED TO STARTING A COMPANY
The more dependencies there are, the higher the chance of these dependencies preventing the startup or later company from adapting to this everchanging environment and therefore running losing their ability to meet the needs of their customers and either going out of business or focusing on something else. But nevertheless: losing their original position and market share.
NOW, WHAT WOULD BE THE LEANEST STARTUP THERE COULD BE?
One key factor slowing down the process of adaption is probably the simple fact, people just don*t have the ability to adapt very quickly. A salesman on average will simply not be able to have the skills of software engineer programming today’s algorithms. You of course can change the people you employ, but this process is also very slow.
THEREFORE AN APPROXIMATION TO THE IDEAL BUSINESS
are today’s tech startups. Uber for example. They are basically only offering software. Offering a platform that connects drivers and people with the need to be driven. Also companies like Facebook and Instagram: simply don*t need to employ thousands of people. And they don’t. And they also will do everything not to. Outsourcing work like content moderation already. And
AUTOMATING IT AS SOON AS POSSIBLE
The ideal business therefore simply is an approximation of the ideal investment. Something that generates profit without the need for any work after the initial investment. Something that doesn*t require maintenance or any work whatsoever. Only your money.
JUST LIKE THE GOLD-ASS
in the brother Grimm’s fairytale of “The Wishing-Table, The Gold-Ass, and the Cudgel in the Sack”. But owing and maintaining a donkey of course still isn*t the ideal investment.
SIMPLY OWNING SOMETHING THAT GENERATES MONEY
Therefore is. But most people simply don’t own enough cash flow-producing assets to cover their cash flow. Therefore investing their current money and time is often a good way to pursue this end goal. Creating something,