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A bad plan beats no plan
Dot-com mania
In late 1999 at PayPal, Peter Thiel was scared out of his wits because everyone in the valley seemed ready to believe anything. People were starting and flipping companies with alarming casualness, and one acquaintance planned an IPO from his living room before he'd even incorporated his company. Acting sanely began to seem eccentric.
The new rules
After the crash, people rewrote how to build companies, out of fear. The new rules were to make incremental advances, stay lean and flexible, improve on the competition, and focus on product rather than sales.
The opposites
The opposites hold up better. It is better to risk boldness than triviality, a bad plan is better than no plan, competitive markets destroy profits, and sales matters just as much as product.
What caused the dot-com crash?
The Nasdaq Composite peaked on March 10, 2000, at about 5,048. Over the next two and a half years it fell roughly 78 percent, to about 1,114 in October 2002. Many internet companies had gone public on promises of future users rather than profits. Pets.com, which went public in February 2000, announced it would liquidate in November of the same year.
How did PayPal grow through the bust?
PayPal went public in February 2002, one of the first technology IPOs after the crash. Its payment service had become the standard way for eBay sellers to collect money. eBay bought the company in October 2002 for about 1.5 billion dollars. Its founders and early employees went on to start or fund YouTube, LinkedIn, Tesla, and Yelp.
Where did the lean startup idea come from?
Entrepreneur Steve Blank described customer development in his 2005 book The Four Steps to the Epiphany. His student Eric Ries built on it and published The Lean Startup in 2011. Ries drew on Toyota's lean manufacturing system, which cut waste by building only what was needed. The book popularized the term minimum viable product.
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