To Start Something New or Merge? A Lean Startup Conundrum

When you run a startup in San Francisco, you constantly find yourself bumping up against lean startup concepts – Even when your startup is a non-tech, service-based, B2B nonprofit.

It’s great because lean principles are still highly applicable to this context, and let’s be honest, they’re just so hot right now. It’s also difficult.  You’re constantly working to apply language, frameworks, and technology for startups, to an organization that’s slightly different. If only there were a community of other mission-driven organizations applying lean principles to bounce ideas off and share best practices! (Thanks, Lean Impact)

The nonprofit I run, Friendfactor, is building a network of programs that help straight people engage in the movement for LGBT equality. I got the idea while building a “straight ally” program at my business school that took off and radically changed the student culture. When I set out to research replicating that model in other schools and companies around the country, I assumed I would be starting from scratch. And that was exciting – it had always been a dream of mine to launch my own social enterprise.

Then I was introduced to the founder and executive director of Friendfactor, a young nonprofit that had spent the past two years building online advocacy tools to engage straight supporters to take action to pass pro-LGBT legislation. Despite a membership of 20,000 and a social media reach of 14M, they were struggling with scale, looking either for their next big play or a way to merge with another organization.

The idea of launching my vision under an existing brand, leveraging all the assets it owned and the infrastructure it had built, was sexy and exciting. It was also petrifying: would this mean giving up my dream of being a founder?

I decided to merge my vision with Friendfactor’s infrastructure.

Ultimately, the decision to merge with Friendfactor came down to a few lean principles:

• What would get me to an MVP most quickly?
• Would it be easier to leverage what already existed or reinvent the wheel?
• What path would enable me to most efficiently find my early adopters and start learning?

It was clear that launching by taking over Friendfactor, rather than building my own organization from the ground up, would allow me to get started in a matter of weeks rather than a matter of months. The merger also fell nicely into Eric Ries’ Vision-Strategy-Product pyramid.

Product	The product of an ‘ally program’ is what we’re currently experimenting with, building various tools, activities, and incentive programs for our early adopters to see what sticks.
Strategy	Building ally programs represents a brand new strategy to achieve the same vision, pivoting away from online advocacy.
Vision	The core vision for Friendfactor (engaging more straight people in the LGBT movement) hasn’t changed from its original reason for being. That’s why the merger works.

We’ve continued to apply lean concepts ever since.

• We launched our MVP – a first pilot – a month after I started working on Friendfactor full-time, calling around to friends and directing them to a landing page that would make designers cringe.
• We got a few pilots going and hounded every participant (and non-participant) for feedback.
• Our next experiment built off the first pilot but tailored it to a specific community – MBA programs – and added a competition component, and so far it’s been a bit more successful.
• We have a list of 75 modules we want to build to help allies execute activities and build culture at their schools and companies, but we’ve decided to only on request, finding out what our clients want so that everything we create gets used and gives us an opportunity for learning.

Building with lean principles doesn’t always go smoothly. We’ve had some challenges applying several of the core principles to our context, and we’re working on smoothing them out. A few of the stickiest challenges we’ve had so far are:

1. The lifecycle on working with institutions, particularly well-meaning but risk-averse corporations, is long and arduous. The feedback we get perhaps most consistently is “these things just take time.” It’s also highly relationship based, not just a function of whether our product “works.” Given those circumstances, how do we determine the timeline on an experiment, when do we cut it off, and when do we know whether our learning is “this doesn’t work” or “this needs more time”? It’s hard to tell when a client who has committed to starting a program, but hasn’t actually executed or used our products yet, should be considered a win, a loss, or a wait-and-see.
2. Our clients (individual allies who are leading the programs) aren’t necessarily our payers (the corporations and universities where we build the programs, supplemented by foundations and donors). This is a typical nonprofit conundrum, and it’s no different when the nonprofit is a startup or is applying lean principles. It means we have to consider pivots on two fronts, the impact front and the revenue front. Ideally those pivot in tandem, but not always. For example, we learned in our first few months that companies and universities weren’t going to pay for our services off the bat, even if they had a need for them – we needed to prove that we were the right partner for the job, and show the impact a program could have on their culture (and their bottom line). So while our impact model remains intact, our funding model is pivoting to more traditional nonprofit means (foundations, donors, crowdfunding) in the short term.
3. Impact metrics are harder to define than financial ones, which means it’s harder to tell whether an experiment has “worked.” The results we get look less like “x number of people signed up” or “landing page A led to x% more conversions than landing page B,” and more like “this roundtable discussion got x% of attendees really excited and asking for a follow-up event.” Culture change and the feeling of safety and inclusion in a community are measurable to an extent, but there will always be intangibles that make it hard to compare the success of one program versus another.

In short, applying lean principles to Friendfactor has provided a great framework, but the devil is in the details. We haven’t been able to adapt every concept from the playbook, but so far it’s been a great tool to have in our toolbox. We look forward to learning from other nonprofits and social change organizations about how they have overcome the challenges we’ve faced to accelerate the process of learning and building sustainable mission-driven organizations.

Your Turn: Has your organization merged with another? Were you able to apply lean principles in your merger? Were your successful or unsuccessful? Please share with us in the Comments!

Image Source: FriendFactor

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