As an example, a pal once worked for some medium-sized company where if you wanted a new pencil, you go down to the basement and through a long hallway to a window. At the window you had to confront the Dragon of the Office Supply Horde, and to prove your worthiness, you had to bring a sufficiently used existing pencil. That company was definitely cheap, but was very much not lean.

Toyota, on the other hand, is the classic lean company. When they don't need to build cars, they don't lay people off or send them home, which would be the cheap thing to do. Instead, they have them clean, polish, train, and generally improve the plants and themselves. They spent extraordinary sums building the first Prius prototype, which could barely get around a track. But they kept on improving it, eventually making one of the world's best-selling cars and making them a leader in a new market.

Spending $500 to incorporate a startup may not be cheap, but it certainly can be lean if you determine that the investment in learning how to correctly do the legal and financial dance will not have as much ROI as paying for it to happen and focusing instead on building the actual business.