Running Lean with Ash Maurya

In the beginning, you make lot of mistakes so it is good to learn in other people’s time
Ash Maurya

Ash Maurya is the author of Running Lean, Scaling Lean and the creator of the one-page business modelling tool Lean Canvas.

He has been an entrepreneur for more than a decade now. He came to the U.S. on a student visa and after graduation, he worked for a large company.

Later he worked for a startup in telecommunications which was a good experience for him as they had a number of false starts and number of failed products as expected from any startup.

Eventually, the company got acquired for a big round and at that point, he left to start his own company which he always wanted to do. So in 2002 he started WiredReach and immediately fell in love with the solution which he was building for his customer’s problem. He told no one about the product and launched it in stealth mode and eventually found that it was too early for its market. It did not really meet the customer need at the time. He did not want to go back working for someone else at that time so he had to figure out how to make the business model work and he somehow managed to survive and ultimately pivoted his product into something which his customers were ready to pay. He continued running the business for many years and eventually sold it in 2010.

In 2009 he got exposed to some early writings of Steve Blank and Eric Ries and he realized that lot of what they were writing about were the mistakes he was making along the way and kind of learning on his own. So he decided to adopt some of those principles and found a better way to launch products. He took one of his newer product and applied a lot of lean startup techniques to it and then refined those techniques further into what is now called Running Lean and Scaling Lean methodologies. Eventually, he started another venture called Spark59 which they recently renamed to LeanStack. The mission of LeanStack is to help entrepreneurs avoid the same mistakes that he made while starting up.

Mistakes I made while building products

Like many entrepreneurs both new and seasoned, he fell in love with the solution. He says that when founders get hit with an idea it is usually based on some observation about market opportunity or customer problem. But instead of going deep into the problem, they instantly jump at the solution.

They keep thinking about how they can fund building the solution. In the beginning, you can bootstrap with your savings which is how he started. Eventually, you build a half finished product by the time you are low on funds and try to push it to customers. He did that for many years. In another approach, you may want to raise venture capital so you put together a team and pitch and you go and tell this awesome story to investors in the hopes of raising money and building the product out.

However, your first product is almost never going to work simply because it is based on the assumptions that just will not match. You need to be very lucky to hit the product market fit in the first go and so these were the mistakes that he made. But a lot of people make the same mistake of rushing to build out the solution or rush to acquire the resources like the team and the money to go build out the solution.

Fall in love with the problem

A better approach is to really fall in love with the problem first. You need to study the market, customer problem. Once you understand this well, you can build simple things like mockups, demos or minimum viable products which will not require a lot of resources.

The idea behind building simple things is to learn that there is really a customer demand first and then jumping in with the right solution. If the traditional approach is to build, demo, find customers and then sell, the new lean approach is to start with the demo first, test with customers and even sell a demo to customers.

You need to first get a customer and then build what they bought which is a much better approach.

Growth metrics to track for Product

Like with many things, the world has changed. Now we can build lots of things and when it comes to metrics we can also measure a lot of things. Too many people get into the trap of implementing every analytical solution on the planet and he did the same mistake looking for that Holy Grail of a metric dashboard or some metric that just going to make the business take off.

He has found out that when we do that we end up drowning ourselves in lots and lots of numbers and actually get lost. It doesn’t get clear and it actually gets murkier. So he is a big advocate of starting with just a handful of metrics and for that, he recommends Dave Mclure’s pirate metrics.

1. Acquisition
2. Activation
3. Retention
4. Revenue
5. Referrals

So when he looks at any startups metrics irrespective of the stage (whether early or growth stage), he just wants to look at those 5 key metrics.

He likes to see them in a relative sense instead of a snapshot at any given time. He recommends checking this month’s metrics versus last few months metrics so that you can tell which ones are going up or down or which are just stagnant. When you do this, it brings focus. You will find a low hanging fruit which can be fixed quickly. For example acquisition or retention. Once you identify the metric to be fixed, you need secondary metrics as you need to understand why something is happening. You may have to do more learning experiments or go and talk to customers or dig deeper into metrics.

How to acquire users on low budget?

He sees that startups want to go as fast as possible and get to the scale stage as quickly as possible. So while that is a good intent, he recommends going slow in order to move fast. You need to do things which do not scale at first. Your goal should be to get the first paying customer for which you may need to get 10 qualified leads. To get 10 leads you may need to get 100 visitors to your website. Your goal should be to talk to at least 100 people to get that 1 magical customer.

When you get that first customer, it’s a magical moment because you understand how you may have position yourself against all the other solutions out there and that gives you lots of insights to then scale. Use any of the non scalable channels, in the beginning, so use your networks, use first-degree networks, use LinkedIn, go to trade shows and even cold call if you have to. Key there is to go to where customers or potential customers hang out and really use some of the lean techniques to understand problems, show them solutions and sign up that first customer.

You have to take the learnings about customers, your value proposition and accordingly, invest in scalable channels going forward. These can be content marketing, advertisements, social media marketing etc.

Once you have your first customer, your next goal should be to get 10 more customers. After 10 customers, make your goal to get 100 customers and so on.
Ash Maurya

How to scale team?

He advises having a small cross-functional team for any business whether big or small. A good team size for a startup is 1-5 people and 3 is the magical number based on his experience. Your team should have complementary skills which can help remove any biases in decision-making at every stage of product development. He also recommends working as a team in a startup instead of dividing the tasks and working in silos. It is very easy to let developers take technical decisions while designer do all UI/UX related decisions. This will create inefficiencies and soon you will have have a company which is running in multiple silos. So he advises getting people come together and work on a customer problem so that everyone has an input on all decisions like landing page design or pricing decisions etc. So it needs to be cross-functional effort instead of divide and conquer effort.

ProductHood

Love the problem and not the solution – Running Lean with Ash Maurya