EP #263 - Ash Maurya: The Lean Startup Methodology

This talk is supported by Small PDF. The successful Swiss scale-up making PDF easy for over a billion people around the world since 2013. You may remember them from a previous podcast we hosted with their CEO, Dennis Just. Their mission is to make PDFs and life easy for people across the world, a mission made possible with their 90+ amazing employees across Zurich, Belgrade and Barcelona. If you want to join this fast growing Swiss scale-up, visit SmallPDF.com/SwissPoner and apply. The mistake I made is I built it first, then started to work through the customer behavior challenges. And if I just flip those, you can improve the time it takes, you can speed up the time it takes to test whether the timing is correct or not. Welcome to the Swiss Praner Show, a podcast about startup stories and learnings from experience entrepreneurs. Here's your host, Sylvan. Ash, a very well-welcome to the Swiss Praner Show. It's a pleasure to have you here today. Yeah, I'm excited to be on. You're the founder and CEO at Leanstack, leading provider of Lean Startup and Lean Business Modeling Tools, content but also coaching resources. And I want to jump right in. Back in the 90s, you actually got a bachelor's degree in electrical engineering and then purposefully decided not to pursue a master's degree. Was this a controversial decision for your family and your friends back then? Well, so if I add on to that, I actually started a master's degree two times and back to way. So the first was the electrical engineering master's and then a few years later, I started an MBA master's of business administration took just one semester and then decided not to move forward. So I'll kind of maybe dive into that a little bit. First of all, it wasn't a controversial decision, at least on my family's part for whatever reason my father, my dad was very practical and he also sat me down when I was doing my bachelor's and said, you've got to pick two pads. You can either go the industry route, so don't stay in school for too long because he kind of did that. He went all the way to the PhD and he said, you don't have to go that route unless you want to be going to research, you want to be an academic. So he was like, if you want to be more, if you want to get into work, just go and do your undergrad and you can always come back and do your master's later. I always had that in the back of my mind, but while I was in school, one of my advisors, my mentors and then their job, they pushed me towards getting the masters and it would have been an accelerated master. So I had my bachelor's for an extra year, I could take some advanced courses and bridge the gap. And so I got started, but then I also got into doing an internship here that they called it a co-op, but an internship and just fell in love with the learning I got outside school. And so I actually came back and said, okay, I'm not going to do the masters. I just want to get out and get some experience. And the same thing happened with the MBA. I thought I needed an MBA to be able to start a company. I always wanted to, I always had this entrepreneurial ambition. And I thought, get the MBA, then start the company. And similarly, I took this one semester, started working with the startup and said, I'm learning so much more just by doing. And I'm learning all these theoretical concepts. And so I decided I'll pause that and again, I never went back. So kind of a long answer, but not so much controversial, but a very, maybe practical fork in the road. And I opted for more learning, learning by doing versus learning, learning in school. But the real world was just so much more interesting to you to learn there instead of in the classroom. You mentioned the entrepreneurial drive before that it was always clear that you wanted to become an entrepreneur. Where does that drive come from? Do you have any role models in your family that inspired you or why was that always clear for you? I don't know. I think maybe my role models came from seeing people at the time, the Bill Gates, the Steve Jobs story. I just got fascinated at some point in school with wanting to build really cool, amazing stuff. And so even though I was going to school for electrical engineering, I started reading a lot of business books and that just kind of picked my interest. It's like, why don't we build something and maybe just more from a personality side. I've always been into magic and prestige. So it always felt like I want to go and build something really cool. I sometimes call that the artistic phase of the entrepreneurial journey where we just want to create something no one has ever done before. I think I've always had that as a thing in me and then entrepreneurship was just a way of trying to express that. But in hindsight, it could have been even just going into something more creative. Now I do a lot of writing as well and I enjoy that as well. It's like creating something, writing something new, sharing a point of views. I think that maybe that was the spark of inspiration. I actually liked that perspective to see entrepreneurship as a creative act. It's a creative art, so to speak. I think that's a wonderful perspective on on basis on entrepreneurship. So you also actually work as a software engineer for five years and then in 2002, you actually decided to found your own company, Wired Reach, which provided a way for creatives, again, the creative angle to share large files. So that is of course very common nowadays. It was not back then. So how does that make you feel if you look at current cutting edge technology or ideas, do you see anything differently, you know, working on that when it was not common, but today it's very common to share large files over the internet. So even before the large file sharing solution, the first product we were building with Wired Reach was called six degrees from the six degrees of separation concept, which is where we are connected by six people or less, which essentially was what became social networking. And so I was actually notorious with my first few products for being too early to market, which is almost as bad as being too late. So that was what happened in both those instances. So with the social networking. We built a product and as much as we like to, as much as we thought we were keeping it secret, because I was in this mindset of stealth, which now I advise people against that, we built a product and sure enough, there was competition, there was friends to LinkedIn spoke or a bunch of different companies that launched around that same time, which, which was kind of interesting, but what we were trying to do there that was different that gave me hope, but it was again too early kind of misguided hope. Was that we were trying to build a decentralized private social network, which was probably 15, 20 years too early. So back then, nobody cared about privacy today. It's a very different time today. You are seeing decentralized networks, you know, signal and all these other kind of difference, you know, signal versus what's up. And you're also seeing private social networks that are, that are getting more and more popular, but back then, we were just too early. And so I was preaching privacy and yeah, no one, no one really cared. Same thing with the file sharing, we built this product and it relied high speed internet for it to work well. And so it worked very well for me. I had high speed internet, my friends had high speed internet, but the market wasn't ready. So again, we were quite early in that space. So we did find a niche there with the creatives who had, who had companies with high speed internet. And that's where we found a small niche. But fast forward today, like the Dropbox phenomenon, that would not have been successful then because there wasn't prevalent high speed. And yes, a lot of things have to come together. And that was a lesson learned. Because that ideas have to be timed correctly. And if you are too early, it can be just as bad as being too late. It's a bit better than being too late, but still just as bad. Yeah, it still doesn't really work, right? In that regard, you know, the importance of timing, this is something that we hear over and over again on our podcast. But it seems to be not a thing that you can influence as an entrepreneur. You can try to understand where you stand. You can try to adapt, but you cannot change the timing. It's just how the world is, right? So what is your tip there? How can you understand whether you have good timing, good momentum, or whether you're too early or too late? Yeah, I did a little blog post on that because there is a serial entrepreneur Bill Gross, who did this extensive research and he concluded that timing is the single most important factor that separates a successful startup from not the same idea launched a year earlier or a year later can determine success or failure. But again, as to your point, when you think that way, it makes you feel rather helpless because it's a bit like luck. You know, are you lucky or are you not lucky? I think the more interesting question is how do you increase your luck surface area, that surface area? That's how I like to think of it. And so what I tell people is while we cannot time an idea, you can look at signals in the market. So we're always looking for switching triggers. Sometimes these are trend, sometimes these are behaviors. So like today, there's a lot of noise around NFTs and you know, blockchain. And there isn't really, I mean, they're probably of course a few killer apps, but there's still this search for what's going to be the big thing. Knowing that that is change is happening can be an interesting input, but doesn't it? help you with timing. So this is where the next part of it is come up with any idea. And rather than saying, I'm going to time it perfectly, we can test whether the time of an idea has come. So like in my case is the mistakes I made with those early examples that I shared is that I was trying to build my social private social network and I was stubborn. I was perseverant. I thought we could convince people to change their behavior. And I tried to do it for two years and then eventually realized that people don't care. I could have, instead of building for a year, we could have started testing some of those riskier assumptions upfront. So I could have probably in hindsight in four to six months been able to conclude that privacy wouldn't matter. So why even go down this path of building it? So the mistake I made is I built it first, then started to work through the behavior, the customer behavior challenges. And if I had just flipped those, you can improve the time it takes. It can speed up the time it takes to test whether the timing is correct or not. Yeah, so it's the same thing with like broadband. If you, if that is a requirement for a solution to work, rather than going and building it and hoping that everyone will get to fast internet, why don't we do a little bit of research and just see how fast that is growing. And so that's where you can again bring in some time, timing thinking into will the environment be ready for the idea? Fantastic tips right there. And that's actually also the methodology that it just described that then let you to launch Leanstack in 2010, right? You also published your book Running Lean, and which is a fantastic book. So many people I talk to have actually already didn't help them tremendously along the journey of being or becoming an entrepreneur. So I wonder when did you first come into contact with the whole Lean startup methodology? For me, it was so you could say that the need for something better had already been I'd already been triggered with that. So I had built a few products, as I said, and every idea that I had looked amazing in the beginning, but a year later, a year and a half later, I began to realize that I missed something risky. I kind of didn't test something that I should have early on. So I was already very introspectively interested in finding a better and faster ways for telling good ideas from bad ideas. And so in around, that had been happening maybe 2007, 2008, but in 2009, I stumbled into Eric Reese and Steve Blank. They were starting to popularize what became customer development and eventually Lean startup. And they were saying the same thing, which is it's not enough just to build the product. We should start by building our understanding of customers. And that just resonated very deeply myself. And of course, a whole bunch of other people who kind of became early contributors to the movement. And so that's when I just jumped in. And I decided I would test everything. So I just started running a blog. So everything you described, the Lean stack is the company, the running Lean book, where all part of an evolutionary process, I didn't really have a master plan of doing any of those things. It really started with writing a blog. And then from there, figuring a few things out, building an audience, and then seeing that this audience really would like something more. So maybe a book that led me down the book. And then eventually, as I was writing the book, I saw that more entrepreneurs were alike than unalike. No matter where I went, I found people thinking the same way, making the same kinds of mistakes. And so that inspired me to say, what if we actually built a company and try to scale this message? And that's where Lean stack came about. Wow, that's a very natural transition. Yeah, in hindsight, everything makes sense. But yeah, moving forward, I can share like the, the, you know, when you see the duck in the water, the swan, everything seems calm on the surface, but underneath is a lot of chaos. So even in my world, I had a company, I had to decide, do I, do I just sell it? Do I walk away from it? Do I keep both? So for a while, I tried to do two things. And it was actually my close friend and advisor. Every time I met him, he would ask me, so how much time are you spending on what became Lean stack, on running Lean versus your current company? And that time share was growing. And he's like, you know, you can do both. You have to pick one. So he was always very adamant. And so that's all the turbulent stuff. But eventually, I sold my, sold wild reach and kind of went all in on on Lean stack. Yeah. Fantastic. And yeah, let's also, you know, start right there with your book. We're running Lean. What is your book all about? Can you walk us through the key concept that you put into the book? Sure. So it tries to chronicle the early stage journey of an idea. So a lot of people, when we hear stories, we think ideas are these overnight successes. You know, Mark Zuckerberg will Facebook. And the next thing, you know, it's all over the world. You know, we quickly skip through all the the flat part of the hockey stick where a lot of the learning and a lot of the messy stuff is. And that's what I wanted to uncover because I had started a lot of products, as I said. And it was taking too long to get to knowing whether it was even worth doubling down on. So that's what I wanted to fundamentally address. So running Lean is a pragmatic step by step guide of sorts that allow entrepreneurs to take an idea at the idea stage and then begin to first deconstruct it using some tools like the Lean Canvas, which helps you see the idea on a single page. Then it helps you prioritize what might be riskiest. Not all ideas are equal. Some may have a lot of technical risks, some most have a lot of customer risk or market risk. So we need to understand what do we tackle first. And then it chronicles a systematic way of testing those risks through the book to where you launch a product and eventually get it to product market fit. Fantastic. And then the process doesn't stop there, right? So you validate the problem, define a solution, validate the solution, but then you don't stop there. It's an ongoing cycle. Yes, absolutely. So I think what's interesting about products and innovation in general is that even when we launch a product and we get customers, there are a lot of other people, especially today competing for the same attention for the same customers. So the question is now how do we make something better? That search of better is what kind of keeps the product cycle continuously moving. So fast forward to say, I even label that continuous innovation because a lot of people think of innovation as a one time thing. You know, we're going to innovate, build a product and then that would work for a while and then we innovate again, but that no longer I find in my opinion works. It's a continuous cycle. We are continuously with every feature with every every release we are aiming to continuously do a better job for our customers. And that's where this mindset of continuous innovation comes in. Yeah, and that's a completely different mindset to doing just one innovation, then milking the cow basically. Absolutely. I also want to talk about the lean canvas model because that's basically where everything comes together and that's also the core of your platform, lean stack. So let's focus on these nine different areas and what they exactly mean. Let's start with the customer segments. Can you talk a bit more about why you should start there and what the customer segments actually mean? Yeah, so fundamentally every business and funny enough, I've asked business owners how many of you want customers and everyone says yes and how many of you want more customers, everyone says yes. So we can all admit that customers no matter what kind of business you have, customers are critical. So that box is fundamentally about trying to understand our customers, even label them and identify them. So that's the segmentation aspect of it. So in other words, who are they? When we try to build at least in the early stages of product for everyone, we end up building a product for no one. If I say I can do everything and anyone can use it, people get very confused. Like I don't know what you're saying, right? But if I say I'm building a file sharing solution for large files for game developers or for creatives, funny enough, it's very clear, people understand that. But even others and it just happened to me, people like waiting photographers contacted me and said can I use it, right? Because I also have large files, you know, could I use it? And I'm like sure you can use it too. But so by being crystal clear, it doesn't mean you are narrowing your market, actually the opposite can potentially happen over time. So that's what the customer segmentation is, be clear about what is the definition of the customer you're going after. And then below there is a further definition of your early adopter, which is where is that ideal starting point? Like in the Facebook example, they started on a college campus with students, even though over time their ambition grew to everyone on the planet, but it starts with a very focused early adopter segment. I also wonder there, very often when we talk to entrepreneurs, they say that in some way, not all of them, but many of them, they try to solve their own problems. Would you recommend that you also belong to these early adopters yourself as a founder? Or is that not necessary from your perspective? Yeah, so we call that the scratcher on itch idea source. And it's a very common one. So I have lean canvas in many ways, the product that we did, the tool we just talked about, I built for myself. Even the running lean book, I tell people, I wrote it for myself because it was about me trying to clarify my thinking and not make the same mistakes. And it happened to be something that resonated with others. And so I published it. So scratcher on itch is a very powerful way for finding ideas. An entrepreneur goes about their regular day, finds something they're unhappy about and says they're going to do something About it. The mistake that we often make in that in that approach is when we extrapolate too far If we just say I have a problem, so everybody has this problem That's the mistake that we make so when someone has a problem and tries to also solve it They become an entrepreneur and they are automatically a different customer segment like they're dead You're no longer your customer. So the advice there is nothing wrong with stumbling into a problem and wanting to fix it But before getting too far ahead Do some discovery to make sure that others there enough people also struggling with the same problem So even in my own story when I described writing the book as I wrote the book and I began to share the ideas on the book I saw lots of people who spoke different languages look different different parts of the world The message was resonating and they all had kind of the same World view and it came to launching products that I could influence in some way So I saw there was a big customer segment that transcended in some some cases geography Which kind of got me excited. So that's that's the important missing step that sometimes people skip over Yeah, so it's great to solve your own problem But make sure that you're not solving the problem just for yourself. Yeah, but it's big enough Yeah, it's worth solving because it's then it's big enough. Absolutely. The next point in the lean canvas model is the problem itself Please talk a bit more about the problem there. Yeah, and maybe we can frame that Or even put a word in front of it when I put problems in there doesn't happen as much these days But in the past people would start describing internal problems like the entrepreneurs problems But these problems are really customer problems. So if you go back to the first box that customer segment it's about who it's for Like who are you building this product for and then this problem box is so what problem are you solving because at the end of the day Customers don't wake up saying I want to buy a solution unless they have a problem, right? So that's when we start looking for solutions So we have to start there and the lean canvas is very Customer centric. So we put the customer at the center and say these are the customers we want to help or serve What are they struggling with and that struggle is what we capture in the problem box? Yeah, perfect Then of course the solution the next part because every problem probably also needs a solution. So what do you tackle there? Yeah, so it's so it's like two sides of the same coin when you've been and I think Charles Kettering said it really well when a problem Well defined is half solved. So if you have identified your customer have identified a clear problem. They're struggling with that's when we can put on our entrepreneurial Habs on and say so how could we address that and that's where for every problem that you list ideally you come up with a possible solution That could that could address that problem Do you have a good example how you would actually phrase that out in the lean canvas? So I guess it would it so depending on how specific maybe I'll Maybe I'll I'll so I know this can sometimes get a bit matter But I'll just use kind of the lean canvas if you look at what lean canvas helps one one do is it helps you Essentially communicate your idea to someone else so they can understand it So it's really a tool where you can deconstruct the idea Traditionally, we would use a business plan for this right people would write a long business plan I would send you a 30 page document. So if you say what's the problem people struggle with their elevator pitches They struggle to get somebody else to understand their idea and they are told go write a business plan That takes too long and when you write it people don't even read the whole thing They're like come and pitch me again and again people struggle, right? So this is the problem that people struggle with and so the solution might be how could we build something that is Faster and clearer to kind of read and then we can have a conversation and that's where you can say lean canvas fits Those those tick marks in that it's a single page you put it in front of someone They can quickly scan it and then you can walk them through what you really mean by what's in those boxes And so it solves that problem of giving them a very thick document or Giving them a five minute description of what your idea is and still people getting confused. You know Perfect example Of course you also need to make money because you probably have bills to pay etc So you also define their revenue streams what do you exactly write down in that part? It's so it's probably what you can think is how do you make money? So how would you charge for the solution and there are two parts of it is like how much would you charge and a lot of people there? And maybe I'll get a bit tactical there a lot of people try to price their product in terms of solution So they say if it costs me $10 to build something I'll put a margin of 20% and will charge, you know But $12 or whatever whatever that ends up being That's a bit backwards because again customers don't really care how much your solution costs they care how much their problem costs And so if I can quantify that so if a startup is trying to to get the attention of an investor and they are spending two months writing a business plan And you can get them to a pitch in two weeks with the lean canvas You can you can see that that one is one is in their mind more valuable And this is where we try to then gauge the value of of the time that they might spend of the investment They might raise and you've got to do a bit of testing and experimenting so if the first question is How much would you charge and in the beginning we just ballpark that you know How much would that be worth to the customer the next thing is how do you charge which is is this a one-time fee? So like something like if they were only using lean canvas ones They're not going to keep paying me month or month so I need to understand how how much we would charge and how often we would charge It's one time exactly. Yeah, I really like the angle here that you focus on the value So it's more of a value-based pricing focusing again on the problem that you're solving and not your own costs or operations or anything of that sort I really like that one Exactly. Of course you also have to differentiate yourself because there might be other solutions out there So you also talk about the unique value proposition This sounds like the magic sauce. How do you get to that? Yeah, so this is probably the hardest one to get right But what helps is if you can narrow down on everything we have talked about right now So if you can be crystal clear on who your early adopters are You can target your messaging so like in my earlier example with Facebook saying this is a social network for students And so you're being crystal clear on who it's for that helps with with Kind of getting clarity in your unique value proposition The other thing is nailing the problem if you describe a problem at a very high level Like if I just said I built a large file sharing solution because sharing files is hard That's okay, but it's kind of three thousand foot people don't understand like why is it so hard? But if I can go into some real specific use cases or scenarios where it breaks for a game developer when they're trying to move large files from say Switzerland to To Asia right and there's a lot of issues with that You can start to then get people to understand like where this fits in So that's those are the keys to like crafting a good unique value proposition Is nail the problem to where if I state the problem it's it's it's it resonates with the customer because they already Struggle with that and it's very specific So it needs to be specific and ideally needs to be short because it has to fit Usually in a headline or a landing page or a tweet message or social media So for those reasons it needs to be short So there's quite a bit of like wordsmithing and copywriting that can come into it But the first thing I always tell people is just try to Talk about what's different or what's the finished benefit of your product after people use your product How do they feel or what what do they what how come do they get if we focus on that That's a that's a way to think of the unique value proposition. Yeah, fantastic Then you also have channels in the lean canvas model So what does that exactly mean what channels are we talking about here? Yeah, so you can think of channels as the path to customers and so I often like to say you can build the most amazing product But if it's launched in the forest and there are no roads to get to that product Is just going to die in that forest right so a big bang in a forest makes no makes no noise It doesn't make noise people are not going to come and get it right So so the same thing kind of is true So when we are building our business model and that's going to the lean canvas is trying to help us articulate We have addressed customer problem solution so far even the value proposition We might promise people but now we need some paths to customers and so examples might be You know they could be organic they could be paid paid channels like advertising Organic channels like blogs are good example where you go and publish blogs podcasts right so there are different channels So instead of you doing a podcast get on a podcast like this one right so there are all kinds of ways to leverage channels and get that word out get the value proposition out and talk about a product So that's what channels ultimately covers That's great how you now just started to link them right so get on channels to bring the the value proposition out there To the world. I think that's great to see how everything they'll also place together Yeah, yeah, and I think that's the key part So so maybe I'll take a step back. We're going through this in a particular order But I often tell people go in any order that makes natural sense to you It's like a jigsaw puzzle you can put it up put put up the fill out the canvas in any order We can make you can put the pieces of jigsaw puzzle in any order But then once you are done the picture needs to be viewable from any angle right if I do a jigsaw puzzle It's not only one way to look at it. I can look at it from any way. And so all of these boxes interconnect. So we can start with channels. And I can say, I have a great channel. And this is why I built this product for these customers. So everything needs to connect up. Or we can start in the order we're going. So yeah, great tip on top of that. You also have key metrics. What do you focus on there? Yeah, so the idea of the key metrics is trying to define how one would measure success. So one of the things that in my stories from earlier that I didn't do too well is I defined success as first building the product. And so my key metrics in the beginning was can I build my product on time and on budget? The problem there, of course, is you can build something on time and on budget. But if it's something that nobody wants, that's still not progress. It's going to get you in that trouble. So with the key metrics, tries to help us think about what things can we measure that will convince us that we are on the right path. And so the right metrics there, again, tend to be, as you can guess, more customer centric than product centric. So we want to measure things like interest. So even with the book, I applied a lot of the techniques in the book and the writing of the book. So again, I tend to be very meta in my thinking and application of things. But as I was writing the book, I shared some teasers and chapter pages and some table of content things. And I was measuring interest. We put up a landing page. And I was measuring people coming in. And for example, giving me their email address in advance of the book being ready. And if I got nobody interested in the book while I was writing it, that would have brought pause. Like why spend a year writing a book when no one's even interested in the concept of the book? So that would be an example of a key metric. So there are four or five metrics that we want people to identify where we can measure things like interest before the product is launched. And then once the product is launched, we of course want to measure things like if you were building a subscription product, things like engagement, retention, things like revenue. So how much do they pay? How often do they pay? Cancelations, right, churn, attrition, like those kinds of things. And when we can get those metrics identified and mapped to our product, they help us in measuring progress as we are building the product and post-building, kind of measuring the product. Great examples again. Then on the other hand, of course, you also have the cost structure that you look at. So what level do you go into detail here? Yeah, so this is where it's very hard to see to the future that traditionally when we do business plans, we are asked to forecast costs five years into the future sometimes, which is impossible when you don't even know what solution you may end up with. Much less how big your company is and how many people you're gonna have, we start doing all kinds of forecasts. So I usually tell people don't worry so much. And the idea of the Lean Canvas approach is it's a very iterative approach. So we want to think in stages. And so I tell people, think of your first stage, maybe as being building the first iteration of your product, your minimum viable product and maybe getting your first 100 customers. And the numbers can be specific to the kind of idea it is, but let's just say we want to launch your product and get 100 customers. That's our first milestone. Let's estimate the costs we would need to get there. So this is how I would think of that. So we'll do the initially in Canvas and only think of getting that far. And once we get that far, we will have more information. And then we can have another milestone. And maybe from going from that first 100 customers, maybe 1,000 customers, and then we may have to hire staff, like what's our cost structure then? And this, by the way, is also how a lot of stage-based investment now is happening. So in the old world, back not too far ago, and maybe in some parts of the world even today, people would write entrepreneurs big checks and say, go away for a few years and come back and tell me what happened. That usually never works today. So today you get smaller checks to go and prove out the model. And that's where the cost structure can be more stage-based versus trying to cover everything, which in the early stages we just can't see. Yeah, and it's all about de-risking in the end, right? Not only financially, but also time-wise, as you invested one to one and a half years to building a product where you then realized, oh, there's actually too early, no need for that. That's frustrating. So you want a de-risk to avoid that frustration. Yes, yes. The last part of the Lean Canvas model is the unfair advantage. Please explain us how this is different from the unique value proposition. Yeah, so I guess the best way to kind of see the differences, the unique value proposition is for your customers, right? So it is basically saying, why pay attention to my product? Why come and buy my product? So if I open a new pizza place or a new ice cream place, if it's like all the other ice cream places or pizza places in your neighborhood, that's not unique. And you might say, why should I go to this new place when I've got my favorite pizza place already, right? So that's where the unique value proposition will come in. I'll have some angle. I'll have some toppings that no one has ever done. And that's the unique value proposition. The unfair advantage is what we message to our competitors, saying we have something that is not worth copying, because it's very hard to copy. So think of it as audience. The unique value proposition is for the customer, unfair advantage is for the competitor. So if I'm in that pizza example, if I have got some secret recipe for whatever reason, it kind of makes the best crust or makes the best pizza, I'm going to protect that. And my competitors can copy it, and that becomes my unfair advantage. Sometimes they can be related. The customer cares about the unfair advantage, but other times they don't. So if you look at Apple, Apple builds simple products that we consumers like to use, but their unfair advantage is could go into the supply chain. They have all kinds of supply chain advantages that maybe their competitors don't have, that we consumers don't really care about. We just happy to get a nice iPhone or a nice iPad, but we don't care about under, you know, behind the scenes what the unfair advantages are. - Yeah, again, fantastic examples. I think this really helps people to understand and soak in the concept. So now we got, you know, the Lean Canvas model. Who is this methodology actually designed for? Who should use it? - So it started definitely, even when we look at the word Lean startup, it started in the startup world, and most of these ideas came from the high tech startup world, but over the years it spread. So it's actually gone into all kinds of domains. I actually went out of my way because I was curious to see Canada apply in other spaces. So we have applied these in services business. We've applied them in retail, you know, all kinds of low tech, high tech kinds of businesses. And then about five, six years ago, a lot of bigger companies started kind of getting interested as well, because they also have a similar challenge when they are launching new products. So if I take a step back, I would say that the Lean Canvas and this methodology and this way of thinking in general, is very applicable to people in general that are launching new products in the world. This could be at a startup, this could be at a large company. The challenges at that high level, at that meta level, tend to be the same as we are trying to bring something new in the world that is going to compete with something that already exists. And the challenges are the same, as we have to understand our customers, their problems, build the solution. So from that perspective, it really does really well in the early stage launch of a product. - And in that regard, then you would also say, it's not a contradiction that both corporates, like large companies, but also small, young, early stage startups used the same methodology. - They do, they do. So principally, and this is what, when I work with both groups, I tell them that I'm going to teach you the same principles, the way you go around the steps are exactly the same. Tactically though, there are some inherent differences. So when we get into larger companies, typically they have specialized into departments. So they have got like different challenges internally. When you specialize into departments, when I ask them, when is the last time you spoke to a customer, everyone looks at each other, and nobody has ever talked to a customer. And that usually is the reason why. So startup struggle because they have no customers. They don't know how they can get people to talk to them. Large companies struggle because they don't talk to their own customers, or the people who do, by the time that gets to the people doing the work, it's like the elephant whisper game, it gets so convoluted that what people hear is not really what the customer said. So those are the challenges, and that's what we try to break. But so that's why tactically how we might implement this at a large company requires some differences. We almost try to get them to mimic more of a startup behavior, which is smaller teams, cross-functional teams, get outside the building, don't stay stuck in your nice fancy offices, right? So those kinds of things are the things. With the startup, it's a different challenge. They have two little resources, and they have to be very scrappy. Many times, they don't want to also get outside the building because they feel like that's not going to be time well-spinned. They should build their product. So they're kind of different challenges in both cases. But from a methodology perspective, they both need to be doing the same kinds of things. - Yeah, great. I'm also curious, I read that when we did our research, you also introduced the terminology entrepreneurial Renaissance. So I wonder in what way does the lean startup methodology relate to that term, the entrepreneurial Renaissance? - Yeah, so I would say maybe the lean startups doesn't as much, it didn't cause it. So the way I like to describe it is over the last 100 years. 100 years, we have built products many different ways. There was lean manufacturing, there was waterfall, agile, and lean startup, and these switches were not because some people got tired of the old way, it's because they are these changes in the world that are happening. So lean manufacturing, after the war, Toyota picked it up because there was very scarce resources they had to be efficient, so that was how lean manufacturing came into being. Lean startup recognized that the world had changed thanks to the internet, we could measure consumer behavior, and there were companies already like, say, Amazon, Facebook, Google, they were already starting to be very data-centric in the way they were improving their products, and so the way I like to think of it is that the lean startup came and codified that and kind of built a methodology or framework to work in that kind of an environment. So it didn't cause the global entrepreneurial renaissance, that already happened thanks to near equal access, thanks to cost of products going down, anyone who wants to start a startup before they would think I have to move to Silicon Valley, today that's not the case, they can start anywhere, you can get servers and write code and launch something from any part of the world, so that's kind of the global entrepreneurial renaissance. So basically a better framework to push you to start your own company and to test and validate things. Yes, so I would say that with the, if I take that a bit further, yes, definitely making the products easier to build helps us build more products, but the question has now changed, the question isn't, should we build this, sorry, can we build this because the can has become easier, but rather should we build it, and that's what lean startup helps to answer, because otherwise we get too many products in the world that nobody wants, and that is the sad realities, that the odds of success, it used to be 8 out of 10, 9 out of 10 startups fail, and when that was 100 products coming out a year, now when there are 100,000 products coming out in the year, they are still the same failure rate because we're building more stuff that just nobody wants, so that's what we're trying to change with these principles in this way of thinking. Focus on their right ideas because they have been validated quickly, perfect. Two years ago you also published a revised edition of Running Lean for its 10th anniversary basically, so what did you learn throughout this past decade? Yeah, there have been quite a few changes, and so I'm trying to see like the best way, so maybe with the big changes with the new edition of Running Lean was beginning to incorporate on the key metric side some exercises for doing some idea sizing, and maybe I'll describe it more as the mistakes that I have even made right after Running Lean, so in Running Lean, if you look at the process, you have an idea, you want to do a lean canvas to understand your idea better, then we might build a minimum viable product, and then we start iterating and trying to get that better. When we don't actually think about the milestones, how do we know how much validation is enough, those were questions that were left on answer. People would even come to me and say, "I'm following this process," and it says, "I should go and launch," but how many people should I launch to? What's the right number? And so there wasn't a very good answer to that, so this is where in the new update I introduce another tool called the traction model, or the traction road map, and think of it like a hockey stick chart, but it helps to put some numbers. So if you're launching, if you launch Facebook and only have 100 users, that we all can say is too little, because that's not a big enough social network. If you have 100,000 users, maybe that's interesting. But if I'm doing a big B2B startup, if I have 100,000 companies, that's too big, that's huge. So it may be 100 is the right number. So that's what the traction model helps us to quantify, and I find that that was a missing piece. So helping people know how much validation is needed at the different stages, as they are going through this iterative journey. So that's kind of a big one. The other change was in the way that we might interview customers in the running lean previous edition, we were doing a lot of problem conversations, so I would say, I think you have this problem, and if you say yes, we would then explore further, I would say explain, help us understand your problem better. The challenge is if I came to you with a problem that wasn't really your problem, if I say, I think you have this problem, and you say, no, I don't have this problem, that's the end of story. I can't do anything else. It's very uncomfortable when somebody says, I don't have this problem. If I go to a creative and say, I think you have a large file sharing problem, and they say, no, I have nothing to do there. That was something that people struggled with, also when you're building a desired driven product, like a video game, you can go and say, what problem does this video game solve for you? What problem are you trying to solve? If you hadn't watched a new Spider-Man movie, what problem are you solving when you saw that? It might have been boredom and other things, but it's hard to have those conversations. In the newer edition, there's a different framing around how we uncover problems that allow us to go into those kinds of scenarios. These are great learnings to share. I also want to talk about obstacles and challenges along the way. The first one is a great follow-up question for what each has mentioned. What do people often get wrong about the lean methodology? I'm sure there are plenty of stories or points that you can share here. The most common one, and people write about this all along on blogs and other places, is the definition of minimum viable product. That's probably the first one. It's a simple concept, but very overloaded. Over the years, people have defined it to mean different things. Let's start with the definition. The definition that I subscribe to is the P in the minimum viable product is product. It needs to be something that you actually can build, give to your customers, and they need to be able to use it and get some value out of it. That's why I call it the first iteration of your solution. Some people might argue that the MVP is anything that can help you learn. At that point, you might put a landing page, I might put up a demo in front of you, and they would call that an MVP. I wouldn't, because it really isn't a product. That's promising value, but not delivering value. At the end of the day, I don't think, it's not that I've given up, but I don't care as much what definition people subscribe to as long as they're consistent. The part that I really get worked up about is when I go into even sometimes a small startup and sometimes a large company, and the different members have different definitions of MVP. That's when you're just speaking a language with multiple meanings, and each word has multiple meanings, and that's not helpful. As long as people are inconsistent, that's the more important thing. That's one of the things that people get wrong a lot. Maybe the other one I'll quickly throw out there is thinking that experimentation is the most important thing, and this is another learning over the last 10 years, because I have to say that I probably was also in that camp, which is when you have an assumption, let's just run a whole bunch of experiments to see if it's true or not, but the point that that misses is if you pick the wrong assumption to test, then you can get into this premature optimization trap where you are trying to, for example, improve the conversion rate on your landing page, but if you don't have a conversion rate problem, but rather it is further downstream, your product really is bad. This is where you should have been focusing on experiments there versus experiments at the top. Many startups divide and conquer. They say, "I work on acquisitions, so I'm going to work on new customers, you work on keeping them happy, you work on collecting money from them," and so we all go again into our silos and start optimizing different aspects of the funnel, and that leads to some, that premature optimization or in a system, you actually can actually create more harm. For example, one way to actually get people to like the product is you might add a lot of new features in the free tier, but when there's a lot of new features in the free tier, people don't want to upgrade or buy, and so it's actually going to hurt revenue. Or to actually increase acquisition, I might start over-promising things on the marketing side, and then you get into trouble later. So when you do that kind of silo thinking, you get into trouble. So we instead like to focus in on a few areas that everyone works on, so rather than divide and conquer, try to find a risky area that is holding the product back and really get everyone to come in and work on that together. Great. Yeah, I love that approach or that attitude, basically, to the perspective. You know, we now learned that the Lean Startup Methodology is a very powerful one, but I'm sure there are also problems that that methodology cannot solve. So what can or shouldn't we do with the Lean Startup Methodology? Yeah, so I find that, so if you think of what the Lean Startup fundamentally is, or my simplification of it, is it helps us to take an idea and tackle what's riskiest about it in a systematic manner. And so a big part of it is risk mitigation and many times those risks are because of uncertainty. So in environments where there isn't [BLANK_AUDIO] uncertainty, which it's possible. So let's just give a simple example. Let's say I'm modernizing an existing product. So if I've got a HR software or payroll software in a large company and I know exactly what it needs to do, people do their time sheets, people get paid, you know, I know what the requirements are, but it is built in a very old technology and I want to bring it into some newer technology. There's a lot of technical risk with that, but there isn't a lot of customer or market risk. And so in those cases, lean startup can be overkill. You are much better off using a methodology, just like Agile, where we can take a big technical problem, break it into stages or iterations, and we can deliver, you know, we can solve that problem. So that's where lean startup would be overkill. So the way I like to describe it is when there is a known problem and a known solution, then lean startup is just, no, it's overkill. I mean, you can use it, but it's like why, why even bother? But when there is an unknown problem or an unknown solution and in many, in the startup, it's both. We don't know who the customer is, we oftentimes don't know what the problem is or the solution is in the beginning. So unknown customer, unknown problem, unknown solution, that's where it really really shines. I really like what you said before, it's about mitigating or reducing the risks. And I think this framework helps you tremendously to do that, because in the end, you can then build, hopefully, if you do it the right way or if you're lucky, you can then build an asymmetric bed, right? You can reduce the downside while still keeping the upside. And I think that's a very, very powerful concept to adapt to business, to life, wherever you want to have it. Sure. Yeah. Absolutely. Yeah. That's exactly, that's a great way of framing it. Now, I also want to talk about your business, basically. You offer so much content free of charge. And of course, you also have some builds to pay, I imagine. So what is your business model behind everything that you do? Sure. So, yeah. So I find that because this is, this is kind of new ways of thinking, there's a lot of content as you describe that we want to put out there. And this is something I even, I in a funny way learn, like I actually honestly thought that when I published my book, I, so I didn't get into this, but as I was writing my book, I was running some workshops to test the concept in the book. That was my MVP for the book. So we can maybe talk about that a bit. But I honestly thought that once the, the book was published, everything that I have to say would be in the book, like all my content is there. And so for $20, people would get that, why would somebody spend $2,000 to come in a workshop, which is what I was charging at the time. And sure enough, after the book came, the people who bought the book said, I read everything, but I have even more questions. And so I want to come in this workshop and ask you that. So that was the thing that I also learned is that as you put more content out there, yes, you are leveling up people's thinking, but it doesn't mean that the problems go away. People then want better, they ask better questions. And that's kind of what, what also happens. It's the same way why when you look at chefs, many chefs will write cookbooks with their recipes from the restaurant, but it doesn't make people not go to their restaurant. In fact, people want to come to the restaurant even more, right? So this is where, so if you think that way, that's kind of how we look at the model with Leanstack is we are trying to share a lot of this knowledge and content, and people learn different ways. If you can read a book, I've actually met a few entrepreneurs that I've never met, but they meet me in a conference somewhere and they say, thanks for your book, I used it to do this and sell my, I've sold my company now and so I'm like, great, you know, that's amazing. So I did, and I've never even talked to them. And then there are others who might read the book and then want to come and do some of our workshops. So we run workshops, we do coaching, we've got a coaching marketplace, we actually build, train the trainer programs where we teach how to, how to apply this methodology. And so we have, for example, accelerator startups, we have corporates that come through that training and they are implementing this. So a lot like agile, if you are familiar with agile and scrum in the early days, there were a few thought leaders with some principles and ideas and they were consultants and eventually it gets codified into a methodology that needs to be practiced and people. So there's a whole ecosystem of trainers and other people on the back end. And so that's kind of our business. As we want to share the methodology with people, but if you want to really go deeper and you need help and you want to kind of learn how to either teach it or do it, we have got some workshops and some training that we can, we can provide. And the online tools as well, we have an online, lean canvas tool for example, we have an online tool for the traction model I described. So the tools are also another aspect of our business. And it says with many things, right, the execution, that's the difficult part. So I fully understand why people call you for help there. Yeah, so yeah, and usually what I'll hear is I love all the examples. I can see how it worked with all these examples, but we are different. So we have unique problems. And so I'm like, okay, let's talk about it. So that's usually what, what, how does conversation start? You also mentioned your MVP basically with the work. So please tell us a bit more how you then validated that one. Yes. So this is where, and this again was on maybe another big new concept in the running lean latest edition, is this idea of not thinking about problems and only one solution, but thinking about customer problems and this idea of the job to be done. So if you look at the job of a book, like a business book, like running lean, it is to share some ideas with people and help them solve a problem. In this case, launch, launch a product, help it be successful, right? They can, but a book isn't the only way they can get this knowledge, right? And that was a light bulb that went on for me. As I was writing the book, it was a very lonely exercise. I was writing it, you know, by myself. If I would like a traditional author, wait for a year to publish it, the risk is I would write a whole bunch of chapters and it would just miss the market. Wouldn't really solve the right problem. And so I didn't want to take that risk. And so I said, how can I test these ideas even faster? So as I was writing my chapters, I decided I was going to, I started with some talks. I would just give a talk on some of these chapters. Eventually, I had enough talks that I could run a full day workshop. And so I started running workshops. And so I went and taught everything in the book before I actually finished the book. So as I was writing it, I was teaching it. And funny enough, in those teachings, in those workshops, people would ask questions. And I would say, oh, that's actually a question I had in thought of. And I would answer in the workshop. And then guess what? I would go add it in the book. That's how the book actually got better, right? So it was a very iterative way of, of almost reading the book to people if you want to call it that, but I was using the workshop as the vehicle. So when we look at that job to be done, it's, I want to learn this methodology. It's way faster to actually go and teach it in a workshop in real time, get the feedback from people with their confusion, with their confused looks, with their questions, and then make the book clearer, right? So solve it in the book. Yeah, the continuous testing and validating. Exactly. That's a continuous innovation. And no two workshops were the same. So as you can imagine, if I sharing a new concept and people get confused, I want to fix it. So in the next month, I run a slightly different workshop and I changed how I'm going to, the flow of how I'm going to introduce the topic. And if I see that's better, that's the flow I use in the book, right? So that's kind of how I was iterating on the book. Fantastic. So now, of course, you also wonder how does the future look like? Do you think that, you know, 10 years after your revised book, basically, is it time for a new version or what do you have planned for the future? I think if the past is any indication, the answer is yes. So this is, so this is a, there's no such thing as a perfect solution. I truly believe it. So whenever we come up with something better, it's going to have either some shortcomings or they are going to be new better questions to be asked, it's just like when I wrote the running lean book, it answered some questions, but then it prompted some additional questions. And so I'm pretty sure that that's going to happen with these other books. And so I believe, and again, the way I described the workshops, lean stack is a company we are continuously learning as well. So as these new iterations of the books come out and people begin to use them, they start asking us questions, which we answer again in real time, build into our products, but also then turn them back into future books. So there may be an update to running lean or if running lean is kind of okay, there may be a new book that comes in that goes deeper on certain topics. So that's kind of how I, I look at everything feeding each other. And I would say that was a very healthy mindset is that if you had asked me 15 years ago before I did any of this lean stack stuff, you know, what do I do? I would tell you I'm a software entrepreneur, I build software products. But if you look at what we do today, we build software, I write books, we teach workshops, you know, we train people. So we do all kinds of things. And that's a different kind of mindset, which is more aligned with we try to create better entrepreneurs. That's our true product, not the things we're actually building. Those are all kind of means to an end. Wonderful. So certainly a very exciting future ahead of you. Yeah, I certainly think so. I mean, I find that this is one of those startups. Even the wide reach example I was giving was, there was passion. It was it was born out of seeing a need and getting excited around some technology. But what got me really excited with lean stack is it aligns with purpose. I describe maybe the stages and we can talk about that some, but I describe the artist stage, right? So entrepreneurs in the beginning go through stage one, which is I want to build really amazing art, really amazing creative, cool things and never have been done before. And that was my first wide reach stage. I wanted to build the first social network, I'm going to build the. first large file sharing solution. Those are what drove me. And then at some point, we realized that artists have to eat as well. You know, to your own point, otherwise they starve. So we have to figure out the business model. We have to figure out how to make money. And making money is a skill as well. You have to learn marketing, positioning, sales, and to being an electrical engineer, a software founder. I started to learn those things and got, of course, other people to help along the way. But that's the stage two of the entrepreneurial journey is we have to get good at understanding that the business has to make money, has to make profit. And then at some point, people make enough money and then they get a bit lost. And that's where purpose comes in. So this is where you look at, of course, the super wealthy, they've paid all the money. And so now they're looking for more purpose-driven kind of ideas, but you don't have to be super wealthy to find purpose. Sometimes that's just a age thing or some trigger. So for me, Leanstack was that. It's like I felt like I had built enough products somewhere super successful, somewhere not so successful. And I wanted to give back and teach. So that's what Leanstack represents. So to your question, I do think that the future is interesting because I see the number of entrepreneurs increasing year over year. There's a lot of hunger for entrepreneurship. And I do believe entrepreneurship can help solve many of the world's problems, even if it's just creating smaller businesses and jobs and things of that nature to like creating, you know, life-saving products. We have big problems ahead of us. Climate change, you know, water, all kinds of things. And so we need innovation. And they typically come from startups, not from larger companies, but we also want to help larger companies. So we're not discriminating there. - Great. Hey, Ash, to wrap up today's episodes, I prepared some rapid fire questions for you. So I either give you different options to choose from or a simple question that you have to answer in one sentence. You ready? - Okay, let's do it. - Yes or no, is a university education as valuable for an entrepreneur as people think it is? - No, it's not. Why not? - Up to a certain level. So I know you said only one sentence, right? - Full of questions are exempt from that. - Right. So I would say that what people learn in university is how to think and you create a learning mindset. But to be successful as an entrepreneur, you always have to be learning. So once you learn how to do that at a university, I find you can learn faster on your own. - I love that. Yeah, great point. What's a product you wish you had invented? - Huh. I don't know, I would probably say something around, I guess is it any time in history or? - Everything, yeah, anytime. - Oh, I would say fire in that case. Oh, nice. - Like a fire? - Girl fire, yes. - Nice. What would you be doing if by now, if you were not an entrepreneur? - I would probably be a writer or a cook, like I love food. So I'd probably either just write, that I could probably think of those. Those are the two things that give me a lot of joy. So either writing, I don't know what, or something with food. - Again, the very creative angle there, right? What's the hardest thing about writing a book? - Oh, getting, it's like this three-dimensional jigsaw puzzle you're trying to put together. So really seeing this structure, like getting the flow of the book, I think, is the hardest thing. - And the last one for you, you always spend some time in Switzerland every now and then. So I wonder Switzerland or the United States. - That's a hard one. - It's hard because I've always come in for just a week. But Switzerland is beautiful. And of course there are inherent advantages with, you can say, when it comes to healthcare and other necessities, I think Switzerland wins points, hands down over the United States. So it's a hard comparison for me to make, but I would always say that living here, and there was a study about how the United States is the most individualistic society, which kind of has its pros and cons. Like it's nice to be left alone, but sometimes being left alone for too long kind of leads to other kinds of issues. So it's a hard one, I don't know that I can say, without having lived in Switzerland longer. - Fair point. Ash, thank you so much for coming on the show. It was a pleasure talking to you. I wish you all the best, lots of success for the future. And I'm just really excited to see what you're working on what you're building in the future. - Thank you, Sylvia, it was my pleasure, and it was a great conversation. (upbeat music) - We hope you enjoyed today's episode. If you did, you can support us by rating our show on Apple Podcasts. This way, we can reach an ever growing number of aspiring entrepreneurs. (upbeat music) (upbeat music)