Ash Maurya was guest at the Lean Startup Meetup in Munich, where we had the chance to interview him about Lean Startup and his ideas about the future of the methodology. Hereafter you find the conversation starting with his personal background, followed by the details of his book „Scaling Lean“ and his thoughts about the future trends in lean startup.
Thomas Hartmann: Hello Ash, I really love to hear entrepreneur’s stories. I wonder how you got started with your entrepreneurial journey in the first place.
Ash Maurya: From a very early age, I wanted to build
something interesting. I wanted to make a difference. That was the idealistic view of entrepreneurship. I look at that as how I got started, and I describe it as the artist stage because I needed to create my art. It was going to be very different. It was going to be very unique. I learned over the years that if it is too different and too unique, then people do not understand what you are creating—and artists have to earn a livelihood, too.
My second stage was about understanding that artists have to survive, and it really is about learning the skills for building things that are not 10, 20, or 30 years down the road but that people could use today.
Of course, there’s a story after that, but that is how I generally got started. It was more about trying to create something interesting. Over the years, I have learned that there is a lot more than just having an idea: you have to think differently.
Thomas Hartmann: So you started as an artist, but then you realized, “I need to eat,”. How did you actually earn your first dollar in your own business?
Ash Maurya: Yes, I did so by sharing my ideas. So, I started my first company in just the way many entrepreneurs do. I thought, “I have got this idea. It is too important and needs to be protected. I cannot tell another living person because if I do, they will just steal my idea.” But the very first customer I acquired was when I started sharing what the technology that I was building could potentially do. I openly blogged about it. I was given coverage by a bigger company that put it on its homepage at some point. That drove traffic, and that is how customer number one came to me. I did not have to go to them.
Thomas Hartmann: While preparing for the interview, I read a study that says that immigrants in America are twice as likely to be entrepreneurs. Your parents are from India. You were born and raised in Nigeria. I wonder whether that impacted your mindset toward entrepreneurship, or even, perhaps, did it help you in entrepreneurship?
Ash Maurya: The US is an interesting place because everyone there is an immigrant. Those of you who are familiar with the foster syndrome and the underdog-type phenomenon know, that whenever someone moves into an unknown country, there is definitely more pressure.
Immigrants tend to want to prove something. They want to do something, so there is that drive. And I do think that is a factor. I would not say that, in general, every immigrant has entrepreneurial DNA, but I do think that it just creates more of that sense and they have to find their identity. They are perhaps searching harder than someone who was born somewhere under very comfortable circumstances where things are more predictable and normal.
Thomas Hartmann: Ash, what is actually driving you as an entrepreneur? What is your big vision or your big goal in your work?
Ash Maurya: That brings me to the third part of the story. The first stage that I talked about is the artist stage. This is where you think, “Let me create interesting art for which people will recognize me.” Then, you realize that you have to turn that into a business, so you learn skills on how to make money, such as learning how to price something and learning how to do the marketing, among other things. All those are life skills that one can learn. At some point, when you make enough money and realize your satisfaction goes down. I think that is the initial driver for this third stage. To me, the first stage is about learning more about the purpose: what are we here for?
What inspires me now is the opportunity to try to help the next generation avoid making all the mistakes that I have made. It is funny when people sometimes read one of my books and say, “I wish I had read your book five years ago.” (It probably is five years ago now.) Then, I reply, “Me too. I wish I read the book back then.” This is because I made every mistake that I tell people not to make. So, to me, that is a kind of inspiration.
But, in the final analysis, I think that when we create more entrepreneurs, we create more opportunities. That, to me, is the priority.
Thomas Hartmann: The first book, Running Lean, was about helping people carve out their ideas, and now you have a second one, Scaling Lean. What did you want to change with the book?
Ash Maurya: If you look at the first book, it was all about, “How do I build the right product and how do I build what customers want?” It takes a lot of inspiration from the works of Eric Ries and Steve Blank and the article Get Outside the Building. My question was, “… and do what?” So Running Lean is more about how to uncover what customers want before you actually start building and then start the process of getting your first ten customers.
The second book was written as a result of the problems that the first one created. What I mean by that is that people would come back inside the building and say, “I went and talked to 10 people. They liked my product. Now give me money, or give me resources to get started.” They would go through the stakeholders’ items, which are as follows: “I need to see a forecast. I need to see a more elaborate business plan. This is nice, but it is at a very small scale.”
That is what the second book begins to address. It is about the conversation that the entrepreneur needs to have with their stakeholder and how to share their idea such that it is more numbers-oriented.
Much of the book is about how to use the right metrics; how to perform innovation accounting, which is a term that every start-up will recognize; and how to do that with the smallest number of metrics possible.
Thomas Hartmann: In the early days of a product or start-up, it is really hard to measure progress. I think the first part of your book addresses that, and you suggested that “traction is the one metric that matters above everything else”. Tell us about that idea and why you think so.
Ash Maurya: Yes, I think most people recognize traction as a hockey stick curve, and it creates a Pavlovian predictable response. If I walk into any stakeholder’s office and show a graph, which is a hockey stick curve, and do not even label the Y-axis, they will still ask me to take a seat and say, “What did you just do? Let’s talk about it.” That is the power of traction.
The problem though is that too many people gain traction, by measuring what we call the “vanity metric.” People who have numbers of signups or even revenue, can show the numbers in a way, which show an illusion of growth. But if you normalize that, it is no longer growth—it is perhaps just flat-lining.
Many of the investors have become more sophisticated such that they can smell any metric from a mile away, which makes you want to be a lot more careful with how you present progress in a start-up. I define traction, which I consider to be a very poorly defined term, as the rate at which a business model creates monetizable value.
That is a very specific definition, and there is usually only one metric, at the most two, that everyone agrees with, which measures traction. If that number is going up into the right, it means that the business model is working.
I will give you a very simple example: I am Airbnb and I just talk about the number of guests in my book, not the number of listings but the number of guests in my book. That number goes up week over week and month over month. You, as an investor, have nothing on you. My business model is growing. You may ask me if I know how it is growing, I repeat it, and I do more of it—the growth is undeniable.
To me, identifying the one or two metrics that matter is the key to understanding traction, and that becomes the North Star Metric.
Thomas Hartmann:So the first step is to identify the metric that is good for the business, and then, in the second part of the book, you combine two ideas: Pirate metrics and the constraint theory from the book The Goal, and you called it a factory blueprint. Can you tell us about the idea and how to apply that?
Ash Maurya: Yes. I read the book The Goal many years ago. I think that it is a very interesting concept, and I have used it in software. For those of you who know the theory of constraints or Kanban, that idea is to identify bottlenecks in a production system and then optimize work.
The big idea behind constraints thinking is that if you are trying to optimize the production of the factory forward, you can optimize all the machines, which is a very expensive way. If you just find the slowest machine and optimize that one, you have solved the constraint. Now the bottleneck, which is the next slowest machine, shifts to something else, and then you repeat the process.
I found the same pattern with business models. I also had this epiphany one day that all of us in our businesses are doing exactly the same thing. I mean, we all think that we build products, but in the final analysis, we are building customers. I do not know anyone who would not want more customers in their business. Is anyone here not in the business of building customers? Yes, I did not think so. You want more customers. Period.
So if you build that customer factory blueprint, the idea is that there are some very specific steps that you can take customers through toward building customers, so for all intents and purposes married up the two concepts.
Thomas Hartmann: But how does an entrepreneur find the constraint in his start-up? And furthermore isn’t marketing getting attention a natural constraint of any start-up?
Ash Maurya: So, at any point in time, there usually is a single constraint. There can be a few bottlenecks; however, the idea is to do what we normally would do in marketing, which is the funnel analysis: trying to find the leakiest bucket. The next step is to ask why that is really occurring. Of all the things that one could be doing, as we were saying, we want to find more customers; we want to keep them longer; and we want to encourage them to refer us to others. But at any given point in time, it is not all of the above.
For me, it is only about getting the start-up team to actually visualize the entire customer factory. You have to figure out not only the leakiest part and the slowest part in the factory but also the root causes. If you cannot get to the root causes, you cannot optimize anything. So, it may not always be a product problem; it may sometimes be a personnel problem. We close our accounts perhaps because we are really bad at sales, so we need to hire someone with more experience or get trained in how to sell things. But until you know those things, you cannot really optimize anything.
Thomas Hartmann: Okay, so we have the first step traction, second step factory blueprint. What is the next step? Experiments?
Ash Maurya: When you find a constraint, all that the constraint tells you is where the hotspot is. So, this is where you have the most defects. This is where you are losing the most number of customers or people are leaving and not coming back. But then, you have to get to the why, and that is the basis for our new tagline.
When I started one of my paradigms was “Practice Trump’s Theory” because a lot of people ask, “How do you take ideas and really make them practicable?” But today, the new paradigm is that we are driven by ”Love the Problem.” If you can really identify the problem, not the solution, to me that is the prerequisite first step. Again, when I look at a constraint, all it tells me is that at this point in time, we are losing customers, but we do not know why. Too many teams will then start throwing a bunch of ideas out there, and sometimes someone gets lucky. But, if you start with the solution, it is like making a key without a door. You know you can sometimes get lucky and open the door and it takes you places; however, if you flip that around and spend time to understand the door better, making the key becomes a lot easier. So, love the problem, not the solution.
Thomas Hartmann: Alright, let’s get beyond the book. You are here in Germany, and the culture is a little bit different as you know, particularly toward entrepreneurship. In Germany is afraid about failure and nobody talks about failure. I wonder whether you can lead by example, share your biggest failure in entrepreneurship, to help these folks overcome that fear.
Ash Maurya: Let me get into how to sidestep the problem entirely and remove failure from the vocabulary.
A lot of people say fail fast and embrace failure. I just think that we as humans do not like failure. I like this quote from a scientist called, Buckminster Fuller, and he said, “there is no such thing as a failed experiment, only unexpected outcomes.” I think that if we think in that manner and if we look at our jobs as entrepreneurs, we try to build a model that is an approximation of a business model. We use that model to make predictions, and then we run experiments. If you get failure, do not call it failure—call it an unexpected outcome. Then, you are trying to find out how we can change the model so that we can actually get better results.
The last piece is, of course, the cycle plan. If you can make those corrections very quickly, say in two-week sprints instead of doing so in three months, six months, or nine months, it is no longer even a failure—it is just learning. It just becomes a continuous process, which is what I like about it. So, when you go fast and learn and change the model, instead of describing it as failures, we describe it as continuous innovation.
Thomas Hartmann: About 10 years ago, we started this journey of applying the lean principles with one big goal in mind—it is to reduce the rate of failure. Looking back, how far have we come? Have we been able to change something with this methodology?
Ash Maurya: I actually found the failure rates going up and not down from my experience. Before you all run out of the room and say, “What is this guy talking about?”, I will explain.
We have actually found that a lot of teams really start out with not very good ideas to begin with. There are ideas in which we see that special something, and we march toward building a solution or testing that solution. The reality is that good ideas are just rare and hard to find. What this process does is that it does not necessarily guarantee success—there is no such thing. We do not have a silver bullet, or Eric or Steve or I would not be openly sharing it; we would be running our own accelerators and pumping our own kind of start-ups.
There is no silver bullet out there, but what this method is very good at is: telling you whether your idea is good or bad very, very quickly. There is a different metric, and to me, it is the cycle of time. What really bothered me was not my success or failure rate, it was that I was spending 18 to 24 months to figure out if the idea works. Now, I can do that sometimes in six to eight weeks. We can quickly tell whether this is an idea that we are pursuing. You do the business model; you do the traction roadmap; you do the validation; and you can tell: should I spend three years of my life on this?
We have put a lot of teams through boot camps where we bring them in with their ideas, and as I said, anecdotally I find that most of those ideas are pivoted or reset not because the teams give up but because they realize this will not work right now.
So, I am optimistic. I think that it is still early days, but I think that there is a long game and a short game. In the short game, I believe that we are going to see more failure, or if you do not want to use that term, unexpected outcomes. You are going to find more ideas getting reset or pivoted, but what we are building on is our better thinking process. We are building better entrepreneurs. Over the long run, the second, third, or fourth idea is really going to build a much more solid foundation. In the long run, you should see more success.
Thomas Hartmann: Ten years is actually quite young, methodologically. Running Leanwas about funding and problem-solving. Scaling Leanhelped the process of scaling. So, what is next step? Which questions and topics are currently on your mind that you think need more attention?
Ash Maurya: In some ways, it is actually going back to the basics. I find that it goes back to the hashtag “Love the Problem.” I am interested in trying to find more effective ways of finding problems to solve, and somehow, even revisiting the interviewing techniques that I described in the first book and coming up with some better approaches. I heard that somebody in the audience talking about Jobs-to-be-Done theory. That is something that I have been digging into quite a bit. That, and some of the design thinking techniques, and then trying to find an intersection there where we can use some of those approaches to really find real problems that we are solving and not fool ourselves. That, to me, is where I feel there is a lot of work.
Thomas Hartmann: We heard from Jobs-to-be-Done, and I think it is a little bit of a trend. How would you actually define Jobs-to-be-Done for yourself?
Ash Maurya: That is an interesting question. It got introduced to it with the milkshake study, which many people may have read about. I think that it is very interesting, but it was not until Bob Moesta, was actually one of the researchers in the milkshake study, approached me and said, “You know, I really think that you should look at this more carefully, and I really want to talk to you because you have a way of looking at things that are hard to explain and because somehow, over the years, you have helped to make it easier to understand.” So, I asked him to define what a job was and he could not do it. And he said, “I struggled with that because I tried to define a job and people do not get it.” I have gone to other people; I have looked at the definition; and I have looked at all of our leaders in the space—they do not agree on what a job really is, but we can see it when we explain it. I find that it is an elusive term, but it really exists for me at the end of the day. It is the reason that makes people switch from one product to the other. There are attributes of a product that we buy a product for, and it can sometimes be unexpected things.
In the milkshake study, for instance, a lot of people were buying milkshakes because they were on their way to work. They did not have time to eat a proper breakfast, so they wanted to eat while driving. And when you are eating while driving, getting a bagel and cream cheese or doughnuts are all bad ideas, you can almost get into an accident. So that is why the job of getting fed while you are driving at 100 kilometers an hour you need to have something that is portable. So, that is at a high level, but so are a lot of details. And I am covering that story. I am covering what a job is; what the triggers are; what some of the problems are that people run into with the existing alternatives and then how they find a better solution that can favor the present situation. I call it the innovator’s gift. So, I talk a lot about how the innovator is biased in those books, and that is the innovator falling in love with a solution. But the innovator’s gift is really going out of the building and studying other solutions out there because every solution fits all our problems, and if you can do better than what is out there, you can create the switching back or beginning. That is a little bit about the area that I am researching in my kind of analysis of Jobs-to-be-Done Theory.
Thomas Hartmann: Do you distinguish between the job itself, the situation, and the customer?
Ash Maurya: Yes, it definitely is very situational. With the kind of characteristics, a lot of people use the persona mindset, so it is a lot about how we can identify who the customer is, but I find identifying when the customer needs something more actionable. For me, the job is really a customer journey. If I am hungry, I am in a hurry, and I am on my way to work, what I am going to buy is going to be very different than the scenario in which I am on my anniversary date with my wife and we wanted to have a nice dinner, right? So, the circumstances are the same—I am hungry—and I am still the same person, but all of a sudden, the circumstances change my solution set. For me, it is a combination of all those things. So, we have a new canvas, it is called the Customer Forces Canvas. I have written some blogs about that, and you can kind of dive in and see what that looks like. But you will see that it is very much a “when something happens”: when a trigger is in someone’s mind. I get on a weighing machine, and I realize after the holidays that I am 10 kilograms heavier than I was three months ago. That was not something that happened instantaneously, but that creates a trigger. Now, all of a sudden, I become a potential customer looking for a solution. I want to lose that weight, and so I might be more open to joining a gym, going on a diet, or taking pills. That did not occur five minutes ago, but that triggering event to me is very, very actionable. Knowing when that happens is, to me, much more actionable than knowing who it is because the person is the same but understanding the “when” is very critical.
Thomas Hartmann: You mentioned persona, and that is really interesting. Intercom recently claimed in a talk the Persona to be dead because Job-to-be-Done defines your segmentation, not the persona. I wonder, what is your take on that thought?
Ash Maurya: Sure. I find that the labels are always misleading in some way or the other, so I would not say personas are dead but that people sometimes go overboard when employing personas. Typically, a persona is as follows: ”Let us define a character, let us give this character a name, and let us create an identity and start to put a lot of attributes in there.” You know, coming from a lean mindset, the more actionable thing is not hundreds of attributes but the smallest attribute set that you can use to identify your customer. So, for me, it is about “less is more.” If I can just come up with three characteristics, that is all I would need. And typically, there are triggers, so there is psychographics as well as demographics. The only thing that I talk about is a photo-sharing app. I was initially going after busy parents with young kids, but after a few conversations, I actually learned that the triggering event was really a first-time mom having a child and it was like night and day. If I went and talked to a first-time mom and she had a new baby, I could probably see that the activity of sharing or taking baby pictures and wanting to share them with family members was going to be disproportionately higher than that with anyone else. That could be the triggering event. There is some element of gender in there, but there are things such as age or giving that character a lot of attributes that matter. Really, it was that first-time mom with the child.
Thomas Hartmann: One more question. You told us about the entrepreneur’s gift. In my personal experience entrepreneurs always have what I call “solution gravity”. People always want to go over to the solution. How do you make entrepreneurs go deep into the problem and not jump over to the solution early on?
Ash Maurya: Yes, totally true. From a coaching perspective, that is actually my new challenge. People ask me, “What is the hardest thing that you are working on?” A lot of it is trying to change that mindset and trying to get people to recognize that they are being half as biased, and it takes time. Sometimes, it is a bit like dual strategy. When people come in and they are very passionate about the solution, rather than letting them finish it or build it, we try to design and experiment where they, in their mind they can see the solution side. That could be a demonstration, a lighting page, or something similar. You want to create that opening. At other times, it can be something that you can rationalize—where you can talk about problems being part of it.
It really is a function of who you are dealing with and what their situation is. But I find that the opening begins to be created when they find evidence of problems and it does not match their understanding of what they are really building. It is very specific to who we are dealing with and knowing what to use and when with this type of people.
About Ash Maurya
Ash is one of the very early adopter and thought leader of applied lean startup methods. He is the author of best selling books like Running Lean and Scaling Lean.
Running Lean was the first book which took the ideas for „The Lean Startup“ book from Eric Ries and translated it into step-by-step blueprint.
Scaling Lean is his recent book where he helps entrepreneurs to find the right metrics to track progress in the early days.
He is also the creator of the Lean Canvas, a widely known version of the Business Model Canvas specifically designed for startups. With his company LEANSTACK he helps companies create continuous innovation.
With his work, he impacted the work of thousands of entrepreneurs and companies for the better. He is one of the heroes of the lean startup movement and we had the chance to have a interview with him at the Lean Startup Meetup Munich.
Special thanks to Boris Danne and AutoScout24 for hosting this event.