Ash Maurya's Blog, page 4

Cognitive Biases

Cognitive biases affect our decision making ability.

Even celebrated scientists like Sir Isaac Newton weren’t immune to them.

For this reason, the science community has built in

several procedures and safe guards into how

empirical research should be conducted and how evidence is gathered.

During clinical trials for medicinal drug testing for instance,

we go through great lengths to setup double-blind tests

where information about the test is kept from both tester and subject until after the test.

This is to avoid two kinds of biases: the observer effect and the experimenter effect.

While of sound intent, conducting entrepreneurial inquiry using the same level of rigor

can be overkill in many instances.

Qualifying early adopters from mainstream customers is the experimenter effect at work.

Similarly any direct sales model employs observer bias to influence the sale.

From a macro level, if you can home in on a select part of a customer conversation,

even due to a past pre-disposition, and turn it into repeatable results,

is that bad?

Some biases (or hunches) may actually help you find that right signal in the noise faster.

The best antidote isn’t denying or avoiding these biases

but rather internalizing a set of ground rules that counter-act them.

Running Experiments isn’t an Option

Every time you release a new feature,

run a marketing campaign,

or make a sales call,

you are running an experiment.

You have some expected outcome (albeit fuzzy)

in mind that you measure your results against.

That in a nutshell is the essence of running experiments:

Guess -> Expect an outcome -> Compare to observed experience (experiment)

So the real question isn’t whether you want to run experiments or not,

but rather whether you want to run a good experiment or a bad experiment?

Have Faith in Yourself But Be Ruthless With Your Ideas

I believe most entrepreneurs are optimists

which is a necessary mindset.

But beware of unchecked optimism,

especially when it becomes blind hope around an idea.

Admiral Jim Stockdale who was held captive

for eight years during the Vietnam War

noted that it was always the most optimistic

of his prison mates who failed to make it out of there alive.

“They were the ones who said,

‘We’re going to be out by Christmas.’

And Christmas would come, and Christmas would go.

Then they’d say,

‘We’re going to be out by Easter.’

And Easter would come, and Easter would go.

And then Thanksgiving, and then it would be Christmas again.

And they died of a broken heart.”

Admiral Stockdale did walk out of that prison camp.

He never doubted he would

and therein lies the paradox that was named after him.

The Stockdale Paradox:

Maintaining an unwavering faith that you can

and will prevail in the end, regardless of the difficulties,

AND at the same time

Having the discipline to confront

the most brutal facts of your current reality”

Credits: Good to Great, Jim Collins

(In)Validate Your Business Model

A poorly understood concept from the Scientific Method

is that a guess or theory or model can never be 100% proven right.

It can only be proven wrong.

It is possible to formulate a guess, build a model,

and run experiments that validate your model for some time.

But as you increase the number of experiments and/or observed experiences

you might gather experiences that don’t agree with the theory

which proves the theory wrong.

This is what happened to Newton’s Law for the motion of planets.

He guessed the law of gravitation,

computed the consequences for the solar system,

which matched up with experiments for several hundred years

until a slight anomaly was discovered with the motion of Mercury.

During all that time, the theory hadn’t been proven right,

but in the absence of being proven wrong, it was taken to be temporarily right.

This is why true science is hard.

The good news is that entrepreneurship, by comparison, isn’t this hard.

Unlike scientists, we aren’t searching for perpetual truths but temporal truths.

Our job is wielding these truths into a business model or growth hack

that works for some slice of time before it is proven wrong by a disruptor.

Herein, lies another parallel between science and entrepreneurship

that drives the lifespan of your guess:

If you aren’t constantly trying to disrupt yourself,

i.e.prove your business model wrong,

someone else will.

Credits: Richard Feynman

Focus on Thinking Processes Before Tools

Despite being a tools provider myself,

I often lead with the following disclaimer:

“The mistake other people make is that they simply copy our tools and process and expect similar results.”

– Jeffrey Liker, The Toyota Way

Simply using Tiger Wood’s golf clubs will not make you a better golf player.

Nor will buying a $3,000 DSLR make you a professional photographer.

You have to internalize the thinking processes first.

A tool is just an implementation of the thinking processes.

Without the first, the second doesn’t matter.

Beware of Best Practices Breeding Into Complacency

“All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident.”

– Arthur Schopenhauer, German philosopher (1788 – 1860)

When applied to methods and methodologies,

there is a fourth stage:

Complacency.

Complacency = habits = inertia.

A method not regularly questioned against the goal

becomes a constraint or limitation of itself

that inhibits versus propels us forward.

Are You Valuing Your Time Correctly?

Most people don’t value their time correctly.

They think that as long as they are working on their ideas on the side

or on company-time, they can afford to take as long as needed.

This isn’t true.

Of all the resources, time is our scarcest resource.

While all other resources can fluctuate up or down,

time only moves in one direction.

For this reason, I place it above all other resources.

This is especially true at the earliest stages of a product

where there is lots of uncertainty and risk

and everything seems possible.

I generally recommend that everyone value their free time

at least at their going market rate.

And, when you factor in the fact that you are using this time to

work on an idea that might have a 1 in 10 chance of succeeding,

you need to multiply your hourly rate by a factor of 10.

Ideas are cheap but acting on them is quite expensive

as ideas can easily consume months,

or more realistically, years of your life.

Time you’ll never get back.

You should do the math to see

what a few months of time can potentially be worth

both in regular billable hours and startup hours.

We talk a lot about seeking investors for our startup.

(or executive sponsors if you are at a larger company)

But you are the first investor in this story.

And your currency of time is even more valuable than money.

Spend it well.

Constraints Are Gifts

Here’s the dictionary definition of constraint:

Constraint (noun): something that limits or restricts someone or something.

Most people view constraints as a negative thing.

They either fall victim to these constrains

and revise their ambition downwards,

or confront these constraints head-on

and look for ways to eliminate them.

Constraints are neither good nor bad.

Every system always has one.

Your business model is no different.

And there is a third way to view constraints:

To embrace your constraints AND still find a way to achieve your goal.

Rather than downsizing or chasing after investors,

Southwest Airlines leveraged their constraints

and turned themselves into the most profitable airline in the industry.

Facebook’s carefully orchestrated staged rollout strategy

that I often attribute as a big contributor to their success,

also started as a constraint – one of money.

Mark Zuckerberg did not have the money or investors

for a full public launch while he was at Harvard.

So he limited Facebook’s rollout to just 3 schools:

Stanford, Yale, and Columbia University.

Even Google’s minimal search box homepage

was not intentionally simple by design

but a constraint of Larry Page’s coding ability at the time.

So rather than viewing your constraints as limitations,

embrace them as gifts and look for ways to

leverage them to your advantage.

An Effective Unique Value Proposition Requires Sacrifice

It is tempting to generalize our offering

to be all things to all people.

After all, given enough time, money, and effort,

we can build almost anything these days.

Sometimes we spin with hypotheticals and

sometimes it’s just a simple rearranging of what we already have.

Both equally drive away, versus attract, customers.

Customers want specific versus general.

They want simple versus complex.

They want something for them versus everyone.

What’s especially counter-intuitive is that

even if your product is not currently targeted at a specific customer segment,

it doesn’t keep them from still asking if they too can use your product.

Clarity cuts through markets.

So even though you can spin your product in every possible direction,

when you market to everybody, you end up talking to no one.

You have to sacrifice and draw a line in the sand,

even if it ends up being the wrong line.

It is far better to have taken a wrong stand and course-corrected,

than fooling yourself into thinking you are connecting with everyone

by taking no stand.

Allergy Season

It’s allergy season here again

and lots of people are coughing, sneezing,

and generally complaining about being miserable.

What always surprises me is the complacency with which people accept feeling miserable.

I know there are far worse things that could happen

but I’m a baby when it comes to how I feel.

Two years ago allergies hit me out of nowhere

and I seriously considered leaving Austin.

Thankfully, they went away the following year

correlating with an increase in local honey consumption

(for what it’s worth)

I was talking about this with Noah Kagan

who also lives in Austin and

also going through allergies this year.

He made the same observation.

The same is true in business.

Lots of people accept the status quo

Others don’t and may even overreact by some standards.

But they end of changing the environment

for themselves and for others.