Ash Maurya's Blog, page 6

Create a Life Plan Before Making Your Business Plans

I see too many entrepreneurs rush to build a business

without taking the requisite time to understand their goal.

I see too many entrepreneurs rush towards growth

without understanding that growth is a choice.

Growth typically requires outside capital.

Growth typically requires getting bigger.

Growth typically requires giving up control.

This isn’t a one-track path.

For inspiration, read Small Giants by Bo Burlingham.

He makes a case for

companies that chose to be great instead of big.

Starting a business is a means to an end.

It’s a means to the life you want to create

for yourself and the people around you.

Start with your life plan before your business plan.

Credits: Bo Burlingham

Going Viral is NOT a Choice

People loosely use the term viral,

but viral has a very specific mathematical definition.

In order for a product to be considered viral,

it needs to have an average referral rate of over 100%.

In other words:

Every customer should be referring at least one other customer on average.

It’s easy to see how the viral engine of growth

is the fastest growth engine and

simultaneously also the hardest to achieve.

Also contrary to popular practice,

going viral is not something you can predictably plan.

Sure, you can lower the friction to encourage

referral behavior but you can’t force viral behavior.

Like a viral infection,

you don’t choose it.

It chooses you.

Advisor Whiplash

Ask 10 people for advice on your idea

and you’ll get 10 different prescriptions.

Which one do you follow?

I see this all the time at some of the world’s top accelerators

where the problem is even further exacerbated because

these teams have access to lots of recently successful entrepreneurs.

These seasoned entrepreneurs are paying it forward

by volunteering their time.

A commendable gesture

but one that often leaves the startups more confused.

When faced with conflicting advice

which one is the entrepreneur supposed to follow:

The one that comes from the mentor who made the most money,

or the one that makes the most sense?

UNCERTAINTY + CONFLICTING ADVICE = CHAOS

Recent success does not necessarily correlate with giving good advice.

You can be a great entrepreneur but not a great teacher.

Tiger Woods is a better player than his coach,

but his coach is a better teacher.

In my view, the advisor’s job is NOT to give solutions

but rather ask the right questions

using the Socratic method.

It is not about giving prescriptions,

but rather an honest diagnosis on top risks.

It is the entrepreneurs job then

to prioritize these risks and

test them through small, fast, additive experiments.

It is also the entrepreneur’s job

to double down on the best advice (and advisors)

and ignore the rest.

Your Deeper Why

People start companies for many different reasons.

Making money should definitely be one of them.

After all, there is no business in your business model without revenue.

Making money or not

is the difference between a business and a hobby.

But making money should not

be the sole purpose for a business.

Think of it as oxygen.

We need oxygen to live,

but don’t live for oxygen.

Making money should be an after effect.

An after effect of creating value,

of fulfilling a purpose,

of achieving your deeper why.

Getting to your deeper why requires asking:

What beyond money is the reason for building

your product or company?

The Communication Experiment

A twelve year old ran a communication experiment on me at a science fair.

She assembled a simple 8 piece model

by snapping together several pieces of differently shaped plastic pieces.

There were squares, triangles, circles, and rectangles

all sticking out in different directions,

but it was a simple model.

My task was to communicate the model

to another person verbally

and have them reassemble it.

I used colors, shapes, and angles in my instructions.

When we compared the finished product,

there was only a 20% resemblance.

This was a great exercise that illustrated

the fallacy of verbal communication.

People don’t see what you see.

The more you explain with words,

the greater the divergence in mental models.

Try this exercise with your team

to highlight this fallacy.

A lot is lost in hand-offs of good ideas

from product managers to dev teams, for instance.

Whenever possible, bring in a simple model or metaphor

so people can at least anchor their mental models with yours.

Talking to Customers

When I work with early stage entrepreneurs,

they often ask me how many interviews they need to run.

They ask me how long it will take.

They really want to know how quickly

they can get back to the stuff they really love –

building product.

I hate to burst their bubble

but talking to customers should never end.

Even at scale when you have lots of analytics in place,

numbers can only tell you what’s going wrong,

not why.

Gathering numbers require that something be built first.

Talking to customers is much faster.

Especially at the earliest stages of an idea –

for a product or even a feature,

Talking to customers is much more actionable.

Building a continuous feedback loop with customers

one that you can call upon at any time

is a competitive advantage.

You can use this to test new feature concepts,

silently kill bad ideas and refine the good ones,

until they are ready to be rolled out,

first at small scale, then to everyone.

Make it a habit for everyone on your team

to talk to at least one customer everyday

Email and chat count as well.

You’ll be amazed what bringing the customers voice

into your workspace does to your product insights.

Before You Can Connect Dots

Before you can connect dots,

you have to lay out a lot of dots.

You have to be curious.

You have to ruthless.

You have to actively seek out the “right” learning.

You have to put in your 10,000 hours.

Then one day it all clicks.

You see your world in high-definition.

The dots connect and patterns emerge.

Things get simpler for a while.

Until you get curious again

and seek out even harder problems.

Then you get back to laying out dots.

[Day 60] Incremental Progress

If you aren’t measuring what you do,

you don’t know if it’s working.

The goal isn’t to always be right.

That’s impossible.

The goal isn’t to always please everyone.

That’s impossible.

In fact, if you aren’t ruffling someone’s feathers,

you’re probably playing it too safe.

But you have to measure nonetheless.

Measure but don’t take yourself too seriously.

Decide on which side your action fell.

Learn today, internalize, then aim for better tomorrow.

Rinse and repeat everyday.

You Don’t Need Permission to Build the Next Facebook

I often use Facebook in my talks.

To which someone will usually comment

that we don’t have the ecosystem of investors here

to support building the next Facebook.

This is misplaced causality.

First, Facebook wasn’t started in Silicon Valley,

but Boston.

They didn’t have the “right” kind of investors in Boston

(at least at the time) so they moved.

Boston to Silicon Valley is a 6 hour flight.

You probably are less than 24 hours away from Silicon Valley.

More importantly,

Facebook didn’t succeed because they raised lots of money.

They succeeded because they demonstrated incredible traction within 30 days of launching

which didn’t let up.

Traction, not funding, is causal.

If you can demonstrate anything near their levels of traction,

even at micro-scale,

I guarantee you won’t have to chase investors,

they’ll come to you.

The Fallacy of Cost Based Accounting

Profit = Revenue – Expenses

Cost-based accounting focuses on the right-hand side of this equation.

It focuses on scalable efficiency and squeezing out costs –

especially labor costs.

This manifests itself as

detailed weekly timesheets broken by task,

downsizing, outsourcing, and other cost reducing measures.

This is short-term thinking.

It is much more powerful to affect the left-hand side of this equation.

Have you tried doubling your prices recently?

Instead of tracking your team’s tasks into micro-buckets,

have you communicated the macro goal of your business,

and current constraints holding it back?

Cost cutting has a theoretical limit – zero.

Revenue (or throughout) does not.

You can always add more value,

build more products, or expand the market.

Instead of focusing on costs,

focus on increasing throughput.

Throughput is the rate of output of your business model.