Scaling Lean: Mastering the Key Metrics for Startup Growth

25th June 2017

Ash Maurya;s mission is to help entrepreneurs succeed in building successful products. In doing this Ash provides tools, content and coaching resources including workshops and bootcamps. He recently launched his second book, Scaling Lean.

Life is Too Short to Build Something Nobody Wants

Being a technical founder who loved building products, Ash has built two successful companies and became acquainted with the challenges in doing so. One day Ash had an epiphany, “I realised that my cycle time from idea to building a successful product was too long, it was taking around 1.5 to 2 years doing it”. Based on this epiphany Ash crafted his own mantra, life is too short to build something that nobody wants. This mantra provided a new sense of direction and from then on Ash dedicated his work to creating faster and more reliable methods for building products. This involved exploring ways to increase the speed of testing product business models, which resulted in the Ash’s first book, Running Lean.

The Product is Not the Product

Ash’s work gave him an interesting angle on what he believes the product in your business really should be. The product of your business is actually ‘the process of how you solve a customer problem, I.e. the methods and processes in your business and the system you create to deliver it’. For SaaS this means that the software element is only a tool you use to deliver your product, rather than being the product itself.

The Innovators Bias

About a decade ago Ash started out with what he now calls the innovators bias. “It’s the idea that if you build something unique and original and put it out there, customers will start using it. A kind of build it and they will come mentality”. Although this approach doesn’t often pay off, Ash was lucky that he built a product related to social media, back when it was becoming a hot topic.

Artists Have to Eat (a.k.a Will Starve Otherwise)

Ash realised some of the product assumptions he made were wrong. “When product companies using the old model of build it and they will come, realise that their products were not as successful as they thought they would be, they would have to find a way to use what they had built for other purposes that might be more successful”.

Ash calls this the ‘Artists have to eat’ stage of product development and it’s tricky because you’re trying to find a purpose for an existing product, which in effect, is doing it the wrong way around. However, Ash was fortunate that he able to do this with his first product and despite having an initial launch that failed, he was able to find a use case that created success enough for Ash to sell his company.

Demo Traction, Not a Product

“Don’t lock yourself up in the metaphorical garage and start building a product until you run out of cash. Investors want to fund a working business model, not the development of your product. The way to prove this is not by demoing your product, if you can demo traction to an investor it is much more effective. Don’t waste time trying to convince an investor on an untested story. Instead go and carry out tests that will begin demonstrating traction. This can include demos, landing pages, and value propositions… you can even obtain paying customers this way. Not only does this enable you to demonstrate traction to investors, but it also reduces the scope and therefore the amount of cash you need. See Dropbox’s original product demo for a great example of this.”

Healthy Daily Habits and Practices

“Focus on doing the Right Action at the Right Time. At any given point there is only one or two key actions that will move your business or product towards success. By focussing on these it’s amazing what you can do. You can move mountains.”

“Take the hardest thing you need to on any given day and make it the first thing you do in the morning. I wake up at 6am and from 6am to 8am I work on the the toughest but most important thing I need to do that day. I don’t check email for the first hour, instead I spend some time writing a journal and planning my tasks for the day.”

The Key Metric for Scaling Lean

If you have a system, optimising everything in the system will not improve the throughput of your system. But if you identify the key area of bottleneck it can make the big impact. It’s instrumental to growth.

If there’s one process that SaaS businesses need to refine to succeed. Instead of going fast on everything, slow down but establish repeatability on what you’re doing. If you don’t know how you get the next 10 customers, you haven’t created a repeatable process. Do this by identifying why people bought your product but also what they are using it for today, often these are different things.

The problem with the term ‘traction’ is that people use it loosely to mean ‘growth’ and are not exactly specific about what they mean. I define traction not just at the scale stage but also at the early stage. I define “Traction is the rate at which a business model creates monetisable value from customers”Every business has customers and users, but we need to define what the monetisable value is.

In Facebook it’s page views, if people load up pages, impressions are made and facebook gets paid. Airbnb it’s when the transactions happen. Number of rooms booked. If measured week by week, this provides a measure of if your business is growing. For a classic SaaS business the monetisable event is the membership renewal. Engagement and retention is used for SaaS. Hubspot provides user scores for this.

Qualify users by increasing sign up friction. This is important at the early stage especially as you want to filter out unsuitable customers.

Links to Reference Material

Resources: Leanstack

Book: Running Lean by Ash Maurya

Book: Scaling Lean by Ash Maurya

Book: The Goal by Eliyahu M. Goldratt 

Tool: Ash Maurya’s Lean Canvas

Dropbox Product Demo

Video: Bijoy Goswami on Simplifying Focus To Do More Impactful Work

By |2017-08-30T13:18:29+00:0025th June 2017|SaaS Growth Show|0 Comments