How Lean is Lean in a Startup?

How Lean is Lean in a Startup

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I recently had lunch in London with Founder of a well known SaaS product in Online marketing space.

I was quite excited particularly for various reasons:

a) I had been chasing him for over 6 months and for one reason or another we could never meet.

b) Their product is very hot at this time and their rise has been quite meteoric. I am a power user myself and everyone I know who use it, absolutely love it.

I guess it is no rocket science but I have personally learnt the value of getting to know and hanging around with very successful people. The very minimum value you will get out of it is that just by hanging around with them you will be forced to think higher and try to achieve more.

Bonus: Download the Lean Sprint Worksheet to track your periodic product development progress.

So I get to the very cosy Italian restaurant in central London…

After introduction and quick laughs on how we had missed each other for 6 months we get talking about business etc.

I see the same recurring personality trait as I see with pretty much all of the very successful people.

That is…

He is extremely Humble…

Not sure why I keep seeing that. Maybe it’s the rigour of starting and building a business that makes them gracious… Maybe I have just been lucky enough to find nice people.

So he starts sharing everything about his business… Like every single detail…So much so that I am thinking ‘Dude we just met, I don’t think you should be telling me that’ LOL…

Another trait I have seen a lot. Most of the successful people are pretty transparent about things. I guess it’s due to the self belief they have strengthened over building their companies that they don’t give a F about being extremely open.

I highly respect that.

In case you are wondering I am talking about Steve from BuzzSumo

Anyway what strikes me most as I talk to him is their actual lean approach to building their business.

The Buzzword: Lean Startup

Most of us entrepreneurs have read many books on lean startups etc but have found it extremely hard to follow it.

Most of us claim to run lean teams…

But are they really lean?

I myself am guilty of making hefty investments into product/businesses where we built something disruptive (well according to us), spent close to a year launching it with a massive team.

3 feets from gold

Guess what happened:

  • They ended up becoming huge money eating projects.
  • By the time we launched, we realised we did not know who our ideal customers were…
  • We started with solving a core problem but in the end the solution was so big that we did not even know what endless stream of problems the solution was solving.
  • The projects became massive sunk costs stuck at 90% completion. We kept sinking more money thinking ‘we are close to 100%  so if we give up now we will lose all that investment’. We took the whole ‘3 feet from gold’ approach in the wrong sense and just kept blindly investing.
  • Eventually we all fell out of love with the projects and they became a massive burden.
  • The projects died horrible deaths and took all of our time, money and dreams with them. Multiples times…

Develop the best MVP

I am somewhat guilty of that with my last business too.

I am even ashamed to write how long it took us to launch the beta version and how much it ended up costing us. What I can tell you is that it probably cost 5X more in time and money.

Luckily we had a solid product and had an early acquisition offer which worked out well in the end. The company ended up getting acquired.

Why do we keep doing it? Are we stupid?

I hope not 🙂

We always mean well and try to take the lean approach and go by the books, influencers but somehow always end up like that.

If I was to put my finger on why we do that, I would say it’s a combination of blind faith in my own abilities (clearly I am not that smart LOL), my team and our blind love for our own ideas.

Thankfully even with this approach, I have made a lot more than I have lost so it’s all good.

But I would definitely have liked to save more time and do it right.

Anyway going back to the lean approach of BuzzSumo.

So how lean is really lean?

I have always struggled with the question ‘How lean is actually lean?’ but this guy really opened my eyes to it.

They take lean to another level.

To really give insight on where they are now:

  • Their product was officially launched for sale less than two years ago.
  • They pretty much hit their initial traction ($100k/month revenue) within few months of launch.
  • I would not want to discuss their current revenues but I can say is that they are sprinting toward Initial Scale ($1 Million/month revenue) and not far from it.
  • They are launching a new product very soon. This kind of contradicts with what I write about later in the article but the product is almost a subset of what they have already.
  • They are investing heavily into innovation and new technologies.
  • They have had many investment and acquisition offers already.

AND…

  • They are only a team of 7 staff all working remotely.
  • They were only 3 partners working e.g 1 doing marketing, 2 developers when they first launched.
  • The original partners met online i.e Reddit.

As I said Steve was very humble. So when I tried to dig deep into how they did it, even though he was telling me everything in detail, his response:

‘I think we just got lucky’.

I strongly disagree.

Yes there might be an element of slight luck, but I think there are key takeaways from their meteoric success.

Here is how you should keep your startup Lean:

1.Quick decisions:

The founders found each other online. It took few days from then on to meet up, convince each other to get in on business and start working.

2. Launch the MVP almost instantly

I think gone are the days when you could take few months to launch the Minimum Viable Product (MVP).

Launch the MVP almost instantly

After being on other side of the equation and taking many months, sometimes close to a year I can truly look back and say that we could have launched the most basic version of those products within few weeks.

Yes the products might not have been very feature rich or stable, but at least we could have started getting users feedback instantly.

Now their product is quite complex with a lot of back end stuff going on.

But…here is the deal..

They launched their product website to start collecting leads within a week of working together and first version of the product few weeks after.

They kept incrementally growing the product based on customers feedback.

After the initial MVP launch, it took them many months to have a product ready to be sold to the customers. However when they finally started selling, they had an immediate product-market fit and lots of users flocking to pay for it.

They had 1000s of free users already so they were instantly profitable. [More on that later]

(Note: Do you really want to follow the Lean Approach? Grab this checklist that will show you how to quickly leverage the 8 hacks mentioned in this post here)

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3. Product/Market fit is binary: It’s either Hot or Not

This was a big one for me.

What we have done in the past is that we finally launch the MVP.

We do the whole shebang around making sure we get some traction and users.

We get a bunch of users. The product will get some usage and eventually everything will go really quiet.

We think it is due to that fact that we got many tire kicker users and need to get more targeted ones. We spend weeks/months trying to get them and eventually realise we should have just pivoted to start with.

Instead…

What their stance was that either they hit almost immediate Product market fit or they pivot.

Launch MVP Fast and Pivot VS Launch MVP later and stuck

As soon as they launched, they saw instant buzz from users, influencers. Though the product was not ready to be sold, they had no doubt that they were onto something.

There might be different schools of thoughts here.

One of them is how we used to think e.g maybe we got wrong users for the product, maybe they found the product too clunky hence did not use it etc. Rather than thinking, may be we are trying to resolve a problem no one has.

Now my thinking is that the particular pain point they were solving was so simple that people instantly understood it and got excited about. That should be and was their very first form of validation.

Check this out: 8 Practical Steps to Measure Product/Market Fit for Your SaaS Startup

4. Focus on building the very best product

Even though they launched the MVP very early in their development, they focused on building the very best product.

Even in the MVP whatever they offered worked like a dream.

They have always taken that approach and as a result they have:

  • Thousands of raving customers (including me)
  • Very low customer support costs because of the solid UX, features and back end.
  • They have had to do very less marketing. Mostly word of mouth has carried their product to success.

Focus on building the very best product

5. Marketing starts with product development

They have not yet bothered with traditional traffic generating activities e.g running ads, sales teams, building sales funnels.

They do very limited but quality content marketing.

Still they have few hundred thousand users and growing. A lazy mind says they just got lucky. Right?

Not really…

What they instead did was started reaching out to influencers, bloggers, thought leaders in the space from day one. They were giving free lifetime versions of their product to them.

Even though most of the people they gave free versions to, did not bother trying it. A lot of them did turn into advocates and openly wrote about them in their blogs, social media etc.

Many still do…

As a result they had over 100,000 free users signed up ready to buy as soon as they launched the paid version.

They started reaching out to influencers from day one. However what got them attention was their solid product. It goes to show that you should know instantly whether your product is ‘hot or not’.

The reason they got so much love from the influencers was probably one of the earliest forms of finding Product Market fit.

So, start making marketing efforts as you start building your product.

6. Hire superstars only

Few years ago I was at a 2 day course designed for company presidents in Dayton, Ohio (Yes I know out of all the places in the world). But it was a world class facility set up by a billionaire who originated from that area and wanted to give back.

There were about 10 people in the class.

Mostly Entrepreneurs, CEOs of successful companies, few from some struggling companies. The recurring theme was that all the people were running their companies and had tons of experience.

Our trainer who happened to be an industry veteran asked the whole class a simple question:

‘At what stage of a company’s life cycle do management start hiring bad people?’

‘a) Is it when company is at very early startup stage?’

‘b) Is it when company has achieved initial success and started to grow?’

‘c) Is it when company is quite mature and stable?’

‘d) Is it when company is on a decline and management is struggling to stay afloat?’

We all gave our answers.

Now don’t forget there were are a lot of experienced people in the room. I was still a novice compared to them.

They all gave their reasons for their answers…BUT…

Not a single one got it right…

The correct answer was….

‘It is when company is experiencing early growth and typically explosive growth’

Hire Superstars not Zombies

SILENCE in the room…

We all understood what he was saying. We had all experienced it and were guilty of it.

At that time, I employed around 85 full time staff members. We were on a massive hiring drive and were looking to hire around 20 more.

Less than 3 years earlier I started working on my business with one more developer on a  dinner table.

85 hires within 3 years…Sounds good right?

It was Horrible…

Anyway…

Here is what the whole room collectively agreed after the trainer said that:

  • When your company experiences initial success, you just need people really quickly.
  • You are so drunk on your success that you feel invincible. You never think the explosive growth is going to ever end.
  • Mostly when you experience that kind of success, you are still quite inexperienced and you think getting more people is the only answer to inefficiencies in the company.

And what ends up happening is:

  • You hire for the sake of hiring and put the first person you find in a role because it needed filling. Let alone the fact that you might not have needed that role in the first place.
  • Because you are hiring so many people so quick, you end up hating the process because you need to concentrate on the core business and you delegate it to your HR (Yes you stupidly hire a full time HR manager too). They pick up even worst people because they need to meet a target.
  • Now you have a ton of people. You are inexperienced yourself to really manage them. There is a clear lack of processes and it’s a jungle.

For me it Very soon came to a point that I did not even recognise a lot of people who worked for me.

It should really be:

‘Hire Slow and fire fast’

AND

‘Hire Superstars only’…

Coming back to BuzzSumo..

They have been Anti-Hiring from day one…

Steve found the very best technical team he could find and made them partners. At the time of their launch they were still only 3 partners working.

Since then they have ‘exponentially’ grown their team to 7. Don’t forget they have been and still are experiencing rapid growth.

That is the very essence of Lean Startup…. Don’t bloat the team and be as flexible as possible ready to pivot whenever needed.

Once again HIRE Superstars only… Do Not Compromise…

Superstars don’t come easy…It could take you a while to find them but better to take your time than fall flat with the burden of your bad hires.

7. Focus on the few not many

I have attended Dan Pena’s Castle seminar twice. Once a normal 7 day one and other hardcore 10 days seminar over Xmas.

If you have not heard of him, worth checking him out on Youtube…Crazy man…

One thing he keeps repeating is ‘Focus on the few not many’ and also puts it down to be the best advice ever given to him.

As entrepreneurs I really think we suffer from slight ADHD. It really bothered me few years ago as I was always coming out with ideas for different projects and struggled to focus on the one making us money.

Bonus: Download the checklist that will show you how to quickly leverage the lean startup hacks.

I have been guilty of starting multiple projects at a time and thinking I am smart enough to divide attention accordingly.

Clearly NOT…

It never works out like that.

See what happens is:

  1. You have a project that finally starts to come together and make you money.
  2. You get excited and start getting all these great ideas about new projects or a ton of features in the new project.
  3. You start multiple projects at a time or at least one more and for a time most of your attention gets diverted to it.
  4. Your cash cow project starts to suffer as a result and you get torn between which project should get more time.
  5. Very soon out of all the projects you have started, you have a clear favorite. So naturally you try to spend more time on it. Rest of the projects suffer and become cost centers.
  6. At the same time your favorite project suffers too. As you try to give it more attention but every time you are trying to work on it, other projects are looming on your head bothering you.

It can really become a vicious cycle.

Some people are naturally good at juggling multiple projects at a time. But those are very few. Most people (including myself) perform better with less on their plate.

Projects don’t fail…People Do…

I truly believe projects don’t fail. Every project has legs given the team working on it is highly focused and willing to roll with the punches and keep iterating on their progress.

It is the people who fail and fail those projects.

One of the big reason people fail is that they are too distracted with too many things.

I can truly say we worked on products where we knew they had potential to earn millions. We knew that because we had competitors selling similar products doing extremely well.

However those products failed because we spread ourselves too thin and they ended up getting no traction.

Same vicious cycle that we had to eventually shut them down with our tails between our legs.

If anything I find now that it is far more enjoyable to work on one project, see it till the end and then move onto another.

Going back….

As I was talking to Steve, he was talking about how they even shunned external investment offers purely to stay focused on the product and one product only.

His stance was that taking on external investment will bring in lots of distractions i.e unnecessary meetings, pressure to grow far quicker with multiple products etc.

They were really focused on improving the core functionality of their product and invested a lot into AI (Artificial Intelligence) instead of adding lots of features and causing feature creep.

Funny! He did admit that they tried to add many features but soon realised over 90% of the users were only using core features. So it made sense to keep improving them.

Staying focused on their one product and its core functionalities have enabled them to stay way ahead of their competition.

I know about some very big companies who tried to copy them and failed, yet this tiny team of 7 keep growing their business.

8. Enjoy what you do

I think there is too much focus on this ‘Hustle’ culture now a days.

The so called ‘Gurus’ on social media preaching what it takes to be successful. Working 15-17 hours for 7 days a week.

It can really be taken in wrong context by someone just starting new, making them feel guilty etc.

I think that is the wrong approach and not sure if that is even possible.  I know some really successful people and none of them work 15-17 hour days.

What I do see is a recurring theme…

Keep reading…

See I hate working. I think my passion in life is eating pizza and watching movies all day. I can easily spend 15-17 hours a day on that.

But…

Once I find a project that really catches my attention…Something I am really interested in.

That’s it…

I will be working on it 24/7… Forget 15 hours a day.

I will constantly think about it, work on it.

I am eating and thinking about it. I am out with family for dinner and I am looking like a retard because I can’t keep up with the conversation and keep drifting off to thinking about the project.

Heck… it gets so bad that most nights I am dreaming about the project. I am sure I am not the only one.

This is the recurring theme I have found with other successful people too. They are constantly thinking and working because they are passionate about what they do.

Find something you are passionate about. If you do not like what you do, move on and try something else.

Keep trying until you find something you can’t stop thinking about.

You would not need to work 15-17 hour days as the Gurus preach.

You would be on it 24/7.

I really feel bad for the people who never get to experience that kind of euphoria and get stuck in something they do not like.

So this was the theme I saw again with them. It looked like their entire team really loved the project.

They were researching and geeking out on things. The reason they love their project is why they are able to run completely remote and keep growing.

Conclusion

A lot has been said about Lean startups. A lot of us are fascinated by the approach and love to use the buzzword to make us look cool.

This was the first time I really experienced what ‘Lean’ actually means. Looking back at what I have written, I do not think they are doing anything that is different than what’s already written in the books.

However doing that in practice is much different to theory.

I will definitely take that approach and apply it to my next project.

I would love hear your thoughts on Lean startups and how lean is actually lean?

(Note: How about a Lean Startup Planning Worksheet to bring your whole idea on one place? Grab this worksheet here)

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6 Responses

  • Chris February 1, 2017 at 3:30 pm

    Great article Hammad, so many people talk about about lean but fail to follow through and fall in to the sales traps that you mentioned above.

    Reply
    • Hammad Akbar February 18, 2017 at 4:19 pm

      Thank you Chris…

      Do you run a software company?

      Reply
  • MC Simon February 17, 2017 at 2:54 pm

    “Eventually we all fell out of love with the projects and they became a massive burden.”

    Been there, done that. 🙂 Sincerely speaking, I still do it.

    “Why do we keep doing it? Are we stupid? I hope not.”

    I also hope not. With all my heart. 🙂 My ego likes to believe that I enjoy the adrenaline’s high level each time when I commit it… again.

    And now my lucky number… 7… it’s never disappointing me.

    Your 7th advice perfectly describes my type.

    “7. Focus on the few not many”

    Of course, I am the negative part of this advice.

    Let me conclude.

    To answer your question “How lean is lean”… my humble opinion is that lean is lean and it will remain so, until one succeeds to focus on few.

    By the way… good and comprehensive article.

    Now, on a non-lean speed, I’ll share it.

    Reply
    • Hammad Akbar February 18, 2017 at 4:18 pm

      Thank you so much MC Simon….

      What should I write about next? 🙂

      Reply
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