New York Times Best Selling Author of “The Lean Entrepreneur”
Our guest is best-selling author Brant Cooper, he made it to the New York Times Best Seller List. He co-wrote the Lean Entrepreneur (AL https://amzn.to/3ILKgxj) and more recently Disruption Proof (AL https://amzn.to/41batfM). He does not call himself an entrepreneur, but he is one. He is also a speaker and active in the startup community of San Diego. You can learn more about him here: https://brantcooper.com/ or follow him on LinkedIn here: https://www.linkedin.com/in/brantcooper/
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If somebody invests in your company, invite them to an assumption workshop.
Brant Cooper, NY Times Bestselling Author
Together with him, we tackle questions like:
- How can I write down all subconscious assumptions?
- How can I set up an assumption workshop to really catch all my assumptions?
- How to be lean in a small or large company?
- Why do large companies measure the wrong KPIs?
- Why target customers have nothing to do with demographics.
Instead of entrepreneurs in residence, we should have philosophers in residence.
Brant Cooper, NY Times Bestselling Author
The Hosts:
- Michelle, a radio, and podcast host based in Silicon Valley. She is a lawyer by training and has worked in and with many startups, especially fintech, and blockchain. Currently, she is working for several non-profit organizations and startups. Michelle is the host of the Stanford Radio Show “Laptop Radio (Wednesdays 2–4 PM)”, which is also available as a podcast (https://linktr.ee/laptopradio). You can learn more about Michelle here: https://www.linkedin.com/in/laptopradio/
- Jörn is a podcaster, startup scout, and entrepreneur based in Frankfurt, Germany. He has more than 12 years of management consulting background, with a focus on financial services and capital markets, as well as working as a startup scout. He hosts an English startup podcast, covering the German startup scene (https://linktr.ee/startupradio) You can learn more about Jörn “Joe” here: https://www.linkedin.com/in/joernmenninger/
You can suggest questions here, use #startingy. Follow our hosts on Twitter:
Automated Transcript
[0:00] Music.
[0:13] Ask entrepreneurs actors investors Innovative and artists on The why.
Why they are doing what they are doing what motivates and drives them and why can’t they stop.
We will start in five four three two one hey guys this is Joe from studying why your podcasts on the mindset of a nurse today I have another Geist you cannot see him because this is an audio only podcast but he is smiling hey Brand how you doing I’m doing great job how are you I’m doing good as well, you are here today because first you are not run or secondly I remember you have a non-for-profit on entrepreneurship plus you are the author of a pretty interesting book on entrepreneurship see I don’t call myself an entrepreneur.
My nonprofit is just simply supporting the startup I don’t have a nonprofit organization but I just I guess giving back I support the.
Local startup scene here in San Diego by mentoring.
[1:18] And offering my services for free because startups shouldn’t be paying Consultants they should be.
Building their business yes and lien entrepreneur boy it’s been.
10 years next year Joe it’ll be ten years since I’ve booked first came out so lots of learning since then have a new book out from November of last year called disruption proof but yes the the lean entrepreneur ideas have evolved over that time so it’s pretty interesting to talk about.
[1:49] I think I had you as an interview guest in the very early days of stone operated also I do have some background information but.
Can you for everybody if she’s out there who’s not on a regular base reading the New York Times bestseller list because apparently you’ve been list that there.
Ten you.
Tell us a little bit what lean entrepreneurship is all about plus would it’s not all about like.
Thinking about paying Consultants.
Right okay so the Cornerstone of being a lean entrepreneur is the ability to admit when you don’t know.
And it really runs counter to a lot of.
Our society which is that you have to know everything or you have to be very good at pretending that you know.
Everything and if you go in front of investors you better know everything and that’s just.
[2:49] That’s not entrepreneurship it’s that’s that’s false and so the ability to admit when you don’t know.
[2:57] Is what great entrepreneurs have because that is what allows them to learn if you know everything then you don’t have any sort of.
Need to go learn whereas learning exploring is really the heart of, of successful entrepreneurship and so there are a number of practices that one can learn how to deploy.
[3:21] That sort of defined Define entrepreneurial Spirit Define the mindset Define this exploration mode so things like understanding your customers.
Deeply it’s not just about going and doing an interview or asking them what they want or what features they require but understanding their needs and their aspirations and the environment that they’re Within.
And it’s running experiments but really the reason why you’re running experiments is to validate or invalidate your assumptions so you have to expose.
What are my assumptions inside of a particular business and how can I test whether those assumptions are true it’s.
The ability to use data evidence to cut through biases that we have we all have biases it’s.
Matter of fact it’s impossible not to have biases so how can you actually build into the work the ability to cut through those biases and then again to work in an agile fashion so fast iterative learning.
You know I dial very much encompasses that and so that’s that’s really at what they lean entrepreneurs about is how to do those things.
The first and very important question I remember.
[4:33] One of the toughest question for me as a consultant as well with how do I figure out all my.
Cautious and subconscious assumptions going into something how can I really.
Make a complete list of all the something’s going in there I know that’s a really tough one right.
Well it’s a you know that sort of thing can be facilitated it’s a.
I think the key to it like you’re take a stack of sticky notes and you put one assumption per sticky note.
[5:08] And you’re trying to answer the question what has to be true from my business for my business to be successful or perhaps you want to start.
[5:18] More on the product side and so what has to be true for my product to succeed in the market and the trick is to not edit while you’re writing it’s a brainstorming exercise its stream of Consciousness and your writing or your team is writing one sticky note includes one assumption and don’t edit don’t discuss with the group just write down as many as you can and what you’ll find is that you’ve got a lot of sort of trivial assumptions that don’t matter that much and then a lot of other assumptions that are are huge and if your if you’ve been in business for a while and you’ve perhaps tried to raise money the unfortunate part of raising money is that.
[6:03] Is that you get used to writing assumptions as if you know they’re going to be true because again the investors don’t want to invest in you if you’re if you’re shaky on what you know and what you don’t know but when and so investment aside when your with yourself and with your team you have to be honest you have to be self-aware you have to be tough on yourself do I really know, if this point is true or not and so I think that that really.
That’s really what gets you what gets you going is is just telling yourself the truth and really what we want to do is look at it from a market perspective so it’s something that’s outside of your head.
[6:41] You know it’s an assumption that you’re going to be able to get a bunch of people to download your app it’s an assumption that you’re going to be able to get people to log into their it’s your app it’s an assumption that you’re going to be able to get them to log in every day and engage with particular features these are all assumptions they’re all testable and so those are the type of things that you want to start documenting and it exists not only on the product side but in the marketing side and in the Revenue model side in the scaling side it exists everywhere so what you wanting to do is build it into your business this.
Ability to explore and the ability to question each other respectfully in order to expose the biggest uncertainties of your business when you’ve been talking I thought okay and who should be on the invite list for such an assumption Workshop because which ran through my mind is when you have like a steady team of.
[7:33] Now let’s say 3 to 5000 ders.
[7:37] I really do believe that you have to have the same number of people who don’t have any clue about what you’re doing and that’ll basically expose, when do you.
Half assumptions and at least that’s my personal experience I think that’s a great idea a matter of fact another investment hack is that if somebody invest in your company invite them to the meeting get them into the process of admitting that they actually don’t know and so part of the especially in corporate Innovation we have to spend a lot of time.
Developing new skills in leaders because they even more than Founders are used to expressing opinions as fact and so we actually have to teach them how to.
Exposed their own biases in their own assumptions and so I actually think what you said is a great idea have somebody there that is absolutely no clue and maybe somebody who’s naturally skeptical and again we’re not really trying to break the business we’re not trying to break it down we’re not trying to be negative it’s what we’re trying to do is expose what’s the riskiest part of what you’re trying to accomplish and so rather than.
[8:47] Being reactive and having to respond to those things when they happen in the real world we’re trying to predict them and we’re trying to test them so that we can actually prepare the business to succeed and another personal recommendation which was really astonishing for me is, when you invite somebody who has no relation to your business at all but studied philosophy they are very good in teasing out assumptions you cannot see this but he’s really smiling I love that idea like we should just instead of having entrepreneurs in Residence we should have philosophers in residents.
[9:23] There’s a new business model for you Joe yes I assumed I would get one or two students of philosophy to be there let let me take some notes Here I want it when you’ve been talking about the lean entrepreneur I was always having in mind that it should be something like.
Required reading for everybody who is bootstrapping their business.
[9:54] Don’t get me wrong like now looking at I think the guardian called it the tech wreck the big layoffs in bigger and bigger tech companies apparently, they have not been lean but if you really working, on a shoestring budget if you work money comes in money goes out on that basis you really have to look at your expenses and that is something personal experience as bootstrapping entrepreneur that really works well with lean entrepreneurship, right you know because big companies are firing people doesn’t mean that they’re not lean it means that they’re buying into a recession that has been created.
Purposely by the fed and so there’s an opportunity to become leaner but my experience is that most often these organizations.
Cut into fat or cut into muscle as well as fat and it’s because they don’t really know how to do it but that’s a different subject for a different time but it does sort of lean into the definition of lean lean is great for bootstrappers people without a lot of resources can’t waste resources or they won’t succeed but the word lean really comes from lean manufacturing which is how a number of writers describe.
How Toyota was building automobiles in the 50s and so it’s you know you’re manufacturing automobiles you’re actually building plants.
[11:23] You’re not you’re not bootstrapping you’re not you’re not trying to not spend money what you have to do is not waste money and so the word lean really is about wasting and so obviously yes for bootstrappers you better not waste the money that you have you betterment not waste the time and the resources that are going into building your business or else you won’t survive.
[11:45] But for well-funded startups you ought to be lean as well think about a, think about a small dachshund which is a skinny little dog or think about a Great Dane which is actually a skinny lean very big dog so it doesn’t have to do with the size of the animal it has to do with sort of the fat versus the muscle and so you want to be a very muscular.
Start up and then you want to grow up to be a very muscular big company and so I think that it’s important to think about lean as how do I reduce the waste in my company how do I reduce the waste in overcoming.
[12:25] Uncertainty how do I how do I do reduce the waste in executing on the business plan that I know is true the part of the business plan that is been proven so yeah that’s where their word lean comes from.
And now the very important Point how to recognize waste spending yeah it’s it’s wait the I think a lot yeah well it’s just really hard I think it’s hard and and I think about I think about like a positive relationship between startups and investors the investors.
Are ones that naturally will keep a company from wasting good investors I should say the investors that actually want, companies to scale prematurely or all about waste they don’t care about any of the value that’s being created they just want to flip their shares and make a lot of money so putting them aside.
Investors naturally will try to keep a company lean because they need those dollars to go as far as possible and so that includes all of these other resources that are your employing but it’s sort of like interesting inside of a large Enterprise the large Enterprise has so much waste it’s absolutely amazing and the difference is that there’s nobody inside the company that understands metrics in the same way that startup investors do and so that the inside of a large corporate like here’s a good example Joe if you’re a startup and you’ve built the product.
[13:52] And the product does poorly in the marketplace and the investor goes to a.
[13:58] Board meeting and in there they’ve got the whole c-suite there because they’ve performed poorly and the investor goes to the VP of engineering and says you know well.
The product is performing poorly and if the VP of engineering says I was on time and under budget so it’s not my fault.
You’re going to kick that VP of engineering outright but if you’re inside of a large Enterprise.
[14:24] And you go to that same VP of engineering and he says I was on time and under budget.
They would go oh yeah must be something else and the reasoning is because inside of the startup you’re measuring the actual impact of the work that you’re doing not just the outcome.
[14:40] Impact not just the result where is in a large company they’re all Silo they all have their fiefdoms no no I just did my job that must be somebody else’s fault because they measure the wrong thing and so to me this is one of the fundamental differences between good startups with good investors and you know sort of the wasteful corporate is the metrics that they’re tracking and the metrics that the whole c-suite the whole team is held accountable in the startup world I really really have to smile here for the very simple reason there was a story I had in mind when I ask you this question.
You started with kpis and I once had a memorable exchange with the head of reporting the big company and he says he just stops sending out reports like the oldest report first and so on and so forth and if it’s not requested by somebody like four times the report was you.
They completely stopped, and that’s such a great idea yeah it is it’s impact right yes it’s like it reminds me of you know back in the early days of lean entrepreneur and what not you know we would say.
Remove a feature if nobody complains keep the feature removed I remember an entrepreneur that wants to shut down his business.
[16:00] Because he told me he came in on Monday and found out that his servers were down all weekend.
[16:07] And no one complained tough lesson yeah tough lesson yeah icse they did the good thing is I started with my own with my own podcast I started external podcast hosting because three years in a row around Christmas what my website just went down way too much traffic and people start to complain on social media and I found the complaint so.
[16:35] Good for you so that was like yep I better fix that right so you were that was actually a little bit that was sort of a mini experiment that you ran without knowing maybe so so basically what we have so far check your assumption get a meeting, invite a lot of philosophy students at best graduate students in philosophy work with a lot of Post-its get it get it get like a few truckloads for all of them don’t waste money and if you want to check out if something is waist or not stop doing it if somebody complained it’s not wasted that’s one way of doing it I you I wouldn’t recommend that for all people in all situations but that’s one way of doing it and it’s not just it’s not just wasting money it’s wasting time it’s wasting inspiration it’s wasting energy its you know there’s a lot of waste that goes into building companies if you allow it so you want to look Beyond just the dollars, I just had in mind when you talked about that if somebody listening to this from Citigroup half the product here hmm let’s get rid of the 8 of all the ATM’s for weekend if somebody complaints well yeah that wouldn’t it be an interesting experiment on a small scale though it’s like which ATMs should I close down well let’s close down the ones that actually aren’t being used.
[17:59] Yeah that I do believe that’s Troublesome idea because you have people that are not complaining they’re just using Bank of America ATMs that’s true so when you lose customers so is is their methodology to really.
Stop doing something and be really certain that.
Nobody complained by either writing you an email or just purchasing the service to Software of a competitor I do believe that three tough isn’t it yeah I think that it getting all of this stuff kind of depends on what scale you’re at but and the digital world allows you to measure things pretty minutely.
And in so it you know maybe it’s not maybe it’s not eliminating it for all people maybe it’s eliminating it for a cohort of people based upon a particular Persona or something like that so there’s a lot of ways to skin the cat I you know I’m not I guess I the problem is that we do the opposite and so I think that that it’s sort of an extreme Story We Tell in order to get people to think differently but the opposite is actually what’s true the and the opposite being.
That we employ our engineering teams to spit out feature after feature after feature after feature regardless of whether we know those features are truly needed by customers or truly wanted or desired.
[19:24] And so I think that that’s the practice that we’re really trying to diminish is that you need to couple.
The value that you’re creating two human beings that need that value and want that value and will pay for that value instead of just turning out more stuff.
Mmm yeah this this this churning out more stuff is something I do believe a lot of companies fall into this trap and then at one point to get the pride idea we label us it as a premium service and charge more for it right.
I mean the the part that we haven’t really talked about here is understanding customers deeply and again I think the digital age makes it easy to never talk to customers and we think that we can figure everything out with split testing with adding stuff and we’ll just beat me that a premium service I think that the successful companies are ones that.
Understand different market segments understand different personas these different people that have shared need.
Regarded you know forget about the demographics for a moment it’s really the shared need and looking and behaviorally the.
[20:32] Are open to or want to address needs in particular ways and so.
[20:37] If one is able to Define personas for your for their startup business and think about these different cohorts of people.
Then they can start attaching.
Features in different ways that they’re you’re creating value to those different cohorts and it makes the data and and the.
And the testing way more interesting and I think way more lucrative but the way you come up with those.
Cohorts to begin with is to go out and talk to customers to go and understand customers to go understand what their needs actually are understand why they’re different from another cohort why they’re behaving in different ways and again I think that you know back in the Lean Startup days Eric Ries and Steve blank and all that I think that we we had a movement then people that were actually spending time with customers.
[21:29] And I think that I don’t know I’m wondering if we’ve sort of lost that again and so I think people go out and talk to customers but I think that the conversations are shallow and I think they’re it’s like feature mongering it’s just like well what do you want you know what do you need it’s not just asking those questions it’s observation it’s it’s engaging in with human beings differently in order to understand what they truly will respond to what their true beliefs are what their true emotions with their true aspirations are and so I think that there’s a lot of great ux designers out there I don’t think that there’s enough of them.
[22:06] Especially if you’re headed into Mobile I it’s an extraordinary World mobile is.
[22:10] Insane the amount of development that has to be work worked on based around user experience the engineering is actually pretty easy and so I think that we need to we need to really get back to I really think that competitive differentiation comes from customer insights not from technology first I found your ID pretty good to come up with different cohorts because I tend to get a little since I’m a start-up Scout I tend to get a lot of pitch decks from startups like.
People don’t even know me and I sent this sent a complete pitch that to me like.
That happens to me like five times a week yeah did you drive me crazy yeah.
No but a tiny bit on the other hand I have to admit it that I always get really really crazy.
When it when I see the Target the Target Customer because it’s like always male female between 25 and 45 color dedicated right.
[23:11] Above average income that’s that that’s basically given so can you give us a few.
Like good example of how you could really generate such a code because when I was still in Consulting everybody was just.
Classifying people by income and I talked and I told them guys why don’t you classify them by where they’re worth of coming from an entrepreneur would be different services then a c-level executive talking about like liability insurance and so on and so forth.
Would be something really different than somebody who inherited the money or.
Whatever so that that would be something I do believe that’s kind of the same idea we both hatch maybe you a little bit earlier than I had.
And yours much more successful than mine oh well I don’t know about all that but I agree I think your examples are great I think that what people don’t understand is that the demographics comes from marketing research when you are trying to reach a random audience of millions of people in you’re already successful so think about like big brands that are running.
[24:26] Advertisements on TV so they break things down by demographics and they’re going to run a bunch of different bunch of different types of ads like different theme themes like Geico is always got like four or five different ads running because they’re trying to appeal to different demographics because they’ve already proven that they can sell to this random audience they can they can already sell to all of the demographics combined so then you look at the demographics and break it down in order to run advertisements against that in order to maximize the value that you’re getting out of each of those demographics.
When you’re starting something new you have none of that evidence you don’t have any idea to be honest about who actually wants your product and it’s not based upon demographics so I like to think about it in terms of community like what communities do you belong to and then look around inside your community or all the demographics the same.
Likely no I think going all the way back to the book lean entrepreneur we use the.
The company beta Brands who had built a pair of pants for people who biked to work so that’s a shared need there’s actually.
Our communities that exist around people that bike to work and so regardless of what you think of the idea the fact is that it had nothing to do with demographics it had to do with the shared need of biking to work.
[25:54] And so.
If you wanted to you could break down the group of people that bike to work into demographics and that might benefit you in terms of marketing and how you’re going to reach out to them but it’s not what you’re solving your solving the need and so I think that the key is that you is to come up with.
These different groups that have a need and think about it in terms of community if you if you go to people that are, audio-visual enthusiasts think about the different.
People that are audio-visual Enthusiast high five people you can go to AV forum and they you know got just thousands of posts per day.
[26:39] It doesn’t have to do with demographics it’s all over the map its young people with no money to old people with no money to old people with lots of money so it’s all over the map and you.
[26:51] You can start putting together the different cohorts of people and then that describes what your, Market size is what your potential size is it’s not you know Googling the number of.
[27:02] IPhone users it’s just that’s just worthless and so I think that if people think about it in terms of what communities they themselves belong to and that you can start to get an idea around what a cohort what a market segment would look like.
[27:16] I actually do believe I’ve done something I do believe we do think alike a lot something like this because I’m also looking to really build celebrated Arrow it wouldn’t they in a scalable startup I DM and basically would I did instead of just having somebody to sign up with an email I actually asked people to do survey if I can help them or not they need just give me five or six answers and if they want to then can leave the them email if they don’t want.
I have two little hint here I can help everybody right you can probably help everybody but if you actually included in that survey the different angles that they’re coming to it and in terms of help that actually gives you all sorts of Clues into what the market looks like so that the I like that idea.
And I think it’s also it runs counter to many entrepreneurs because most entrepreneurs want to count the vanity metric of how many people that signed up whereas you’re actually saying no no no if I can’t help you.
[28:24] Don’t sign up so he’s to call these things like high hurdle experiments like.
I only want the people that really want me I don’t want the people that just kind of want me.
And so if you if you kind of want me I’m going to put up a wall.
[28:40] And if you don’t get over the wall I’m not going to help you but the people that actually get over the wall now I know I’ve got my market segments now I know I’ve got my community.
[28:49] Right so it’s not just counting oh I want as many people to get over the wall as possible so I’m going to make the wall really small no I’m going to make the wall big because I want to actually I want to focus in on only those that are willing to go over the wall we’re running pretty close to your deadlines out just one more question about that like this hurdle the people who are going over the hurdle do you also think the pricing of Apple is something like this only the people who really want it by the premium price and pride premium product hey there’s no doubt about it.
No there’s no doubt about it I mean so like it’s so funny to me that people like would look at Steve Jobs and go like oh well he never talked to customers.
That guy understood his Market segment better than anybody in the world and not only did he sell products to them he hired them, his whole company is based upon was based upon these people that they want the elegant product that just works he used to say that all the time right just people want stuff that just works.
[29:54] In the Apple products just worked and you paid a premium for it you could always go to get the Microsoft on on Hewlett-Packard computers and have to hassle with it and those people were actually more it related people because they had to work on their own computers you could always go do that and it’s less expensive.
An apple saying no if you want the elegant designed elegant functionality that just works consistently You by Apple and you’re going to pay a premium for it yeah when you want to be able to find the features that you really need yep.
[30:26] Yep.
Bread that would be so much more I would love to talk to you about including your new book maybe we should schedule a recording for the new year for our audience this recording was done on 12th of December 20 22 and maybe we can just continue this interesting interview like with real life examples next year so far I would like to thank you very very much but we are here word over your deadline thank you very very much for being a guest merry Christmas happy New Year and hopefully hopefully have you back pretty soon and we can talk about your new book and how to really get your target audience you Coho together yeah Joe always fun to talk to you Merry Christmas Happy New Year to you too and I would I would love to come back and continue the conversation wait awesome have a great day bye bye bye.
