Hi there -
Here is this week’s “1 principle, 2 strategies, and 3 actionable tactics” for running lean…
1 Universal Principle
“A rough estimate is better than none.”
Speed is often cited as a startup’s unfair advantage. But I learned the hard way that moving fast in the wrong direction just gets you lost faster.
Years ago, I built a product called CloudFire that seemingly did everything by the book.
- I had sketched a Lean Canvas,
- conducted 40 problem interviews,
- sold a demo before building,
- launched an MVP, and
- acquired 500 paying customers.
Until one simple 5-minute calculation on the back of an envelope revealed a fatal flaw in my business model that couldn’t be fixed with more customers or better features.
The lesson? Spending 5 minutes could save you 5+ months!
2 Underlying Strategies at Play
I. Good estimates don’t validate but invalidate models.
Many people waste countless hours building fantastical forecast models, aiming to validate their business model.
But you can’t validate a business model on paper because
- there are too many unknowables at the outset of an idea,
- it’s easy to mask innocent lies through complexity, and
- no plan survives first contact with customers.
A better approach
- doesn’t seek perfection but estimation,
- doesn’t seek validation but invalidation, and
- uses simple inputs that can’t lie.
If your model can’t work in a best-case scenario, there’s no point pursuing it. This, unfortunately, is the majority of initial ideas. But in the process, you learn exactly where your model broke and what to do to fix it.
II. Pricing is often the most powerful lever in your business model.
Most people chase a large market, and sure, that’s important. But simply operating in a large market is not enough. The fatal flaw I see in many business models is not charging enough.
Pricing is one of the most underutilized growth levers, where your goal should be to charge as much as your market will bear. There is no competitive advantage in being cheap — unless you’re Amazon or Walmart.
3 Actionable Tactics
I. Run viability stress tests before building anything.
Before doing anything else, I now put every idea, project, and even major initiative through a rapid viability stress test.
The rapid viability test (linked below) takes just 5 minutes to run. I’ve used this test to nip dozens of “Zombie startups” in the bud and shortlist them to a much smaller minority of ideas worth pursuing.
II. Identify key inputs as key metrics.
The rapid viability stress test uses a handful of key inputs. These inputs are what belong in the Key Metrics box of the Lean Canvas. They are the key assumptions that you can start testing in days and weeks versus months and years to see if your business model is headed for triumph or tragedy.
III. Apply all seven stress tests to your business model.
This 5-minute viability calculation is just one of seven stress tests I now apply to every business idea.
These tests check for:
- Mission
- Clarity
- Desirability
- Viability
- Timing
- Feasibility
- Defensibility
If you’re a current BMD Challenge student or a past alumnus, be sure to review the latest tests added to the LEANFoundry platform.
If you’re neither but want to take the challenge with your current or next big idea, check it out here.
Running through all seven tests can take a few hours, but it will save you months of wasted effort. And avoid getting stuck in a “zombie startup” that’s neither dead nor alive - just… stuck.
That’s all for today. See you next week.
Ash
Author of Running Lean and creator of Lean Canvas
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P.S.
P.S. Here's the full story on the rapid viability test:
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P.P.S.
Whenever you're ready, there are 2 ways I can help you:
1 - Get my Just Start course: If you're new to this framework, you'll learn the key mindsets for building the next generation of products that matter.
2 - Take the Business Model Design Challenge: If you're an aspiring or early-stage founder looking to launch a new idea in 2025, join my next Business Model Design Challenge, where you'll learn how to design and stress-test your idea without wasting resources.
