The Lean Canvas

The Lean Canvas is a one-page visual business plan that’s ongoing and actionable. It was created by Ash Maurya, and inspired by Alex Osterwalder’s Business Model Canvas.² As you can see in Figure 1-1, it consists of nine boxes organized on a single sheet of paper, designed to walk you through the most important aspects of any business.

Figure 1-1. You can describe your entire business in nine small boxes

The Lean Canvas is fantastic at identifying the areas of biggest risk and enforcing intellectual honesty. When you’re trying to decide if you’ve got a real business opportunity, Ash says you should consider the following:

1. Problem:

   Have you identified real problems people know they have?

2. Customer segments:

   Do you know your target markets? Do you know how to target messages to them as distinct groups?

3. Unique value proposition:

   Have you found a clear, distinctive, memorable way to explain why you’re better or different?

4. Solution:

   Can you solve the problems in the right way?

5. Channels:

   How will you get your product or service to your customers, and their money back to you?

6. Revenue streams:

   Where will the money come from? Will it be onetime or recurring? The result of a direct transaction (e.g., buying a meal) or something indirect (magazine subscriptions)?

7. Cost structure:

   What are the direct, variable, and indirect costs you’ll have to pay for when you run the business?

8. Metrics:

   Do you know what numbers to track to understand if you’re making progress?

9. Unfair advantage:

   What is the “force multiplier” that will make your efforts have greater impact than your competitors?

We encourage every startup to use Lean Canvas. It’s an enlightening experience, and well worth the effort.

What Should You Work On?

The Lean Canvas provides a formal framework to help you choose and steer your business. But there’s another, more human, side to all of this.

Do you want to do it?

This doesn’t get asked enough. Investors say they look for passionate founders who really care about solving a problem. But it’s seldom called out as something to which you should devote much thought. If you’re going to survive as a founder, you have to find the intersection of demand (for your product), ability (for you to make it), and desire (for you to care about it).

That trifecta is often overlooked, withering under the harsh light of data and a flood of customer feedback. But it shouldn’t. Don’t start a business you’re going to hate. Life is too short, and your weariness will show.

Bud Caddell has an amazingly simple diagram of how people should choose what to work on, shown in Figure 1-2.

Figure 1-2. Bud Caddell’s diagram belongs on every career counselor’s wall

Bud’s diagram shows three overlapping rings: what you like to do, what you’re good at, and what you can be paid to do. For each intersection between rings, he suggests a course of action:

• If you want to do something and are good at it, but can’t be paid to do it, learn to monetize.

• If you’re good at something and can be paid to do it, but don’t like doing it, learn to say no.

• If you like to do something and can be paid to do it, but aren’t very good at it, learn to do it well.

This isn’t just great advice for career counselors; when launching a new venture, you need to properly assess these three dimensions as well.

First, ask yourself: can I do this thing I’m hoping to do, well? This is about your ability to satisfy your market’s need better than your competitors, and it’s a combination of design skill, coding, branding, and myriad other factors. If you identify a real need, you won’t be the only one satisfying it, and you’ll need all the talent you can muster in order to succeed. Do you have a network of friends and contacts who can give you an unfair advantage that improves your odds? Do you have the talent to do the things that matter really well? Never start a company on a level playing field—that’s where everyone else is standing.

These same rules apply to people working in larger organizations. Don’t launch a new product or enter a new market unless your existing product and market affords you an unfair advantage. Young competitors with fewer legacies will be fighting you for market share, and your size should be an advantage, not a handicap.

Second, figure out whether you like doing this thing. Startups will consume your life, and they’ll be a constant source of aggravation. Your business will compete with your friends, your partner, your children, and your hobbies. You need to believe in what you’re doing so that you’ll keep at it and ride through the good times and the bad. Would you work on it even if you weren’t being paid? Is it a problem worth solving, that you’ll brag about to others? Is it something that will take your career in the direction you want, and give you the right reputation within your existing organization? If not, maybe you should keep looking.

Finally, be sure you can make money doing it.³ This is about the market’s need. You have to be able to extract enough money from customers for the value you’ll deliver, and do so without spending a lot to acquire those customers—and the process of acquiring them and extracting their money has to scale independent of you as a founder.

For an intrapreneur, this question needs to be answered simply to get approval for the project, but remember that you’re fighting the opportunity cost—whatever the organization could be doing instead, or the profitability of the existing business. If what you’re doing isn’t likely to have a material impact on the bottom line, maybe you should look elsewhere.

This is by far the most important of the three; the other two are easy, because they’re up to you. But now you have to figure out if anyone will pay you for what you can and want to build.

In the early stages of a startup, you’ll be dealing with a lot of data. You’re awash in the tides of opinion, and buffeted by whatever feedback you’ve heard most recently.

Never forget that you’re trying to answer three fundamental questions:

• Have I identified a problem worth solving?

• Is the solution I’m proposing the right one?

• Do I actually want to solve it?

Or, more succinctly: should I go build this thing?