The art of starting a startup — Gagan Biyani’s advice for generating, validating, and executing on ideas
Episode 56

The art of starting a startup — Gagan Biyani’s advice for generating, validating, and executing on ideas

Today’s episode is with Gagan Biyani, co-founder and CEO of Maven, a company that empowers the world’s experts to offer cohort-based courses directly to their audience.

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Today’s episode is with Gagan Biyani, co-founder and CEO of Maven, a company that empowers the world’s experts to offer cohort-based courses directly to their audience.

After being early at 3 startups that achieved over $1 million in run-rate in their first six months of going live, Gagan has learned some valuable lessons and seen a wide range of outcomes — from Udemy going on to IPO in 2021, to Sprig shutting down in 2017.

In our conversation, we dive deeper into the process of starting a startup. We start on generating ideas and open-ended exploration. We talk about key signals to look for in the market and the competition, as well as the mistakes he sees many aspiring founders make.

Next, he recaps his concept of minimum viable tests for validating early versions of your idea. As we mention in the episode, Gagan wrote a popular article on The First Round Review last year, where he shared much more detail about his “Minimum Viable Testing Process.”

Then, we dig into how you start bringing the idea to life, from exploring different potential business models, to selecting your co-founders and managing that relationship as the company grows.

If you’re eager to hear even more on finding startup ideas from Gagan, he’s teaming up with The Hustle’s Sam Parr to run an Ideation Bootcamp on the Maven platform — learn more and sign up here by May 2nd if you’re interested.

You can follow Gagan on Twitter at @gaganbiyani. You can email us questions directly at [email protected] or follow us on Twitter @firstround and @brettberson.

Brett Berson: Well, thank you so much for joining us. I'm excited for the convo.

Gagan Biyani : Me too, Brett. Thanks for having me. 

Brett Berson: So we're going to spend our time together kind of talking all about the kind of negative one to one phases of company building. And one of the reasons that I'm so excited about exploring this with you is that I just think that there's not a lot written or shared, and it's a little bit like black box voodoo magic that happens when you look at how a company gets off the ground.

And you've shared some different insights in the past, on the review, and we kind of want to build and expand on what you've already shared. But I thought the place that we could start is really about. How do you find startup ideas and what you've learned across the different companies that you've worked on and the tons of founders that you've collaborated with over the years.

Gagan Biyani : it's funny because I think that the best answer to this question is just that it has to be completely unstructured. And you actually can't come up with some sort of magic formula. You do these three things over the next six weeks. at the end of it, you will have an amazing, you know, startup idea. The answer is it doesn't work that way, but I do think there are a couple of things you can do to dramatically increase your chances of finding startup ideas.

I'll put them in three major buckets. The first bucket is you can immerse yourself in an industry. So if you're someone who's really interested in education, a lot of people would have the default assumption that they should go and talk to all the best ad tech entrepreneurs out there, or go spend time with the investors. And I think that's totally wrong. I think instead you try to either be an educator or be a student you should either go to school or try to learn online or try to learn a new skill. And so that's my first thing is just immerse yourself in the industry as a customer or a consumer industry. Or if you're an, a B2B type of person, then immerse yourself as a practitioner in that industry. The second piece of advice is to generally just study startups. People under estimate how many ideas are just some version of another startup idea that's already existed. there's all these amazing resource out there.

And I actually think spending a fair amount of time just consuming this content is useful. And then the third thing I think is really is free time. I just, I just really believe in you're in the phase of exploration, not working 80 hours a week, you will get there once you start building a company and you're at the stage I met Maven, you will end up working 80 hours a week, and the thing about that is what you learn when you get back into that grind is your creativity goes down right now. If you asked me to come up with startup ideas, it would take me a long time to get out of the work mindset and into the creative mindset that, that builds on new ideas.

And so you to be successful as a creative and as someone who's creating new ideas for your startup, you absolutely need to, you know, be free, have your mind go on long walks, go travel, go on a sabbatical, et cetera. 

Brett Berson: So kind of digging into a couple of them. Can you share some stories about what immersing yourself in an industry looks like maybe tell the story about how you did this. Maybe in this company, a previous company to kind of bring it to life.

Gagan Biyani : Yeah, I mean, Maven is a pretty good example I didn't know, I wanted to start an education company. When I came upon the idea for Maven, I was just thinking, I want to start something. I want to do something useful. And as part of that, explored my natural passions. And one of those is I love writing. I was starting to understand the creator economy a little bit, and I thought, Hmm, I should write a book or maybe I should start writing blog posts or Twitter articles. And what I ended up doing in order to sort of figure this out was enroll in a bunch of online courses. And I found all sorts of online courses. I took stuff from masterclass. I took, in-person courses, pre pandemic. some courses on, on marketing. through that time period, by acting like a student and sort of learning and just trying to learn new skills in 2019, I started to pick up on a whole new modality on the internet, which is how live learning and cohort-based courses are coming about. And then from there I dove deeper. I decided to teach a course. So I actually made like over a hundred grand, I think maybe like two, 300 grand worth of course sales before I ever started Maven. and that was through teaching courses because I realized that if I liked these cohort based courses, I better understand what it's like to be a teacher. And I also interned or. Consulted for other companies. Like I worked with on-deck for a little while I helped another person start their education venture. And so I was just sort of immersing myself as an operator and as a user in that industry. And we did something similar with Sprig when I was thinking about the food industry and on demand, I just spent my days, literally at restaurants walking around, I just became an expert at walking down street in San Francisco and just hopping into a restaurant and looking at their menu and examining it and understanding why they do certain prices and why they don't ordering food that I wouldn't need.

So I'd ordered tons and tons of food delivery and take away and everything And just try bites of it, just to see what it's like. but that's the type of stuff. I mean, by immersion

Brett Berson: And when you're doing that, How do you sort of translate the experience of being an instructor or a student or trying masterclass? How do you narrow in, or what do you on the lookout as you're doing all these different things?

Gagan Biyani : A couple of things?

One is I'm on the lookout for new behavior that is emerging in the industry people are hacking things together on. So in the case of cohort-based courses, behavior that people were, participating in was they were hacking together, zoom, slack, and, you know, teachable or something like that.

And trying to build a course that was live and, and synchronous over the course of a couple of weeks. And so was an example of something. I learned. Another example in the food industry was people. Um, trying to hack Postmates and door dash to order, you know, regularly in order more cheaply, food that they, that they would eat every day.

And so, it's like, you're looking for situations where are already doing a behavior, that if you built it in a seamless way, you could then make that behavior main stream and you have to have the creativity and the vision to see that behavior and say, behavior is one that could be mainstream, and this is a behavior that can't be mainstream. that is an art that I don't know, I've have a very clear framework on, but certainly something that I'm looking for. Another thing I'm looking for is just like trying to understand the industry better. I think very often people don't realize that if you enter in an existing industry, which most companies do at this point, um, It already has existing dynamics and those dynamics are important to understand.

So I'm thinking about how's the restaurant make money? Like does a restaurant become a chain? What is it that makes a chain really successful? Why do chains always tastes kind of bland? You know, these are all details that I'm curious about. And this curiosity paints a picture that eventually when lightning strikes allows me to have a better, clearer understanding of whether or not my vision is plausible or not, 

Brett Berson: When you start this sort of process of immersion, do you start it without any clue as to what could be an interesting. Startup idea or insight that you could build around and you're just kind of exploring, or there's some prepared mind or, or thesis that you're going into the exploration with.

Gagan Biyani : Ooh, I like that. I generally have no thesis at all. In fact, I J I believe that having a thesis is the enemy of success in this straps. So often meet people. I remember teaching at on-deck and I remember meeting people and they'd be like, I'm looking at the mental health space. And I always remember thinking like, are you kidding me? Like, how could you possibly think about markets? So narrowly that you've picked this like very narrow set of markets and you're like, I'm going to come up with.

a company in that. reason why that doesn't work is because in every given five-year span, there's usually only one or two interesting companies in the space built.

And oftentimes there are decades that go by where nothing interesting is built in a specific space. So the more narrow your thesis is going in, the more likely you are to end up. Pigeonhole yourself into a market that isn't ready for change or disruption. in 2022, I think that there is some merit to the fact that every industry is going to be disrupted eventually, and you should put some effort into it. I still tend to think that there's industries that are more likely and less likely, and that can only come through observation. And so, I come in without a thesis. In fact, at the time that I was coming up with Maven, I didn't even have a thesis on whether or not I wanted to be an entrepreneur. And I actually think that is also something that affects your ability to be successful.

I think a lot of people feel like they have to be an entrepreneur first and again, that pigeonholes them to one strategy. Now you have to start a company. You can't possibly join a company that's blowing up and just decide to work with them. you can't join a venture firm and invest in a whole space or, or, or you can't decide to become a creator, uh, or something.

And so I started like very broadly just saying, Hey. I'm back on the market. I want to do something with my life. I don't know what it's going to be. I looked at all sorts of things. I looked at politics, I looked at conservation, I looked at writing and creators. and then eventually I settled on starting another education company, but that took a long time. 

Brett Berson: when you zoom all the way out, as you were just sort of mentioning, how do you time box the exploration? do you say, okay, I'm going to go immerse myself in politics for the next four months and look at it from every angle.

And if I turn all these stones over and there's nothing interesting there, I'm going to go onto the next or like, is it parallel processed? What have you learned about that?

Gagan Biyani : So my situation was a true situation of luxury because I had the ability to take time off and do whatever I wanted. So I'll give you that answer and then I'll apply it to more standard startup process. Um, cause you know, I'd already built you to me and had built Sprague. And so I had a little bit of, um, of runway from that.

Um, so I actually gave myself full exploration. No, no timeline. Actually the only timeline I had was a minimum timeline. I had to give myself at least 12 months to figure out what I wanted to do next. if it was more than that, it was okay. So, uh, that means that if I come up with an idea in three months, I have to give it another nine months of exploring other ideas before I decide for. And was actually really productive for me, uh, because it meant that I not going to rush into something, which is what I think most people make the mistake of it really in any career decision, I feel that's one of the biggest mistakes people make is that?

they rush themselves into things. So then the obvious question is like, okay, Well, what if I don't have 12 months of runway And I don't have the patience or time to do that? Well, then I take a completely different approach. That is the same in principle, but in practice it looks a little different, which is I would always be looking for startup ideas, but I wouldn't start a company until the perfect moment arises. so, I'd be spending my time working in industry as an operator let myself have some curiosity on the side. always going to have maybe a week of vacation, or maybe just like podcast to and from work. your time of expiration happens after hours. and you try things until the moment at which something really clicks, but you're still sort of paying the bills and keeping yourself active in the meantime. 

Brett Berson: And so, as you were mentioning in the minimum threshold of 12 months where you literally bouncing across all these industries and all these vantage points in sort of a very organic way, or was there some, I'm going to go deep in this area for a number of weeks and I'm going to go deep in that area.

Gagan Biyani : Yeah. Um, I gave myself 12 months after I had already tried some of these things. So both politics and conservation were actually before the 12 months, which is interesting. it's probably like a total of 18 to 24 months of time during which half of it was like vacation. So I wasn't spending much time working just to my personal history clear, uh, when I'm in that one-year period, was bouncing between things usually doing something like two to three things at the same time, rarely more than two to three things at the same time. And these things that I'm doing are not actually directly correlated to a business idea. Oftentimes they are just micro businesses. So, you know, I told you about teaching an online course or trying to write a book. are little projects that allow me to immerse myself that eventually lead lead to bigger projects. And so if you're going to take something away from this as a listener, what you should take away is like, just do interesting projects that move the ball forward in your life, but don't necessarily move the ball forward towards starting a company. So I remember before I started Sprague, I started the growth hackers conference. I didn't have any money. I was my way of paying the bills and also keeping myself relevant, but being able to work closer to 10 to 15 or 20 hours a week instead of 80 hours a week. And that way I still had free time to do other things.

And so I say pick up two to three projects, maybe consult a little bit, for 15 to 20 hours a week and then spend the other 20 to 30 hours a week on one or two other projects at a time. then whenever a project feels like it's met it's and just flip to a new one, I don't have really clear, hard lines here beyond that.

Brett Berson: when you're kind of immersing yourself in this way. Are you organizing what you're bumping up against in some sort of way in a notebook or is it just, you're waiting for something to stick in your brain and you use that as a signal that you want to go deeper in that area.

Gagan Biyani : Mostly the ladder. So I'd consider myself a creative entrepreneur and not a systematic entrepreneur. I am sure that there are people who are more systematic. In fact, I teach a course with this guy named Sam Parr. Um, and he has a really systematic way for starting for teaching people how to run, you know, and come up with ideas.

And I'm like the total artists in the room I have no system. And I just sort of like, like half guidelines. So my answer is, um, you know, I keep a notebook. I do have an Evernote open with a ton of startup ideas. And every once in a while, if I come up with an idea, I'll put it in there. for the most part, I'm coming up with ideas for specific projects, and I'm just deciding, should I do this project or not?

And then if I do the project, that'll usually like result in some lesson That I don't really record, but it just sort of like informs the process. by the end of it, I, I happened to find something that's just really exciting to me. So in the case of Maven, you know, I was doing all sorts of things in cohort based courses and coming up with all sorts of ideas. And it wasn't until like month 11, actually of my whole thing. I remember thinking to myself, oh my God, I gave myself 12 months and it might take me 18 to 24 months and I'm tired. I want to go start a company now or do something interesting. And then it was like month 11 And I, uh, it hit me, you know, so I do think that it's kind of one of those things where lightning strikes you should go for it, 

Brett Berson: And when you're immersing yourself, do you think it's important to intentionally try to see the space or opportunity from every angle or that's not required? Meaning let's say we're. I know going to go spend some time in gardening, um, that you need to hire gardeners. You need to be a gardener. You need to be. It's figure out what are the companies that, you know, these larger gardening companies go look at the what's the history of gardening over the past hundred years, where's value created and captured. is kind of going deep in every angle, a part of this, or, or that's unnecessary.

Gagan Biyani : I think eventually you do have to go pretty deep in multiple parts of it. there are industries in which that's impossible. I mean, I can't imagine trying to figure that out for them. You know, air flight, like, can you really learn everything there is about air flight and like three to six months, maybe not, but like, you should have a broad based understanding of most of the aspects of air flight the same thing with gardening.

I mean, you should understand majority of it because it's the best way to actually say, okay, know that I'm tackling the right part of this market. The insight here is that there's usually only like one or two opportunities in any given market. Maybe there's five in some, you know, and if that's true then, and you could come up with a hundred usually.

So you have the a hundred options and only three or four of them are right. Okay. If you just think about it, there's no way you're going to come up with all 100, right? Brett, like you personally are only going to come up with 20. If you put a lot of effort into it, you'll come up with 20 options of how to target the gardening market. And so if you only come up with five, percent likelihood that one of those is your dynamite option is really, really low. So you want to come up with at least 20 or 25 or 30 or something like that. So that at least one of those is right. And then you just have to pick which one's best. So if you don't have enough alts and enough alternative options to whatever, you've come up with, a problem.

I see entrepreneurs do all the time and it's amazing how many entrepreneurs start a company that has a model. And the entire part of the business is all baked in from the beginning. It's like, this is going to be a marketplace for gardening supplies. peer to peer where people are going to sell gardening supplies to their neighbors, because what's the point of having gardening supplies in your backyard that you don't use. And I'm like, I could take that idea split it up into five or 10 different ideas. if it wasn't just guarding supplies? What if you were just sharing household supplies with your peer? So peer-to-peer supply marketplace. What if instead of renting, you are selling them.

So, you know, you could buy and sell them instead of renting them. What if I offered a rental service where you can rent gardening equipment from a centralized location? Um, what if it was a gardening equipment, uh, e-commerce company? What if I decided to invent better gardening equipment than what exists today?

And I decided to build a new gardening equipment line. And if you don't think through all those different factors, if you're trying to start a startup, chances are someone out there in the marketplace. Ideas is going to come up with the right answer and you're going to be screwed because you're going to be someone inventing gardening equipment. And the real winning idea is actually, uh, you know, building a gardening marketplace. And you just didn't even spend the time to figure out all the options. And so you were dead on arrival from day. 

Brett Berson: how do you think about the market itself and how compelling it is versus other markets? maybe you found an interesting opportunity, but the market actually itself is not that compelling.

Gagan Biyani : I actually think that last part is very rare. Every market is compelling.

Brett Berson: Like every market in the world, at least on some level, if you wrap it up is going to be multi-billion dollars. And probably a business to be made everywhere. It's just about timing. Can you talk more about that?Everybody talks about market timing and maybe the timing is not right. if a friend of yours or somebody that you're coaching is doing this work, how does that idea of market timing fit into ID or insight selection? I've started three companies now and identified a fourth lift when it was really early. So, you know, I've been right twice once and we'll see about the fourth time. Right. And so the truth is, and I'm sure you, as an investor feels similarly, truth is you can't know.

Gagan Biyani : So let's just all accept look at this whole situation. Like you can't know if your timing is right. You can't know if the market's going to be ready. so we're just optimizing, but we're not going from 10% to 90% confidence intervals.

We're going from 10% to 12%. Right. And As, long as we all understand that, then I can answer your question. So you're going from 10 to 12% confidence interval, I think the question you really got to ask yourself is like, put the effort in to figure out whether or not this is possible And then whether or not you'd be okay with doing this business for the next decade or two, because it's possible that it's just about longevity anyways. And so I would say. You know, to two different things here. Uh, one is, to figure out the timing, watch the behavior see whether or not the behavior and the players who are the buyers or the sellers in that market are ready to change behavior.

And whether there are macro trends that are giving you that opportunity, know, macro trend could be the rise of the creator economy. It could be the rise of mobile. It could be, um, the rise of zoom, you know, that's something that mavens using. those are macro trends that are affecting, you know, certain people, but not then the second, the second thing I'm going to say. That when you, when you are identifying timing, um, because you cannot be a hundred percent, right? You just have to accept that in the way that you capitalize mentally prepare yourself for being an operator. And so it may have been, you know, we're having this conversation right now where cohort based courses are relatively new. we are just educating the market on this If you're a creator, you think of a podcast is one of the media things you got to do build your empire and cohort based courses.

Aren't in that yet. And so we're going to have to be around for five or 10 years as the rise of courses, especially cohort-based courses, courses that are more engaging and more delightful and more live oriented community oriented. We have to be around for the next decade or so as that market comes to fruition. Um, and so you also just got to enter a market that you're so excited about that you're willing to spend that much time in it. And because you can't get the timing, right. I don't know.

 in this category of early exploration and immersion, you hit on a bunch of different errors that you've noticed that people make.

Brett Berson: But is there anything that we didn't cover sort of commonalities other than doing the opposite of sort of what you're telling people that people should just keep an eye out for? Because they're traps that you've observed, happening quite frequently.

Gagan Biyani : The number one thing about being a founder is it's an internal game. So my answer is ego. I don't really know how to define that. I'll just give you some examples of things that people do due to their ego, but like, If you're the, not the person who comes up with the idea and someone else comes up with the idea you don't join the best idea in your space, that's your ego. Um, if you are someone who feels like they have to be an entrepreneur and actually are not that good at being an entrepreneur. And I see this all the time, I'm like, why is this person starting a company they're so good at operating, but actually going from zero to one does not feel like a real strength me. people feel like that's the only way to be cool. It's the only way to be special or important is to be a founder there's so many ways to be successful. And then the other issue I'll say on top of egos, just not doing the math. And I don't mean that just literally like doing the math on an Excel spreadsheet, which I, which I think is important, but also just doing the math of like, okay, we start this company, know, what is it we're going to have to figure out and what needs to get done in the first year to make this successful is that attractable thing.

Can we get that done? And if we did that, where would that position us? and having some vague idea of a plan, it doesn't need to be very good. You're going to change it anyways. But just some vague ideas, something I'm surprised how many people don't do, and, their plan is just super weak, right?

 and so I don't believe that the plan is gonna work, but I think if you don't know what your plan is, it has an even higher likelihood of not. 

Brett Berson: Uh, a couple of things to sort of pick up on the first is, you mentioned that you've seen people. Try to start companies that just shouldn't that they're better exact scalers operators, not zero to one. What do you think makes somebody good at that or the opposite? Like you've noticed somebody that's just sort of playing out a position.

Gagan Biyani : it's so hard to pinpoint one style because there's so many ways to be good at zero to one, but there's way more ways to be bad at it. So I'll say a couple of things. I mean, decisiveness, uh, scrappiness, you know, ability to, um, sell nothing, sell vaporware, um, that's usually what you're doing early on. the type of creativity is very different. Um, in zero to one, it's the type of creativity that involves like coming up with an entire, fully formed product from nothing as opposed to taking a product that already exists and making it better and seeing how it can be transformed. but also I'd say it's a little bit of a, you know, it, when you see it kind of thing, for example, if you can't figure out how to make a hundred thousand dollars this year via just your own sheer will at this point on the internet. You probably can't start a multi-billion dollar company. and then there's grit. And I think that it's really hard to be a successful entrepreneur. If you don't kind of enjoy getting your ass. kicked. Like have this, we have the saying, we ended up making it a little bit softer in our company values, but it, we ended up calling it work is fun, but, but the original value was written. Like we love eating shit. And so funny because like 

Brett Berson: Good rebrand.

Gagan Biyani : yeah. I mean, of course it's not a good, it's not a good value. It was just my riff on it at the original time. But it's like, If you aren't someone who likes eating shit, it's really hard for you to be a good founder because that's really all you do every day. I'm a relatively successful founder, I've got a personal brand, people know me, yet still all the time, people get on the phone with me and tell me, you know, I'm not going to join your company.

I'm not going to invest in your company. I'm not going to, know, buy your product, use your product, your product sucks, whatever that now most people say nice things to me to be fair. So there's plenty of positive there. you still just have to get used to the eating shit part of being a founder. 

Brett Berson: A couple of minutes ago, you talked about one of the mistakes are people don't. Put a plan together in the early days, recognizing that, of course it's going to change it in all sorts of different ways. Could you explain a little bit about like what you think in the very, very early days a good plan actually looks like?

Gagan Biyani : Yeah. And by the way, I don't, I don't necessarily believe in like business plans where you write them out. I, I do write them out. I wrote one out for, for my company, Maven. but, um, the, my view on a business plan, or just like a plan in general early on is that you should have an idea of how you're going to go. You know, financing and getting to critical mass in an industry and being successful and what that success would look like if it gets there. So you know, you want all the basic stuff, you have to have a target market of a customer that actually is going to be your first buyer. to have a go to market strategy of how, if you get those customers, then you'll be able to get more customers for X, Y, and Z reason. You probably need some understanding of what your product positioning is going to be. And then you need some understanding of how hard it's going to be to build out product and what the costs might be a building out product whether or not you can be profitable if you build that product at scale. So those are some elements, sure there's like some business model canvas out there that tells you exactly what you need in your plan. but the core lesson I can provide, that's not already written in the literature is just. You should be able to look at yourself in the mirror and actually believe this plan has a good shot.

So, you know, if it's going to take you $10 million to build a product that is going to make, you know, 2 million in revenue, and from there, you're going to raise another 50 and then to, you know, it's going to make 5 million in revenue. Like have to look at those numbers and ask yourself, is there enough juice here to be squeezed? And that's something, I think a lot of people just don't ever put that effort in to figure out

Brett Berson: So I want to kind of continue on this journey. You know, you explore an industry from all sorts of different angles, you land on what you think might be an interesting problem to solve. You put together a high level plan. W where do you think people should go next?

Gagan Biyani : In-between coming up with a high level idea and actually putting together a plan. I think you need to do what I call minimum viable tests. So we talked about this in the first round of article a won't go into detail, but I just wanted to call out that before you write down a plan, you probably just need to go and try things in the market and see how the market responds to various versions of your idea. 

Brett Berson: I don't believe in building a full on MVP. I believe in building just little slices of it. but it, just to your point, in the show notes, we'll put a link to the article, which is fantastic. Maybe you could kind of give people the cliff notes or the, the trailer, just to give a little bit more substance to it, to what you mean by that.

Gagan Biyani : Yeah. So whenever you start a company, you know, I talked about having a plan. Well, before a plan, you just need to think about like, okay, if this idea is going to work, What are the various things that if I'm right, would make this idea become really big and if I'm wrong would kill the. And so I recommend like literally writing these down, like on a whiteboard with your, with your colleagues or just on your own or with an advisor or whatever, just going up and writing down, like, okay, I'm starting a widget company. If the widgets cost more to make than. We might die. I need to figure out how to make the widgets cost less. that's one risk, Let's say I also need to ask like, okay, getting widgets to people is actually going to be very difficult. So let's say this is a widget that's particularly bulky and complex. Like I need to be able to deep risk the supply chain issue. So you write down a list of these risks. Usually somewhere between five and 25 risks that could kill your business and you rank order them based on the ones that are highest likelihood to succeed, 

So the ones that are most likely to either help you succeed, or if you're wrong on them, they're going to make your fail. And then you can actually create little tests to test these things. So if you want to figure out how much cost is going to make to build your widget. You could go to China and talk to a manufacturer and see how they build it. your tests would literally just be like trying to strike a deal with someone for a hundred thousand of these widgets and find out what the price is. then look at one of those widgets and try to sell one of those widgets to someone. another classic that you need to test the risk, almost every startup has as well. People want this product. And so what you want to do is try and deliver this product on a very, very narrow level to the customer a test. in the example of Maven, Maven is building a platform for cohort based courses. to make it easy for any creator out there to build a course and to monetize their audience. So tests, our minimum viable tests, we're just teaching one course with one creator. So we, instead of building an MVP, like an initial product that creator could use where they could build a course, we actually manually built a course via no-code software with a creator. much faster. And we were able to make a few hundred grand right away test what we want to build before we. So that's an example of a minimum viable test that tests two things, whether or not a creator is going to work with us and what that process looks like. then to, uh, how much money can we make and whether consumers are going to love a course from us. What's interesting about tests is it's not just a binary outcome. Like you might say.

every hypothesis you have, you've proven that you're excited about it. And you're, you're optimistic that you can figure it out. That's not the point. Well, it's only half the point. The point is that when you go about testing things in this way, in a very fast iterative manner, you learn things that inform what you end up building as your first version of your product and your MDP. And that's why you Do tests of building a product right away, because when you actually go to build product, uh, make sure that it's as good as possible and as right as possible, because that's a very expensive process.

Brett Berson: you mentioned sort of how, one of the benefits of this kind of testing oriented way of getting off the ground is that it often leads you in, in different, interesting ways. Can you maybe share a couple of stories or a story that comes to mind in terms of how one test brought you in another direction?

Gagan Biyani : sure. I mean, mavens is a pretty interesting one because we, you know, really framework was designed before we started Maven, which means that I was using this, this framework to get the launch out the door. And so we did a bunch of tests and one of the most interesting insights was that creators didn't really care about the customer experience for this. And so when we originally started Maven, we thought, these cohort based courses are really clunky for the student and should make that experience better by unifying it. And we hadn't really thought as much about the operational improvements that we knew we could make operational improvements, but we were. Focus on the student experience. And As we did tests and started working with creators, we realized that with our particular go to market strategy, actually are surprisingly separated from their student experience. They care more about whether or not they feel good than whether a student feels good. And so we ended up switching. A lot of our early built was about getting courses out the door and helping instructors launch courses and make it easy to operate and manage. And actually as we continue to grow, we're more and more learning how much more we need to build on the supply side versus the demand side for our instructors, because courses as much harder than taking a course.

Um, and so, yeah, we we've built a lot of product on that side. for example, we launched Bavan, without a website and without a fully featured product, really at all. Um, and we knew we could do that because, our creators had basically told us, so in their actions and in their, in their words directly.

Brett Berson: As you're running these tests and you're trying to figure out, like, are you onto something? Is it, is it judgment and instinct similar to a couple of the things you were talking about a second ago? Like product market fit. Like you kind of know when you see it or, or as you're getting now feedback and you're running these tests, what should you be on the lookout for.

Gagan Biyani : well, ideally you have some idea of what success looks like before you run a test, so you can compare what you expected and what the outcome is, but yes, it's judgment and instinct on what your expectations are then comparing the outcome to the expectations. Obviously there's a ton of industry data that you can cross reference.

So if you do a test via paid advertising, better know what the average CAC or LTV is in a market. That's similar to yours that you can compete on ad words or Facebook ads. Very well. I generally don't recommend people doing Facebook ads or advertising as their early tests for this reason, because most people don't. Another example is like a landing page test. Well, if your landing page converts at like two to 5%, you know, that's a lot better than half a percent or 1%. And if you know that that's better than not knowing it. Um, but sometimes it's hard to know those things and sometimes it's hard to know why people converted and whether or not they convert it for the right reason.

And that's why judgment is so important. You can't just ride on industry comparisons, but they are helpful. You're also looking for like actual behavior. So your tests are, it's usually going to judge whether or not someone is behaving in a certain way. you're not just looking for them to say, yeah, I enjoyed that experience or no, I didn't enjoy that experience.

It's like, they asking you unprompted? Whether they can do it again? Are they trying to negotiate a contract with you at the end of this, to do this over and over again for them? And what are the main things that they're focused on when they're negotiating that contract? Is it the thing that you think you can actually provide really well or not? 

Brett Berson: What is the role of, of competition or potential competition when someone's going down this path?

Gagan Biyani : The best role of competition is actually information I look at every competitor in our industry as like a test balloon that I can track and monitor to see what's working and what's not. one of the biggest mistakes we made at Sprague was saw DoorDash and Postmates and thought, well, they're doing a pretty good job. We should build something different. Oh, that was such a big mistake. Instead, we should have. Wow, those businesses are amazing. They're growing super fast. should copy them or, or not do it at all. Um, because actually, if something's working in a market, it's very rare that 10 things will work in a market. you like really want to coalesce around the thing that really works. I view competition primarily as Intel. Um, and I'll learn little things from competition and learn big things from other competitors. It just depends on what they do. So I'm always friends with all my competitors in part, because they're also going to get Intel on me And that's okay, but I want to Intel on them.

And then I just have to assume that I'm going to be more likely to be right than them. And that's the game that you play when you're a startup trying to be trying to be more right than your competition. But I don't, I don't suggest shying away from competition.

Brett Berson: And when you think about future competition, does it come into play at all? Or you could care less in, in like in, in a classical sense you would zoom out and say, Hey, is there a potential to develop a wide moat in this business? Um, do you think about that in the early days or, or it's something you've kind of emerges in the future and it's not even a part of the calculus.

Gagan Biyani : it's part of the tapestry that I'm talking about, especially the plan side of it. So a plan isn't good. If, if you execute on it, 10 other people are going to enter the market and they're gonna be able to do the same thing for half the cost. And you're just sort of screwed at that point. So think that it matters whether or not you can build a moat, modes are often overrate.

Like there's often many different types of modes, like as an example, it's so interesting to me that we used to think that the only mode was network. And I still believe network effects are the one of the best modes for internet businesses. And I'm trying to build a network effect business. So like I take that with the greatest salt, but there are plenty of businesses that don't have very good network of flex, you know, Amazon's network effect is relatively weak, right?

It's just an e-commerce store. Like you can start another e-commerce store and they have Amazon prime and they have the ability to add the marketplace and stuff, but it's not, not a core part of what made Amazon successful. It's not a huge network effect business. And it's one of the biggest businesses on the internet. So I would say that like every industry is different. You can build success any different way. So there is a value in understanding what your moat could be, but the modes can be very, very different so kind of continuing on after you're sort of running this series of tests and iterating through these, I wanted to spend a little bit of time of, of what you figured out happens after and something we've spent a little bit of time talking about in the past is this idea of exploring different potential business models on the backend, or maybe as a part of this process.

Brett Berson: And in curious to spend a little bit of time getting your thoughts on, on that topic.

Gagan Biyani : Yeah. We teach this in our ideation bootcamp. So Sam Parr, I mentioned earlier and I run a course and of the best parts of the course, I think is this business model canvas that we've built just like you all the different business models. subscription, consumer subscription, uh, B2B, uh, you know, licensing pay by usage, et cetera, et cetera. And I think one of the more common mistakes that entrepreneurs make when they're starting a company is not looking at the various business models that they could run and then making sure they look at all of them before they decide which one they're going to go down. And so starting a widget company, you should decide, should I be the manufacturer of the widget? Should I sell other people's versions of their widget? Should I become a. Network where you can learn more about this widget. Should I be a community of enthusiasts for people who are using this widget?

Should I build software for the widget? and for lots of other types of widgets like that, you know, there's so many ways to tackle any individual industry. And I think it's worth at least considering a good number of those options. Before you go down the path of whichever one you have.

Brett Berson: And what should you be considering?

Gagan Biyani : well, ideally you're considering?

vision you think is most likely to succeed. So probably the number one goal here is just to consider the. Right. Which is the most likely to have the right level of effects or modes or whatever we, you know, we talked about earlier would become the best and most successful business.

So, and I would do that based on Tam or total addressable market size, ultimately like that is often one of the biggest drivers of whether or not you have the right, business opportunity. Another way to look at it is to look at which one's the easiest to get started tomorrow. Right. So that's certainly helpful.

And I think it's important. It's not enough, but it's helpful. Um, another way to look at it is which one is going to, if w if all three existed, which one would win in a competition. So at Sprig, the mistake we made was Sprig was a better experience in door dash or Postmates for a long time. And we were gaining market share.

I think at some point we had like 60 or 70% share, and we were, you know, two years. So we were pretty happy by 67%, I mean, 60% of Postmates market share. So not total market share, but rather we had 20%, Postmates had 30% door dash at 30% and then, you know, the field had everything else.

And so we were getting close. We were two thirds of the category winner and, uh, But what ended up happening was eventually Uber eats came in and, uh, Uber eats had the same model as DoorDash and Postmates, and they subsidized the market. And by some size of the market, they were able to sort of fast forward our eventual demise two years. whereas Postmates and DoorDash, we're going to get to where Uber eats was. Um, Uber eats got there right away by, by, you know, basically buying it boom, all of a sudden when Uber eats or the sort of food delivery model of, uh, having a courier, deliver food for you from any restaurant the city was fully operational and really working. All of a sudden our business fell apart. So our business was working when, um, you know, Postmates and DoorDash were taking an hour to deliver and they were essentially unoptimized. they were not at maturity yet. and what I didn't ask myself was what's going to happen 10 years from now when this business is. Working, and it's the best version of their customer experience as opposed to their current version. how is that going to compete with Sprague? And I don't know, hindsight's, hindsight's 2020, but I would like to like to think that I could have avoided the mistakes by noticing that, DoorDash and Postmates just had a better model than ours period. 

Brett Berson: So one dimension you're getting at is kind of total addressable markets today or in the future. Other than that, are you, as you're kind of exploring three, five or 10 potential business models or product instantiations, are you running a series of these tests across all of those as well?

Gagan Biyani : Sometimes. I mean, usually the tests are more micro, so they don't test like a whole business model. They just learn more about a market. But I think actually testing the market, it doesn't work that way. You can't just like test a marketplace and see whether or not it's going to work over the next five years.

Like you can't predict that very well. So instead what you do is you just watch how consumers behave. And so you run a test where you just try to sell food to the consumer and then you ask consumers and watch them and see their behavior and see what they value. And then you come up with the business strategy that most optimizes for what they value. kind of have to go a level deeper in. What is it that a consumer is buying in the food space? Why are they buying it? What do they care about? And then you have to say, which model is eventually going to be the best model for that. 

Brett Berson: Switching gears a little bit something we didn't talk about is the role of co-founders. And do you think it's best to pull people around an idea after you've kind of done some of this. Or it can be equally as successful that the two are, you were on this hunting expedition together, 

Gagan Biyani : I think everybody's got a different strategy here in any strategy can work. You know, there's people who argue that a solo founder is better than being co-founders. My strategy has always been, um, that I'm looking for co-founders. While I'm coming up with startup ideas. And so I happen to find a co-founder before I come up with an idea, If I happen to find a co-founder after great. If the co-founder happens to be the one with the idea, great, I'll listen to their idea and be like, Hey, can I work with you on that? Um, and so actually don't think there's a right or wrong answer here. Uh, I think it's better to just do whatever feels right. And to remember that there are positives and negatives to each side, I think you're going to ask me what the positive negatives are. So I'll just, I'll just try and answer that, which is if before, if you have the co-founder before you come up with an idea, then you have to have that come to Jesus moment or whatever, where you ask each other. that we have an idea that you're excited about, are we both really excited about. And is this really a good idea? And I think you should come to conviction on your own, um, but you can work together on it and bounce ideas around, et cetera. And then you have to ask yourself, should you really work on it together?

Or should you, you know, one of the other out kind of thing. the advantage of having co-founder beforehand is nice to have a partner to talk to. I think a lot of people like that, nice to have a, um, have shared appreciation for the difficulty of finding the idea and working together on it. There's a lot of positives to just having that comradery. Um, and then the positives and negatives. If you come up with the idea first. You've really put independent thought into this. You're you're likely not to be up in the moment. Um, you can find purpose focused co-founders I may even, you know, before, I didn't know if I was going to start an education company at all. Um, and then when I decided I did, you know, we went and found two, two co-founders, one of which was an expert in cohort-based courses and other whom had already started an educational app that sold to Google. So were able to find really purpose-built co-founders loved the space and level of your building. and I think was pretty valuable for the first 18 months of the company to have people who already knew what they were doing now 18 months, it kind of makes, you know, you can kind of have anyone, um, can learn within 18 months, but that first 18 months is so critical. And without Wesson, trans having already the shared context, I think it would have been a lot harder. 

Brett Berson: Uh, in working with a bunch of different co-founders over the years, are there underpinnings of what you found make really fruitful and successful relationships?

Gagan Biyani : One is just having a prenup, you know, and the prenup is essentially saying like, who's the boss here? Who CEO? Who's not, how do we make decisions? If we disagree, et cetera, I've had, I've had many different formats. My first company, you to me, I was the president, my co-founder was CEO. And so when difficult decisions came up, like he'd have to make those decisions.

Like Erin made those decisions. And respected that. I got that. That was the deal we had to come up with that agreement very early on at Sprig and Maven I've been CEO. And so my co-founders have to accept that there might be times where I'm in charge. I'm going to make the biggest personnel decisions at the executive level. I'm gonna make the biggest decisions on strategy. at the same time you need trust. That's the second thing you need. mutual respect. I knew that Aaron would trust me enough to let me contribute to decisions. And I'd built that trust over six months of trial period, where we worked together without any deal. Nope, no. Um, I had the same thing with, I have the same thing now with my co-founders I think I trust drowns when it comes to engineering stuff. When west tells me instructors, you know, where we are on our, on product market, fit, instructors love us, or they don't love us. You know, I trust her instincts there because she understands those people really, really well. 

and then the final thing is you just need 

who are just good. Like you should really make sure that you're raising your bar and they bring elements to the table that you don't have, that they're better at certain things than you are. I think that's very, very clear to me at every company.

I don't view myself as good at everything. I view myself very much as a specialist in certain ways, you know, I'm not a fuzzy make you feel good leader. I'm a, I'm a hard charging move fast, kind of. Run with respect. People respect me and like me, I'm not, not likable, but I'm not lovable. And So Schranze is much more lovable.

Like it's nice to have a co-founder who's lovable, right? Who people really enjoy. And they like, know, he thinks about people in a different way than I do. And then west is like the, absolute, like she wants to be the public face. She wants to go do the things

talk to people, et cetera. Like this is a rare podcast interview for me, because west is so much better at it than I am And she likes it more. So are different things. West is also much better at the details than I am. She's so much more executionally exceptional than I am. And so when we're doing something execution, like evaluating a hire, I'm the one who's going to sell the higher. She's the one who's going to evaluate, whether they're really good enough for us. And that just kind of like, it's good to have complimentary skill sets. And then finally you need to have a shared culture though. So you can't get comparably skillsets. You have to have a similar style. And this is where I think. It's a bit controversial, but okay to have some level of homogeneity in a team.

 like with west, trans and I obviously we're all, you know, west as west, as a woman I'm man, trans is an immigrant west and I were born here. Um, there, there are lots of, uh, lots of things that were different on, but one thing that we share our culture of how we work and how we like to work is actually very, very similar. We're all like to be direct. We're all brutally honest with each other and with others, to a fault at some point, but, but still that's part of it. We're all people who are pretty rigorous in our thinking. We don't like taking the first answer and just going with it. by the way, you're just hearing me list off our company values because that's, that's kind of the point. Like you want a clear set of values that come from the culture of that founding. Um, and then finally this idea that your co-founders don't need to run orcs, is something that I think we did S did poorly at Sprague and we're doing better at Maven, which is. so some people are good at leading teams, but some, but you need the people who are good at innovation coming up with new things too. I think one thing that's really important that founding teams is accepting the fact that once you have a founder, ideal scenarios for them to stay at the company as long as possible. so you don't want to pigeon them holding the rules that they're not actually going to be good at. So founders are supposed to help you get the company off the ground, and then they're supposed to help you keep innovation and fire as the company grows and be closers and have gravitas and those kinds of things. And so if you do over there, co-founders, it's usually best. If you're willing to accept a CEO that some co-founders are gonna end up being more like running smaller teams and sort of grassroots co-founders who run a few things at the company. eventually you're always going to hire execs to run almost every org.

Gagan Biyani : That's just natural. even as CEO, you end up giving over the reins to a COO. Eventually I think. 

Brett Berson: So I wanted to zoom out a little bit, and you've touched on this in different ways as we've been talking through these early phases of building, but I'm interested, are there other psychological traps that folks that are doing this or cognitive traps should keep in mind? And, um, one example was you talked about when you sort of went in this exploration process, you said to yourself, you, you need at least 12 months.

And I really liked that because one of the things that I've noticed is that a lot of, future founders so badly want to land on the insight or the idea. That they would rather take a worse idea that they get in eight weeks, then trudge through a year and a half of exploration. And it's, it's a really terrible cognitive trap to like, want to be done this process of finding the thing, because no matter how long you spend on it, you're going to spend a decade or more trying to bring this thing in the world.

And so having an appropriate level of patience and a very, very high bar. I think is important. And I'm curious when you zoom all the way out, are there other traps or things that people should keep in mind to avoid that you've noticed that are more cognitive or maybe psychological in this process?

Gagan Biyani : yeah, another good one is, when you're done with the process and you find a good business idea, you have to ask yourself two questions. One is what are the skills required to successful at this? And am I good at those skills? And then two, am I going to enjoy this market? Because you're going to be this market for a long time. And I think a lot of people never ask themselves those questions and they start a business. Like I had a friend recently. And kudos to them for how they ended it. But I had a friend who started a company and they wanted to build an influencer company. Now I don't even think these people use social media on a regular basis.

I think they're pretty anti-social media, they like live in LA they got excited by influencers because they meet them all the time and they wanted to start a consumer internet company because it's cool. And they ended up on this idea of helping influencers monetize by letting them do like quick minute consultations with people, right.

 There's a bunch of companies in this space. And they went on the path of trying to make this company successful. And then eventually they realized the only the market that they, the beach and market they could come up with was Instagram influencers in astrology. And they realized that, wait a second, I don't really like astrology and I don't really like Instagram influencers. And so they eventually had to sell the company to a competitor because they just, you know, after a year they realized they didn't really it. I think so many people end up spending two or three years, or was a predictable mistake and they don't even know it. Um, and pretty soon they're in a market.

Gagan Biyani : They hate doing things. They don't love, you know, it's like people who start a restaurant, but don't actually like working, you know, 60 hours a week on their feet And then on the other question, that was more on the second question on the first question, you know, whether or not you like, you're good at the work. If you realize you have to build a marketplace and you're not good at marketing, uh, you're you're in for a world of hurt because the number one challenge of a marketplace business is not building product.

It's building, it's marketing, almost all marketplace businesses are defined by whether or not you can take this market of supply that you've built up and convince to come to. And, uh, or if the best idea in your market is going to be a consumer SAS play, and you're not great at building beautiful products, like that's a 

challenge. You have to be excellent at product. Um, if you're going to build a consumer SAS company, consumer SAS companies, I say consumers, SNB, SAS, like convert kit or something like that, Luma, et cetera, because these folks have the highest expectations out there and you got to build a beautiful thing that they really love and they want to use, and they rave about. I anything that, that we didn't talk about or things that you find, you know, I'm sure you spent a lot of time with founders over the years, trying to get things off the ground, things that you find you say over and over again.

I'm usually trying to convince founders not to start a startup. So I think 90% of people who start a startup would be better off starting a business. And if they start a business instead of a startup and don't raise capital for it, it might feel harder in the beginning, but it's longterm going to be way better.

 once you raise venture capital, you're used to spending money, you know, that you don't make, so you have to really go for a hundred million revenue plus business. You have to sacrifice, you know, building a profitable business in the short-term order to build a. Big business in the longterm. And I think a lot of people don't realize that, like, if you're good at building a startup and you're capable of actually doing that, then you're probably capable of building like a five or $10 million business that's profitable from day one. And it's really a lot easier honestly, to build a bootstrap business than it is to build a startup. I know there's a lot of people out there who think it's harder. I don't know. I built a lot of bootstrap businesses that, um, and the level of challenge is just so much easier the lifestyle is so much better. And actually, I know a lot of startup entrepreneurs who started a startup, built a boat multi-billion dollar company and decided screw it.

Gagan Biyani : I'm going to start building lifestyle businesses and their lifestyle businesses make them more money than the starter. It was pretty amazing. 

Brett Berson: On the point about, should something be a bootstrap business or venture backs for like lack of better terminology? Is it just scale of opportunity that separates them? Or what sort of the, you know, you said 90% of people should just build a bootstrap business. Like what should a person be asking themselves to set them on the right course in the early days?

Gagan Biyani : If tomorrow someone gave you $2 million, uh, cash or $5 million cash to you not start this company. And instead to buy your company, would you take it, do you want to be in a situation where you have a high likelihood of failure and basically make decisions that increase your likelihood of failure dwindle your chances of success? are you okay with a 10% success rate or would you rather have a 25 or 50% success rate? Are you someone who wants to run a large team and a large company, and that matters more to you, uh, would you rather have a hundred million dollar business and own a hundred percent of it or a billion dollar business and own 5% of it? I want to answer to anyone? One of the things about, about startups is actually startups are situations where you have lots of stakeholders. So you have like of bosses, whereas in a bootstrap business, you can often have no bosses, really good. Um, so are you okay having a board, who's going to break down your neck and tell you you need to grow to five X a year, um, or would you rather have a better pace of change? Those are all some questions that I'd ask. Basically I'd run through exercises of scenarios that really force yourself to ask yourself the question. Am I really interested in building, in a startup entrepreneur or am I just interested in being an entrepreneur? of people want to be entrepreneurs who would be great as starting a company, but don't need to, raise venture capital. 

 So I really believe that one of the biggest pieces of advice I can give you is if you find that the market you're interested in, there's a really good profit opportunity.

Like a small business opportunity, go do it. there's 

you have to build a startup like that 

Brett Berson: construct that you've put in your head that or may not be serving you very. wellAwesome. Thanks so much for spending this time with us.

Gagan Biyani : Thank you. I appreciate you having me. I'm such a fan of everything I'll do at first round. a happy customer of yours. This both in both a founder, as well as a consumer of your content podcast and newsletter