Lean Startup
is awesome
Who Am I
Joshua Cyr
Developer and Startup Enthusiast
Owner Alpha Loft - Coworking in Portsmouthfocused on tech/creative/startup
Run the Startup Meetup / Web Dev Meetup
What is Lean StartupLean Startup is a rigorous process for iterating from Plan A to a plan that works.
Leap of Faith Hypothesis
Your business model is actually a leap of faith.
Find a way to test your hypothesis as quickly as possible.
ExamplesWill people listen to music privately in public setting?
Will people pay for music online?
Will people share their personal moments on video in a public portal?
Will people share their dating interests publicly?
Feedback Loop
My MVPThe term ‘Minimum Viable Product’ is best thought of as “the smallest iteration of work you can do to validate your assumptions”.
The product in MVP can be a misnomer as it’s not always a tactile object.
Minimum Viable ProductHow we test our Leap of Faith.
How we know what is working and not.
How we do it quickly.
Minimum Viable ProductIterate often.
Measure EVERYTHING
Fail quickly and learn from it to improve.
Minimum Viable Product
Short CyclesStuffing Envelopes - Efficiency vs Reality
What if something is wrong?
We can perfectly execute what ends up being a failed hypothesis.
Customer InterviewsThe average person isn’t usually very good at giving feedback on something that doesn’t exist.
That’s why we create a small product for our customer to play with.
MeasuringInnovation Accounting and Measurement
Build into our product and process such as Split Tests.
Learn from mistakes.
Cohort Analysis
Sign Up 9700 (100%)
Download5804 (59%)
Activate/Install3186 (32%)
Purchase1147 (12%)
Full Month
Cohort Analysis
Sign Up 2100 (100%)
Download1218 (58%)
Activate/Install630 (30%)
Purchase210 (11%)
Week 1
Sign Up 2450 (100%)
Download1470 (60%)
Activate/Install808 (33%)
Purchase269 (11%)
Week 2
Sign Up 2550 (100%)
Download1530 (60%)
Activate/Install1020 (40%)
Purchase408 (16%)
Week 3
Sign Up 2600 (100%)
Download1586 (61%)
Activate/Install728 (28%)
Purchase260 (10%)
Week 4
Sign Up 9700 (100%)
Download5804 (59%)
Activate/Install3186 (32%)
Purchase1147 (12%)
Full Month
Split Test
Sign Up 2100 (100%)
Download1449 (69%)
Activate/Install945 (45%)
Purchase630 (30%)
Layout A
Sign Up 2450 (100%)
Download1470 (60%)
Activate/Install808 (33%)
Purchase269 (11%)
Layout B
Sign Up 2000 (100%)
Download1100 (55%)
Activate/Install600 (30%)
Purchase200 (10%)
Control
Build Into Your MVPTo properly measure we need it built INTO our Minimum Viable Product.
Which means it must be part of your MVP, not tacked on after.
Vanity MetricsMillions of downloads vs no activations.
Incredible website growth vs no paying customers.
20% month over month customer registrations vs flatline customer return rate.
Useful MetricsActionable:Is there a clear cause and effect?
Accessible:Is the measurement simple to understand and available to all? Internal finger pointing?
Auditable:Is the measurement credible to all employees?
Growth EnginesHow can we understand our likely growth engine so that we may know how to measure and thus improve?
Sticky EngineExample: Games, Auction Sites
Measuring new customers not enough
information.
Customer retention and Churn rate of existing
customers key.
Customer Acquisition must be > Attrition
Reducing Churn is key aim.
Viral EngineSocial Networks, Tupperware
Viral Coefficient is key measurement
1 person in 10 recommends product = 0.1
Not a sustainable loop.
1.0+ Coefficient = 1 person brings > 1 new
person in.
1.0 becomes exponential
Viral Engine Visual
Viral Engine ExampleHotmail
Sluggish growth at first.Added "P.S. Get your free email on Hotmail" to bottom of every email.
1 Million in 6 Months5 Weeks later 2 Million.18 Months later 12 Million / $400 Million Sale.
Paid EngineMeasure Lifetime Value of Customer
Must be greater than Customer Acquisition Cost.
Customer Acquisition includes Advertising, Outbound Sales, Retail Location, etc.
Lifetime value > Acquisition cost = growth
Tuning Feedback Loop Key
8% vs 10%
Tuning Feedback Loop Key8% vs 10%
Compounding Growth Rate As Of Company A Company B
Six Months Ago 0.5% 9.8%
Five Months Ago 2.0% 9.6%
Four Months Ago 3.2% 9.9%
Three Months Ago 4.9% 9.8%
Two Months Ago 6.1% 9.7%
One Month Ago 8.0% 10.0%
Burn Raterunway = cash on hand / burn rate
# iterations = runway / speed of each iteration
How many iterations do you have left?
How many businesses are exactly the same as when they started off?
Time to PivotIs it time to change direction?
Options:● Zoom In: Focus on one Feature● Change Vertical Markets● Focus on new Customer Segment● New Product Idea Entirely
Goal is to do this before you run out of funds.
Pivot ExamplesGroupon
Draw Something
