lean business startups · lean business startups startups mission rigorously measure status,...
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Lean Business StartupsStartups Mission
Rigorously Measure Status, Experiment Towards Goals
Class 3
Startup Navigation
3 Growth Engines
What Makes A Good Metric
Practical Application
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How to think of startup navigation…
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A startup’s job is to:
• (1) rigorously measure where it is right now, confronting the hard truths that assessment reveals
• (2) devise experiments to learn how to move the real numbers closer to the ideal reflected in the business plan.
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Experiment toward the ideal
Problem Fit Market FitMVP
Your Goals
Surveys - Presentations - Sales Pages – Demos – Crowdfunding – Concierge – Launch - Scale
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Pivot or Persevere
Problem Fit Market FitMVP
Your Goals
Pivot
Death Valley
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Pivot Example
•When numbers are not improving
•Pivot
On-Line
Game
Casino
Sponsors
Player
Instruction
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Good Metrics
•Comparable
•Understandable
•Relevant to model goals
•Actionable
•Ratios
What characteristics of Good Metrics do we see in a Nissan 350Z?
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General Startup Metrics
• Signups(Activations)/Week
•Customer Lifetime Value (Earnings/Customers)
•Viral Coefficient (Referred Users/User)
•Viral Cycle Time (Months/Referred User)
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E-Commerce Startup Metrics
•Conversions/Click
•Average Shopping Cart Size
•Abandonment %
•Customer lifetime value
•Net subscriber gain.
•Mailing List Conversions
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Membership Startup Metrics
•Net Member Gain (per month)
•Visits Per Month – Stickiness
•Member Acquisition Cost
•Member Content Creation
•Churn
• Sharing & Virality
•Notification Effectiveness
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Cohorts
•Reduce Noise In Measurements
•Users Sharing a Common Experience.
• Track through lifestyle
•Comparable
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Cohort Example
• Site users spend the most in their first month
• Site has good growth
• As older users mix with newer, average spending decreases.
• No way to see the cause without splitting user base into monthly cohorts
1 2 3 4Month
Use
r P
urc
has
es
Time >>
Avg
Rev
enu
e/C
ust
om
er
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Tuning The Three Engines of Growth
StickyUnique VisitorsPages / VisitVisits / Month
PaidRevenue / MemberPaid Member %Churn
ViralReferrals / MemberReferral Cycle Time
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Pick your
#1
Leap of Faith
Draw a
Line in
the Sand
Build and Run
Experiement
Line in the
Sand Met?
Pivot
Never Gonna Happen.
Yes!Next Assumption
Not Quite.Tune withNew Experiment
Lean Cycle
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Experiments Review
1. Who did we talk to
2. Discoveries?
3. Value
4. Differently next time
Q&A of Prospective Experiments
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Tools / Resources
• Lean Analytics: http://leananalyticsbook.com
$9.60 on Kindle
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Homework is Fun!!!
•What to Measure
•Draw Lines in the Sand
• Tally up a Few Metrics
• Envision Next Experiment
•NEXT TIME: Pricing – Modelling Financials - Pitching