Startup Case Study
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Startup Case Study

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A quick startup case study in the applied use of the Steve Blank Customer Development Model, the Dave McClure AARRR model, and the Eric Ries concept of the pivot.

A quick startup case study in the applied use of the Steve Blank Customer Development Model, the Dave McClure AARRR model, and the Eric Ries concept of the pivot.

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Startup Case Study Presentation Transcript

  • 1. The Sacred, The Profane, and the Pivot A Brief Case Study of Applied CDM, AARRR Metrics, and Lean Principles (c) 2009 David Binetti
  • 2. Definitions Sacred Steve Blank’s Customer Development Model (CDM). I follow it religiously. Profane Dave McClure swears every third word. Oh, and his Acquisition, Activation, Retention, Referral, Revenue (AARRR) model is awesome. Pivot Eric Ries’s concept of strategic shifts predicated on learnings. (Sorry, no pithy witticism for this.) (c) 2009 David Binetti
  • 3. CDM (Brief Version) A) Establish Hypotheses Test -> (Iterate or Exit) B) Sell Test -> (Iterate or Exit) (c) 2009 David Binetti
  • 4. CDM (Discovery - Phase A) Category Hypothesis Product State what you are selling. Problem State the customer problem you are solving. Channel State how you are going to sell your product. State how you are going to generate demand for Demand your product. State the market type (existing, re-segmented, Market Type new) you’re in. Competitive State the competition you face. (c) 2009 David Binetti
  • 5. CDM (Validation - Phase B) I could explain in detail, but basically boils down to: prove you can sell by actually selling before you scale. (c) 2009 David Binetti
  • 6. AARRR Model (AKA, Metrics for Pirates) Metric Description Acquisition Users visit Activation Users sign up Retention Users come back Referral Users like and refer Revenue User pay something for something (c) 2009 David Binetti
  • 7. AARRR Model (cont.) The Model measures: Conversion rates for each step Expected value at each step (not included here.) A ‘one-slide pitch deck’. Have these numbers, and you need nothing else. (c) 2009 David Binetti
  • 8. Slight Differences The CDM has you look at and test the whole business model. The AARRR assumes the model rolls up in the metrics. (c) 2009 David Binetti
  • 9. How They Complement The CDM teaches you to test assumptions, but isn’t as specific on how to measure results. The AARRR gives metrics to know what’s good, but not how to identify what’s broken. (c) 2009 David Binetti
  • 10. Case: Votizen Social Network for Registered Voters Civic Participation Made Simple and Meaningful Voter-Focused (as opposed to politician- focused) approach to $5B Political Market. Independent, non-partisan, simple and fun! (c) 2009 David Binetti
  • 11. CDM (Brief) Category Hypothesis Social Network for Registered Voters (“LinkedIn Product for Politics”) Traditional campaign techniques #fail in a web Problem 2.0 world. The internet is the primary source of voter Channel information. Demand Social networks are both the product and the demand-generator. Resegmented; displace current market for Market Type direct-mail & robocalls. Competitive Hyper-fragmented. (c) 2009 David Binetti
  • 12. AARRR (Brief) Metric Description Creates account on system. (Precursor- Acquisition requirement) Certifies voting record (Authenticates - gives Activation voter the power) Referrals Forwards to friends (Acquisition model) Uses system to affect change (Validates lifetime Retention value) Private! (Sorry, not appropriate for a public Revenue document.) (c) 2009 David Binetti
  • 13. Applied Started with MVP - Minimum Viable Product. Just enough to get feedback (cost: $1206) Metric MVP Acquisition 5% Activation 17% Referrals - Retention - Revenue -
  • 14. Improve Tried a bunch of A/B testing on home page. Found an optimal message. Learning: When given the option to explore, people explored. When given a direction, they took the direction. If you want something done, make it part of registration flow. (c) 2009 David Binetti
  • 15. Applied Significant, immediate jump in initial metrics. (Spend ~$10K) Metric MVP V.1 Acquisition 5% 17% Activation 17% 90% Referrals - 4% Retention - 5% Revenue - -
  • 16. Improve Retention and Referrals Same Process, Different Results A/B, Feedback, Analytics, etc. Incremental improvement on retention and referrals. Was improving, but marginal value of efforts were asymptotic. Time for a pivot! (c) 2009 David Binetti
  • 17. The Pivot Eric Ries concept: shift direction while grounded in learning Implementation of “back to start of CDM” I took learning and created new MVP. So, $10K sunk cost -- buh-bye! (ugh) Needed to fire current developers, hire new skills. (double-ugh) (c) 2009 David Binetti
  • 18. The Pivot (cont.) But, not a waste! Time, money and effort brought learning. Look beyond the features to the problem. “I always wanted to get more involved. This makes it so much easier. Thanks!” (c) 2009 David Binetti
  • 19. Applied New product launched as MVP - @2gov on Twitter Contact all public officials at a single address. Results? Much better R&R, and better conversion. Metric MVP V.1 New Product Acquisition 5% 17% 42% Activation 17% 90% 83% Referrals - 4% 54% Retention - 5% 21% Revenue - - -
  • 20. Applied Next step: test revenue assumptions Provide a channel for voters to support causes and candidates in which they believe. Another pivot! - No data yet Metric MVP V.1 New Next Product Iteration Acquisition 5% 17% 42% ? Activation 17% 90% 83% ? Referrals - 4% 54% ? Retention - 5% 21% ? Revenue - - - ?
  • 21. Takeaways Set up your CDM hypotheses so that you know what you are trying to accomplish and how to tell if you are finished or need to start over. The AARRR approach serves as a great ‘startup dashboard.’ Numbers don’t lie (as long as you don’t lie to yourself.) Should you need to iterate, then pivot -- don’t flail. Measure success by lessons learned, not by the results themselves (oh, and restate CDM.) (c) 2009 David Binetti
  • 22. Learn from the Source CDM: http://www.steveblank.com AARRR: http:/ /www.slideshare.net/ Startonomics/startup-metrics-for-pirates- presentation Pivot: http:// www.startuplessonslearned.com/2009/06/ pivot-dont-jump-to-new-vision.html (c) 2009 David Binetti
  • 23. Feedback Wanted! Would love feedback! Want to get better, so criticism is preferred. “If you don’t have anything bad to say, then don’t say anything.” dbinetti@gmail.com (c) 2009 David Binetti