Metrics for Startup Success and Failure


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A talk I gave at the Customer and Business Development Class at Berkeley taught by Steve Blank and Eric Ries.

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Metrics for Startup Success and Failure

  1. 1. Metrics that Matter Defining startup success and failure Hiten Shah Customer and Business Development Class at Berkeley • Mar 9, 2010
  2. 2. The Startup Pyramid The Race to the Top Growth Transition to Growth Product / Market Fit Sean Ellis:
  3. 3. Product / Market Fit • Low burn, focused on product, no VPs / sales people • Customer Development (Steve Blank, Four Steps) • Minimum Viable Product (Eric Ries, The Lean Startup) • Pivots (Eric Ries, The Lean Startup) “…the life of any startup can be divided into two parts – before product/market fit and after product/market fit.” Marc Andreesen, Founder of Netscape
  4. 4. Customer Development • It’s all about learning and discovery • Outlined by Steve Blank in Four Steps to the Epiphany
  5. 5. Minimum Viable Product • Coined by Eric Ries as part of The Lean Startup • Lean Startups are a series of MVP’s • Each designed to answer a specific question (hypothesis) “ The minimum viable product (MVP) is often an ad on Google. Or a PowerPoint slide. Or a dialog box. Or a landing page. You can often build it in a day or a week.” Nivi, Venture Hacks
  6. 6. “ If Apple can launch a smartphone without Find or Cut-and- Paste, what can you cut out of your product requirements?” Lance Glasser, former CTO KLA-Tencor
  7. 7. “ The first version of Gmail was literally written in a day” Paul Buchheit, Google / Friendfeed / Facebook
  8. 8. Pivot “ The idea that successful startups change directions but stay grounded in what they've learned.” Eric Ries, The Lean Startup • Segment pivot - existing product, different customers • Customer problem pivot - same customers, different problem • Feature pivot - pick a feature and reorient around it
  9. 9. Product / Market Fit Metrics Created by Sean Ellis (12in6) • 40%+ of users say they would be “very disappointed” • Representative of a large enough target market • Use to get started Sean Ellis:
  10. 10. Transition to Growth “ Once you have achieved product/market fit, it’s time to accelerate through the next steps of the pyramid and then begin scaling your business.” Sean Ellis, 12in6 • Positioning - optimize first user experience via messaging • Economics - implement a business model • Optimization - track and report on the right metrics
  11. 11. First Product Iteration Target Customer: Social Application Developers
  12. 12. Pivot 1 Target Customer: Many customer types
  13. 13. Pivot 2 Target Customer: 1 specific customer type
  14. 14. “Metrics are people, too” Eric Ries, The Lean Startup
  15. 15. Test Things for Yourself!
  16. 16. Thank You! “Passionate about helping other entrepreneurs and startup people.” @hnshah
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