Entrepreneurship...Entrepreneurs recognize they are going to have to follow their own internal compass and embrace the uncertainty as part of the journey. - Steve Blank - more on: http://steveblank.com/2009/06/29/agile-opportunism-entrepreneurial-dna/
Get out of the building (by Steve Blank) Your business assumptions can be wrong Go out and speak with your customers
What’s a startup?A startup is ﬁrst of all an experiment, it is a humaninstitution designed to deliver a new product orservice under conditions of extreme uncertaintyAt its heart, a startup is a catalyst that transformsideas into product. (From Lessons Learned blog By Eric Ries)
What’s a Lean Startup? Lean startup is a rigorous process for iterating from Plan A to a plan that works. (by Ash Maurya)
What Metrics Matter? Example: Facebook on early days 150k users, little revenue Many superior competitors What would indicate their future success?
What Metrics Matter? Example: Facebook on early days 75% of users visit one or more times per day Within one month of launching on a new campus, can acquire 90% of the students
What Metrics Matter? Good Metrics (Three A’s) Are Actionable Can be Audited Are Accessible
Actionable Metric An actionable metric is one that ties speciﬁc and repeatable actions to observed results (by Ash Maurya)
A/B Testing - New Blomming home VS Deﬁne your Goals
A/B Testing - Deﬁne your goals A/B Testing Goals One single important Goal:% Users that sign-up for the service (as a seller) Secondary Goal: % Buyers that buy something after landing on the homepage
Multivariate Testing at Google “Yes, it’s true that a team at Google couldn’t decide between two blues, so they’re testing 41 shades between each blue to see whic oneperforms better. I has a recent debate over whetera border should be 3, 4 or 5 pixels wide, and was asked to prove my case. I can’t operate in an environment like that.” (by Doug Bowman on Design at Google)
AARRR - Different orders (example) 1. Activation, Retention (happiness) 2. Revenue (sustainability) 3. Acquisition, Referral (virality) (this is the Ash Maurya or 37signals order: “Charge from day one”)
Activation Sure, they signed-up!!! BUT did the like it???
Activation at Facebook (i) which data points predict whether a user will stay?(ii) if they stay, which data points predict how active they’ll be after three months?
Activation at Facebook (i) which data points predict whether a user will stay? having more than one session as a new user and entering basic proﬁle information.(ii) if they stay, which data points predict how active they’ll be after three months?how often a user was reached out by others, frequency of third party application use, and how available a user was on the site.
Activation at Facebook “At the time, I heard many people criticize Facebook’s early investors, claiming that Facebook had ‘no business model’ and only modest revenues relative to the valuation offered by its investors...”“...Facebook was different, because it employed a different Engine of Growth. It paid nothing for customer acquisition, and its high engagement meant that it was accumulating massive amount of customer attention every day.” (Eric Ries - The Lean Startup)
Activation Metrics Activation metrics often drive other metrics in Referral, Retention, Revenue
Making Money Key for any business is to ﬁnd out how much proﬁt they make for every customer and scaling the number of customers
Lifetime Customer Value How much money you make for every customer you acquire For some this a single transaction For subscription businesses it depends on retention
Cancellation Rate Cancellation rate = is the percentage number of customers who cancel in any given month compared to total (paying) customers [Cancellation rate] = [product utility] + [service quality] + [acceptable price]
Lifetime Customer Value (LTV) LTV = monthly revenue x n° months in lifetime N° months = 1 / cancellation rate LTV = monthly revenue / cancellation rate
Lifetime Customer Value (LTV) For example: If €20 a month and cancellation rate is 10% a month LTV = €200
Lifetime Customer Value (LTV) Often not that simple. Short term cancellation rates are much higher than long term Use Cohort Analysis to determine
Lifetime Customer Value (LTV) r = short-term cancellation rate (e.g. 0,15) p = long-term cancellation rate (e.g. 0.03) s = number of months in the “short-term” age group (e.g. 3) (1-r)^s x (s + 1/p) = expected months
Innovation Accounting “To improve entrepreneurial outcomes, and tohold entrepreneurs accountable, we need to focus on the boring stuff: how to measure progress, how to setup milestones, how to prioritize work. This requires a new kind of accounting, speciﬁc to startups” (Eric Ries - The Lean Startup)
Innovation Accounting Concentrate on macro metrics Everything you do should attempt to change a metric Try to use as few tools as possible
Kanban Board I know: this isn’t an example of an exciting and well done Sprint :)
(Lean) Product Management Well, trying to connect the dots: what we learnt so far is how the Product Owner can deﬁne and prioritize stories at every Sprint in a Startup that wants to be called, you know, Lean! :)
Learning Boards - Lean Stack We will talk about the Lean Stack of Ash Maurya or other possible “lean mapping” frameworks in a future presentation
Credits Stuart Eccles - Lean Startup Metrics Joshua Porter - Metrics-Driven Design David Cancel - Data-Driven Marketing Lean Startup Machine - How to measure the metrics that determine real progress(and the others speciﬁed directly in the slides when picking some parts of books or blogs)