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Introduction to Lean Analytics webinar (O'Reilly)


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An introduction to Lean Analytics - the basic principles, metrics, and how to stay focused in a startup

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Introduction to Lean Analytics webinar (O'Reilly)

  1. 1. LEAN ANALYTICSUsing data to build a better startup faster Ben Yoskovitz @byosko
  2. 2. A little about me… Acquihired Started writing Exited (but Big win! instigator blog not a real win)
  4. 4. Wrong subtitle!
  5. 5. PARTONE The future of business is lean.
  6. 6. Silicon Valley doesn’t love failure.
  7. 7. It just hates it lessthan the alternative:
  8. 8. Building somethingnobody cares about.
  10. 10. The basic Lean messageis learn and adapt, fast.
  11. 11. READY, AIM, FIRE IS SO 1995. Photo by US Army. Used under Creative Commons.
  12. 12. Instead: aim, fire, ready
  13. 13. Different things matter now.
  14. 14. Knowing what’s notGetting working,features right quickly,matters less. matters more.
  15. 15. FindingBuilding knownproduct needsmatters less. matters more.
  16. 16. “What if”“We should” mattersmatters less. more.
  17. 17. ParallelYour experimentsroadmap mattersmatters less. more.
  18. 18. BusinessBusiness modelsplans matter matterless. more.
  20. 20. WE’RE ALL LIARS
  22. 22. Your Gut Increased + = likelihood ofLean Analytics success
  23. 23. PARTTWO The basics of good analytics.
  24. 24. Analytics is the measurement ofmovement towards your business goals.
  25. 25. In a startup, the purposeof analytics is to iterate toproduct/market fit before the money runs out.
  26. 26. Three categories of metrics to think about: 1.Qualitative and quantitative 2.Vanity and actionable 3.Exploratory and reporting
  27. 27. What makes a great metric? 1. Comparative over time, against a baseline 2. Understandable 3. Ratios and rates, not numbers 4. Improves the accuracy of your predictions 5. Your behavior changes when it does
  28. 28. PARTTHREE Key principles of Lean Analytics
  29. 29. What you should track is dependent on: Your basic business The stage your model startup is at How you make $$ Lifecycle • E-commerce • Find a need • SaaS • Find a solution • Free mobile app • Find a product • Media site • Find a business model • Collaborative content site • Find an exit • Two-sided marketplace
  30. 30.
  31. 31. Eric Ries’ Engines of Growth1. Sticky engine2. Viral engine3. Price engine
  32. 32. The Long Funnel• Understanding the customer journey• Exploratory & reporting Get it here!
  33. 33. THE GATES OF LEAN ANALYTICS Area of focus “Gate” needed Key metrics for Lean McClure this stage at this stage to move forward I’ve found a real, poorly-met Qualitative responses Customer Attention Empathy need a reachable market Meetings held development (of faces. testers, prospe Scored qualitative cts, etc.) Surveys, bulk feedback I’ve figured out how to solve MVP building the problem in a way they Signup rates Stickiness will adopt and pay for. Activation Activation on invite/beta MVP iteration,Startup lifecycle stage sticky engine Retention MVP adoption I’ve built the right Retention product/features/functionality that keeps users around. Message open rates Organic Referral Virality Inherent sharing growth, viral Viral coefficient/cycle time Growth rate engine The users and features fuel growth organically and Word of Mouth sharing artificially. Key goal conversion rates Monetization, Revenue Revenue Customer lifetime value price engine I’ve found a sustainable, Customer acquisition cost scalable business with the Margins right margins in a healthy Access to employees ecosystem. Inorganic Attention Attention Access to capital growth, (at scale, of Competition beyond Lean customers) I can achieve a successful Visibility/SEO/SEM exit for the right terms. Channel health Exit!
  34. 34. The One Metric That Matters Or how to deal with your crippling ADD
  35. 35. Choose only one metric.
  36. 36. Benefits of the OMTM: 1. It should answer the most important question you have 2. There’s a clear goal 3. Focuses the entire company 4. Instills a culture of experimentation
  38. 38. Lean Analytics example: SaaS Area of focus at this stage Empathy Qualitative analysis (any interviewees writing checks?) Scoring problem interviews Survey results Beta signup (how many people sign up?) Stickiness Enrollment (how many visitors become users?) Daily, weekly, monthly active users Churn (how many users leave in a given time period?) Virality Virality (inherent – built into the product) Virality (artificial – invite someone for a free month) Growth rate Conversion (how many users become paying customers?) Revenue per Customer Revenue Up-selling (what makes customers increase spending?) Customer Acquisition Cost (CAC) Customer Lifetime Value (CLV) Attention Building sales channels Site visitors (how many people visit with other #s maintained?)
  39. 39. Draw lines in the sand.
  40. 40. What’s ideal? • ~2.5% churn • Free to paid in freemium of 2% • CLV is 3x CAC • Time to recoup CAC of 6-12 months
  41. 41. The Problem-Solution CanvasOr how to stay focused as much as possible
  42. 42. Problem-Solution Canvas #1
  43. 43. Problem-Solution Canvas #2
  44. 44. Sneak peek! • Break down of 6 business models and key metrics to focus on • How to use Lean Analytics at every stage of your startup & for big companies / intrapreneurs • Examples of “what’s ideal” for each major metric • The penny machine • The three-threes model • How crowdfunding fits in • How to instill a culture of analytics • Case studies from Circle of Moms, AirBnB, WP Engine, SEOmoz, Backupify, Wooga and more!
  45. 45. Thank you!@byosko &