SlideShare uses cookies to improve functionality and performance, and to provide you with relevant advertising. If you continue browsing the site, you agree to the use of cookies on this website. See our User Agreement and Privacy Policy.
SlideShare uses cookies to improve functionality and performance, and to provide you with relevant advertising. If you continue browsing the site, you agree to the use of cookies on this website. See our Privacy Policy and User Agreement for details.
Successfully reported this slideshow.
Activate your 30 day free trial to unlock unlimited reading.
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
Vanity Metrics - TechCrunch &
Co “mDialog raises 5 Million from Blackberry partners” “GroupMe is now sending one Million texts every day” “Google Plus hits 10 Million users in 2 weeks”
What’s a startup? A startup
is first of all an experiment, it is a human institution designed to deliver a new product or service under conditions of extreme uncertainty At its heart, a startup is a catalyst that transforms ideas 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 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
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 one performs better. I has a recent debate over wheter a 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)
David Cancel’s Funnel 2% “The
average conversion rate in the United States of America wheter you’re selling elephants or iPods” (by Avinash Kaushik - Analytics Evangelist, 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”)
Measuring Cost of Visits Cost
per click (site visits) Cost of campaign / Traffic generated (Social media) Cost of effort / Traffic generated
Measuring Cost of Acquisition Cost
of one visit / conversion rate = Cost of an Acquisition Acquisition could be paid for acquisition of free sign-up ...unfortunately is not so simple
Acquisition Cost of Acquisition <
Customer Lifetime Profit Then scale acquisition at a similar or lower rate A/B test acquisition channels to optimise
Acquisition including Referral If it
costs €3 to acquire a customer through advertising But a customer brought in 2 other customers through referral The COA of that channel is €1
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)
Returning Users Tracking unregistered users
that return often (useful for content sites with advertising) Tracking registered users that return and take some sort of action.
Viral Coefficient - Example Each
company customer invites 5 other customers via email 20% click on that email link 50% of those users convert into customers
Viral Coefficient A viral co-efficient
greater than 1 means that every customer gets more than one other customer on average Therefore your product will grow virally
Viral Cycle Time Viral Cycle
Time = the average time taken for a referral to turn into a customer With the viral coefficient and viral cycle time you can determine your viral growth
Net Promoter Score Net Promoter
Score: Number of people who would recommend your product to a friend A single question survey
Net Promoter Score “How likely
is it you would recommend my product to a friend or colleague?” 0 1 2 3 4 5 6 7 8 9 10 NPS = % Promoters - % Detractors
Net Promoter Score Survey a
small percentage of your customers by email weekly Record who you sent to so you don’t repeat the same people every week
Net Promoter Score NPS is
not a direct measurement that translates to key metrics Can act as a leading indicator of other metrics
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) 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 to hold 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)
(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)
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
Vanity Metrics - TechCrunch &
Co “mDialog raises 5 Million from Blackberry partners” “GroupMe is now sending one Million texts every day” “Google Plus hits 10 Million users in 2 weeks”
What’s a startup? A startup
is first of all an experiment, it is a human institution designed to deliver a new product or service under conditions of extreme uncertainty At its heart, a startup is a catalyst that transforms ideas 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 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
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 one performs better. I has a recent debate over wheter a 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)
David Cancel’s Funnel 2% “The
average conversion rate in the United States of America wheter you’re selling elephants or iPods” (by Avinash Kaushik - Analytics Evangelist, 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”)
Measuring Cost of Visits Cost
per click (site visits) Cost of campaign / Traffic generated (Social media) Cost of effort / Traffic generated
Measuring Cost of Acquisition Cost
of one visit / conversion rate = Cost of an Acquisition Acquisition could be paid for acquisition of free sign-up ...unfortunately is not so simple
Acquisition Cost of Acquisition <
Customer Lifetime Profit Then scale acquisition at a similar or lower rate A/B test acquisition channels to optimise
Acquisition including Referral If it
costs €3 to acquire a customer through advertising But a customer brought in 2 other customers through referral The COA of that channel is €1
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)
Returning Users Tracking unregistered users
that return often (useful for content sites with advertising) Tracking registered users that return and take some sort of action.
Viral Coefficient - Example Each
company customer invites 5 other customers via email 20% click on that email link 50% of those users convert into customers
Viral Coefficient A viral co-efficient
greater than 1 means that every customer gets more than one other customer on average Therefore your product will grow virally
Viral Cycle Time Viral Cycle
Time = the average time taken for a referral to turn into a customer With the viral coefficient and viral cycle time you can determine your viral growth
Net Promoter Score Net Promoter
Score: Number of people who would recommend your product to a friend A single question survey
Net Promoter Score “How likely
is it you would recommend my product to a friend or colleague?” 0 1 2 3 4 5 6 7 8 9 10 NPS = % Promoters - % Detractors
Net Promoter Score Survey a
small percentage of your customers by email weekly Record who you sent to so you don’t repeat the same people every week
Net Promoter Score NPS is
not a direct measurement that translates to key metrics Can act as a leading indicator of other metrics
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) 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 to hold 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)
(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)