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Lean Startup Marketing Driving Sustainable Growth at Normal Vs Network Effect Startups Sean Ellis Lean Startup LA August 10, 2010
Objectives for Today’s Meeting Apply lean startup principles to driving growth Normal startup Network effect startup Refine based on group feedback 2 startup-marketing.com
What are the Lean Startup Principles? Nail it then scale it Rapid hypothesis testing about market, pricing, customers (customers & markets unknown) MVP (Minimum viable product) Low burn by design (no scaling until revenue) Metrics, iteration, agile development Learn fast (fail fast) 3 startup-marketing.com
“Lean-ish” Mktg = Back-to-Back IPOs First Startup Goals (1996 launch) Lead online game category Get users at cost lower than user value (ARPU) Minimize waste via sophisticated metrics Second Startup Added Goals (2003 launch) Understand user perceptions of value Optimize funnel (reduce friction) 4 startup-marketing.com
“Value” in Normal Vs Network Effect Normal  Value same with 1 user or 1m users Google LogMeIn Xobni Network effect  Value improves with more users Facebook Skype Ebay 5 startup-marketing.com
Growing Valuable “Normal” Startup 6 startup-marketing.com
Creating Value: Normal Startup Product/market fit = product is “must have” (value) Become a “must have” with customer development Validate “value” assumptions early (who needs/why?) Get users on first release ASAP Find “must have” users/use cases Facts outside building (interviews then surveys) Pivot if necessary to create value 7 startup-marketing.com
Key “Value” Question on Survey.io “How would you feel if you could no longer use Product?” 8 startup-marketing.com
Start Transition to Growth 9 startup-marketing.com
After P/M fit: Race to Scale “Value” is perishable (“MH” window of opp) Focus on speed rather than short-term burn*  Long-term burn will be less with speed Difficult after “low burn” VC praise Requires major shift in culture 	Culture shifts from patience to speed * During growth transition 10 startup-marketing.com
Key Growth Transition Projects Understand– core value perceived Positioning - based on perceived value Right metrics – to focus resources Optimize conversions - LP & funnel Viable economics - business model Scalable growth strategy - who/intent? 11 startup-marketing.com
Optimize Before Growing Landing pages 12% 13% 8% … 12 startup-marketing.com
2. Visualize/Optimize Funnel Home Page 200,000 100000 50% Signup 50000 100,000 12.5& 12.5% Path 2 Path 1 25000 X000 25000 X% Path 1 (step 2) X000 X00 X% X% X% X% Paid Paid Free Free X000 X00 X00 X000 13 startup-marketing.com
Better conversion efficiency and rev per user       Improves range & scalability of viable channels 14 startup-marketing.com
Scalable Growth Now Possible 15 startup-marketing.com
Test from Free to Paid Channels 16 startup-marketing.com
Driving/Managing Growth Spend as many positive ROI dollars as possible 17 startup-marketing.com
Normal Startup Easy VS Network Effect 18 startup-marketing.com
Network Effect Business     Critical Mass Required for Full Validation (Lean is normally antithesis of “get big fast”) 19 startup-marketing.com
Pre Growth Prep for Network Effect Customer Dev critical to validate up front Raise enough money to get past “no man’s land” Define minimum viable critical mass (MVCM) Facebook– Harvard, Twitter - SXSW Within region, demographic, product type (mkt place)… Have strategy for “priming the pump” (or fly wheel) 20 startup-marketing.com
Scale & Optimize On the Fly Scale growth to MVCM (minimum viable critical mass) Generate revenue early Engage users to reposition, iterate and optimize on the fly Engage to validate gratification reached Replicate approach for next critical mass after gratification in first MVCM 22 startup-marketing.com
Priming the Pump (for Some)* Create network balance Ebay, dating sites, etc. Example short-term strategies Subsidize customer acquisition for dragging 1/2 Services or hands on to “fake” balance (Aardvark) *i.e. if buyers and sellers 21 startup-marketing.com
Network Effect = P/M Fit After Critical Mass Product/Market Fit (Reposition on Value) Get Efficient Conversions Drive Growth 23 startup-marketing.com
But Standard Pyramid for Most 24 startup-marketing.com

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Startup Marketing Slides from Lean Startup Circle LA

  • 1. Lean Startup Marketing Driving Sustainable Growth at Normal Vs Network Effect Startups Sean Ellis Lean Startup LA August 10, 2010
  • 2. Objectives for Today’s Meeting Apply lean startup principles to driving growth Normal startup Network effect startup Refine based on group feedback 2 startup-marketing.com
  • 3. What are the Lean Startup Principles? Nail it then scale it Rapid hypothesis testing about market, pricing, customers (customers & markets unknown) MVP (Minimum viable product) Low burn by design (no scaling until revenue) Metrics, iteration, agile development Learn fast (fail fast) 3 startup-marketing.com
  • 4. “Lean-ish” Mktg = Back-to-Back IPOs First Startup Goals (1996 launch) Lead online game category Get users at cost lower than user value (ARPU) Minimize waste via sophisticated metrics Second Startup Added Goals (2003 launch) Understand user perceptions of value Optimize funnel (reduce friction) 4 startup-marketing.com
  • 5. “Value” in Normal Vs Network Effect Normal Value same with 1 user or 1m users Google LogMeIn Xobni Network effect Value improves with more users Facebook Skype Ebay 5 startup-marketing.com
  • 6. Growing Valuable “Normal” Startup 6 startup-marketing.com
  • 7. Creating Value: Normal Startup Product/market fit = product is “must have” (value) Become a “must have” with customer development Validate “value” assumptions early (who needs/why?) Get users on first release ASAP Find “must have” users/use cases Facts outside building (interviews then surveys) Pivot if necessary to create value 7 startup-marketing.com
  • 8. Key “Value” Question on Survey.io “How would you feel if you could no longer use Product?” 8 startup-marketing.com
  • 9. Start Transition to Growth 9 startup-marketing.com
  • 10. After P/M fit: Race to Scale “Value” is perishable (“MH” window of opp) Focus on speed rather than short-term burn* Long-term burn will be less with speed Difficult after “low burn” VC praise Requires major shift in culture Culture shifts from patience to speed * During growth transition 10 startup-marketing.com
  • 11. Key Growth Transition Projects Understand– core value perceived Positioning - based on perceived value Right metrics – to focus resources Optimize conversions - LP & funnel Viable economics - business model Scalable growth strategy - who/intent? 11 startup-marketing.com
  • 12. Optimize Before Growing Landing pages 12% 13% 8% … 12 startup-marketing.com
  • 13. 2. Visualize/Optimize Funnel Home Page 200,000 100000 50% Signup 50000 100,000 12.5& 12.5% Path 2 Path 1 25000 X000 25000 X% Path 1 (step 2) X000 X00 X% X% X% X% Paid Paid Free Free X000 X00 X00 X000 13 startup-marketing.com
  • 14. Better conversion efficiency and rev per user Improves range & scalability of viable channels 14 startup-marketing.com
  • 15. Scalable Growth Now Possible 15 startup-marketing.com
  • 16. Test from Free to Paid Channels 16 startup-marketing.com
  • 17. Driving/Managing Growth Spend as many positive ROI dollars as possible 17 startup-marketing.com
  • 18. Normal Startup Easy VS Network Effect 18 startup-marketing.com
  • 19. Network Effect Business Critical Mass Required for Full Validation (Lean is normally antithesis of “get big fast”) 19 startup-marketing.com
  • 20. Pre Growth Prep for Network Effect Customer Dev critical to validate up front Raise enough money to get past “no man’s land” Define minimum viable critical mass (MVCM) Facebook– Harvard, Twitter - SXSW Within region, demographic, product type (mkt place)… Have strategy for “priming the pump” (or fly wheel) 20 startup-marketing.com
  • 21. Scale & Optimize On the Fly Scale growth to MVCM (minimum viable critical mass) Generate revenue early Engage users to reposition, iterate and optimize on the fly Engage to validate gratification reached Replicate approach for next critical mass after gratification in first MVCM 22 startup-marketing.com
  • 22. Priming the Pump (for Some)* Create network balance Ebay, dating sites, etc. Example short-term strategies Subsidize customer acquisition for dragging 1/2 Services or hands on to “fake” balance (Aardvark) *i.e. if buyers and sellers 21 startup-marketing.com
  • 23. Network Effect = P/M Fit After Critical Mass Product/Market Fit (Reposition on Value) Get Efficient Conversions Drive Growth 23 startup-marketing.com
  • 24. But Standard Pyramid for Most 24 startup-marketing.com

Editor's Notes

  1. Value can’t be dictated, it has to be crowd sourcedSomebody loves it - who, why?Fine tune product, messaging around this “must have” use case
  2. Landscape of choices quickly changes. Only a “must have” when no good alternatives, then “nice to have”
  3. Range and scalability of viable channels dramatically increases
  4. Becomes more like regular marketing (but keep metrics driven discipline)
  5. Acquisition, Activation, Retention, Referral, Revenue
  6. Range and scalability of viable channels dramatically increases
  7. Range and scalability of viable channels dramatically increases