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Lean Business StartupsStartups Mission
Rigorously Measure Status, Experiment Towards Goals
Class 3
Startup Navigation
3 Growth Engines
What Makes A Good Metric
Practical Application
How to think of startup navigation…
A startup’s job is to:
• (1) rigorously measure where it is right now, confronting the hard truths that assessment reveals
• (2) devise experiments to learn how to move the real numbers closer to the ideal reflected in the business plan.
Experiment toward the ideal
Problem Fit Market FitMVP
Your Goals
Surveys - Presentations - Sales Pages – Demos – Crowdfunding – Concierge – Launch - Scale
Pivot or Persevere
Problem Fit Market FitMVP
Your Goals
Pivot
Death Valley
Pivot Example
•When numbers are not improving
•Pivot
On-Line
Game
Casino
Sponsors
Player
Instruction
Good Metrics
•Comparable
•Understandable
•Relevant to model goals
•Actionable
•Ratios
What characteristics of Good Metrics do we see in a Nissan 350Z?
General Startup Metrics
• Signups(Activations)/Week
•Customer Lifetime Value (Earnings/Customers)
•Viral Coefficient (Referred Users/User)
•Viral Cycle Time (Months/Referred User)
E-Commerce Startup Metrics
•Conversions/Click
•Average Shopping Cart Size
•Abandonment %
•Customer lifetime value
•Net subscriber gain.
•Mailing List Conversions
Membership Startup Metrics
•Net Member Gain (per month)
•Visits Per Month – Stickiness
•Member Acquisition Cost
•Member Content Creation
•Churn
• Sharing & Virality
•Notification Effectiveness
Cohorts
•Reduce Noise In Measurements
•Users Sharing a Common Experience.
• Track through lifestyle
•Comparable
Cohort Example
• Site users spend the most in their first month
• Site has good growth
• As older users mix with newer, average spending decreases.
• No way to see the cause without splitting user base into monthly cohorts
1 2 3 4Month
Use
r P
urc
has
es
Time >>
Avg
Rev
enu
e/C
ust
om
er
Tuning The Three Engines of Growth
StickyUnique VisitorsPages / VisitVisits / Month
PaidRevenue / MemberPaid Member %Churn
ViralReferrals / MemberReferral Cycle Time
Pick your
#1
Leap of Faith
Draw a
Line in
the Sand
Build and Run
Experiement
Line in the
Sand Met?
Pivot
Never Gonna Happen.
Yes!Next Assumption
Not Quite.Tune withNew Experiment
Lean Cycle
Experiments Review
1. Who did we talk to
2. Discoveries?
3. Value
4. Differently next time
Q&A of Prospective Experiments
Tools / Resources
• Lean Analytics: http://leananalyticsbook.com
$9.60 on Kindle
Homework is Fun!!!
•What to Measure
•Draw Lines in the Sand
• Tally up a Few Metrics
• Envision Next Experiment
•NEXT TIME: Pricing – Modelling Financials - Pitching