Questions every Startup faces - Lean Startup Circle Boston Jan 2011 Meetup Notes – Part 2

This is Part 2 of my notes from the Boston Lean Startup Circle January meetup. You may also want to check out Part 1 of the notes. Part 2 focuses on the key questions that Lean Startups face. What are the some of the key questions that every startup faces, and what are the some of the ways in which Lean Startups can find answers to those questions?

1. How do we know when to pivot? Lean Startup know to pivot when the product decisions and experiments are not “moving the needle”. The worst scenario that a startup can be is the so-called “Land of the Living Dead”, where there is some growth but not enough growth to have meaningful traction. And it is important that the “needle” is not something defined using vanity metrics.

2. How do Vision, Strategy and  Product relate to each other? Vision is all about the big picture. It is about changing the world.

 And you dont really iterate on the Vision. Strategy is about how you build a business to achieve that vision. And a Product is nothing but one instantiation of the strategy. When you pivot, what you do is to change strategy. You change who you sell to, how you sell or even what you sell.

1. **What should we measure? **Be sure not to track growth or traction using Vanity metrics. You might have gotten good PR and a lot of pageviews / uniques, but what is important is if those resulted in real conversions, and more importantly if those newly acquired users are engaged with the product. You need to take into account that Metrics are people too and define a set of “per customer metrics” that tracks user level engagement, retention and so on.

2. How do Products grow? At a fundamental level, how do you know if your product is growing?
3. Apply the Value Test: Ask yourself, does my product create value?

4. If so, Do you have an engine of growth : All successful businesses need a viable engine of growth. There are three typical engines of growth. a.) The Paid Engine of Growth: It is pretty simple, you just charge for your product b.) Viral Growth: Your product gets used more because of Virality, and your users have an incentive to spread the word about your product (Facebook is  the obvious example). c.) Sticky / Compounding Growth : This is when your users show unusually high engagement over long periods of time.

5. What is in the MVP? And How do I use Landing Page Testing when there is not enough traffic? The Minimum Viable Product (MVP) is the least amount of work needed to learn the most amount in whichever part of the business has the

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maximum uncertainty. If you are not quite sure if something should be in the MVP or not, then “NO” is a good answer. It is always possible to test demand using smoke tests and fake landing pages, even when there is not adequate Search traffic or if people are not searching for what you are building. Outside the now familiar example of DropBox, Eric also highlighted an interesting newer perspective on how they used Landing Page testing in IMVU.  At the time, IMVU was testing channels where IM/Chat would have demand. So they took a wide range of keywords with good traffic (Such as World of Warcraft, Starbucks etc,.), bid on these keywords and added the word “Chat” as part of the ad. While the absolute conversion rates (say 1.5 % for World of Warcraft and 0.2% for Starbucks didn’t mean anything), the fact that World of Warcraft Chat converted much higher _Relative to _Starbucks Chat is a strong signal on which would be a more effective channel.

1. **How do I help my organization Adopt Lean Methodologies? **The best way to show results / proof is to find one area where the current setup hurts the most and apply lean principles there. Be sure to try it where you have the authority. And if you are a founder, it is very important to know that you cannot delegate Customer Development to the “Sales Department”. Good Sales People don’t take no for an answer and Customer Development is all about listening to the NO that your prospective users says, factoring it into the product and pivoting. Bring on Paid Sales people when you have found a repeatable way to sell your product.

I have already been using some of these questions as a valuable way to power my “Validated Learning” . I am hoping to blog more about our pivots and metrics in the future. What is on your mind? What questions do you have as you apply Lean Startup principles to your idea? Let me know.