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

On January 30, 2011, In customer development, leanstartup, Lessons Learned, by Anand Rajaram

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?

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.
How do Vision, Strategy and Product relate to each other?
Vision is all about the big picture. It is about changing the world. And youdont 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.
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.
How do Products grow?
At a fundamental level, how do you know if your product is growing?
1. Apply the Value Test: Ask yourself, does my product create value?
2. 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.
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

MVP - Photo courtesy of Scragz @ Flickr

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.
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.

Tagged with: leanstartup

Notes from Lean Startup Circle Boston Jan 2011 Meetup – Part 1

On January 28, 2011, In customer development, leanstartup, Lessons Learned, by Anand Rajaram

Lean Startup Jan Meetup was exciting, thanks to a presentation by Eric Ries. Thanks to HBS and their course on Entrepreneurial Management, I am hoping Eric will be around town more often, and we get to pick his brains on all kinds of interesting things on Lean Startups. The original announcement promised to go “Beyond methodology”. I felt like Eric couldn’t get to a lot of the ”new material” until the end, which was a bummer, but the Q & A session made up for that in some ways.

This is Part 1 of my notes from the session (some of them are recaps, all the way back to #sllconf last year). Stay tuned for Part 2 over the weekend.

The Unit of progress in a startup cannot be that of ”advancing to the next stage”. That way of looking at things, is mostly based on three “Shadow Beliefs” :
- We know what customers want
- We can actually predict the future
- Advancing the plan is “progress”

Instead, the more appropriate unit of progress in a Startup is ”Validated Learning”. In effect, your startup’s success depends on how many times you can go through the “Build -> Measure -> Learn” loop, and you maximize the number of times through the loop, by optimizing through the ENTIRE LOOP and not just a specific part of it.

When you are in a startup, you no longer have a functional discipline. You are not a programmer, not a marketer, you should do whatever is needed at that moment. Personally, I am a big believer in this idea, and this is one big part of what motivates me to start / work for a startup. I have had intense discussions on term sheets, design and send email marketing, hack a script to do cohort analysis, figure out a weird issue with “phrase search” in our search engine and be on phone-support and live-chat support, all in the same week.
Insert Customary slide about pivot being the “P-word” and funny NewYorker cartoon :
Now it gets interesting. Eric crystallized Lean startups into 5 important principles:
- Entrepreneurs are everywhere : In effect, wherever there is uncertainty, there is entrepreneurship. This is a bit of a blue-sky, mom-and-apple-pie notion, but I’ll play along. Every earth shattering idea is something simple at its core and this could be one such core of Lean Startups. The larger point is that Lean Principles need not be applicable only to startups, they can as well be applied to other contexts.
- Entrepreneurship IS management : Entrepreneurial management is a peer-level to the more traditional MBA-like General Management. One is not better than the other, they are just different. General Management focuses on processes, efficiencies, scale while Entrepreneurial Management focuses on trying to find a sustainable business model.
- Validated Learning: See notes above
- Build – Measure – Learn: Refer to the Kent Beck session notes from my earlier blog post from #sllconf 2010
- Innovation Accounting: It is essential for a startup to focus on actionable data, and not on vanity metrics. Metrics that always go up and to the right (such as Cumulative total accounts) don’t matter. Metrics that reflect random environmental events, press releases (such as Pageviews) don’t matter. Metrics that focus on Per customer engagement are very important. How many times have users logged in? How many people have they referred? (#aarrr). Eric’s point was that we need an accounting paradigm that lets entrepreneurs communicate quantitatively what they have done by way of validated learning. This kind of a paradigm will be helpful when raising money. (I really like this term, and I hope it doesn’t get abused and overused like Pivot was)

And here are the soundbites from my twitter stream during the event :

Did you attend the event? What did you get out of it? Stay tuned for Part 2, for some of the questions that every lean startup faces and how to head in the right direction when faced with those questions.

Anatomy of an Apple email

On January 11, 2011, In leanstartup, marketing, by Anand Rajaram

Last week, I had posted an analysis of a customer service email I received from Apple. It had all the elements of a well-written email (and there is a happy ending to that story, Apple refunded me the money!). Flowtown, (which I knew first as a case study for a Lean Startup ) has dissected the anatomy of Apple’s promotional email.

Clear layout, Well designed call to actions, and useful tips (such as Did you know?) are the hallmarks of a good converting email. Here is the complete anatomy . Thanks, Flowtown.

Tagged with: design • email marketing • lifecycle marketing

The LeanStartup’s guide to scoring a post on TechCrunch

On August 20, 2010, In leanstartup, marketing, by Anand Rajaram

Back in the heydays of blogging, the recipe for getting your startup mentioned in popular blogs like TechCrunch, went something like this:

Start following the blogs of those who care about
Be interesting and start commenting in their blog posts
Over time, you will develop a rapport with the author
When your product is beta, invite them to try
Try to get a few of them to write on the same day, and start with a splash.

But by now, it is pretty obvious that the top tier bloggers are pretty much as “ivory-towered” as reputed MSM reporters. Whats more, just last week, I read in a post in Techcrunch, touting a Chrome plugin that removes TechCrunch comments. All those tips from the self-proclaimed social media experts aren’t worth the keyboard in which they were typed on. Hmm, what is a leanstartup slogging their behind off in a garage to do? Enter me.

I took it upon myself to come up with this flow-chart, that should this whole process as easy as 1-2-3. Here it is

techcrunch-2.post.png

Have you had luck scoring a post with TechCrunch? What has worked for you?

Tagged with: marketing • startup

Drinking from the Fire-hose – Lessons I learned from the Startup Lessons Learned Conference : Part 1

On April 26, 2010, In customer, customer development, leanstartup, by Anand Rajaram

I spent a good chunk of Friday drinking at the Cambridge Innovation Center attending the Boston Simulcast of the Startup Lessons Learned Conference (#sllc) Oh, I mean drinking from the proverbial firehose.

While every talk was pretty good, I am first going to summarize those from which I learnt the most (in the order in which they appeared in the conference). You may also want to check out the list of my tweets from the conference. This is Part of 1 of the Lessons that I learned from the conference. (Update : Part 2 never materialized because I was busy “getting out of the building” and building awesome scanner software that people are willing to pay fo)

Kent Beck on To Agility and Beyond: Kent made a case that the ”Build” -> “Measure” -> “Learn” loop is actually backwards and that it ought to be “Learn” -> “Measure” -> “Build” or put more elaborately, it is to say :

Make an assumption
Identify how you will validate it, and
Build something to validate it.But as Ash Maurya comments on Kent’s blog post, I think the loop is just as fine, depending on your definition of “Build” (Build can be something as small as a dummy landing page or a mockup). The larger takeaway for me was how Kent expanded the Agile Manifesto to Customer Development. Specifically, these extension points were the most interesting to me.

Pre-Agile	Agile	Extension for Cust.Dev.
Comprehensive Documentation	Working Software	Validated Learning
Contract Negotiation	Customer Collaboration	Customer Discovery
Following a plan	Responding to change	Initiating change

And finally, Kent highlighted that Good engineering is not the same as Good Startup Engineering. Good Startup engineering involves making the transitions from “hack” mode to “scale” mode to “optimize” mode, transitions which define the success of a startup.

Ash Maurya on Continuous Deployment: I was originally amazed when I first read about Eric Reis mention 50 builds a day. My most important takeaway from this was that it is not necessary to think of continuous deployment as a mega project. In fact, that is against the spirit of being lean. Start somewhere meaningful, and keep chipping at it.
IMVU Team on Scaling Customer Development : This was the most informative talk of the conference. It was great to get insights into a how a moderately big-size company does Customer development and if the concept Scales. Well, it does! But you have to watch for some traps.

Too much emphasis on customer facing changes will likely increase technical debt: I can definitely related to this. This is precisely while we have instituted a “Kaizen Sprint” at OfficeDrop. The Kaizen Sprint is a short sprint at the end of every 3 sprints, with the goal of reducing the technical debt accumulated during the prior sprints.
“Big bet” projects could become next to impossible and a missed opportunity : Yep. When your “radar” is defined by two sprints ahead and you are constantly thinking “Minimum Viable Product”, you absolutely run the risk of doing this. One way to mitigate the effect of such narrow/sharp focus is to institute “hack weeks” (or the Atlassian-inspired variation – FedEx Days that we do at OfficeDrop). Developers can work on whatever they want for that time period and at the end of that, the Product Owner decides on incorporating it back in the product or adds it to the backlog.[Update : Thanks @bdurrett for links to the slides and video from the conference]

Eric Reis’ chat with Randy Komisar : This was the highlight of the conference for me. Randy’s “sage-advice” was that once a startup gets funded, the business plan goes to the trash and gets replaced by a Business Dashboard. No, there is no template for that Dashboard, because that would then be relegated to the same usefulness as the plan. Fundamentally, the dashboard culturally represents your company, is relevant to your industry AND most importantly, is helpful to you to provide a sense for where the company is headed. Here are the key components of what should be in a Dashboard

Your “leap-of-faith” questions: These are the fundamental questions that will determine if your product will succeed. For example, for the Sony Walkman, the question was whether people would stick in headsets in a subway, rather than talk to other people.
What you measure to track those questions: These would include the typical vanity metrics, but also those that are specific to your product / business
What are your alternatives if you don’t track against those metrics : This basically forces you to ask the question of “Do we pivot”?

I still have a ton of goodness to write about, including wicked cool stories about Aardvark, KISSMetrics, DropBox and an inspirational talk by Steve Blank. Some teaser questions for you until then (one easy, one not-so). Do you know who founded GM? Do you know who was the rockstar CEO of GM in the early 20th century?

Startup Product Manager

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

Notes from Lean Startup Circle Boston Jan 2011 Meetup – Part 1

Anatomy of an Apple email

The LeanStartup’s guide to scoring a post on TechCrunch

Drinking from the Fire-hose – Lessons I learned from the Startup Lessons Learned Conference : Part 1

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