leananalytics

Founders are magpies, chasing the shiniest new thing they see. They often use the pivot as an enabler for chronic ADD, rather than as a way to iterate through ideas in a methodical fashion. But one of the keys to startup success is achieving real focus and having the discipline to maintain it. You may succeed if you’re unfocused, but it’ll be by accident. You’ll spend a lot more time wandering aimlessly, and the lessons learned are more painful and harder-won. If there’s any secret to success for a startup, it’s focus.  Focus doesn’t mean myopia. We’re not saying that there’s only one metric you care about from the day you wake up with an idea to the day you sell your company. We are, however, saying that at any given time, there’s one metric you should care about above all else. Boiled down to its very essence, Lean Startup is really about getting you to focus on the right thing, at the right time, with the right mindset. As noted in Chapter 5, Eric Ries talks about three en...

Over the years we’ve seen a number of frameworks emerge that help us understand startups and the changes they undergo as they grow, find their markets, and help startups acquire customers and revenue. Each framework offers a different perspective on the startup lifecycle, and each suggests a set of metrics and areas on which to focus. After comparing and contrasting a number of these frameworks, we’ve created our own way to think about startups, and in particular the metrics that you use to measure your progress. We’ll use this new framework throughout the book—but first, let’s take a look at some of the existing frameworks and how they fit into Lean Analytics. Dave McClure’s Pirate Metrics Pirate Metrics—a term coined by venture capitalist Dave McClure—gets its name from the acronym for five distinct elements of building a successful business. McClure categorizes the metrics a startup needs to watch into acquisition, activation, retention, revenue, and referral—AARRR.* Figure...

Data is a powerful thing. It can be addictive, making you overanalyze everything. But much of what we actually do is unconscious, based on past experience and pragmatism. And with good reason: relying on wisdom and experience, rather than rigid analysis, helps us get through our day. After all, you don’t run A/B testing before deciding what pants to put on in the morning; if you did, you’d never get out the door. One of the criticisms of Lean Startup is that it’s too data-driven. Rather than be a slave to the data, these critics say, we should use it as a tool. We should be data-informed, not data-driven. Mostly, they’re just being lazy, and looking for reasons not to do the hard work. But sometimes, they have a point: using data to optimize one part of your business, without stepping back and looking at the big picture, can be dangerous—even fatal. Consider travel agency Orbitz and its discovery that Mac users were willing to reserve a more expensive hotel room. CTO Roger Liew to...

As a founder, you’re trying to decide what to spend the next few years of your life working on. The reason you want to be lean and analytical about the process is so that you don’t waste your life building something nobody wants. Or, as Netscape founder and venture capitalist Marc Andreesen puts it, “Markets that don’t exist don’t care how smart you are.”*  Hopefully, you have an idea of what you want to build. It’s your blueprint, and it’s what you’ll test with analytics. You need a way of quickly and consistently articulating your hypotheses around that idea, so you can go and verify (or repudiate) them with real customers. To do this, we recommend Ash Maurya’s Lean Canvas, which lays out a clear process for defining and adjusting a business model based on customer development. We’ll discuss Ash’s model later in this chapter. But the canvas is only half of what you need. It’s not just about finding a business that works—you also need to find a business that you want to work on....

How to Keep Score Analytics is about tracking the metrics that are critical to your business. Usually, those metrics matter because they relate to your business model— where money comes from, how much things cost, how many customers you have, and the effectiveness of your customer acquisition strategies. In a startup, you don’t always know which metrics are key, because you’re not entirely sure what business you’re in. You’re frequently changing the activity you analyze. You’re still trying to find the right product, or the right target audience. In a startup, the purpose of analytics is to find your way to the right product and market before the money runs out. What Makes a Good Metric? Here are some rules of thumb for what makes a good metric—a number that will drive the changes you’re looking for. A good metric is comparative. Being able to compare a metric to other time periods, groups of users, or competitors helps you understand which way things are moving. “Increased conv...