leananalytics

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...

We’re All Liars Let’s face it: you’re delusional.  We’re all delusional—some more than others. Entrepreneurs are the most delusional of all. Entrepreneurs are particularly good at lying to themselves. Lying may even be a prerequisite for succeeding as an entrepreneur—after all, you need to convince others that something is true in the absence of good, hard evidence. You need believers to take a leap of faith with you. As an entrepreneur, you need to live in a semi-delusional state just to survive the inevitable rollercoaster ride of running your startup. Small lies are essential. They create your reality distortion field. They are a necessary part of being an entrepreneur. But if you start believing your own hype, you won’t survive. You’ll go too far into the bubble you’ve created, and you won’t come out until you hit the wall—hard—and that bubble bursts. You need to lie to yourself, but not to the point where you’re jeopardizing your business. That’s where data comes in. Your d...