Lean Startup

is awesome

Who Am I

Joshua Cyr

Developer and Startup Enthusiast

Owner Alpha Loft - Coworking in Portsmouthfocused on tech/creative/startup

Run the Startup Meetup / Web Dev Meetup

What is Lean StartupLean Startup is a rigorous process for iterating from Plan A to a plan that works.

Leap of Faith Hypothesis

Your business model is actually a leap of faith.

Find a way to test your hypothesis as quickly as possible.

ExamplesWill people listen to music privately in public setting?

Will people pay for music online?

Will people share their personal moments on video in a public portal?

Will people share their dating interests publicly?

Feedback Loop

My MVPThe term ‘Minimum Viable Product’ is best thought of as “the smallest iteration of work you can do to validate your assumptions”.

The product in MVP can be a misnomer as it’s not always a tactile object.

Minimum Viable ProductHow we test our Leap of Faith.

How we know what is working and not.

How we do it quickly.

Minimum Viable ProductIterate often.

Measure EVERYTHING

Fail quickly and learn from it to improve.

Minimum Viable Product

Short CyclesStuffing Envelopes - Efficiency vs Reality

What if something is wrong?

We can perfectly execute what ends up being a failed hypothesis.

Customer InterviewsThe average person isn’t usually very good at giving feedback on something that doesn’t exist.

That’s why we create a small product for our customer to play with.

MeasuringInnovation Accounting and Measurement

Build into our product and process such as Split Tests.

Learn from mistakes.

Cohort Analysis

Sign Up 9700 (100%)

Download5804 (59%)

Activate/Install3186 (32%)

Purchase1147 (12%)

Full Month

Cohort Analysis

Sign Up 2100 (100%)

Download1218 (58%)

Activate/Install630 (30%)

Purchase210 (11%)

Week 1

Sign Up 2450 (100%)

Download1470 (60%)

Activate/Install808 (33%)

Purchase269 (11%)

Week 2

Sign Up 2550 (100%)

Download1530 (60%)

Activate/Install1020 (40%)

Purchase408 (16%)

Week 3

Sign Up 2600 (100%)

Download1586 (61%)

Activate/Install728 (28%)

Purchase260 (10%)

Week 4

Sign Up 9700 (100%)

Download5804 (59%)

Activate/Install3186 (32%)

Purchase1147 (12%)

Full Month

Split Test

Sign Up 2100 (100%)

Download1449 (69%)

Activate/Install945 (45%)

Purchase630 (30%)

Layout A

Sign Up 2450 (100%)

Download1470 (60%)

Activate/Install808 (33%)

Purchase269 (11%)

Layout B

Sign Up 2000 (100%)

Download1100 (55%)

Activate/Install600 (30%)

Purchase200 (10%)

Control

Build Into Your MVPTo properly measure we need it built INTO our Minimum Viable Product.

Which means it must be part of your MVP, not tacked on after.

Vanity MetricsMillions of downloads vs no activations.

Incredible website growth vs no paying customers.

20% month over month customer registrations vs flatline customer return rate.

Useful MetricsActionable:Is there a clear cause and effect?

Accessible:Is the measurement simple to understand and available to all? Internal finger pointing?

Auditable:Is the measurement credible to all employees?

Growth EnginesHow can we understand our likely growth engine so that we may know how to measure and thus improve?

Sticky EngineExample: Games, Auction Sites

Measuring new customers not enough

information.

Customer retention and Churn rate of existing

customers key.

Customer Acquisition must be > Attrition

Reducing Churn is key aim.

Viral EngineSocial Networks, Tupperware

Viral Coefficient is key measurement

1 person in 10 recommends product = 0.1

Not a sustainable loop.

1.0+ Coefficient = 1 person brings > 1 new

person in.

1.0 becomes exponential

Viral Engine Visual

Viral Engine ExampleHotmail

Sluggish growth at first.Added "P.S. Get your free email on Hotmail" to bottom of every email.

1 Million in 6 Months5 Weeks later 2 Million.18 Months later 12 Million / $400 Million Sale.

Paid EngineMeasure Lifetime Value of Customer

Must be greater than Customer Acquisition Cost.

Customer Acquisition includes Advertising, Outbound Sales, Retail Location, etc.

Lifetime value > Acquisition cost = growth

Tuning Feedback Loop Key

8% vs 10%

Tuning Feedback Loop Key8% vs 10%

Compounding Growth Rate As Of Company A Company B

Six Months Ago 0.5% 9.8%

Five Months Ago 2.0% 9.6%

Four Months Ago 3.2% 9.9%

Three Months Ago 4.9% 9.8%

Two Months Ago 6.1% 9.7%

One Month Ago 8.0% 10.0%

Burn Raterunway = cash on hand / burn rate

# iterations = runway / speed of each iteration

How many iterations do you have left?

How many businesses are exactly the same as when they started off?

Time to PivotIs it time to change direction?

Options:● Zoom In: Focus on one Feature● Change Vertical Markets● Focus on new Customer Segment● New Product Idea Entirely

Goal is to do this before you run out of funds.

Pivot ExamplesGroupon

Twitter

Draw Something

Instagram

How To ContactAlphaLoft.comSeacoast.io

@jcyr@alpha_loft

jcyr@joshuacyr.com