Wednesday, August 21, 2013

Lean Startup Implementation Lessons

Guest post by Lisa Regan, writer for The Lean Startup Conference.

The Lean Startup Conference was founded four years ago to bring together real entrepreneurs who have applied Lean Startup techniques and have useful advice to share with each other. Last year’s conference was no exception: speakers talked about their direct experience with practices you may need help implementing—things like metrics, feedback, and experimentation. This year’s conference will go deeper on advanced entrepreneurship topics, and we wanted to get you up to speed on some of the key ideas from 2012.

Metrics play a big role in any conversation around implementation. But which numbers matter, and which are vanity metrics--numbers that make you feel good, but don’t actually tell you how you’re doing? At last year’s conference, Red Room CEO and co-founder Ivory Madison pointed out that vanity metrics are among those numbers most commonly cited in investor decks: page views, new members, unique visitors, conversions and, vainest of them all, Twitter followers. None of these, she says, provides information about how well your company is delivering on your business model, nor about the true lifecycle of a customer. Instead, Ivory says, track metrics that capture revenue, observe the behavior of real, individual customers, and demonstrate cause and effect, or how you can replicate a result. These show success at your core business. For the details, here’s Ivory:

Running Lean author Ash Maurya seconded Ivory’s advice. He counsels tracking only five kinds of behaviors: Acquisition (how do users find you?), Activation (do they have a great first experience?), Retention (do they return?), Revenue (how do you make money?), and Referral (do users tell others?). He also advised making it your goal to move just one of these measures at a time, and described his own effort to improve activation with an experiment that yielded unexpected results at pretty much every turn. Check out his talk for the specifics of how Ash tests a metric:

On the subject of experimentation, few have learned more than Matt Brezina, whose company Sincerely launched nine products in its first year to form a group of apps that are the world’s largest gifting network. Matt has deep experience in mobile development and nailed down ten steps to rapid app development, noting that mobile is an environment not obviously compatible with Lean Startup techniques. His talk covered building a minimum viable product (in his case, an app that let people send their kids a photo of Santa) to test basic processes like billing and delivery, reasons for testing in Canada rather than the US (really!), and buying cheap users—plus it encompassed team structure and time management. The talk is detailed and specific—a must-see for anyone in app development:

For one last example of experimentation, we point you toward a short, inspiring talk from Alejandro Velez and Nikhil Arora of Back to the Roots. These two Berkeley grads heard from one of their professors that it was possible to grow mushrooms in coffee grounds. Based on that thin evidence, they became full-time urban mushroom farmers. But what got them into retailers like Bed Bath & Beyond was a series of experiments they ran at farmer’s markets, where they used a timer to test whether they could get more engagement from customers if, in addition to fresh mushrooms, they also offered mushroom growing kits. Results: “For the first time, we were having kids and families engage with us,” Alejandro said, “and they would be with us for minutes.” The kits enormously increased engagement—but it’s important that this product change did not actually alter their mission. Here’s Nikhil: “Our vision has remained the same since day one: making food personal again. But that test…actually shifted our vision from growing fresh product, fresh mushrooms, to educational products that can inspire people to grow their own food."

Alejandro and Nikhil were listening to their customers, a theme Lean Startup constantly returns to. Last year we heard a variety of strategies for getting customer feedback, beginning with Tendai Charasika of Greater Louisville, Inc. offering ten ways founders can get out of their offices. His tips include some crucial reminders (i.e., don’t just ask your mom for her opinion) to some things you may never have considered, like moving your offices to where your clients are, rather than to where the other startups are.

We also had one very specific tip from Adam Goldstein of travel site Hipmunk: install live chat on your site. Live chat gets real-time feedback and accurate information about where customers are getting hung up. “People don’t email to say that something is tricky to use,” Adam pointed out.

At this year’s conference, we’re bringing in speakers who are ready to describe the exact methods they use to implement Lean Startup methods, what numbers they look at, how they pivot from them, how they test their product, and how they find out what their customers want. In upcoming posts we’ll fill in the details about our breakout sessions where you can directly ask successful entrepreneurs, “So how do I do this?” We sell tickets in blocks—when one block sells out, the price goes up. Our current block of tickets is nearly sold out, so register today.

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