More on this book
Community
Kindle Notes & Highlights
Build-Measure-Learn feedback loop.
New term
appetite
Yet successful startups are full of activities associated with building an institution: hiring creative employees, coordinating their activities, and creating a company culture that delivers results.
To open up a new business that is an exact clone of an existing business all the way down to the business model, pricing, target
customer, and product may be an attractive economic investment, but it is not a startup because its success depends only on execution—so much so that this success can be modeled with high accuracy.
unpredictable, customers face a growing array of alternatives, and the pace of change is ever increasing.
Is it any wonder that learning has a bad name in entrepreneurial and managerial circles?
What should we build and for whom? What market could we enter and dominate? How could we build durable value that would not be subject to erosion by competition?
Most of the time customers don’t know what they want in advance.)
The effort that is not
absolutely necessary for learning what customers want can be eliminated. I call this validated learning because it is always demonstrated by positive improvements in the startup’s core metrics.
launching a low-quality early prototype, charging customers from day one, and using low-volume revenue targets as a way to drive accountability.
Think Big, Start Small
We could survey them to get their opinion, but that would not be very accurate because most people have a hard time
assessing their feelings objectively.
Experiments provide a more accurate gauge. What could we see in real time that would serve as a proxy for the...
This highlight has been truncated due to consecutive passage length restrictions.
retention rate of those employees.
A likely way this program could expand is through viral growth. If that is true, the most important thing to measure is behavior: would the early participants actively spread the word to other employees?
Do consumers recognize that they have the problem you are trying to solve? If there was a solution, would they buy it? Would they buy it from us? Can we build a solution for that problem?”
KISSinsights,
“Success is not delivering a feature; success is learning how to solve the customer’s problem.”
, the products a startup builds are really experiments; the learning about how to build a sustainable business is the outcome of those experiments. For startups, that information is much more important than dollars, awards, or mentions in the press, because it can influence and reshape the next set of ideas.
Why Startups?
BUILD-MEASURE-LEARN FEEDBACK LOOP
The two most important assumptions are the value hypothesis and the growth hypothesis. These give rise to tuning variables that control a startup’s engine of growth.
The method I recommend is called innovation accounting, a quantitative approach that allows us to see whether our engine-tuning efforts are bearing fruit. It also allows us to create learning milestones, which are an alternative to traditional business and product milestones. Learning milestones are useful for entrepreneurs as a way of assessing their progress accurately and objectively; they are also invaluable to managers and investors who must hold entrepreneurs accountable.
Method?
leap-of-faith
Previous technology X was used to win market Y because of attribute Z. We have a new technology X2 that will enable us to win market Y2 because we too have attribute Z.
“It solved a critical question that Steve Jobs never had to ask himself: Will people listen to music in a public place using earphones?
break my business. In the iPod business, one of those leaps of faith was that people would pay for music.” Of course
Beyond “The Right Place at the Right Time”
What differentiates the success stories from the failures is that the successful entrepreneurs had the foresight, the ability, and the tools to discover which parts of their plans were
working brilliantly and which were misguided, and adapt their strategies accordingly. Value and
“get out of the building” and start learning.
“go and see for yourself”
Lean User Experience
Unfortunately, because customers don’t really know what they want, it’s easy for these entrepreneurs to delude themselves that they are on the right path.
the goal of the MVP is to begin the process of learning, not end it. Unlike a prototype or concept test, an MVP is designed not just to answer product design or technical questions. Its goal is to test fundamental business hypotheses.
Exp
unlikely to provide a head start. The only way to win is to learn faster than anyone else.
this system innovation accounting, an alternative to traditional accounting
startup’s job is to (1) rigorously measure where it is right now, confronting the hard truths that assessment reveals, and then (2) devise experiments to learn how to move the real numbers closer to the ideal reflected in the business plan. Most products—even the ones that fail—do not have zero traction. Most products have some customers, some growth, and some positive results. One of the most dangerous outcomes for a
The rate of growth depends primarily on three things: the profitability of each customer, the cost of acquiring new customers, and the repeat purchase rate of existing customers. The higher these values are, the faster the company will grow and the more profitable it will be. These are the drivers of the company’s growth model.
A smoke test measures only one thing: whether customers are interested in trying a product.
This is an important rule: a good design is one that changes customer behavior for the better.
cohort analysis.
our team is not working hard, not working effectively, or not working efficiently.
The alternative is the kind of metrics we use to judge our business and our learning milestones, what I call actionable metrics.
became clear that the key to student engagement was to offer them a combination of social and solo features.
Thus, stories could be cataloged as being in one of four states of development: in the product backlog, actively being built, done (feature complete from a technical point of
