The Startup Way: How Modern Companies Use Entrepreneurial Management to Transform Culture and Drive Long-Term Growth

by Eric Ries

it’s essential that the dashboard encompass the value hypothesis and the growth hypothesis (from Chapter 4). Making these two concepts quantitative is a big improvement over the common way investors and entrepreneurs alike talk about product/market fit. For the value hypothesis: What is the specific customer behavior that indicates delight with the product?5 In Level 1, we might use a proxy variable for this, like net promoter score (NPS)6 or GrowthHackers founder and CEO Sean Ellis’s “very disappointed” survey.7 These are good indicators of customer satisfaction, but they are hard to translate into dollars and cents. How do we know what NPS score is “good enough” to convince people to invest more time and money into a project? By contrast, a Level 2 value hypothesis indicator should measure a behavior like repeat purchase, retention, willingness to pay a premium price, or referral. What threshold is “good enough”? That’s easy to answer now: whatever number is required to make our business plan’s spreadsheet add up.