Lean Startup Principles Throughout Your Company Lifecycle

Transcription

1 Lean Startup Principles Throughout Your Company Lifecycle Hiten Shah Strata, New York September, 2011 Introduce myself. Founder of KISSmetrics Our mission is to help businesses make better decisions.

2 Consulting company CE only successful one KM, venture backed Trying to be a jack of all trades :P 8 years doing business on the web

3 Failure attracted me to the Lean Startup I ve failed a lot and I want to fail faster and fail smarter. You can t succeed without trying a lot of things that don t work. The Lean Startup principles help you fail faster so you iterate to success.

4 Lean Startups are Built to Learn Key idea is that we should be learning about customers ALL the time. Validated learnings from customers are fuel for your heat seeking missile.

5 Lean Startup Heroes Sean Ellis Dave McClure Eric Ries Talking to one of these guys... I won t talk about them, since you all probably know of them. Personally, I ve learned a lot from them about startups and entrepreneurship. At KISSmetrics we use various principles from all of these guys to drive our business.

6 The Startup Pyramid The Race to the Top Growth Transition to Growth Product / Market Fit Sean Ellis: Startup-Marketing.com Sean Ellis and his 3 stages of a startup We use the Startup Pyramid to remind us where we are and what our success metrics should be. Product / Market Fit, Transition to Growth, Growth

7 AARRR Created by Dave McClure - 500startups.com Designed by 1. ACQUISITION Customers come from various channels 2. ACTIVATION Customers use product for first time YOUR PRODUCT 3. RETENTION Customers come back multiple times 4. REFERRAL Customers refer others 5. REVENUE Customers make your business money AARRR!!! Dave McClure s pirate metrics. Helps you frame key areas of your business based on a customer s lifecycle. We use this for idea generation.

8 Minimize TOTAL time through the loop IDEAS Learn Faster Split Tests Customer Interviews Customer Development Five Whys Root Cause Analysis Customer Advisory Board Falsifiable Hypotheses Product Owner Accountability Customer Archetypes Cross-functional Teams Semi-autonomous Teams Smoke Tests LEARN BUILD DATA CODE MEASURE Measure Faster Split Tests Funnel Analysis Clear Product Owner Cohort Analysis Continuous Deployment Net Promoter Score Usability Tests Search Engine Marketing Real-time Monitoring Real-Time Alerting Customer Liaison Predictive Monitoring Eric Ries: StartupLessonsLearned.com Build Faster Unit Tests Usability Tests Continuous Integration Incremental Deployment Free & Open-Source Components Cloud Computing Cluster Immune System Just-in-time Scalability Refactoring Developer Sandbox Minimum Viable Product And of course, Eric s lean startup graphic. It s about validated learnings about customers and increasing cycle time. So we can build something a LOT of people want to buy.

9 Build Faster Test Driven Development (TDD / Unit Tests) Continuous Deployment Continuous Integration Just-in-time Scalability (Amazon Web Services) On average we deploy new code fifty times a day. Timothy Fitz, IMVU Have the ability to ship code all day, every day. By doing this we are able to have many small releases, small batches of code which Leads to faster, more measurable iterations...

10 We have purposefully deployed: Poorly designed features Inflexible, short-sighted code Half-done features Known bugs Crappy code with major performance issues This has resulted in sub-par, sub-optimized code. But our customers don t care, in fact they are delighted by our daily iterations. Customer s don t care how awful the code is and you shouldn t either. Remember, it s about getting validated learnings... Don t build to scale from the start, build to learn first.

11 Measure Faster Funnels & Cohort Analysis (KISSmetrics) Feedback (NPS, Surveys, KISSinsights) Usability Testing (UserTesting, Mockups, etc...) Split Tests (A/B Testing) (KISSmetrics + Internal) It's about changing customer behavior -- for the better. Eric Ries, The Lean Startup Here are some key areas and tools we use for measuring our business. Idea is to focus on a few key pieces of data at any given time. Be able to experiment faster. Here is one way we do that...

12 Measure the Macro - Eric Ries We came up with a model for our business. We then established our actual baseline which became our macro metrics. Find the riskiest assumptions in your macro metrics. And attack them...

13 Learn Faster Fake it till you make it (Smoke Tests) Five Whys Root Cause Analysis Falsifiable Hypotheses Customer Development (Customer Interviews) Customer Development will help you force you to make better decisions based on tested hypotheses, rather than untested assumptions. The Entrepreneur s Guide to Customer Development, CustDev.com Learning is all about testing your assumptions. Taking your customer hypotheses and actually test them. There are so many ways to do that, from talking to actual customers to testing fake landing pages, etc... Idea is to be able to do this efficiently.

14 Minimum Viable Product Coined by Eric Ries as part of The Lean Startup Lean Startups are a series of MVP s Each designed to answer a specific question (hypothesis) The minimum viable product (MVP) is often an ad on Google. Or a PowerPoint slide. Or a dialog box. Or a landing page. You can often build it in a day or a week. Nivi, Venture Hacks Bloomspot

15 If Apple can launch a smartphone without Find or Cutand-Paste, what can you cut out of your product requirements? Lance Glasser, former CTO KLA-Tencor

16 The first version of Gmail was literally written in a day Paul Buchheit, Google / Friendfeed / Facebook

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18 Pivot The idea that successful startups change directions but stay grounded in what they've learned. Eric Ries, The Lean Startup Early on capital efficiency Goal is to attract earlyvangelists Start with customer discovery and customer validation Next create a minimum viable product and pivot as necessary

19 YouTube - Customer Need Pivot YouTube - Dating site Customer need pivot - same customers, different need Focused on video sharing.

20 PayPal - Feature Pivot PayPal - Beam money via Palm Pilots Feature pivot - pick a feature and reorient around it Focused on sending money via .

21 Facebook - Platform Pivot Facebook - Platform, Facebook Connect Platform pivot - open up an application to third parties to become a platform

22 Start with a Hypothesis Our hypothesis is that product manager type people have a problem doing effective customer research Our hypothesis is that people have a problem doing Everything should start with a hypothesis Focus on the type of person and the problem they have

23 Turned into a on-page customer feedback tool

24 Original Hypothesis for KISSinsights Our hypothesis is that product manager type people have a problem doing fast/effective/ frequent customer research. Our hypothesis is that product manager type people have a problem doing fast/ effective/frequent customer research. Question: Is this hypothesis in fact true or not?! Take the least amount of effort to find out... We did everything from customer interviews, fake landing pages, building a minimum viable product, pivoting and now have reach product / market fit and are optimizing the business.

25 What we wanted to learn... What are they doing now? What are other tools leaving on the table? Who is involved? How frequent / severe is the pain? What else are customers complaining about? Ask questions like this to learn. These questions can work for you too for SaaS B2B apps.

26 How we learned ~20 phone interviews (15-20 minutes each) 3 in-person user tests with paper prototypes 2 landing pages Hacky MVP on KISSmetrics.com 8 alpha testers Many ways to learn, phone interviews, in-person, landing pages, MVPs, etc...

27 What we learned People are not doing customer research. They want private feedback and targeting. It requires developer involvement. It is a constant pain. Specific high-level things we learned with our process... Took many interviews to narrow it down to these things.

28 What we built A freemium on-site customer feedback tool That involves an easy one-time install Which provides private customer feedback And easy to understand reporting. Built in 2 months based on what we learned. What is KISSinsights? Response rates higher than normal surveys Turned into a valuable tool, Google uses it!

29 Lean Startup Process The principles of build, measure, learn help us think about how to get answers. The methods and process of communication and information exchange are much different in a lean startup. The tactical stuff to build, measure and learn faster is one side of things. Now I m going to talk about the business processes and what we have learned trying to apply them. Before continuing...clarify business process for a startup.

30 No Departments, Just Two Teams? Problem Team What are the most important problems to solve? Solution Team Find the minimum solution for a given problem. Company is divided into two teams. No sales, marketing, etc... Problem team identifies the most important problems to solve. Solution team finds the minimum solution for each problem. Problem team is more non-technical, solution team is more technical / makers. There are cross-functional folks too.

31 15-45 minute team meetings (M,W,F) 3 team meetings every week Monday - Team meeting to describe most important problems and goals for the week. Metrics + Few tasks, determine if solution team has input and let deadline for ideas on Tuesday. Wednesday - Check in on how are we doing, solutions already getting implemented? What have we learned so far? Friday - Postmortem on learning and peek into next week from the Problem Team. Problem team is 1-week ahead.

32 Your Focus Needs More Focus To do this effectively we built a tool we are internally call KISSfocus. A tool we built to increase autonomy and communication, focused on our validated learnings driven process. 5 tasks per person, only 1 is active (green-lighted), not in KF then not exist, backlog. We set weekly goal and metrics based on most important problems. Whole team has visibility across all tasks, keeps solution team focused on most important problems.

33 Lean Startup Lessons Learned We ve learned some lessons in our efforts to apply lean startup principles. It hasn t been easy since this stuff is new and we re still learning ourselves. Here are three key ones.

34 Speeding can lead to crashes Optimizing one area in the Build Measure Learn loop causes bottlenecks in others. Once we implemented the infrastructure to build faster, we then increased our ability to discover customer problems. But we didn t have a good process for organizing and finding solutions. So we created KISSfocus to help us. Once we had that, we started discovering a lot about our team...

35 The only path to perfection is iteration The only path to perfection is iteration - Quote from our CTO, John. This was a really hard realization, because we are a team of perfectionists! It takes a lot of discipline to stay focused on validated learnings. We now focus on iteration based on validated learnings instead of perfection.

36 that f*cking green light next to a task for 7 days is really depressing. KISSmetrics Engineer The team becomes more accountable But once we applied this process everyone became more accountable. Team members started policing themselves. One of our engineers likes to get himself in a hole and just code for days without coming up for air. Doesn t come up for air and only 50% of time does he produce fantastic results. He ed the team and said: that f ing green light next to a task for 7 days is really depressing. Our process helped him catch himself and in fact stop before he went on for a really long time. Ultimately, applying lean principles has led us to find all types of bottlenecks in our startup business processes and start plugging them fast. That result has been priceless.

37 Thank You!