Metrics for Startup Success and Failure

Metrics that MatterDefining startup success and failure

Hiten ShahCustomer and Business Development Class at Berkeley • Mar 9, 2010

The Startup PyramidThe Race to the Top

Product / Market Fit

Transition to Growth

Growth

Sean Ellis: Startup-Marketing.com

• Low burn, focused on product, no VPs / sales people

• Customer Development (Steve Blank, Four Steps)

• Minimum Viable Product (Eric Ries, The Lean Startup)

• Pivots (Eric Ries, The Lean Startup)

Product / Market Fit

…the life of any startup can be divided into two parts – before product/market fit and after product/market fit.”Marc Andreesen, Founder of Netscape

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• It’s all about learning and discovery

• Outlined by Steve Blank in Four Steps to the Epiphany

Customer Development

• 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)

Minimum Viable Product

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

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

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

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• Segment pivot - existing product, different customers

• Customer problem pivot - same customers, different problem

• Feature pivot - pick a feature and reorient around it

Pivot

The idea that successful startups change directions but stay grounded in what they've learned.”Eric Ries, The Lean Startup

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• 40%+ of users say they would be “very disappointed”

• Representative of a large enough target market

• Use Survey.io to get started

Product / Market Fit MetricsCreated by Sean Ellis (12in6)

Sean Ellis: Startup-Marketing.com

• Positioning - optimize first user experience via messaging

• Economics - implement a business model

• Optimization - track and report on the right metrics

Transition to Growth

Once you have achieved product/market fit, it’s time to accelerate through the next steps of the pyramid and then begin scaling your business.”Sean Ellis, 12in6

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First Product IterationTarget Customer: Social Application Developers

Pivot 1Target Customer: Many customer types

Pivot 2Target Customer: 1 specific customer type

“Metrics are people, too”Eric Ries, The Lean Startup

Test Things for Yourself!

Passionate about helping other entrepreneurs and startup people.”

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Thank You!

@hnshahhshah@kissmetrics.com