Libro: La ciencia del crecimiento de las empresas (de redes)

'La ciencia del crecimiento': Lo que Facebook sabía, pero lo que no hizo Friendster
Pittsburgh Post Gazette


Sean Ammirati autor de la foto


Por Brian Rossi / Pittsburgh Post-Gazette
Con más de 27 millones de empresarios en los EE.UU. y $ 128 millones de dólares en capital de riesgo mundial creció en 2015, la demanda de orientación sobre la gestión de productos está en plena marcha. "The Science of Growth: How Facebook Beat Friendster — and How Nine Other Startups Left the Rest in the Dust", fue escrito por un empresario y capitalista de riesgo Sean Ammirati, un instructor en la Universidad Carnegie Mellon que vendió su empresa a LinkedIn.

El Sr. Ammirati ofrece hasta algunas prácticas probadas y verdaderas que son compatibles con su metodología de investigación descrito en la introducción. Se proporciona una vista "datos informados" de empresas como PayPal, Automattic (Wordpress), LinkedIn, Facebook, YouTube y Twitter. Sostiene que la priorización implacable, entre otras cosas, ayudaron a estas empresas superó a sus competidores.

El Sr. Ammirati hace un excelente trabajo incorporando empresas que el lector está familiarizado con el de pasar el mensaje puntos clave. Se cuenta la historia de Coca-Cola y Pepsi y Pepsi cómo estaba en la necesidad de un nuevo diseño de la botella para competir con la botella de cristal onzas de Coca-Cola de la firma 6.5. Según el Sr. Ammirati, John Sculley, entonces CEO de Pepsi, aprovechó un proceso de "datos informados" que llevó a la creación de la botella de dos litros de plástico.

Después de notar en sus pruebas de que los clientes estaban bebiendo toda la Pepsi en las botellas más pequeñas, el Sr. Sculley la hipótesis de que iban a aumentar la satisfacción del cliente, ofreciendo grandes cantidades. Resultó que Walmart amaba el nuevo diseño de la botella, también. Debido a que estaba hecha de plástico resistente en lugar de vidrio frágil, que ya no estaba en alto riesgo de rotura durante el transporte y el despliegue. Como resultado de haber sido "los datos informados" en lugar de "basados ​​en la información," Pepsi evitar el fracaso de la simple creación de una botella de 6,5 oz con ligeras modificaciones. En su lugar, se definen una nueva categoría de producto, logística optimizada, y la reducción de una barrera de entrada con los minoristas. Este tipo de anécdotas que hacen reflexionar son un componente común dispersos en los capítulos.

"The Science of Growth" es un compañero maravilloso para el plan de gestión de productos canónica, "The Lean Startup" de Eric Ries, que el Sr. Ammirati hace referencia varias veces a lo largo del libro. "La ciencia del crecimiento" aprovecha el movimiento del espíritu empresarial magra como la base para sus lecciones. prácticas comerciales "pobre" a menudo se caracterizan por su utilización de los recursos de las personas y con una eficiencia sistemática con el fin de validar y luego escalar una idea.

El Sr. Ammirati guía al lector a través de las primeras fases de la actividad empresarial, a partir de la validación idea. Se alienta el análisis reflexivo del tamaño del mercado y la importancia de la primera interacción. Él va tan lejos como acuñar un aumento de la frase popularizada Eric Ries "viable mínima del producto (MVP)", que el Sr. Ammirati se refiere como el "producto impresionante mínimo (MAP)." Su punto es bien entregado en relación con un usuario de primera interacción con un producto, indicando, "... beneficios esenciales del producto no puede realizarse si se entrega a través de una experiencia horrible."

El Sr. Ammirati continuación, hace hincapié en la necesidad de que "el producto a ser impresionante incluso con características limitadas si realmente desea validar su hipótesis acerca de su éxito final."

En un espacio lleno de libros sobre temas similares, "La ciencia del crecimiento" cumple con su promesa de "mostrar el secreto de 'la ciencia del crecimiento' y cómo cultivarla en cualquier organización."

A través de una mezcla de ejemplos bien descritos y experiencias personales, este libro describe un proceso que se puede repetir en la mayoría de los sectores de actividad. Los empresarios, ejecutivos corporativos, gerentes de producto y por igual podrían beneficiarse de las lecciones del libro de Sean Ammirati.

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Un repaso a la Lean Startup

Por qué respaldo a Eric Ries por sobre Peter Thiel
Jason Saltzman - Entrepreneur




En mi entrevista con Eric Ries, Eric llamó Peter Thiel crítica su libro, "Lean Startup". Su crítica es a Lean Startup como experimentación agnóstica es más o menos en hacer encuestas y pidiendo a los clientes lo que quieren, y en realidad no tienen una visión propia del emprendedor", dijo Eric. "Si usted va a cualquier laboratorio científico moderno y ves gente haciendo un montón de experimentos, que no sería como, '¡Oh! ¡Un montón de experimentación agnóstica! "La gente en el laboratorio se reiría en su cara".

Yo no soy un multimillonario de Internet, y no pretendo saber más que alguien que, obviamente, ha demostrado su capacidad de crear valor e invertir en ganadores enormes. En el metro éxito proverbial, soy una garrapata en elefante de Peter Thiel.

Pero voy a lado con Eric Ries en esta lucha. He aquí por qué:

Mi propia experiencia.

Peter Thiel me puede llamar un perdedor por abrazar la competencia (de su artículo Competencia Wall Street Journal es para los perdedores), y decir que me falta el conjunto de habilidades derecha. Pero traté de construir algo que nadie construyó antes. Contraté el mejor equipo y la mejor compañía de relaciones públicas para comercializarlo porque pensé que tenía la mejor idea para las veces que estuvimos en. Después de perder un millón de dólares, me aplastó. Si he utilizado la metodología Lean Startup, habría creado una página de destino, creado una cuenta de AdWords de Google, y descubierto en un día que mi idea era un pedazo de mierda.

Mi entorno.

He estado luchando en las trincheras del mundo puesta en marcha de Nueva York durante años. He albergó a más de un millar de empresas de inicio en AlleyNYC. Y cada vez que veo a alguien tratando de construir algo que nunca se ha hecho antes, yo verlos fallan. Me pregunto cuántos Facebooks que tardamos en llegar a Facebook. Todo lo que una pérdida de tiempo y energía en la construcción de algo que nunca se acostumbró. Imagínate lo que se vería como si tuviéramos un depósito de chatarra en línea de código de todas las nuevas empresas que intentaron algo nunca hecho - y fracasaron. Me pregunto cuánto espacio en el servidor que tomaría.

Las Victorias.

Sé que el espíritu empresarial es diferente para cada persona. Algunas personas están tratando de cambiar el mundo, y los demás están tratando de crear algo que les hará un montón de dinero. Les diré esto: En los años de trabajar por cuenta propia y parte de una comunidad de emprendedores, las victorias que veo a mi alrededor con frecuencia no son ideas sexy que nunca se han hecho. En cambio, son ideas que abastecen a los mercados concurridos, como bienes raíces, marketing y servicios de alimentación. Yo sé que no es sexy, pero para aquellos que quieren ganar a lo grande, los concurridos mercados están llenos de gente por una razón. Los mercados más altamente competitivo ya han demostrado la oportunidad. Ojo, no estoy diciendo que renunciar a la innovación. Sólo soy un gran fan de hacerlo mejor que el resto. Las probabilidades son mejores cuando se innova en un mercado comprobado. (Y recuerde: ese tipo de competencia es buena.)

El billete de lotería.

Tengo que decir esto: La creación de una nueva empresa de éxito es bastante difícil, incluso en un mercado competitivo. Estadísticamente hablando, más del 95% de todas las nuevas empresas fracasan. Esto es principalmente porque los empresarios están construyendo cosas que la gente simplemente no quieren. En un mercado que sí se ha probado, no están contando con un billete de lotería. A riesgo de sonar negativo, yo lo llamo un billete de lotería, porque las probabilidades están tan en contra de usted. La creación de algo que no se ha hecho antes me recuerda el Jackpot Mega Millions, de una manera: Sólo un ganador enorme, y todo el mundo tratando de conseguir un pedazo.

Hacer una tortilla con un millón de huevos.

Para un inversionista como Peter Thiel, mirando a un millón de ofertas de un día, es fácil ver por qué le diría a usted que inventar algo, y hacer algo increíble que nunca se ha hecho antes. Es bastante inteligente como para decirle a un millón de personas para crear algo increíble. Los inversores como Peter son la luz al final del túnel. Pero ¿qué pasa con la gente en las trincheras que tratan de romper? Me pregunto: ¿Cuántas nuevas empresas y los sueños aplastados qué tienes que ir aunque para llegar a ese UNO gran idea que rompe el molde? ¿Cuántos huevos tuvo que romper para hacer que la tortilla? La verdad es que soy un maldito huevo y, estadísticamente hablando, es usted, también!

Por lo tanto, va a hacer estudios de mercado y las ideas de pruebas contra un mercado limitar su visión? ¿O es la visión que un lugar que desea ir y validar su hipótesis es la forma más práctica de llegar allí? Se mire como se inclina, usted tiene que estar de acuerdo que es una conversación filosófica interesante. Me encantaría escuchar su punto de vista sobre el tema.

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Lean Startup como una filosofía empresarial en boga

Beyond Lean Startups: Eric Ries’ movement heads to Fortune 500, government, and beyond

Conrad Egusa is the co-founder of Espacio, the co-owner of Colombia Reports, and is currently a mentor at The Founder Institute.

Lean Startup: the name itself evokes images of a computer science graduate working on the next big idea in a garage-office, boxes of Ramen noodles stacked to the ceiling.

During the first years of its development, the Lean Startup phenomenon fed on this image. Eric Ries, who coined the term “Lean Startup” and is the author of the popular guidebook that codifies the methodology behind it, is in the position he is today because of the startup community quick to adopt a model privileging flexibility and streamlined customer-based development over extensive venture capital funding.

However, in the coming years, Ries believes that the business philosophy he pioneered is poised to transition from small-budget entrepreneurial endeavors to large, even worldwide organizations, be they Fortune 500 companies or government agencies, where he feels it could do even more to change the dominant structural and operational paradigms.

“The Lean Startup,” said Ries, who failed in his first two startups prior to co-founding the IMVU instant messenger service, “has already moved beyond startups.”

The Lean Startup Conference is perhaps the best evidence that he is right. Held this year in San Francisco, the conference brought together academics, startup entrepreneurs and global business leaders under the umbrella of improved efficiency and smarter organizational design. Speakers ranged from members of the NYC Educational Department to representatives of Facebook and Toyota.

But the focal point of the event was General Electric’s announcement of what Ries called “undoubtedly the largest deployment of lean startup ideas in the world.” Over the past year, the so-called Fastworks initiative, pushed by GE Chairman and CEO Jeffrey Inmelt, has integrated the Lean Startup methodology directly into the central operational policies of a global business leader with a 130 year track record, 300,000 employees across the world and $130 billion in annual profits.

The variety of speakers and attendees at the conference gave the impression that Ries is planting a more comprehensive discourse, the kind that fits with his broad claims as to the utility of lean thinking as a mechanism for social change as much as boosted profit margins.

The Fortune 500 presence in particular raised the question of the position Ries will play with respect to the change he has inspired. Specifically, is he moving beyond the role he’s assumed as a thought leader in the tech world, one Steve Blank, his former teacher, continues to occupy? Will Ries emerge as a more prominent management guru along the lines of a Jim Collins, author of the best selling book “Built to Last: Successful Habits of Visionary Companies”?

The lean startup methodology has not gone without criticism in the startup community. Said Michael Sharkey in his guest article on VentureBeat, “it seems that many entrepreneurs have interpreted the Lean Startup model as an excuse to rush incomplete or fractional products to market. The result? Lots and lots of companies built around a handful of features that matter to almost no one, least of all customers.”

Another counterargument to the lean startup came inadvertently from LinkedIn founder Reid Hoffman, who when answering a question about the methodology prefaced his response by saying that for the entrepreneurs who are not Steve Jobs, the lean startup should be followed. However Steve Jobs, or Elon Musk for today’s generation, is exactly the role model that many technology founders are aiming to become.

Mark Cuban, owner of the Dallas Mavericks and billionaire entrepreneur, told me in an e-mail, “I’ve always been a fan of lean startups. Eric has done a great job of productizing it and making it available to many more companies.”

Yet despite its wide adoption, to many the lean startup method has not yet answered whether it is compatible with the swing for the fences startups that venture capitalists such as Vinod Khosla are looking for. In this regard, perhaps the methodology will find more support within Fortune 500 companies and governments across the globe, where innovation and product development are clearly in need of greater help.

With General Electric, one of the largest and most diverse companies on the planet, putting the lean startup philosophy to aggressive use, it’s hard to imagine that others in the corporate community will not soon follow suit.

Beyond that, the possibilities seem endless.

Venture Beat

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Blank: Why the Lean Start-Up Changes Everything (Harvard Business Review) (2/2)

Blank- Por que el emprendimiento ultraligero está cambiando todo

Publish at Calameo or read more publications.

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¿Por qué Lean Startup está cambiando todo? (1/2)

Why the Lean Start-up Changes Everything

by Danny Ackerman 

Why the Lean Start-up Changes Everything, an article in the Harvard Business Review by Steve Blank makes the compelling argument that mainstream adoption of the lean start-up is not only attainable, but would provide the basis for a newer innovation based economy.

He begins by comparing prevailing start-up management techniques of the past 40 years to the lean start-up and how the lean start-up would change the economy:

Using lean methods across a portfolio of start-ups will result in fewer failures than using traditional methods. A lower start-up failure rate could have profound economic consequences. Today the forces of disruption, globalization, and regulation are buffeting the economies of every country. Established industries are rapidly shedding jobs, many of which will never return. Employment growth in the 21^st century will have to come from new ventures, so we all have a vested interest in fostering an environment that helps them succeed, grow, and hire more workers. The creation of an innovation economy that’s driven by the rapid expansion of start-ups has never been more imperative.

By transitioning lean start-up concepts from the traditional technology start-up to the mainstream small businesses, Blank asserts that GDP and employment would grow. Moreover, the article mentions several reasons that hindered start-up growth and how this methodology breaks these barriers down:

1. The high cost of getting the first customer and the even higher cost of getting the product wrong.

2. Long technology development cycles.

3. The limited number of people with an appetite for the risks inherent in founding or working at a start-up.

4. The structure of the venture capital industry, in which a small number of firms each needed to invest big sums in a handful of start-ups to have a chance at significant returns.

5. The concentration of real expertise in how to build start-ups, which in the United States was mostly found in pockets on the East and West coasts.

The lean approach reduces the first two constraints by helping new ventures launch products that customers actually want, far more quickly and cheaply than traditional methods, and the third by making start-ups less risky. And it has emerged at a time when other business and technology trends are likewise breaking down the barriers to start-up formation. The combination of all these forces is altering the entrepreneurial landscape.

The reduced number of failures combined with the reduced barriers would have an impact on the entire business landscape; however, the bigger question remaining is: how does the lean start-up successfully transition to traditional small businesses? Blank gives a few examples of technology start-ups using the lean start-up methodology, and then goes on to show how business schools are leading the way on the path toward embracing this philosophy. Small Business Labs shows how the recent food truck craze is using the lean start-up:

Lean start-up approaches and methods have mostly been applied to software and internet businesses. But it's interesting to look at food trucks through the lean start-up lens:

1. Food trucks are much cheaper to start and can get to market much faster than brick and mortar restaurants.  In many ways, food trucks fit the Lean concept of the minimally viable product.

2. Food trucks can quickly and easily test new concepts, menus and recipes.  In many cases food trucks are being used as lean start-up-like laboratories to test potential brick and mortar restaurant ideas.

3. Food trucks take an iterative approach to their menus and even location based on customer feedback.  "Build-measure-learn" is a daily occurrence with food trucks.

4. Food trucks are tightly focused on their customers and interact with them every day.

This may work for certain industries with high customer availability, but what about small businesses where they do not have high customer availability or the ability to fail fast? Other ventures may not be able to have a Minimal Viable Product as Mark Andreesen stated in a talk at the lean start-up conference as noted by GigaOM,

I would serve this as a challenge for the Lean Start-up community. Especially the ones with the really audacious goals.  Sometimes they start audacious because otherwise the product will never get to market. The Macintosh, that product had to exist in its entirety for people to wrap their heads around it, he said, pointing to modern entrepreneurs like Elon Musk’s ventures as ones that can’t be done on a small scale at first. You got to get the rocket into space.

Blank does acknowledge that the lean startup is going up against the traditional business management techniques of the past 100 years; however, he concludes that the rate of disruption and rapid change in the 21^st century will be felt by all types of businesses and the lean start-up approach will allow rapid innovation and tranform business as we know it.

Infoq

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Lean Startup: Aprender (4/4)

The Lean Startup in a Nutshell IV: Learn

In this part of the Lean Startup in a Nutshell series, we finally close the build-measure-learn loop and learn how to—well, learn. Learning is arguably the most crucial step within the feedback loop. If a startup is unable to learn properly, people's time is wasted. Lean means: eliminate waste. Waste is eliminated by learning as much as possible as frequently as possible.

Customer interviews

Learning from accessible and actionable metrics is straightforward. Learning from qualitative one-on-one interviews with customers is harder. When conducting these interviews, the reality distortion field of the founders must be taken into account:

True visionaries spend considerable energy every day trying to maintain the reality distortion field. Try to see it from their point of view – none of the disruptive innovations in history were amenable to simple ROI calculations and standard linear thinking. In order to do something on that scale, you need to get people thinking, believing, and acting outside the box. Their greatest fear is categorically not that their vision is wrong. Their real fear is that the company will give up without ever really trying.

— Eric Ries

Nobody wants to become trapped in local maxima: "Customers don't know what they want." It's true—they don't. So how can we then learn from customers? The rules are simple:

1. Stay true to the vision—an acute pain that others do not see.
2. Present the currently specified product to early adopters.
3. Look for customers for whom your product vision is a perfect fit.
4. Only if you are unable to find them after extensive trials, pivot.

In a customer interview, you are thus essentially looking for a negative result. It is like a scientific experiment—you are trying to prove your current product vision wrong. It is not that you want to extract feature requests from customer interviews—it is the vision and the founders' intuition which should dictate the next feature additions. You are merely looking for the constant assurance that you are on the right track.

If you are curious to see how a negative result in customer interviews—even withstanding the enormous power of the reality distortion field—looks like, enter Eric Ries:

 "I've never heard of that. My friends have never heard of that. Why do you want me to do that?" It requires a lot of explanation. Instant messaging add-on is not a category that exists in your mind. But since she is in the room with us, we could talk her into doing it. So, she downloads the product. We have her install it on the computer. And then we say, "Okay. It’s time to check it out. Invite one of your friends to chat."

And she says, "No way."

Customer segmentation

One-on-one conversations with customers are a good way to look for patterns in the noise. While you should be ignoring a single feature request made by a single customer, a feature request being articulated consistently across interviews should make you aware of the possibility that you have identified a real need.

Often, using the knowledge from customer interviews is not enough to identify reliable customer segments. Surveys are a good tool to broaden the search. Of course, you always want to know which customer segment is closest to bring you product/market fit.

Segmentation will help you see which customers are the most relevant to realizing the overall vision of your startup.

Customer Advisory Board

The culmination of letting customer feedback penetrate your company as part of an integrated discipline is a Customer Advisory Board:

Here’s what it looks like. In a previous company, we put together a group of passionate early adopters. They had their own private forum, and a company founder (aka me) personally ran the group in its early days. Every two months, the company would have a big end-of-milestone meeting, with our Board of Directors, Business Advisory Board, and all employees present. At this meeting, we’d present a big package of our progress over the course of the cycle. And at each meeting, we’d also include an unedited, uncensored report direct from the Customer Advisory Board.

I wish I could say that these reports were always positive. In fact, we often got a failing grade. And, as you can see in my previous post on “The cardinal sin of community management” the feedback could be all over the map. But we had some super-active customers who would act as editors, collecting feedback from all over the community and synthesizing it into a report of the top issues. It was a labor of love, and it meant we always had a real voice of the customer right there in the meeting with us. It was absolutely worth it.

— Eric Ries, A real Customer Advisory Board

A Customer Advisory Board is essentially a safety net, safeguarding against the cases where the reality distortion field of the founders clouds their vision.Facebook Beacon comes to mind. A customer advisory board gives the customers the power to break through to the visionaries, essentially begging them for help: Look, we aren't asking for much, but this is absolutely necessary. Please, please, implement this.

Five Whys

Five Whys is one of my personal favorites. It is a technique for solving problems in a sustainable way, not combatting symptoms, but using root cause analysis. Five Whys is easy to formulate. It consists of two distinct steps.

The first step is to ask "Why?" five times whenever there is a problem, going deeper with each question and unconvering the root cause of the problem, not just the surfacing symptoms:

A new release broke a key feature for customers. 

1. Why? Because a particular server failed.
2. Why did the server fail? Because an obscure subsystem was used in the wrong way.
3. Why was it used in the wrong way? The engineer who used it didn't know how to use it properly.
4. Why didn't he know? Because he was never trained.
5. Why wasn't he trained? Because his manager doesn't believe in training new engineers, because they are "too busy."

— Eric Ries, The Five Whys for Start-Ups

The second step is to make proportional investments at each layer of the problem. For the above example that means that:

1. The broken release should be rolled back and fixed.
2. The subsystem should be made less obscure.
3. The engineer should be trained to be able to use it properly in the future.
4. A roadmap for setting up a training program should be formulated.
5. The manager should be talked to and convinced of the value of training.

Five Whys usually traces back a technical problem to a human problem.

Proportional investments are never complete solutions at each problem layer. Rather, they are a first step to improving the situation at that level of depth. Imagine the Five Whys hierarchy as a building. Each floor should be reinforced a little bit. That makes more sense than reworking the entire first floor and leaving the other floors in their desolate condition.

Proportional investments leverage the 80/20 rule. The minimal solutions will always account for the bulk of the problem. With each subsequent Five Whys analysis, similar investments will lead to more complete solutions for those layers which seem to be among the root causes of many surfacing issues.

If you are interested in the detailed mechanics of conducting a Five Why root cause analysis, I highly recommend this in-depth guide by Eric Ries. 

Conclusion

Learning in a Lean Startup is the hardest part. It takes a commitment to objective standards and scientific methods to break through the reality distortion field. Learning creates anxiety for the founder's ego. Setting up processes designed for continuous learning are thus indispensable for a thriving startup whose success is not based on mere luck, but on method.

This concludes the Lean Startup in a Nutshell series. I have left out some of the concepts which I personally consider more controversial and less well illustrated in detail—such as the subdivision of a startup into two cross-functional teams—, but I bet that you will not have a difficult time continuing your Lean Startup journey on Eric's blog or by reading his book.

Devianbits

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Lean Startup: Medir (3/4)

The Lean Startup in a Nutshell III: Measure

In this part of the Lean Startup in a Nutshell series, let us look at how to take the interactions between customers and our code and turn them into valuable data about these customers. Each technique described here is designed to help us become more data-driven and ease decision making by favoring facts over fiction.

Split testing

Spli testing (or A/B testing) is the core technique required to learn about user behavior.

In a split test, we deliver a reference experience to some of our users and an alternative experience to the rest of our users—while measuring the impact of the change within one group as compared to the other.

Split tests should be micro in their scope but macro in their impact measurement. The former means that a split test should test an isolated aspect of the experience, such as adding a feature, changing the appearance of a button, consistently changing a design element across the site, etc.

The latter means that the impact of the change implemented within a split test should be measured in terms of the overall metrics relevant to the business—such as the global signup rate or the revenue per customer—and not in terms of a local click-through or conversion rate.

Eric Ries offers many examples for counter-intuitive—but extremely powerful—insights derived from split-testing. Let me cite only one: When a mere link indicating a premium experience (such as a V.I.P. club) was added to the navigational interface at Ries's company IMVU, this increased the overall revenue per customer even for those customers who never clicked on the link. The mere presence of the link primed the users to make them willing to spend more on the website.

A good split testing environment ensures:

1. easy one-line implementation for developers
2. easy reporting to render all test results understandable
3. starting simple and getting more complex over time
4. making concrete predictions and testing against these

Cohort analysis

They were adding new features, improving quality, and generally executing against the product roadmap. Each month, their gross numbers move up and to the right. So, they said, they must be on the right track.

Then I asked them this question: what would happen to the company if the entire product development team took a month off and went on vacation? The sales staff would keep signing up new customers. The website would continue to get new traffic from word of mouth. Could they be sure that they wouldn’t—as a business—be making just as much “progress” as they claim to be making now?

In one scenario, they’ve been working overtime, putting in crazy hours, and in the other, they’d be on vacation. If both scenarios lead to the same result, how can the product development team claim to be making progress? To be doing effective work?

— Eric Ries, Are You Building The Right Product?

Cohort analysis means looking at the new customers who join every day as a distinct group. This enables an organization to ask how today's customers compare to yesterday's, to ask whether measured improvements are not just a result of the already well-working system, but of the most recent changes. It also enables an organization to detect "fake improvements", features or changes which actually worsen the user experience.

For each cohort, you may ask:

1. What fraction of users signed up?
2. What fraction of users bought the product?
3. What fraction of users upgraded to the premium account?

Cohort analysis is also perfect for killing features. Just remove a feature and see what happens. If the relevant overall business metrics don't change, you just improved the product by making it simpler.

Conversion funnels

Sales funnels and customer acquisitions funnels are old and time-tested concepts. Key to building meaningful and trustworthy conversion funnels are person-based analytics (or per-customer metrics) instead of global analytics (or vanity metrics) such as the total number of views or visitors.

There is a great talk by Mike McDerment explaining what he calls the Google Analytics line and how to go beyond it by connecting marketing and customer account databases. Going beyond the line of vanity metrics (such as the total number of page views) is a prerequisite for collecting the data necessary to analyze and build conversion funnels.

I highly recommend the above talk as well as the related article by Eric Ries in order to get started with person-based analytics. Always remember, "metrics are people, too".

Net Promoter Score and product/market fit

NPS is a methodology that comes out of the service industry. It involves using a simple tracking survey to constantly get feedback from active customers. It is described in detail by Fred Reichheld in his book The Ultimate Question: Driving Good Profits and True Growth. The tracking survey asks one simple question:

"How likely are you to recommend Product X to a friend or colleague?"

The answer is then put through a formula to give you a single overall score that tells you how well you are doing at satisfying your customers.

— Eric Ries, Net Promoter Score

The Net Promoter Score is a powerful concept to get a birds-eye holistic view of your business. It is designed to measure the overall customer satisfaction a product or service yields.

For Sean Ellis, a slightly different question is at the root of determiningwhether a startup has reached product/market fit:

"Would you be very disappointed if you could no longer use the product?" or

"Do you consider the product a must-have"?

Sean Ellis supposes that only when 40% answer "yes" to the above question, the startup has reached product/market fit.

Measuring the NPS and the product-market fit constantly ensures that a startup never forgets the overall picture of improving customer happiness while split-testing and working on conversion optimization. These holistic metrics are probably also the best way to measure product development progress in the long run.

User testing

If Product Development is simply going to start building the product without any customer feedback, why have anyone talk to customers at all? Why don’t you just build the product, ship it, and hope someone wants to buy it? The operative word is start building the product. The job of Customer Development is to get the company’s customer knowledge to catch up to the pace of Product Development—and in the process, to guarantee that there will be paying customers the day the product ships.

— Steve Blank, Four Steps to the Epiphany

User testing is a cheap way to "get out of the building" and talk to customers. User testing means having a bunch of individual users interact with your product or service, giving you qualitative feedback. There are a number of user testing service providers on the web, usually providing a screen-sharing video and a written report for each user doing the test.

Conclusion

Good measurement relies on good and reasonable metrics. It requires an actual understanding of what constitutes progress and how to document it. It puts science ahead of vanity. And it recognizes that metrics are people, too.

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Lean Startup: Construir (2/4)

The Lean Startup in a Nutshell II: Build

In this part of the Lean Startup in a Nutshell series, we discuss how to accelerate the first stage of the build-measure-learn feedback loop where we build code from ideas. Each technique is designed to help us build faster and eliminate waste.

Minimum viable product

In product development, the Minimum Viable Product or MVP is a strategy used for fast and quantitative market testing of a product or product feature, popularized by Eric Ries for web applications. — Wikipedia

Or, as defined by Eric Ries himself,

The minimum viable product is that version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort. — Eric Ries, StartupLessonsLearned.com

The MVP caters to early-adopter customers:

The minimum viable product is that product which has just those features and no more, that allows you to ship a product that early adopters see and—at least some of whom—resonate with, give you money for, and start to give you feedback on. —Eric Ries, Venture Hacks interview

The MVP falls in between the maximum-feature approach—building a complete product implementing the entire vision of the startup founders—and the "release early, release often" mantra—shipping code immediately, listening to customers, implementing what customers want, repeating the process.

The MVP presupposes a clear long-term vision of a product or service which solves a core problem. It represents the smallest effort of building a product that delivers the promise of that vision to early adopters—the people who have the same visioning power as the entrepreneurs, who will be the most forgiving, and who will fill in—in their minds—the features which aren't yet there.

An MVP can be a crappy first web application, a clickable screen design, a paper prototype, or just a text, video, or graphic describing the problem and the solution embodied in the vision for the product.

Agile development

Individuals and interactions over processes and tools
Working software over comprehensive documentation
Customer collaboration over contract negotiation
Responding to change over following a plan

That is, while there is value in the items on
the right, we value the items on the left more.

— The Agile Manifesto 

Talking in depth about agile development would require a blog post of its own—or probably even an entire book. Let me thus assume that you are familiar with the basic aspects of the agile methodology (XP, Scrum, TDD) and talk instead about how agile development relates to customer development.

All agile development methodologies, be it XP or Scrum or Kanban, at some point need to answer the question, "What is the most important work we should do right now?". Usually, the answer to this question takes the form of a backlog, a collection of stories to be worked on in the next iteration.

In a Lean Startup, the backlog is fed as part of the company-wide feedback loop, by the new hypotheses derived from actual customer feedback.

Continuous deployment

Remember, a Lean Startup optimizes the total time through the company-wide feedback loop. Imperative to that aim is not to "get stuck" in the build phase for longer periods of time than necessary. Whenever you're working on a current release, make it as minimal as possible. Your aim is to learn as quickly as possible whether the work you are doing makes sense.

Continuous deployment is the natural extension (and completion) ofcontinuous integration:

For those of you with some background in lean manufacturing, you may notice that integration risk sounds a lot like work-in-progress inventory. I think they are the same thing. Whenever you have code that is un-deployed or un-integrated, it's helpful to think of it as a huge stack of not-yet-installed parts in a widget factory. The more code, the bigger the pile. Continuous integration is a technique for reducing those piles of code.

— Eric Ries

What continuous deployment adds to that is to actually deliver the code to the customer to get the company-wide feedback loop running again. It means to overcome the anxiety of occasionally releasing a broken or malfunctioning product and to embrace the power of being fast and flexible enough to fix problems as they occur.

Of course, some development environments—such as the iTunes App Store—restrict the developer's ability to do continuous deployment. In that particular case, try to gain back the freedom of continuous deployment by having an alternate version of the product—a web-based client—running at a faster pace of iteration, or by relocating part of the product's magic from the client side to the server side.

Open-source components

There are two kinds of philosophies: the closed-source world of Microsoft Windows and proprietary systems, and the open-source world of harnessing the world's knowledge and giving back accordingly. I tend to resonate much more with the second philosophy, and it is at the very heart of the Lean Startup.

Leverage open-source technology to its full extent not only to keep costs down, but to increase the speed and versatility of product development early on. Open source operates using the model of commons-based peer production which is proven to be incredibly effective at creating and nourishing extensive collaborative communities and cooperative ecosystems.

If I were to include one specific tool here, it would be GitHub.

The cloud

Cloud technologies—such as cloud computing, cloud storage, SaaS offeringsand IaaS offerings—enable young tech companies to start with zero overhead and practically zero cost while being able to scale considerably onceproduct/market fit is achieved.

Today, there is almost no point in setting up your own data centers upfront, before having validated that you are actually building something people want. My newest startup uses open-source technology (e.g. Ruby on Rails) and cloud IaaS (e.g. Heroku) exclusively in order to achieve a high speed of iteration at low cost.

I believe that the advent of powerful scalable cloud infrastructures with pay-as-you-go models basically supersedes—and renders less important—Eric Ries's concept of just-in-time scalability. If you are interested in the story of just-in-time scalability, enter Eric Ries.

Cluster immune system

The concepts of agile development and continuous deployment may seem quite radical to project managers of older schools, having practiced thewaterfall-style approach to product development. When you think of a product juggernaught such as the Microsoft Windows operating system, for instance, how could you possibly even dare to think about deploying this piece of software continuously?

What if someone breaks an important feature during a deploy? What if someone interrupts the e-commerce flow of an online store system? What if someone hides the "Payout" button in an online payment system, turning the entire business into a hobby (borrowing from Eric Ries)?

These concerns are all valid—unless there are proper defenses in place to guard against such potential dangers. Test-driven development and strict continuous integration rules are among the first lines of defense. The cluster immune system is later-stage, more sophisticated, line of defense.

A cluster immune system is designed to track bad deployments—changes having unintended consequences—to the production environment in real time. It continuously measures the business's core metrics and automatically rejects and reverts changes affecting these metrics in a negative way.

A good cluster immune system would understand that a recent code change made the average order volume drop to about 50% of the original value. It would then revert the change, returning the system to the previous working state. It would also interrupt the deployment pipeline so that further changes would become impossible. It would send an e-mail to the author of the change as well as the whole development team to inform them about the problem. It would only allow deployment to resume once a human got to the root cause of the problem and understood and fixed it.

Building a cluster immune system isn't easy. It doesn't happen in a single day. Cluster immune systems should be built iteratively as well, starting simple and becoming more complex over time. Their development should be driven by the needs of the development team and the particular technology stack used by the team.

Conclusion

Building products in a Lean Startup requires technology and methodologies which enable the development team to iterate as rapidly as possible while remaining as flexible as possible at the same time. The speed of iteration is to be counter-balanced by defensive methods designed to remove anxiety from the team. Making mistakes is vital in a Lean Startup. Design the development environment so that mistakes can never have disastrous consequences.

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Lean Startup: Fundamentos (1/4)

The Lean Startup in a Nutshell I: Foundations

I remembered a specific moment from my very first startup. It was the moment I realized my company was going to fail. My cofounder and I were at our wits’ end. The dot-com bubble had crashed, and we had spent all of our money. We were trying desperately to raise more, and we could not. The scene was perfect: it was raining, we were arguing in the street. We literally couldn’t agree on where to walk next, and so we parted, in anger, heading in opposite directions. (...)

It remains a painful memory. We had begun as friends, and ended as enemies. The company limped along for months after, but our situation was hopeless. Looking back, I know our failure was inevitable, because we had no clue. It seemed we were doing everything right: we had a great product, a brilliant team, amazing technology, and the right idea at the right time. (...) But despite a promising idea, we were nonetheless doomed from day one, because we did not know the process we would need to use to turn our product insights into a great company.

– Eric Ries, Startup Lessons Learned

When I first read about the concept of the Lean Startup in Eric's blog, it was a fragmented set of ideas, case studies and practices – most of them useful, many of them thought-provoking. Little did I know that it would take this collection of thoughts only a few years to turn into a global movement and a coherent theory of entrepreneurship.

And while the orignal story of the Lean Startup yet remains to be written, let me try to give a practioner's overview of both the theoretical foundations of the Lean Startup as well as the specific tools and techniques it employs to achieve maximum efficiency. The Lean Startup in a Nutshell series will walk you through each of the different building blocks of the Lean Startup, and hopefully turn you into a Lean Startup expert in no time.

None of the ideas presented in this series are original ones. They have all been extracted from the works of Eric Ries, Steve Blank, and other evangelists of the Lean Startup movement.

The startup as an experiment

A startup is not a small version of a larger company. It is en entirely different kind of organization, driven by different goals and different needs. In other words: The dollhouse theory of startups is wrong. Neither does a startup need the same departments – engineering, marketing, QA, finance, support, etc. –, nor should it follow the same product development methodology as its hypothetical larger counterpart.

While an established business focuses on executing and scaling a proven model, a startup is essentially an experiment. It is a human institution designed to create something new under conditions of extreme uncertainty – meaning that both the solution to the supposed problem as well as the problem itself are unknown. The purpose of the startup is to find a way of transforming the vision of its founders into a working and sustainable business model before it runs out of money.

The product development methodologies

Every organization strives to solve a problem. In an established business, the problem is well defined. For such a business, both the waterfall and the agile product development methodology may be appropriate, depending on whether the solution to the problem is known in advance or not.

In a startup, all that is certain is the vision of the founders. A startup is thus an organization in search of the right problem to solve. It must develop partial solutions to hypothetical problems while constantly gathering feedback until it is able to figure out what customers really want. The right methodology for a startup is the build-measure-learn feedback loop.

Let us review the three different product development methodologies.

• The waterfall methodology (known problem, known solution)specifies a linear plan of product or service milestones. It goes from requirements to design to implementation to testing. In the waterfall model, progress is achieved by advancing the plan. Using this definition of progress, whether product development results in success or failure entirely depends on whether the solution to the problem is accurately known in advance and whether the problem is actually a problem customers care about.

• The agile development methodology (known problem, unknown solution) is an iterative and incremental approach to software development. It emphasises frequent interactions over extensive documentation and the ability to respond to changes in specification over the linearity of advancing a pre-negotiated plan. It is perfectly suitable for situations where it is known what customers ultimately want, but where the team is unable to predict the best way to get there due to a lack of past experience solving that problem. Progress in the agile methodology is measured by lines of working code.

• The build-measure-learn feedback loop (unknown problem) is the underlying development methodology of the Lean Startup. In essence, it combines agile product development and customer development in a company-wide feedback loop of learning and discovery. In a Lean Startup, progress is measured by validated learning – by the number of full-turns through the entire feedback loop. It is important to understand that unless the whole feedback loop is completed quickly, work carried out in a single stage of the feedback loop (building, measuring, or learning) does not count as actual progress and is very probably a waste of time.

The remaining parts of the Lean Startup in a Nutshell series will discuss the specific techniques to accelerate each stage of the feedback loop in detail.

Pivots and innovation accounting

A startup consists of a vision and a strategy (a business model, i.e. a collection of hypotheses) designed to turn that vision into a real-world business that is creating sustainable value. What I particularly like about the Lean Startup framework is that within it, the vision is the only thing that remains untouched. It is thus in perfect alignment with Simon Sinek's model of the power of purpose and the built-to-last concept.

While the startup's vision functions as the guiding light, its strategy is temporary and fluid until it has been validated by subsequent iteration of the build-measure-learn feedback loop. In the Lean Startup model, a change in strategy is called a pivot, and it represents the most fundamental concept of the Lean Startup:

If you look at the real story, you'll discover this weird zig-zaggy path between the initial idea and the successful idea. (...) It's just that successful entrepreneurs, when they run into difficulty, they don't just give up and go home, but neither do they persevere the plane straight into the ground. They do this thing called the pivot. They change some elements of the business while keeping others constant. They keep a new strategy for achieving the same vision. So you pivot the strategy, you stay true to the vision.

And the premise of the Lean Startup is this: If we can reduce the time between pivots, we can increase our odds of success before we run out of money.

– Eric Ries, RailsConf 2011

In order to decide whether to pivot or not after an iteration of the feedback loop, we use innovation accounting. Innovation accounting consists of formulating and testing a set of key metrics – quantitative assumptions – by working backwards through the feedback loop:

1. What are we trying to learn next?
2. What do we need to measure in order to learn that?
3. What do we have to build to be able to measure that?

It is time to pivot whenever further iterations of the feedback loop lead to diminishing returns, whenever it becomes unlikely that the quantitative assumptions needed to validate the current strategy can be met at all.

Innovation accounting brings accountability to entrepreneurship: It enables us to know whether we are actually making progress and whether we are getting closer to realizing our vision or not. It empowers us to set goals and decide when to pivot in advance, and act accordingly once we collect the necessary validated learning.

The remaining parts of the Lean Startup in a Nutshell series will discuss each of the three stages of the feedback loop: Build, Measure, Learn.

The Lean Startup in a Nutshell series

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