Dos and Don’ts of Lean Startup- Top Takeaways from The Lean Startup Conference 2014

Lean Startup Conference 2014

Lean Startup Conference 2014

Main Takeaway- Continuous Experimentation Well Beyond The Startup Stage

Contrary to the generally held belief that lean startup principles advice experiments in early stages of a startup; many speakers at the conference showed how they are experimenting continuously at all stages of their ventures.

Eric Ries in said that “Product market fit and experimentation is not a one time activity. It’s a continuous flow of activities. There are no discrete big jumps! Think of these steps in continuous flow that lend themselves to go back if an experiment fails”

Hiten Shah of Kissmetrics reiterated that a meaningful metric leads to a hypothesis and then to an experiment to validate it. Startups should always be A/B testing. Empirically 1 out of 5 tests succeed. Strive to win 1.67 out of 5.

A/B testing can help not only at different stages of a startup; but also for various activities including website traffic, app installs, welcome emails, Web/Mobile onboarding, E-mail digests, Triggered notifications, dormant/churned users.

Des Traynor also said that having continuous feedback is more valuable than one time event driven feedback.

Experiments helped even established brands like Rally, Google and Vox Media to validate hypotheses at later stages of their product lifecycle

  • Rally launched a dummy brand waffle.io targeted towards developers to protect the parent brand from the impressions created by the experiments. Finally Rally decided to have both brands.
  • Google Adsenses team validated Partner Problems using Lean Startup Principles. Blair Beverly said that they faced problem with new projects scaling too early and failing as they lacked historical data to go by. He got coworkers at Google ad senses team to use the Lean Startup. They scheduled office time to read the book, being helpful and not pushy. They also gave them a reading guide with questions. In the end they identified three hypotheses; put together templates like the partner problem hypothesis. People felt good about invalidating their own hypotheses as it saved them work that would’ve been wasted.
  •  Vox Media launched Vox.com in 9 weeks using analytics to guide customer validation. Melissa Bell got her co founders and others from Vox media in the same room to get everyone on the same page about her vision. Many editorial staff came from Washington Post whereas Vox was an agile technology company. They used card stacks for flexibility. They had problems with the way editors used card stacks, as it was difficult to navigate-hence they analytics were used to solve the problem. Now Vox.com has 22m users. Delivering content to users where they are-on social channels such as Facebook or YouTube instead of own URL.

Lean Startup- Dos & Don’ts

Max Ventilla

  • Pivoting statistics- 80% of failures didn’t pivot, 65% of successes Pivoted but 85% of Huge Successes (>$1B exit) didn’t pivot. Those didn’t pivot felt that evolution is safer than betting on intelligent design.
  • You need to eat your own dog food. Use your product to solve your own problems. If not you are at an enormous disadvantage.
  • Invert the org chart :customers & customer facing team should be on top. They should be heard and not told what to do.
  • Force yourself to pretend at the earliest possible moment what you want to be- to learn whether its worth being what you want to be. Landing pages, Concierge or Wizard of Oz are ways to pretend.
  • Don’t speed up for the sake of it. For startups not going fast enough is not the main risk. False summit is the reality. Journey of a startup is slow like that of a mountaineer. A new goal appears once you have reached what seemed like the ultimate goal.

Grace Ng

  • According to Grace Ng success criterion for any experiment is the weakest outcome that will give you enough confidence to move forward.
  • Testing the riskiest assumption on buy side in a two-sided market place could be deceptive in a sellers’ market. Sellers may not automatically follow even if you find many buyers.
  • Validated hypothesis doesn’t necessarily lead to a viable business. Grace Ng tested a hypothesis whether birdwatchers will post photos to ask questions. The Hypothesis was valid but the problem turned out to be too small – not a big pain-point.
  • Don’t validate the solution before validating the problem. As in the case above; the problem was not big enough though the solution was right.

Eric Ries

  • When it takes too long to learn as end results take time, use proxy metric like number of likes or start a cohort.
  • Don’t depend on one experiment to determine the product market fit. Keep testing and validating along the way as you grow. Growing too fast by taking product-market fit for granted is dangerous.
  • Don’t get misled by corporate America’s habit to underinvest or overinvest. “All Hands On Deck” sounds great but surely is a sign of overenthusiasm.
  • Avoid handing off innovation between silos. Handoffs kill innovation. What is learnt in one silo can’t be handed off to another silo.
  • Don’t add features for the sake of it. Its better to err on the side of being too minimal to get early feedback and learning. Its easy to add a missing feature later.
  • Pay more attention to paid users’ feedback than free users’ feedback. Free users ask for more; paid users ask for better.
  • Don’t use vanity metrics- Eric’s law: At any time no matter how badly you are doing there is at least one Google analytic graph that’s up into the right

Joanne Molesky

  • As you go through build-measure-learn cycles for product the same way you should be going thru build-measure-learn cycles for process compliance.
  • Beware of developers’ tendency to focus on how to do things than on outcomes. Developers tend to ignore security as they are dazzled by technology, so they focus on doing things faster-not safer. Security testing, threat model and risk metrics should be included right from the beginning and not at the end.

Dan Milstein

  • Don’t take idle pleasantries as positive feedback. People tend to be polite and cordial even though they are least interested.
  • Don’t choose to see what fits in a narrative that sounds good and makes you look awesome. That is self-deception. Realize that a startup is a series of unpleasant encounters with reality.
  • Don’t own a plan. Own questions. Plans will change.

Hiten Shah

  • Test small changes- Google sign on and changes to verbiage improved acquisition by 314% for KissMetrics.

Brant Cooper

  • Don’t as two questions that kill breakthrough innovation – what is the roi? When do we get it? In order to answer these questions we have to look at existing markets which kills innovation -innovator’s dilemma. We need to build cultures or safety net for innovators.

Conclusion

Most of the takeaways and dos and don’ts are common sense for any practicing entrepreneur. According to Eric Ries The Lean Startup process is more widely practiced than talked about. Most entrepreneurs are agents of long term change. They don’t think The Lean Startup is a big deal. As with most profound thoughts- it seems obvious after its well thought through, well organized and well presented.

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7 of 7 Unique Ways India Conditions the Minds of its Entrepreneurs to Excel

New Age Start-ups – Advantage India!

7. Variety and fragmentation? Indians have always been dealing with them.

As discussed in Chris Andersen’s “The long tail” businesses have to deal with millions of players with their unique offerings competing for a part of the pie. Niche offerings and the internet’s ability to address the “audience of one” has resulted in fragmentation of every market. India has always been a fragmented market given more than 26 languages, hundreds of sub cultures with their own religious customs. Hindus believe in worshiping a different deity (God or Goddess) depending on the purpose or day of prayer. Even food habits demonstrate the same variety.

It’s time Indian entrepreneurs realized that they have these special advantages while competing with others in general and the western entrepreneurs in particular.

6 of 7 Unique Ways India Conditions the Minds of its Entrepreneurs to Excel

New Age Start-ups – Advantage India!

6. Indian entrepreneurs are used to a crowded world where one has to compete for everything.

Startups have to compete hard to get a part of the pie. Indian entrepreneurs are used to fierce competition from childhood days. Its not easy getting into a good primary school in India. Parents have to prepare their children for months for the test/interview conducted by recognized primary schools. This is the first taste of competition for the child which continues to develop through high-school , college and finally in the job-market and beyond. Its very difficult for startups to get funded. Recent business plan competition by The Economic Times had sixteen thousand participants out of which only a handful got funded. The economy of shortages has forced Indians to find innovative and efficient ways of using scarce resources. Fierce competition will eliminate those who don’t.

Unique Way 7 >>

5 of 7 Unique Ways India Conditions the Minds of its Entrepreneurs to Excel

New Age Start-ups – Advantage India!

5. Indian entrepreneurs are more comfortable in communities than corporations

In my earlier blog “Bottom up, employee driven corporate metamorphosis” I have extolled the virtues of communities in this age of crowdsourcing and how they are more valuable than corporations. Corporations are a western phenomenon. Deep hierarchies in the armed forces and Government were introduced by the British in India.  Typically an Indian village was ruled by a group of elderly villagers called Panchayat. Spread of the Hindu religion happened in a viral way with many Gurus and saints acting as change agents propagating the message of their religious belief unlike Churches that had a well organized hierarchy managing them. More recently communities have been organized as co-operative societies in India. Amul – a dairy co-operative is competing well with international brands like Nestle and Kraft. Co-operative societies organized by communities dominate banking, sugar, poultry and dairy business in India. Most of the trading businesses are managed by communities that specialize in the specific merchandize being traded. It will be interesting to see how these traders compete with large retailers like Wal-Mart.

Unique Way 6 >>

4 of 7 Unique Ways India Conditions the Minds of its Entrepreneurs to Excel

New Age Start-ups – Advantage India!

4. Indian entrepreneurs prefer dealing with people than processes

Successful startups often adopt agile development. The agile manifesto values people over processes. Indians have simplified most processes by having “agents” who “take care” of the forms , rules and supporting documents required. Natural response of an Indian dealing with a process in a Government department or a large private corporation is to find out “Who do I meet?” or “Who will do this work” . His first choice will be to find out if he already knows someone who can help him navigate. These human interfaces hide a lot of complexity that no one wants to deal with. The agile manifesto can’t find more convincing validation than this. Indians are very comfortable in an environment where who you know matters more than what you know.

Unique Way 5 >>