3. SO YOU WANT TO BUILD A STARTUP ...SO YOU WANT TO BUILD A STARTUP ...
... yolo?
4. #1 SHOULD YOU?#1 SHOULD YOU?
(aka - why building a startup sucks)
5.
6.
7. •Not very status-oriented
•Doesn’t follow rules very well and questions authority
•Can handle high degrees of ambiguity or uncertainty
•Can handle rejection, being told “no” often and yet still have the
confidence in your idea
•Very decisive. A bias toward making decisions – even when only
right 70% of the time – moving forward & correcting what doesn’t
work
•A high level of confidence in your own ideas and ability to execute
•Not highly susceptible to stress
•Have a high risk tolerance
•Not scared or ashamed of failure
•Can handle long hours, travel, lack of sleep and the trade-offs of
having less time for hobbies & other stuff
Common attributes of entrepreneurs
8. ARE YOU SURE YOU WANT TO DO THIS ... ?ARE YOU SURE YOU WANT TO DO THIS ... ?
“9 out of 10 startups fail”
http://www.quora.com/What-is-the-truth-behind-9-out-of-10-startups-fail
9. According to the NationalAccording to the National
Venture Capitalists AssociationVenture Capitalists Association
3 startups fail, have gone bankrupt or business were closed
3 startups are worse than average, aren’t very profitable,
returning less than the invested capital, but are still active
3 startups are a moderate success, are profitable, returning
just the invested capital, were not acquired yet and are still
active
1 highly successful startup that will pay the investor a multiple
return on all of his 10 investments; that startup had an IPO or
were a target of a significant acquisition
11. #2 FINDING THE RIGHT PEOPLE#2 FINDING THE RIGHT PEOPLE
“It’s like dating all over again, and I can’t wait to find the
meat markets”
12. BUILDING THE RIGHTBUILDING THE RIGHT
TEAMTEAM
http://solveforinteresting.com/the-three-kinds-of-ceo/
http://steveblank.com/2011/12/13/the-startup-team/
16. If this is a sea, wtf are theIf this is a sea, wtf are the
fish?fish?
Fellow Students
Founder Dating (http://founderdating.com/about/)
Startup Weekend
Startup Drinks
Bitmaker Labs
Make Your Own
Tell your friends you’re in the market
17. WHOLE LOT OF TALENT, WHOLE LOT OF DEMANDWHOLE LOT OF TALENT, WHOLE LOT OF DEMAND
(shit.)
23. Most startups don’t even knowMost startups don’t even know
what problem they solvewhat problem they solve
Paypal first built for Palmpilots
Freshbooks was invoicing for a web design firm
Wikipedia was to be written by experts only
Mitel was a lawnmower company
Hotmail was a database company
Flickr was going to be an MMO (it’s back to being one now)
Twitter was a podcasting company
Autodesk made desktop automation software
24. #4 THE LEGAL SHIT#4 THE LEGAL SHIT
IANAL (sounds worse than it is - it just means that I’m not a
lawyer)
30. LEARN FASTER WITH CUSTOMER DEVELOPMENTLEARN FASTER WITH CUSTOMER DEVELOPMENT
by Hiten Shah
http://www.slideshare.net/startuplessonslearned/hiten-shah-the-leanstartupsxsw-736
40. Some rules of thumbSome rules of thumb
You have paying flagship customers or loyal high
profile individual evangelists
You’ve reached 10k registered / active users (if you’re
b2c)
Fundraising takes about a year and gives you about a
year
41. Some rules of thumbSome rules of thumb
Begin to get to know investors in the Toronto area
now (OMERS, MaRS, iNovia, BDC, Mantella)
Spend as much time as you can in the valley, and get
valley interest first
Come back to Toronto investors with something to
show
55. Analytics is theAnalytics is the measurementmeasurement
of movementof movement towardstowards
business goalsbusiness goals..
http://www.flickr.com/photos/itsgreg/44http://www.flickr.com/photos/itsgreg/44
58. In a startup, the purposeIn a startup, the purpose
of analytics is toof analytics is to iterateiterate
to a product/market fitto a product/market fit
before the money runsbefore the money runs
out.out.
If you remember only one thing...If you remember only one thing...
59. Message reachMessage reachMessage reachMessage reach
InfrastructureInfrastructure
healthhealth
InfrastructureInfrastructure
healthhealth
Market sentimentMarket sentimentMarket sentimentMarket sentiment
User engagementUser engagementUser engagementUser engagement
Business modelBusiness modelBusiness modelBusiness model
SustainabilitySustainabilitySustainabilitySustainability
Viral coefficientViral coefficient
AmplificationAmplification
PerformabilityPerformability
Customer researchCustomer research
Community sentimentCommunity sentiment
Time since last visitTime since last visit
Core goalsCore goals
Extended funnel abandonmentExtended funnel abandonment
Movement towards goalsMovement towards goals
Cost per engaged visitorCost per engaged visitor
Peak to average ratioPeak to average ratio
Minimum sustainable burnMinimum sustainable burn
60. Viral coefficientViral coefficient
On average, for each message they hear,On average, for each message they hear,
how many people does someone tell?how many people does someone tell?
11
70. A call to actionA call to action
ConversionsConversions
VisitVisit
ss
ShoppingShopping
cartcart
PaymentPayment
optionsoptions
ReachReach
(impressions)(impressions)
Emphasis onEmphasis on
maximizingmaximizing
impression-to-clickimpression-to-click
ratioratio within thewithin the
communitycommunity
Emphasis onEmphasis on
maximizingmaximizing
impression-to-clickimpression-to-click
ratioratio within thewithin the
communitycommunity
90. What do visitors think ofWhat do visitors think of
us?us?
Both on the site (VoC) and in the worldBoth on the site (VoC) and in the world
(community monitoring)(community monitoring)
4&54&5
91.
92.
93. How engaged areHow engaged are
users?users?
Time since last visit, as a histogram, not anTime since last visit, as a histogram, not an
average, compared to baselines.average, compared to baselines.
66
94. Days since lastDays since last
visitvisit
120120
00
100100
00
8080
00
6060
00
4040
00
2020
00
00
11 22 33 44 55 66 77 88 99
Days since lastDays since last
engagementengagement
JanuarJanuar
yy
FebruarFebruar
yy
DisengagedDisengaged
(>10 days)(>10 days)
25002500
00
20002000
00
15001500
00
10001000
00
500500
00
00
NumberofNumberof
usersusers
95. Core goals driving theCore goals driving the
businessbusiness
Pick the 3-4 tasks you’ve set for users.Pick the 3-4 tasks you’ve set for users.
Always know what these are and whyAlways know what these are and why
they correlate to business growth.they correlate to business growth.
77
102. In the last build, whatIn the last build, what
moved us towards &moved us towards &
away from goals?away from goals?
Requires knowing the goalsRequires knowing the goals andand the keythe key
features addedfeatures added
99
103. Cost per visitorCost per visitor
Operations costs per site visitorOperations costs per site visitor
1010
104. Peak-to-average ratioPeak-to-average ratio
How much busier are you at busy times?How much busier are you at busy times?
What premium do you pay for thatWhat premium do you pay for that
surplus?surplus?
Can you decommission well?Can you decommission well?
1111
108. Message reachMessage reachMessage reachMessage reach
InfrastructureInfrastructure
healthhealth
InfrastructureInfrastructure
healthhealth
Market sentimentMarket sentimentMarket sentimentMarket sentiment
User engagementUser engagementUser engagementUser engagement
Business modelBusiness modelBusiness modelBusiness model
SustainabilitySustainabilitySustainabilitySustainability
Viral coefficientViral coefficient
AmplificationAmplification
PerformabilityPerformability
Customer researchCustomer research
Community sentimentCommunity sentiment
Time since last visitTime since last visit
Core goalsCore goals
Extended funnel abandonmentExtended funnel abandonment
Movement towards goalsMovement towards goals
Cost per engaged visitorCost per engaged visitor
Peak to average ratioPeak to average ratio
Minimum sustainable burnMinimum sustainable burn
1212
thingsthings
toto
watchwatch
I’ve worked with Alistair a lot in the past, and many of these slides are ones that he’s created. I want to give him full attribution for this right off the bat.
Step 2: acid party an idea.
The idea doesn’t need to be innovative. You don’t need to come up with the next Google today. In fact, you won’t be able to.
I’d much rather use something existing, or work on a tiny component of something that you’ve been dying to work on.
Good ideas are ones that have a single serving purpose. You’ve heard the term minimum viable product thrown around. A product isn’t something that you’ll be able to easily make in the time frame you’re given. Rather, think of a minimum viable feature.
Okay, a second big change. Now that you’ve got all the data, you need to act on it.
Correlating your metrics to the business makes them relevant. And the key to relevance is to understand your business’s goals, and then to correlate them to your metrics.
Amazon: what do they want you to do?
Maximize your shopping cart size
They’re a transactional site. They make money when people complete a process, usually involving a purchase or subscription, or even entering an email address like you did on bitmakerlabs.com
But Amazon also wants you to leave reviews
And add something to a wishlist
These are forms of collaboration, where communities create content.
What about another kind of site. What does gmail want you to do? What happens when gmail goes down?
GMail is first and foremost a SaaS site. It wants you to be productive, so you can get work done and keep using the system. A paid SaaS site is the same thing.
Of course, GMail is also another kind of site -- a media site. That’s an ad up there.
Media sites want you to click on targeted advertising.
The reason why this matters is that I just spelt out what every single one of you will be tasked to measure, whether your working for yourself, starting a new company, or joining one.
One of the most important questions that you can ask yourself or any company you interview with is: “What’s the business model of this company? Is it SaaS? Ecommerce? Media? Collaboration? As soon as you know its main model, you’ll know exactly what the company cares about, how you should talk to them about it.
Analytics is about measuring the movement of a business towards its goals. It’s what makes the Lean thing work so well. And now that we expect high visibility on our websites, businesses are demanding it elsewhere.
Analytics is about measuring the movement of a business towards its goals. It’s what makes the Lean thing work so well. And now that we expect high visibility on our websites, businesses are demanding it elsewhere.
The first one is called Viral Coefficient. VC is basically: “when i get a user, how many others do they tell?”. If it’s more than 1, you’re happy.
The best example of this is hotmail because every single mail that people ever sent on hotmail contained a link that infected people that read the message.
In fact, the growth of hotmail followed the predictive model built in the 1960s by a guy named Bass, called the Bass Diffusion Curve that shows how viral messages propagate.
So, there’s tons of figures for viral messages and you really don’t want to try and figure them out, so I’ll give you a simpler one.
Viral coefficient is simply, how many new users you’ve got x the change that they're going to tell someone something, minus the churn or abandonment that you have. And if that's great than 1 you're happy, and if it's less than 1 you're miserable because you'll have to spend money on marketing.
And maximize ice cream sales (perhaps by locating them near lifeguard stands just to be sure.)
And maximize ice cream sales (perhaps by locating them near lifeguard stands just to be sure.)
And maximize ice cream sales (perhaps by locating them near lifeguard stands just to be sure.)
And maximize ice cream sales (perhaps by locating them near lifeguard stands just to be sure.)
And maximize ice cream sales (perhaps by locating them near lifeguard stands just to be sure.)
We can also measure whether our site is working properly. I brought some examples.
this might not seem like marketing’s fault.
We can measure performance -- which, it turns out, has a huge impact on the effectiveness of our app.
Google revealed some interesting stats on performance
When they introduced an artificial delay, they found a significant decline in searches per user. Which is quite a lot of money...
Microsoft revealed similar data
(it turns out slowness affects nearly every KPI in search)
Shopzilla did a performance makeover and measured the results.
They saw a jump in revenue
And an increase in page ranking
Other tests we’ve done show optimized sites get more visits, from visitors who return more
Have lower bounce rates
Have a greater time on site per visitor
Have more pageviews per visitor
And see a much higher conversion rate and order value
You need to know how engaged your users are. This is super important. I had one VC once tell me that they would’ve saved 9 million dollars had they done this analysis in the past on a particular startup.
Engagement is basically measured in something like “Days since last visit”. So, I have number of users on the left and i’m plotting this over days since last engagement. That means that roughly 400 users were here yesterday. another 400 were here two days ago, and about 600 were here 3 days ago and so on.
And then I compare that to february. Wow, that’s actually really good because the number of visitors that came back a few days ago is up. So I can see that more people are coming back more often, and then I do the overall comparision, which is how many people haven’t been back in more than 10 days and I can see that disengagement is up. This is a really painful chart, but a necessary one.
There are other things we can watch. Usability, for example, to find out how visitors interact.
...or how they fill in a form and where they stop...