We’re entering the fifth week of our twelve week program at the LaunchPad. As we experienced last year, many of our teams are opening up more questions than answers via their Customer Discovery process. Many are having a hard time getting people to talk to them and several are questioning their core hypotheses on multiple levels. It’s a little scary but experience tells us that this is a good thing- it means they are cracking open their business model and finding out where the real value may be hidden.
And a few may be discovering a key thing about doing a startup:
“If you can’t find 120-150 people to talk with about your startup, over three months, then you might ask yourself: Do I actually know anything about the problem I’m solving?”
This is the key to the uncertainty and questioning we saw at our last round of presentations. The word ‘pivot’ started appearing. A few changed focus, probably prematurely.
What’s really going on is they are just starting to talk to enough people. Typically at this stage they have talked to 15-25 in total, well below the expected 10-15 per week. This is where you discover how persistence, and making full use of every resource you have, are the keys to startup success. It’s also where teams discover that focus is critical. The more focused you are the easier it is attract interest and feedback.
While it seems that solving more problems should lead to more connections, it’s simply not the case. When you accurately define the problem -the main problem- that your startup is attacking, you become a lot more interesting. Why? Because you are starting to acquire expertise which you can share, adding value to your conversations.
But, ask yourselves: If after four weeks we’ve only had a handful of conversations, what are we doing wrong? Are we in the wrong market? Solving a problem that isn’t urgent and painful enough? Or maybe not really all that interested in what we thought we were doing? These are important questions to ask…and they can lead to breakthroughs. We saw it last year across the board.
Metrics are a very important part of the Lean Launchpad process. By keeping track of interactions with customers in a variety of ways you are building a convincing story about the viability of your business model; a story that will be invaluable when you start selling, acquiring users or raising money.
Some of the things you’ll need to be measuring can be tracked with a simple spreadsheet:
Development milestones for your Minimum Viable Product (MVP)
Customer roles and relationships
Interactions that take place online, via the Internet or mobile, are a different story. Google Analytics is free software activated by placing a line of code into your site or app. That line of code gathers a wide range of information about those interacting with your site or product including:
Where, when and how (what device or browser was used)
Length of interaction and where you ‘lost’ them
Hotspots on your pages
Behaviors within apps and sites
Their ‘path’ through the experience you are providing
…and much, much more. So much, in fact, that even experienced users of Analytics often miss important stats and metrics or don’t understand how to use them to do testing. Fortunately Google offers a service called Analytics Academy that provides both structured and self-guided courses for both beginners and experienced users. Find out more here.
This really isn’t optional, though many startups don’t take full advantage of it. The reason I say that, is it gives your startup an incredible advantage as you gain sophistication with these powerful tools.
“Direct involvement may be the most important factor, even if it cannot be easily quantified. A 2007 Kauffman study found that angel investors can get outsized returns if they offer a high level of diligence and direct involvement. Thus, we think its critical that entrepreneurs and VCs consider an accelerator by whether its leadership has done their homework on their prosective members’ underlying markets, and by whether they have teams ready to dedicate time and resources to help their business.”
“Based on these historical results, we found that companies in accelerator graduating classes from before December 2009 returned 11.3x on capital invested. These are fantastic returns for entrepreneurs, VCs, and accelerators.”
Bear in mind that the programs studied typically took an equity position of 6-9% in exchange for an investment of $15-20k. The numbers also reflect a couple of huge gainers (AirBnB, Dropbox). We don’t currently take equity positions in our startups.
While our team sifts through the 33 applications we’ve received for the HTRLaunchPad 2014, I’m going to jumpstart the thought process they’ll need when setting up their Minimum Viable Product (MVP). At this stage, prior to customer discovery, your MVP should be as simple as you can get away with- a sketch, a story, a video, a simple user-interface design. As you learn more about the problem you’re solving you’ll refine your solution as demonstrated by the MVP. And when your solution is out there where users can play with it analytics will be very important to understanding how to improve it.
How Much Do Social Networks Impact Our Ability to Meet Goals?
What Sources Drive the Most Conversions?
How Many Visits Does It Take for Visitors to Convert?
What Desirable Actions Do People Take on the Site?
If you don’t understand what these things mean or why you should understand them, the article is required reading. But even if you think you know this stuff, read it- there’s a ton of very useful information that will help you get the metrics part of your lean startup off on the right foot.