Summary : Lean Analytics – Alistair Croll and Benjamin Yoskovitz

We sometimes remind early-stage founders that, in many ways, they aren’t building a product. They’re building a tool to learn what product to build.

Have I identified a problem worth solving?
Is my proposed solution the right one and is it better than what’s already there?
Do I actually want to solve this problem? That is, will I make enough money for the business to be sustainable and enjoyable

What is the riskiest part of your business plan?
What metrics can be used to track those risks?
How can you reduce those risks?
How can you iterate to move forward?

Don’t sell what you can make; instead, make what you can sell.

“Success is not final, failure is not fatal: it is the courage to continue that counts.”

“Sometimes, growth comes from an aspect of your business you don’t expect. When you think you’ve found a worthwhile idea, decide how to test it quickly, with minimal investment. Define what success looks like beforehand, and know what you’re going to do if your hunch is right.”

The One Metric That Matters is the one number you’re completely focused on above everything else for your current stage. You’ll always track and review multiple numbers. Some will be important: these are your key performance indicators (KPIs), which you’ll track and report every day. Others will be stored away for future use, such as when it’s time to tell the company history to an investor or to make an infographic. Capture everything, but focus on what’s important.”

One Metric

Once you’ve clarified what business model you’re utilizing and your current stage of growth, you can then pick the one or at most two metrics which you really need to track to make it to your next stage of growth.

Stage 4 – Revenue is where you monetize what you’re doing. You’re now focused on maximizing the revenue streams rather than on anything else. The goal in this stage is to transition from proving your solution works to proving you can make money in a scalable, self-sustaining way. You’re not just building a product in this stage, you’re building a company.

Revenue per customer minus the cost of acquiring that customer is the key metric for this stage. You also start focusing on the ratio of money poured in to the business against the money which comes out. You try to decide whether you need to optimize revenue per customer, your number of customers, your operational efficiencies, the frequency of purchase or something else. You also look at cash-flow and track when you pass breakeven point and become self-sustaining.

tage 3 – Virality is where you determine whether customers will tell others about what you’re doing. If you can get word of mouth endorsements happening from your existing customers, that’s a great sign. Having something go viral is a force multiplier for your paid promotions as well.

The key metric in the virality stage is obviously the number of new customers you get from your existing customers. It stands to reason if every customer you now have invites their friends and associates to also become customers in the future, your growth is assured.