Notesale: Turn your study into money

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A startup must start with a vision, which leads to
strategy, which leads to product
 VISION – this is your overall goal to create a
world changing business
 STRATEGY – business model, product
roadmap, positioning, customers, etc
 PRODUCT – your offering to the customer

Break strategy down into 1 or 2 most important
assumptions – Leap of Faith assumptions
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The typical leap of faith assumptions are1
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GROWTH HYPOTHESIS – How do new
customers discover the product? What
growth engine will you use? (see Learn
section)
 Go and see for yourself - What problems do
customers have? Talk to them! Create a
“Customer Archetype” to which daily decisions
can be aligned
 Always test the riskiest assumption first
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 Types of pivots
o ZOOM-IN PIVOT – A single feature in a
product becomes the whole product
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o CUSTOMER NEED PIVOT – As a result of
deep customer knowledge it is clear that
other related problems are more important
than the original problem
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o MONETISATION PIVOT – A change in the
way customers pay for the product
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o ENGINE OF GROWTH PIVOT – A change
between viral, sticky, or paid growth models
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For
example consumer goods are sold in a
grocery store, cars in a dealership,
enterprise software by consulting firms, etc
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 Figure out what we need to learn (hypothesis), then figure out the simplest product that will work
to prove or disprove the hypothesis - a MINIMUM VIABLE PRODUCT (MVP)
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o Lacks many features (that may prove essential later on with mainstream customers)
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o Can range in complexity – can simply be a “smoke test” (just an advertisement or website
taking pre-orders to see who bites
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o When in doubt, simplify! Remove any feature, process or effort that doesn’t contribute
directly to targeted learning
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o Once proven you can scale knowing there is value and it’s a desired product
o Can validate “Growth Hypothesis” systematically- if using paid model, see if cost of
acquiring and serving customers is less than revenue
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o Need to find the EARLY ADOPTERS for first customers
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Early adopters have the greatest need and are more likely to tolerate mistakes
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This applies to MVP, but also company
infrastructure, processes and the company training/induction manual
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Additionally, a defective product or process used as a starting point it’s a shaky foundation
to build upon
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o Try to build in smallest possible batches
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o An example is sending 100 letters
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However the quickest way may be to
complete one full letter and envelope at a time
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What if
they don’t fit in the envelopes? Or 100 envelopes are packed and they don’t seal?
o Doing it one at a time is faster when uncertain
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Plus one
complete product is shipped every few minutes, rather than all at once at the last minute
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Metrics need to
be Actionable, Accessible and Available
o ACTIONABLE - It should be obvious based on the results what action must be taken
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o ACCESSIBLE – Make reports as simple as possible
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o AUDITABLE – Data must be credible to employees
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 Collect customer feedback data using COHORT ANALYSIS
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o For example, one cohort may be customers that signed up to version 2
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The next
cohort may be customers that signed up to version 2
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o This simplifies comparisons
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o Using gross accumulative numbers is referred to as “vanity metrics”
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o These graphs have the same data
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So we can say “with version B01, customers showed this behaviour”
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This allows tuning while
limiting bad press if something goes wrong
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One group of customers is split randomly and
exposed to either option A or options B
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Reference: Ries, E, 2011
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1st ed
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They are much more demanding and less tolerant of
 VALIDATED LEARNING –
mistakes
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o Validated by empirical data collected from real customers
 Growth from customer actions has 4 primary modelso Is created by offering something to customers and
o WORD OF MOUTH – Enthusiastic customers talking
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people the product
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Or when emails
o Make proportional investments – a minor issue needs
automatically say at the bottom “sent from iphone”
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o ADVERTISING – Only sustainable if paid for by revenue o Make incremental improvements
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time freeing up time to run the business better
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This can be through subscription such
o TUNING – experiment with changes in the product
as payTV, or through voluntary repurchase such as
(persevere with current strategy)
lightbulbs or Nespresso capsules
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If not making progress or progress is limited, then the
for the long term
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 The mechanism can be different between products
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Or you might have a product that
strategy to seek greater validated learning
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o If after a pivot the tuning activities are more productive,
 Companies using the sticky engine must track their
then the pivot was a good move
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The churn rate is the fraction
of customers who fail to remain engaged with the product
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If the
rate of customer acquisition exceeds the churn rate, the
 General feeling development should be more productive
product will grow
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Like a bank account earning interest- the
a widespread set of customers that resonate with the product
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you’re asking, you’re not there yet
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If the
customer acquisition metric is good, but the churn metric
is bad, focus needs to be on retaining customers
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 The viral engine is powered by the viral loop - determined
by the “viral coefficient”
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1 means 1 in every 10 customers
will bring 1 friend
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1: 100 + 10 + 1 = 111 total)
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0 will grow exponentially (100
new customers at 1
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 Companies must focus on increasing the viral coefficient
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o PAID – Paying for advertising or staff to sell the products
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So if
it costs 80c average for every new customer, and each
brings $1 of revenue, 20% of the revenue (marginal profit)
remains to reinvest in acquisition
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 To increase growth rate: Increase LTV, decrease CPA
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Your product needs to differentiate itself to stay ahead,
and/or target a different demographic
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For example company A currently has 5%
growth and company B has 10%
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5
3
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0

9
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7
10

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