A Great Case Study of Customer Development + Pirate Metrics + Lean Startup

September 21, 2009

This is a brilliant case study of someone using Customer Development, Pirate Metrics and Lean Startup principles to develop their startup.

If you’re not familiar with these three concepts, here are the 3 links you need:

  1. Steve Blank’s blog on Customer Development
  2. Startup Metrics for Pirates: AARRR! by Dave McClure
  3. Startup Lessons Learned by Eric Ries

And you should also consider buying Steve Blank’s book: The Four Steps to the Epiphany (aff)

The presentation is something you should bookmark (or bookmark this post) for future reference. If you’re in the midst of launching a startup, you’ve already launched, or you’re thinking about launching something, please do yourself a favor and check out this presentation and the additional resources provided. You’ll save yourself a considerable amount of pain and frustration.

Startup Case Study
View more presentations from dbinetti.

To summarize Customer Development, Lean Startup and AARRR – Pirate Metrics, here’s what you need to know:

  • Write out your key assumptions based on the problem you’re solving. There’s a very good chance your assumptions will be wrong, but if you don’t write them down succinctly and with some manner of thought behind them, you won’t be able to test against them properly.
  • Think about a Minimum Viable Product (MVP). An MVP is the smallest possible product you can launch that people will pay for. I’m simplifying and generalizing (and there’s a ton more you should dig into), but do away with the waterfall strategy of building some robust, full-scale application before launching and instead get down to the real crux of things – what’s the smallest thing people will buy?
  • Use actionable metrics for testing. A lot of metrics are just bullshit. They aren’t actionable; you can’t do anything with them. AARRR stands for: Acquisition, Activation, Retention, Referral, Revenue. You need actionable metrics that you can adjust your assumptions, product, and entire business on.
  • Stay lean, learn to pivot. The concept of a pivot from Eric Ries is that you have to shift direction (sometimes quite substantially) with your product and/or business, but it must be grounded in learning.

The Customer Development process might seem tedious but it will save you a ton of headaches down the road. This overall approach might feel like an increased burden of planning and management, but these systems are in place to make sure you don’t head down a path that’s not going to generate the result you want: a successful startup.

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Comments
When commenting, please use your real name. Simple as that. Otherwise your comment will very likely be deleted. There's absolutely NO SEO benefit to using a cheesy website name. So don't do it.
  • this seems to be very handy fo me
  • Essential advice for beginners and dare I say some old hand's as they realise that their method(s) was wrong lol. GOod stuff, thanks.
  • domainapraisal
    i also believe that writing the problem in details in a paper opens the path to solve the problem a good strategy.
  • This is a good analysis, though some numbers to back this theory will be truly appreciated.
  • Granted, this is true.
  • backupvault
    Nice and good analysis.
  • backupvault
    It's really good job and well explained.
  • backupvault
    Well written and explained post.
  • Some good info here - especially in this economic environment, the general model of running "lean" is the best place to be. I think a lot of these slides are gold dust for start ups and existing companies alike.
  • alantollemache
    I like the MVP concept - When starting out, it is helpful to keep things simple.
    Businesses should also pay attention to their competitive landscape. So many times businesses fail because they under estimate the level of competition or availability of product substitutes.

    Regards,
    Alan
    http://www.accountant-bookkeeper.com.au
  • can you put some numbers from real time situations and backup this theory? I would love to learn how these theories reflect the reality...
  • These aren't just theories without support. If you read Four Steps to the Epiphany you'll see supportive material in there. And look up Eric Ries who is pushing the lean startup concept in a very public way. There's lots of data out there to prove these concepts work. And the presentation itself has valuable metrics.
  • samdodd
    Great advice I really like the ideas and I have used them in my personal business. You should always try to spend the least amount of money for the largest return. Thats what it all boils down to.
  • unique_gift_ideas
    Great resource. Thanks for sharing. This post touches on several topics that I've been pondering lately.
  • Yeah, customer service can be a major pain to put it lightly but it's pretty darn essential.
  • Depends on the variable output you want to derive. Some metrics can't be trusted but this is one amazing way.
  • home business is the way to go in this recession. Their are lots of program that has newbie section and SEO Free tools to get you started.
    Jerome Nickerson
    http://www.onlinerecessionbuster.com
  • crisdsadasd
    If you're a high school student, how many times have your friends and family asked you that question? Or, it's counter-part, 'what do you want to do when you grow up?' It may get annoying to you, but really, all they want to know is what your interests are, what you are thinking about studying, and if you know what type of work you might like to do in the future. As early as your freshman year in high school, there are several things that you should consider to help you get pointed in the right direction. Here are a handful of them:

    College Prep Curriculum

    Your high school guidance counselor can recommend courses that provide a good preparation for college. They may not know everything related to every career or even what the financial aid options are that you have, but they can help here. Each college specifies how many English, math, social studies, foreign language, and science classes applicants should take to qualify for entrance, but there are similarities among colleges. So, make sure you are taking the right courses and enough of them.

    Advanced Placement Courses and Exams (AP)

    AP classes give you a chance to complete college work while still in high school and are offered in many subjects. They enable you to study an area in greater depth and challenge yourself to do college-level work. They can be rewarding because you gain new skills and study habits. If you pass the AP exam at the end of term, you can receive college credit. If you do well, your chance of getting into the college of your choice improves because you have demonstrated that you can succeed in college-level courses. The AP courses you complete in high school can often be skipped in college, saving you time and your parents money. Just be careful not to overload yourself with too many of these...we don’t want to see your grades suffer!

    College Visits

    As early as your freshman year, but definitely by your junior year at the latest, plan to visit several colleges you think you might like to attend. If you're unsure about where you want to go, then pick a range of schools that are close by. Be sure to visit some state schools, as well as some private schools as well. And always be sure to go while school is in session. That part is critical, so you can see what the students look like, not just the buildings. This will also allow you to see if the students look like the kind of people you want to be hanging around with for four years of your life.

    And, when it comes time to apply, I’ve found that you are best suited if you apply to 8 universities, give or take a couple. The transition from high school to college is one of the defining moments in your life, and you want to have the best shot of success possible. So, be sure to use your time and energy in high school wisely by getting good grades, challenging yourself, and using the time to explore your interests.

    http://www.egitimcafe.com
  • Some good theory in here, but there is always room for gut feeling. Don't get me wrong, I think gut feeling alone is a recipe for disaster - but that coupled with the theory above is probably the best thing.

    Gotta say, I run my own small business blog, and thats some of the best info i've seen.
  • Ben, thanks for the great case study. I particularly liked the video/presentation on lean principles, etc. Very information. Thanks for the great insight!
  • fitnessmeetsopportunity
    I like starting off small when it comes to selling/buying. My goal has always been to have something small in price, big in value, and something the masses needed. I'm still trying to crack that code;)
  • Great case study here. And thanks for those links, I spent a good deal of time reading over at venturehacks.com as a result.
  • ofertascelularesargentina
    can you put some metrics about it?.
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