The key ideas

Lean Analytics

Alistair Croll and Benjamin Yoskovitz, 2013

Is ten million users a success? Not always: in one app with that many, almost nobody did anything. Alistair Croll and Benjamin Yoskovitz gathered the stories of dozens of startups and showed how to stop fooling yourself with numbers. The book teaches you to pick one key number for your stage, to draw the line for success in advance and to grow in the right order.

Who it is for

For anyone launching their own business, a startup or a new product inside a company who wants to know whether the idea really works. And for everyone tired of reports where every number goes up while the business goes nowhere.

Let's face it: you're delusional. We're all delusional—some more than others. Entrepreneurs are the most delusional of all.

Ten million users and nearly empty circles

“Let's face it: you're delusional.” That is how Alistair Croll and Benjamin Yoskovitz open their book. We're all delusional, they write, and entrepreneurs most of all. To start a business you have to believe in what hasn't been proved. But whoever starts believing their own hype hits the wall at a million miles an hour.

In 2008 the Facebook app Circle of Friends had 10 million users. Co-founder Mike Greenfield was chasing growth, and growth was there. Yet fewer than 20 percent of the friend “circles” people created ever saw any activity afterwards. A pretty number was hiding emptiness. What turned up in the data is the subject of the first chapter.

The authors don't ask you to throw away your gut. In their words, instincts are experiments, and data is proof. Their scheme is simple: understand what kind of business you have and what stage it is at, pick one number that matters more than the rest right now, and decide in advance which value of it counts as success.

Ahead: a restaurant where the bartender yells out “24!”, and a hundred conversations in one evening. Let's start with the most deceptive thing of all: numbers that can only go up.

A number that can only go up

Greenfield understood that if people don't come back, a social network won't make money from them. So he went digging through the database himself to see who was doing what in it.

He found a group that behaved differently: moms. Their messages were on average 50 percent longer, and they were 115 percent more likely to attach a photo to a post. In June 2008 the team changed course, and in the autumn it launched Circle of Moms. At first the numbers fell, but by 2009 the community had grown to 4.5 million people, and those people really used it.

The authors have a name for figures like the total number of users: vanity metrics. They go up on their own and only flatter your ego, because they include even the person who signed up and vanished forever. A useful metric here is the share of active users. You can move it by changing the product, which means you can learn from it.

When you look at any number, ask yourself what you would do differently if it changed. If there is no answer, the number decides nothing. Ratios work better: the distance a car has travelled is just information, while speed tells you whether to step on the gas or brake.

Another trap is rewarding a number. Croll watched a head of sales tie salespeople's pay to the number of deals in the pipeline rather than the deals closed. The salespeople piled up empty leads, which then took two quarters to clean out.

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About the author

Alistair Croll is an entrepreneur and analyst, a co-founder of Coradiant, a company that monitored the speed and performance of websites. Together with the entrepreneur Benjamin Yoskovitz, he was an advisor and investor at the startup accelerator Year One Labs.

All books by this author: Alistair Croll and Benjamin Yoskovitz

Terms from the book

  • Startup
  • Empathy
  • Virality
  • Circle of Friends: A Facebook app launched in 2007: it let people sort their friends into “circles” and share posts with each circle separately.
  • Greenfield: Mike Greenfield, a co-founder of Circle of Friends. He found the most active users in the data and rebuilt the company around them.
  • Circle of Moms: A community for moms that the Circle of Friends app turned into in 2008. In early 2012 it was bought by Sugar Inc.
  • Vanity metrics: The book's term for numbers that are nice to look at but don't help you make a decision: total sign-ups, page views, followers.
  • Metric: A number you track to understand how things are going: the share of active users, revenue per customer, the share of customers who left.
  • Solare: An Italian restaurant in San Diego. The authors use it as an example of a business that looks at one or two key numbers every day.
  • Smerik: Randy Smerik, the owner of Solare and a serial entrepreneur with a background in technology and data.
  • One Metric That Matters: The book's key concept: the number a company focuses on more than any other at its current stage.
  • Moz: An American company, formerly SEOmoz. Its subscription software helps websites track and improve their positions in search engines.
  • Feld: Brad Feld, a venture investor at the Foundry Group, one of the lead investors in Moz.
  • HighScore House: An app in which parents make a list of chores for their children, and the children earn points for them and trade the points for rewards.
  • Line in the sand: An image from the book: a value of a metric set in advance, at which an experiment counts as a success. If the line isn't reached, you try something else.
  • Seaman: Kyle Seaman, co-founder and CEO of HighScore House. He phoned dozens of families to understand how they used the app.
  • Stickiness: The second stage in the authors' scheme: the product is liked so much that people come back to it again and again.
  • Color: A startup the authors give as an example of growing too early: it tried to grow fast without proving that people came back to it.
  • Soman: Nick Soman, the founder of LikeBright, a startup in online dating.
  • Accelerator: A program that helps young companies over a short period with money, advice from mentors and connections.
  • TechStars: An American startup accelerator. In 2011 LikeBright got into its program in Seattle.
  • LikeBright: A startup in online dating that got into the TechStars accelerator program in Seattle in 2011.
  • Mechanical Turk: An Amazon service where people are paid small amounts for simple tasks: rating a logo, tagging a picture, flagging spam.
  • Farina: Massimo Farina, the founder of Static Pixels.
  • Static Pixels: A startup that prints Instagram photos on recycled cardboard.
  • Churn: The share of customers who stopped using a service or cancelled their subscription over a given period, usually a month.
  • Backupify: An American company founded in 2008. It makes backups of data from cloud services.
  • Viral coefficient: How many new users one existing user brings in on average. If it is above one, the product grows on its own.
  • Skok: David Skok, a venture investor. The authors rely on his calculations of how virality and the speed of invitations affect growth.

All terms

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