The Lean Startup - Chapter 8 Pivot (or Persevere)
Monthly burn rate
Net drain on the account balance
We have a remarkable ability to
See the signal in the noise
Startup Runway
remaining cash in the bank divided by the monthly burn rate
channel pivot
same solution is delivered through a different channel, leading to more effective results
zoom in pivot
single feature becomes the whole product
customer need pivot
the target customer has a need worth solving, just not the one that was originally anticipated
engine of growth pivot
A company changes its growth strategy to seek faster or more profitable growth.
technology pivot
Achieve the same solution by using a completely different technology
Pivot
Special kind of change designed to test a new fundamental hypothesis about the product, business model and engine of growth
Pivot
Structured course correction designed to test a new fundamental hypothesis about the product, strategy and engine of growth
business architecture pivot
Change from high margin, low volume to low margin, high volume
value capture pivot
Change in the way the company captures the value it creates
Rationale for building low quality MVP
Developing any features beyond what early adopters require is a form of waste
Purpose of innovation accounting cycle
Testing a clear hypothesis in the service of the company's vision
The Viral Engine of Growth
High referral rate learning to growth without spending significant marketing money
True measure of runway
How many pivots a startup has left: the number of opportunities it has to make a fundamental change to its business strategy
Three primary engines of growth that power startups
The viral, sticky and paid growth models
Failure is
The prerequisite to learning
What is the problem with the notion of shipping a product and then seeing what happens?
You are guaranteed to succeed - at seeing what happens
As soon as you have a handful of customers
You will have five opinions about what to do next
Mainstream customers have ________ requirements and are much more demanding.
different (than early adopters)
Pivots are a permanent fact of life for any growing business...
even after they achieve initial success, it must continue to pivot
customer segment pivot
keeping the functionality of the product the same but changing the audience focus
zoom out pivot
what was considered the whole product becomes a single feature of a much larger product
Reasons why pivots do not happen sooner
1) Vanity metrics can allow entrepreneurs to form false conclusions and live in their own private reality 2)When entrepreneurs have an unclear hypothesis, it is almost impossible to experience complete failure, and without complete failure there is usually no impetus to change 3) Acknowledging failure can lead to dangerously low morale
best way to view a pivot
As a new strategic hypothesis that will require a new minimum viable product to test
Two major business architectures according to Geoffrey Moore
Complex systems model - high margin, low volume Volume operations model - low margin, high volume
Path's goal (this company closed)
Create a more personal social network that maintains its quality over time. Many people have had the experience of being overconnected on social networks. Such broad groups make it difficult to share intimate moments
The overriding challenge that every entrepreneur eventually faces in developing a successful product:
Deciding when to pivot or persevere
Path's launch strategy
Get the product and vision into the market broadly in order to get feedback and begin iteration. Listen to feedback honestly. And continue to innovate in the directions we think will create meaning in the world
the human element of entrepreneurship
Vision, intuition, judgement
Startup productivity is not about cranking out more widgets or features, it is about
aligning our efforts with a business and product that are working to create value and drive growth
platform pivot
change from an application to a platform or vice versa
