One of the most often-repeated themes from Lean Analytics has been this: If a metric won’t change your behavior, it is a bad metric. So when Brydon mentioned to us that we’re all celebrating the wrong things, his comment made a lot of sense. Here are his thoughts on the subject, in our first guest post.

The moments we choose to celebrate say a lot about what we consider important. They’re a proxy for the metrics we value, because we’re signalling to others by their very celebration. And yet, I’ve always been of the belief that startups tend to celebrate the wrong things.

If that’s true, what signals are we sending? We celebrate product launches, government grant acceptance, fundraising, winning pitch contests, and so on. Too often, these are the vanity metrics of our startup ecosystem.

Of course, some of these events are worthy of celebration. A grant lets us live to fight another day; a winning pitch might drive sales or help us to hire a key employee. But they would be way down on my list, personally, if my goal was to build a real business. Let’s stop concentrating on celebrating events like taking on debt or winning what is often little more than a beauty contest—and focus instead on what we should celebrate but rarely do.

At ThreeFortyNine, we celebrate the achievements that matter to the business model. Consider, for example, the first time you sell something to a complete stranger. That’s worth celebrating because it’s the first sign your business might have legs of its own. In our Founder’s Club events, we celebrate selling our first train tickets to strangers; Foldigo celebrated its first-ever sale to a stranger. Our plan is to build up this list and move it into our monthly socials.

We’re building our Startupify.Me program around the concept that talented developers stepping into startup life need options. Incubators, accelerators and government grant programs funnel them into a single, traditional path, thereby discouraging experimentation. We want our cohort to have the option to create a lifestyle business or even a small, local business—if they choose. Of course, any of them can still try and swing for the fences, but the key is that they have all of the options available to them when they start.

“We didn’t get to where we are today thanks to policy makers – but thanks to the appetite for risks and errors of a certain class of people we need to encourage, protect, and respect”,

—Nassim Taleb

Only in recent years have books like Lean Analytics begun to draw out the real risks of obsessing over feel-good data that does little for the business—so-called “vanity metrics”. There’s a very real danger if a young entrepreneur believes that success comes in the form of taking on debt, winning a pitch contest and launching a product. Those may be required for some businesses but they shouldn’t be misconstrued as success.

Part of the challenge here is the proliferation of what I call success turnstiles in our ecosystem. These are entities whose prime motivation is to funnel as many businesses as possible through their turnstile. It’s a pure numbers game for them as they chase their success metrics. These entities tend to be government funded and these success metrics are defined by bureaucrats and can be tracked up the organizational hierarchy to a speech-writer’s desk.

We need to lead real conversations about what success is because it comes in many shapes and forms. Advocates of this more mindful form of celebration include Jason Cohen imploring founders to get 150 customers instead of 1000 fans and Rob Walling helping startups to start, and stay, small.

Here’s an initial list of milestones and accomplishments worth celebrating to get you started.

• Performed 30 interviews with real potential users.
• First customer acquired.
• First customer acquired without knowing where they came from.
• Covering your monthly personal costs.
• Identifying the first product feature a potential customer will pay cash for.

Which vanity metrics need to stop being celebrated? Which do we need to celebrate more?

Although Lean Analytics focuses mostly on tech companies, Alistair and I quickly realized while doing our research that the principles and tactics of Lean Analytics apply to many types of businesses. We managed to highlight a few examples in the book, including Solare, a San Diego-based restaurant that uses two key metrics to guide their decision-making.

Recently, Curtis Peterson reached out to us about a blog post he wrote, Lean Football Play Calling. The basic premise is that Lean Analytics can be used to make better plays during a football game. Curtis talks about a couple of hypotheses that he has around “explosive plays” and the use of play action passing.

It’s fascinating to see Lean Analytics applied in areas outside of technology. It’s not surprising though, because the challenges remain the same. And the way to get things accomplished remains the same. You have a goal. You need hypotheses on what to do (experiments to run) that you think help you achieve your goal. And you need to measure your progress.

Curtis hasn’t tested his theories out (it’s the offseason!) but I’m hoping he will, and I’m hoping others will as well. It’d be fascinating to see if a structured approach like the one he’s proposing can help in winning football games. Wouldn’t that be something?

Photo from Flickr.

Prize winners were selected at random.

If you won a prize you were notified by Twitter or email, so please check those carefully. I’ve heard back from a lot of the winners, but not all of them. I’ll reach back out in another week or so to those remaining winners that didn’t respond.

The grand prize is a free trip to the International Startup Festival in Montreal. It includes a free ticket, $1,500 for travel/hotel and a few other goodies.

So who won?

Our grand prize winner is: Damian Matheson!

Damian (@iamdamian) is a 23-year old entrepreneur living in Toronto. He got the entrepreneurial bug thanks to attending the Digital Specialization program at Ryerson University (inside the Digital Media Zone). Previously, he was studying Criminal Justice at the University of Guelph.

Damian is the co-founder of FoodStory, which aims to bring farmers’ markets online and into the 21st century. Consumers will be able to log onto the website, see a profile of each of the attending farmers/vendors at the market, connect with them, learn their story (so they know they’re truly supporting a real local farm), and then see what will be available.

“Ultimate, we are creating a service that allows consumers to receive a completely customizable weekly box of farm-fresh goods right from the farmers’ markets, delivered right to consumers doors,” says Damian. “Think of it as a customizable, multi-farm online shopping experience with a strong emphasis on the connection between consumer and producer.”

Congrats Damian, and congrats to all the other winners!

Let me thank each and every one of you for buying Lean Analytics–the response has been awesome. Alistair and I are blown away and really appreciate it.

The folks at Geckoboard are awesome. They’ve contributed to our sweepstakes, where you can win awesome prizes (including a free trip). I did an extensive interview with Geckoboard’s CEO, Paul Joyce, which you can watch on Vimeo. And now, they’re hosting a 1-day workshop event for Alistair and I in London.

The event is on Friday, June 7, 2013.

They put together an awesome site (better than anything we could do ourselves!), which you can see here: http://www.geckoboard.com/lean-analytics-london/.

Tickets are £120 and space is limited.

Alistair and I are very excited about going to London and sharing Lean Analytics with the community. It’s going to be a great, interactive format where we work with local startups and help them out with their analytics. If you’re in the area or nearby and want to hang out, we hope you’ll attend!

I was in Austin for SXSW this year. It was my first time there—I’ve always had some other event to attend. I’ve been told it has long since jumped the shark, and many who’ve decried its demise say it’s proof that technology is mainstream. With that in mind, and not knowing anyone, I fully expected it to feel like crashing someone else’s high school reunion only to find that all the cool kids had already snuck out the back for a smoke.

I was presenting a workshop on social media measurement, playing the part of the curmudgeonly entrepreneur; and I was there for the launch of the book, and as a mentor for Eric Ries’ Lean Startup event.

I also managed to squeeze in an interesting afternoon with librarians at a guerilla “salon” they’d erected just beyond the confines of downtown Austin. Turns out I knew people, too: Blake Robinson of Analect took me under his wing, and my colleagues from Decibel showed up towards the end, ushering me into a fantastic set by Flying Lotus. I also had a bumpy, sweaty ride around the city on an RV that felt (and smelled) like a moving version of Spring Break. It says a lot about the festival that this RV had just performed engagement ceremonies for the Twitterati.

But all of these paled in comparison to my experience with bikes.

I need to be less sedentary, and I’m trying to find hacks to do so, as I’ve outlined elsewhere. When I started planning for SXSW, the closest hotel I could find was five miles North of the city. Wary of waiting in interminable shuttle lines or spending a lot on cabs, I thought that it might be good to have a bike.

A bike has other benefits, of course. It’s good exercise. It doesn’t burn gas. Bought from Walmart or Target, it costs less than six cab rides. And I can leave it to Goodwill, or a Boys & Girls Club, or some other association, so someone can benefit from a nearly-new bike.

Enamoured with this idea, I shopped around. Sure enough, a simple, one-speed road bike was $99 on Walmart.com. I’d made up my mind: In a few weeks, I’d buy it, and ship it to a friend’s in Austin. I didn’t want it lying around in her house for too long, after all.

When the middle of February rolled around, I went back to Walmart, only to find the price had gone up by $50. Undaunted, I bought the bike, and shipped it. I knew I’d have to do some assembly, but this seemed a small price to pay.

Shortly after I’d drop-shipped the bike, I found out that another friend (who’s busy changing the world) wouldn’t be able to make it, and her partner had a spare room in downtown Austin at La Quinta, just a few blocks from the conference. The long journey I’d feared would, for the most part, not happen. I’d be walking distance from things for much of the conference.

(If you came here for Lean Analytics stuff, bear with me—we’re getting there.)

A few days later, I flew from Montreal to Newark, where, apparently, they don’t know how to deal with snow. As a result, I arrived in Austin late, missing a dinner and a Big Data meetup. I took a taxi to the Holiday Inn Express far North of the city, and crashed, surrounded by boxes of books rushed from the printer to my hotel.

I woke early the next morning, and my Austin friend came to pick me, my luggage, and my boxes of hot-off-the-press books up.

We drove to a Walmart near her house for supplies. This was my first real warning. In front of me were rows and rows of pre-assembled bikes, hanging from the rafters in an array of styles.

Had I known I’d be here to buy a helmet and other things, I could simply have bought a bike that was ready to ride, and skipped the assembly, and not needed tools. Lesson learned.

Eventually we found our way to the bike supplies themselves. These were, to say the least, lacking. Most of them featured a licensed cartoon character of some sort, and few of the helmets fit my head.

The locks were witheringly frail, but I rationalized that a cheap bike was unlikely to get stolen. In the end, I left with a helmet, lights, a bike lock, and some basic tools. I was also $97.22 lighter.

Then we went to her place, and I spent an hour or so assembling the bike. This was a sweaty, uncertain process. Fortunately, I’d found the right tools, but even then it was tricky in places, particularly in getting the brakes properly aligned. After an hour, I stood back to review my handiwork.

Now, if you look closely at that picture, you’ll realize something that had only just occurred to me. Those tires aren’t inflated. Lesson learned. Having not thought this through, I now needed to find a bike pump. My friend drove me to my second hotel, downtown—already, I was missing the opening sessions of the Lean Startup workshop at the Hilton—and fortunately the parking staff had an air compressor on hand.

I thanked her for her help, changed, and biked off towards registration. I flew down a surprising number of hills on my way towards the river, regretting with each street I crossed the potential energy I was bleeding off, and the kinetic energy I’d have to give back on the return trip.

I need to pause, at this point, to say one important thing:

Having a bike at SXSW is fantastic.

The feeling of caroming around corners, hair in the wind, street rolling by, is wonderful. It’s exhilarating. I have no regrets. But if that sounds like foreshadowing, well, it is.

Badge and swag retrieved from the well-oiled machine that is SXSW, I hopped back on the bike—which handled fairly well—and pedalled a few blocks to the Lean Startup event. I spent some time there, and left to meet Blake at a party. I walked out of the Hilton with a spring in my step, ready to board my trusty steel steed and head off to the event …

And stopped. My front tire had a flat.

I texted Blake to tell him I couldn’t come to the party, because I had to fix my tire. Then this happened.

Apparently, SXSW provides. In this case, it provides a Chevy Volt party next to a bike repair shop.

Okay, if you’re here for the Lean Analytics stuff, this is where it will make sense. Because as I walked the ten blocks to Mellow Johnny’s, I had time to reflect. Normally, all of this would have made me furious—paying too much, realizing I’d made dumb mistakes, having a flat. But I was kind of enjoying it. My whole frame of mind had shifted from “I need a bike” to “I am running an experiment.”

As I’d been preparing for the trip, I’d thought to myself, “maybe someone should start a business for travellers who want to keep in shape.” For all the reasons I’ve mentioned, having a bike in a city is great. And giving it to goodwill—possibly with a tax receipt in the process—might make it a viable business model. But I hadn’t got out of the building.

Now here I was, decidedly out of the building, walking a dilapidated bike down a dusty street in a city I didn’t know. And I was loving it. I’d learned at least ten things about this hypothetical bike-in-a-city business in less than a day, and all of them were crucial to the business. Never mind that I had no intention of setting up such a business. Simply viewing it as an experiment turned every mishap into a triumph.

It’s hard to explain the Zen-like calm that had overcome me. But I didn’t have time to muse any more—I’d arrived at my destination.

Outside Mellow Johnny’s, it was SXSW as usual—dozens of people, all staring at their phones, oblivious to the other people they’d travelled hundreds of miles to see. I walked my bike into the store and introduced myself to one of their staff.

His first reaction was a compliment—he liked the bike. It seems the designers at Walmart had conceived a vehicle that, on initial inspection, looked solid and well designed. I explained the provenance of said bike, and the history, and he quickly changed his mind.

He agreed to repair the tire, and check the brakes for me. There was a small tear in the tube, so he’d replaced it. As it turns out, the tires on the bike weren’t standard, requiring not only a new tube but also an adapter for the valve. Lesson learned.

$30 poorer, but delighted with the staff, service, and coffee at Mellow Johnny’s, I headed off. I was only slightly worried by his parting words: “I fixed those brakes as best I could, but I wouldn’t go down any hills if I were you.” After a few more events that evening—abetted by my ability to flit from venue to venue quickly—I returned to my hotel, locked up the bike, and went to sleep.

The following morning, I found a relatively unsullied coffee shop with good Wifi, did some work, grabbed a great brunch at an Exact Target party, and went to see friends at the Canadian tech pavillion. By now, I’d noticed that my bike had some wear and tear. The seat, for example, had started to split from the moisture and exposure of the overnight rain. Lesson learned.

Then I returned to my hotel for a board call, and headed back out to meet my friend and past co-author Sean. We decided not to wait in the line for Girl Talk, and instead headed to the Driskill.

Now, if you’d been out all night, you might be upset when you walk out of the bar and find …

… your back tire now has a flat.

Not me. My Zen-like attitude was unassailable. Joy! More data points for my test case! More lessons learned!

Sean clearly thought I was mad. But I was reminded of something Dave McClure said at Startupfest last year: The only thing worse than bad feedback is no feedback at all. Here I was, walking back to La Quinta with a flat tire once again, absolutely swimming in negative feedback!

The following morning I had to pack my bags and leave them at the downtown hotel. My respite from the long ride was over; I’d have to rely on my bike to get to and from the original, distant hotel. I walked back to Mellow Johnny’s and had the bike repaired a second time.

Another $24.80 spent. I did learn, however, that renting a bike from Mellow Johnny’s would have cost me $25 a day. I took a moment to delight in this nugget of competitive pricing data, and another lesson learned.

I biked off for a quick chat with some of the folks from Soundcloud, then made my way across the bridge to a video interview I had scheduled with the folks at Software Advice (which I’ll post here sometime soon.)

Did I mention that having a bike in Austin is amazing?

The wind across the river, and the spring sun, were fantastic. I climbed a short hill, and turned down a smaller road towards the studio. And then I noticed that the wheels were making a strange noise.

Flat number three.

Again, at this point, I’d normally have thrown the bike off an embankment. But this was a lesson, to be consumed, considered, and shared, dear reader, with you. I walked my bike the remaining distance to the studio, and did the interview with Ashley Verrill, who handled a rather sweaty guest with poise and aplomb. Shortly afterwards, I was scheduled to speak with a bunch of librarians about Big Data, and they’d kindly offered to pick me up. So I asked them if they had room for a bike.

We squeezed the bike, and five passengers, into an SUV and crawled the few miles to the next venue. It was during this drive, shoehorned between seats and spokes, that I learned I was far from the first to consider getting bikes in each city I visited. No, David Byrne has been doing this a long time, and has even written a book—the Bicycle Diaries—about it.

The hypothetical-startup-founder in me celebrated: I’d unearthed a competitor! Another lesson learned.

When we finally reached our destination, my Austin native—who’d patiently waited while I assembled the bike in the first place—was there. She told me of a friend had recently lost everything, even her car, and badly needed a way to get around. So I gave her the bike, with $20 to fix the third flat.

Things have a funny way of working themselves out.

I’d spent $314.49 on my bike experiment. The rest of the conference was uneventful by comparison. There were some great parties, and the aforementioned RVIP. Reggie Watts helped us skip a line. And the workshop went really well, giving me insight into how social media marketers and agencies think about metrics—and into why vanity metrics won’t die. But that’s for another day.

I learned a lot from the experience. It reminded me just how vital it is to get out of the office and try something yourself. And it demonstrated what a difference it makes when you think of your experiences as experiments. They cease to be disappointments and become learnings. Even if you’re not starting a company right now, pick a crazy, hare-brained idea and see if it works. It’s refreshing.

Ultimately, when you’re trying something new, you’re not defined by your idea, your product, your plans, or your services. Rather, you’re defined by what they’ve taught you. This is true for founders, but it’s also true for humans. It’s a much more Zen way to look at your life.

And that’s why, for me, the best thing about SXSW 2013 was a shitty bike.

]]> http://leananalyticsbook.com/sxsw-bikes-and-the-zen-of-finding-things-out/feed/ 10 http://leananalyticsbook.com/startup-metrics-toronto-2013/ http://leananalyticsbook.com/startup-metrics-toronto-2013/#comments Sun, 24 Mar 2013 18:58:33 +0000 Alistair http://leananalyticsbook.com/?p=392 Last week, Paul Dowman launched the Toronto Startup Metrics Meetup. It was a great chance to talk Lean Analytics with dozens of founders and analysts in the city, and the Bitmaker Labs offices were the perfect venue for the evening event.

Here are the slides, for those who asked.

They’re both right, in a way. And that has important implications for entrepreneurs

Many people think a startup is a small business. It’s not. A small business is a small business, and if you want to change that, you’ll have to follow both Paul and Steve’s advice: start searching for a sustainable business model that can grow fast.

Paul’s view

Let’s talk about Paul’s view first. He explains that while tech companies aren’t necessarily startups—Dell and Microsoft aren’t growing rapidly—startups might necessarily be tech companies. That’s because fast growth happens either from a big market shift, or from a dramatic lubrication of a market. Technology causes both huge shifts and copious amounts of lubrication.

• Tectonic changes in the market: Consider Google or Dropbox. They grew fast because of a huge, irresistible shift—the use of the web, or the willingness of the average person to store data in the cloud. There are plenty of other reasons they grew, but they were part of a rapidly expanding total addressable market. The market they targeted came out of nowhere, and grew very, very fast. If startups are boats on a river, then these ones are going fast because the river’s a rushing torrent.
• Reduction of friction in the market: Now consider Über or Groupon. There’s nothing necessarily disruptive about taxi services or coupon clipping. Those are slow rivers. But both companies found ways to lubricate the inherent friction in their markets: smartphone-equipped limos; or social sharing with a threshold incentive. These are the fast boats.

Put another way, startups move fast downriver, either because they’re on a really fast river, or because they have a motorboat and everyone else is in a canoe. Graham thinks (and I agree) that to achieve fast growth, most of the time you need a low-cost, short-cycle-time mechanism. And that’s usually software, because humans make bad processes. As Andreesen said, software eats everything. People retire; software gets upgraded.

Steve’s view

Okay, on to the other definition. Startups are searching for a scalable and repeatable business model. To me, that means it’s sustainable without the direct involvement of the people who created it, because founders don’t scale.

A startup is not a lifestyle business. A startup does not mean consulting. It does not mean bespoke.

Etsy is sustainable; one-off quirky knitted sweaters are not. Etsy is software; sweaters are slow, messy, hard-to-scale wool. Sustainable, to me, means that as the business grows, the incremental cost of acquiring additional revenues or customers descends towards zero.

A few months ago, I wrote about a hairstylist who’s setting out on her own. She’s a small business owner. She can learn plenty from Lean methodologies about how to improve her business, just as Fortune 500 companies can improve their competitiveness by using Lean approaches. But she’s not a startup by either Steve or Paul’s definition.

Since Paul mentioned a barber shop as an example of a not-startup, I wondered, “what would a hairstylist need to do to become a startup?” They’d have to be searching for a sustainable business model that could grow fast, probably because of a new market or a lubricant that changes the economics of an existing one in an important way.

Consider some of the ways a hairstylist might try to launch a startup, based on their domain expertise. They could focus on a market that they feel is growing quickly; or on a technology that makes new products possible.

Your source of growth drives your metrics

The source of your growth will influence the kinds of metrics you measure, and which you consider riskiest, and how much of your product or service needs to be built before you can test it. Some of these business models are SaaS; some are e-commerce; some are user-generated content. Each makes money in different ways: subscriptions; transactions; advertising. And all of that drives the One Metric That Matters for these companies.

Growing market (fast river)

If you choose to innovate by focusing on a growing market (fast river), then most of your risk is about whether you can capture that market. You’ll need a really good go-to-market strategy, because you’re not really doing anything new (you’re still cutting hair, just not in the traditional walk-in hair salon way.) You’ll care about exclusivity, partnerships, and existing competitors going after the same blue ocean.

Exclusivity means you’re the only one on the fast river. Partnerships mean that others already on the river help you get there. And competitors reduce your advantage, since they have the same fast waterway as you. The longer you can stay on a fast river, the better—but these days, it’s a fair bet that competitors will quickly copy you. Worse, several Internet giants (Google, Facebook, Twitter, etc.) are really, really good at fast rivers, since they run the underlying infrastructure. They shape the riverbed, and can divert the river’s course or slow the river to their advantage—think Twitter changing its APIs, or Facebook blocking an app’s access to its graph.

(It should be noted that neither home visits nor AirBnB haircuts are growing fast enough to qualify for Paul’s “designed for rapid growth.” That kind of growth takes something truly new, and often exploding because of network effects: the phone system, the Internet, credit cards, television, the printing press.)

Disruptive technology (fast boat)

If you choose to innovate by focusing on a disruptive technology (the fast boat in this analogy), you’re going to care more about whether you can build and run it; whether it will work and easily replace existing solutions; and whether it will really go as fast as you think it will.

The “can you build it?” question is true only of genuinely innovative technology, and often your adoption will come from patents or the barriers to entry that you create because of your invention.  Your risk is that your Arduino/Dyson/Kinect Frankenscissors might not work.

Invention is a special segment of the startup world, and its value comes from an ability to demand high margins because of the advantage the product conveys to those who use you. For example, a chip manufacturer that increases network performance tenfold charges far more than the cost of making a chip, because of the value it conveys to network infrastructure that uses it.

The “will it work?” question is about substitution. If people won’t consider your offering a viable substitute, it’s no good. If Über cars weren’t widely available at launch, they wouldn’t be a viable alternative to taxis—which is why Über paid drivers $30 an hour to sit idle when they first launched. They basically rented a city’s population of limos until their demand took off. A good rule of thumb is that something must be ten times better than the alternative. Humans have intertia, and incumbents have inertia, and you need to overcome both.

The “speed” question is about being able to achieve the volume and cycle time you expect. Let’s say you think you can do a perfect haircut in 30 seconds because of your new hair-cutting invention, which will give you a 60-fold increase in productivity. You’re still running a salon. Your business hasn’t changed (much.) But there’s real risk that some other element of your business model (say, reservation management) becomes a bottleneck that prevents growth.

Both at once

If you’re doing both (new idea in a new market—fast boat on a fast river) you’ve got even more risk, because you have to focus on market fit and product fit. The best companies do this:

• Microsoft’s Windows was a motorboat, and the home PC was a fast river.
• Credit cards were a motorboat, and the rise of consumer banking was a fast river.
• Google’s Pagerank was a motorboat, and the rise of the consumer web was a fast river.

But it’s taken an amazing amount of dexterity for these companies to stay around, and they’ve had to adjust constantly. Microsoft nearly steered their motorboat into the shore when the Web happened, and it took a draconian intervention by Bill Gates to get them back on course. David Allen explains this history in his consequences of state interference and non-interference.

Coming upon this scene about two years ago, in late 1995, Bill Gates found that his Microsoft was caught flat-footed. The company’s cash flows were tied to desktop computing, but there was a fundamental shift underway, toward networked computing. Remarkably, among many such performances by the man, he turned his leviathan virtually “on a dime” and steamed it off in relentless and vigorous pursuit of the Internet.

In other words: Beware the founder claiming to have a fast boat on a fast river.

Startups aren’t easy

It should be obvious that I’m not suggesting anyone go launch Airbnb for haircuts and the other business models I’ve mentioned here. These are bad examples. That was precisely the point of Paul’s post:

…if you want to start a startup, you’re probably going to have to think of something fairly novel. A startup has to make something it can deliver to a large market, and ideas of that type are so valuable that all the obvious ones are already taken.

That space of ideas has been so thoroughly picked over that a startup generally has to work on something everyone else has overlooked.

The issue here isn’t that a hairstylist couldn’t launch a startup. It’s that the realm of hairstylist-related innovations is relatively small, and unlikely to yield something fast-growing in a big market. That’s why good ideas are scarce, and investors snap them up for what seem like unreasonable valuations. A speedboat on a fast river is a rare thing indeed, and they all want to get on board.

So consider this corollary: Invest in the founder who’s found a fast boat on a fast river, and whose idea seems daft at first and obvious in hindsight.

A conscious decision

Many entrepreneurs delude themselves into thinking they’re building startups, when in fact they’re building businesses. There’s nothing wrong with building businesses. In fact, it’s amazing. The hairstylist isn’t a startup founder, she’s a small business owner, and that’s fine. She has many of the same problems, but she isn’t girding herself for fast growth or searching for a sustainable, repeatable model.

What a lot of entrepreneurs who run lifestyle businesses don’t get is this: if they become a startup they’re quitting their job. They’re shutting down the current business (or finding someone to run it for them as a cash cow) and launching an entirely new one. None of the companies in my nonsense example above are a hairstylist—they’re a reservation platform, or a haircutting machine, or an iPhone app.

Until they mentally “quit” their lifestyle-oriented, slow-growth, unsustainable, unrepeatable jobs, they’ll never turn their businesses into startups. And that’s one reason why it’s so hard for small business owners to become startup founders.

They need to change jobs.

It was a fun presentation, the first time I’ve given it (since I often redo my presentations each time!) and I got some great feedback. Briefly, here are the 7 myths:

1. Lean = Cheap. Sure it’s cheaper to start companies but it still costs money to scale them. The lesson is simply this: know when to hack (do something quick, cut corners, cheaply) and know when to scale.
2. Lean = Small. You need a big vision to win. I’ve said that before. And you use Lean Startup best practices and analytics to zig zag your way towards that vision.
3. Lean = Crappy. An MVP is meant to be a minimalistic version of your product, but it also has to be viable. The key is that an MVP has to provide you with meaningful learning and insights, and it also has to provide the value you’ve promised customers. There’s no “shitty” in MVP and I use Sincerely, Inc. as a great example of building smart MVPs.
4. Pivot is a bad word. I did an entire presentation just on pivots and brought some of that into this presentation. The key to a pivot is that it’s a shift in one aspect of your startup’s focus based on validated learning.
5. Lean is only for consumer startups. Lean Startup has gained most of its adoption amongst consumer startups, but it applies across the board. I shared some quick examples from consumer products companies, a church, a restaurant and more. Many of these examples are in the book.
6. Lean = Easy. We all know startups are hard. Lean Startup helps mitigate risk and clear the path a bit more, but it’s not easy. And that flows into the final myth…
7. Lean = Auto win. Simply by following the Lean Startup steps (or Lean Analytics methodologies) doesn’t guarantee success. You can’t walk through the process and expect to win. It takes guts, luck, brains and much, more more.

I hope you find the presentation helpful. I also shared some thoughts about how I believe metrics can be the common language used by entrepreneurs and investors to bring them together more often than not and keep them on the same side of the table. It’s clear that entrepreneurs are concerned about reporting numbers to investors, and it’s clear investors want more numbers.

Metrics –used properly– can cut through a lot of bullshit on both sides, which I think is a good thing if everyone is willing to participate. If you have any questions about the presentation or what I rambled on about during my talk, please let me know!

Here are the slides from the event.