Lean Analytics Lecture Notes

Vocabulary flashcards based on the 'Lean Analytics' book transcript, covering key startup frameworks, metric definitions, and development stages.

Lean Analytics

A methodology and mindset that involves asking the right questions and focusing on the one key metric that will produce the desired change for a startup.

Customer Development

A four-step framework developed by Steve Blank that focuses on discovering and validating the right market for a product through constant user feedback.

MVP (Minimum Viable Product)

The smallest version of a product required to maximize validated learning about customers with the least effort, without a requirement for the product to be fully functional or scaled.

Lean Startup Cycle

The 'Build-Measure-Learn' loop used to iterate quickly and find a sustainable product-market fit.

Innovation Accounting

A term used by Eric Ries to describe a way of measuring progress objectively to determine if a startup is moving toward its goals, used as a replacement for traditional financial accounting which can be misleading for startups.

OMTM (One Metric That Matters)

A single numeric indicator that a startup focuses on above all else during a specific stage to keep the team aligned and disciplined.

Vanity Metrics

Data points that make a company look good on paper but do not provide actionable insights or help in making business decisions, such as total registered users.

Actionable Metrics

Indicators that provide a clear course of action and directly help optimize a product, pricing, or market position.

Lagging Indicator

A metric that provides information about the past, such as churn rate or monthly revenue, where identifying problems often happens after they occurred.

Leading Indicator

A metric that helps predict the future and allows for course correction, such as current number of prospects in a sales funnel.

Correlation

When two metrics move together in a predictable pattern.

Causality

When a change in one factor directly results in a change in another factor, allowing a company to control its future outcomes.

Cohort Analysis

The study of behavior among similar groups of people over time, often based on when they first signed up for or experienced a product.

Segmentation

Categorizing a market or user base into groups that share common characteristics, such as technology used, geography, or demographic traits.

A/B Testing

A comparison of two versions of a product or feature (Version A and Version B) to determine which performs better in a controlled experiment.

Multivariate Analysis

A method of testing multiple variables at the same time to isolate which individual factors have the greatest correlation with a target result.

AARRR (Pirate Metrics)

A framework by Dave McClure consisting of five stages: Acquisition, Activation, Retention, Revenue, and Referral.

Growth Engines

Three primary ways startups grow as defined by Eric Ries: Sticky, Viral, and Paid.

Lean Canvas

A simplified, one-page business plan visualization developed by Ash Maurya that covers 9 key components of a startup's business model.

90-Day Repeat Purchase Rate

A metric used in Ecommerce to determine if a store is in Acquisition mode (1% to 15%), Hybrid mode (15% to 30%), or Loyalty mode (over 30%).

Churn Rate Formula

$$\text{Churn Rate} = \frac{\text{Users lost in a period}}{\text{Users at start of period}}$$

SaaS (Software as a Service)

A business model where software is delivered on an as-needed basis, usually via the web, and typically charged through recurring subscriptions.

Viral Coefficient

The number of new users that each existing user successfully invites or transforms into customers.

CLV (Customer Lifetime Value)

The total predicted revenue a business will derive from its entire relationship with a customer.

CAC (Customer Acquisition Cost)

The total cost associated with convincing a potential customer to buy a product or service.

A/B Test Success Rule for CAC

A general rule of thumb that a business is healthy if its $\text{CLV} > 3 \times \text{CAC}$.

Engagement Pyramid

A model for User-Generated Content sites showing different levels of participation, from passive 'lurkers' to highly active 'creators'.

Two-Sided Market

A business model where the company brings buyers and sellers together to facilitate transactions, such as eBay or Airbnb.

Empathy Stage

The first phase of Lean Analytics focused on identifying a true need in a reachable market through qualitative feedback.

Stickiness Stage

The second phase of Lean Analytics that ensures the product has enough value to keep users coming back before focusing on growth.

Virality Stage

The third phase of Lean Analytics where the focus is on maximizing user invitations and word-of-mouth growth.

Revenue Stage

The fourth phase of Lean Analytics aimed at proving the business can generate sustainable profits efficiently.

Scale Stage

The final phase of Lean Analytics where a company expands into new markets, channels, and geographies.

Hole in the Middle

A concept by Michael Porter describing firms that are too large to be effective niche players but too small to compete on cost or scale.

Intrapreneur

An individual working within a large organization who uses entrepreneurial skills to drive innovation and change.