Lean Analytics: Key Metrics for Evaluating Startups

Every aspiring entrepreneur knows that creating something no one wants is a fatal trap. This is why we must conduct the right data analysis. The book "Lean Analytics" provides entrepreneurs with some good metrics for evaluating success.

Moving in the Right Direction, Then Data-Driven

Data is vital for business. Entrepreneurs need to use data to persuade others. Sometimes, entrepreneurs tend to overestimate their success, but data does not lie. It can help founders stay grounded. However, personal judgment on which data to pursue is also important. Entrepreneurs should not simply become slaves to the numbers.

What Are Good Metrics?

To collect data, you need to find metrics that can provide meaningful information. Good metrics have three characteristics:

• Comparable: A good metric can be compared across different time periods and consumer groups.
• Understandable: Good metrics are simple and easy to comprehend.
• Ratios: Metrics are often ratios because they are effective and comparable.

The Five Stages Startups Will Experience

• Empathy Stage: Identify people's needs and define your niche market.
• Stickiness Stage: Discover how to meet those needs with products that keep users coming back.
• Growth Stage: Add features that attract users.
• Revenue Stage: The business starts generating income.
• Scaling Stage: Expand or penetrate new markets.

Focus on One Metric

To achieve success, founders must focus on the most critical metric. Knowing what the most important metric is can prevent you from getting lost in the world of data.

What Are the Best Metrics?

There is never a one-size-fits-all best metric. The best metrics vary across different industries. For e-commerce companies, the most important metric is revenue per customer. But for media websites, the most important metric is click-through rate.