How we participate in the startup education program
In order to develop our project and improve business skills, I decided to participate in some program for start-up entrepreneurs. Studying is good, but I would like it to go through with minimal damage to the normal workflow, i.e. did not take all the time. The choice fell on Netology , the leader of distance education for managers, marketers and other IT specialists. In this post I would like to tell you what the most useful knowledge and discoveries I have already learned from the course.
Web-payment.ru is a highly specialized website about payment services, fintech startups and e-commerce with an electronic currency exchange aggregator. The goal of the project is to collect various services and useful information on the subject of electronic payment systems within one site, to create a platform on which both industry experts and ordinary users can meet. We strive to make it easier to work with electronic money.
Web-payment.ru is the most honest monitoring of exchangers , about 10,000 pages, hundreds of news, articles, posts on the forum, interesting author's content.
')
Those who will take this or a similar course, and generally everyone who is interested in entrepreneurship with a scientific approach, I advise you to read the following books as soon as possible, this is the main literature to which the lecturers referred, and in which the foundation of the modern start-up industry is laid.
Startup: Founder Handbook
Steve Blank, Bob Dorf
Business from scratch: A Lean Startup method for quickly testing ideas and choosing a business model
Eric Rees
Running lean
Ash Maurya ( retelling , the book is not translated into Russian)
Building a business model: Handbook strategist and innovator
Alexander Osterwalder, Yves Pigne
Blue ocean strategy
Chan Kim, Rene Moborn
Purpose. Continuous improvement process
Eliahu Goldratt
Startup Guide: How to start ... and not close your Internet business
Ed. Mr Zobnina
Design thinking in business
Tim Brown
Bridging the abyss
Jeffrey moore
How does product development usually occur? People gather, come up with an idea, invest money and start to cut the product. Sawing, it happens, a year, sometimes, two, the money starts to run out or a crisis comes and then the question of making money becomes acute, and suddenly it turns out that nobody needs the product and cannot sell it. In such cases, the founders say: âeven though the company failed, but then we gained valuable experience.â However, this âvaluable experienceâ is notorious, you wonât pay salaries to employees, donât return dividends to shareholders, and donât invest in development.
Lean Startup methodology can help to avoid this situation, concentrate on the most important, reduce risks and start earning. For me, Lean turned out to be one of the most interesting topics. Although we do not consider our project to be a classic startup, I wanted to take from this methodology what can be used in Web-payment.ru and adapted as necessary.
So, the main fundamental ideas from Lean:
- 9 out of 10 startups fail. The main reason is that no one needs a product.
The reasons for the failure of startups. CBinsights.com source
- Any of your idea is just a hypothesis that requires verification. You can check differently: through an interview with a client, MVP, Landin page with an advertising company. But you have to check any idea before you spend on it the strength, money and time, so that later it does not turn out that it is not very necessary for you and you have wasted resources.
As Thomas Edison said: âSuccess is determined by the number of experiments that can fit in 24 hours.â Your daily work should take place in the following cycle:
Form a hypothesis -> Think up and conduct an experiment -> get some data, on the basis of these data draw conclusions and correct the hypothesis. Repeat the cycle until the hypothesis is confirmed. The sequence of such actions is also called the HADI cycle.
- Any idea can be tested before product development. Create a landing page on which you describe your product or service, set a price and make the âBuyâ button, which leads to the form where you need to leave an email. Start up targeted traffic, for example, from the context, calculate the conversion by this funnel, and even before developing a product you will be able to estimate the demand and calculate the convergence of the economy (i.e., whether the costs of attracting a client are paid back by the profit it brings).
- Minimal Viable Product - MVP. Before you develop the product itself, you should start with MVP, but this is not just a bad version of the product, it is an experimental process of finding a solution with constant feedback from the client. You must make a minimum version of the product, which is designed to test the activation of its most important objective function. You need to check whether the people you were able to bring to the product really will use its key function, whether it solves their problem, whether they will return. For example, the MVP service of laying the optimal route for the courier service may at first be able to route a route at just three points, or the compilation of the route can be done manually by the founder. Then you will certainly make a very cool product and it will have many useful functions, but for a start, in order to understand whether the idea works or not and figure out what the client needs, the minimum viable product will suffice.
- âGet out of the building!â - Steve Blank. The main principle of Customer Development is that there are no reliable facts in the office or in your head. To test your hypotheses and get to the bottom of some insights and insights, you need to communicate with your potential or actual customers. Only they can push you to the truth, to what they really need.
- Any business model can be described on a special canvas. Alexander Ostervalder and Yves Pigne were the first to develop such a canvas in their book on building business models, which I mentioned at the beginning. The canvas itself can be downloaded from the bookâs website in the original, and itâs easy to find the adaptation in Russian in Google on the âbusiness model canvasâ request. But it is well suited for companies already operating with the established model, and for startups it is recommended to use Lean Canvas variation from Ash Maurya (here is a retelling of the book where it is described). Download in Russian, you can pdf or ready-made template to fill in Google Docs .
These are the most basic principles of Lean Startup and CusDev, for a more detailed study you need to familiarize yourself with the work of Steve Blanc, Bob Dorf, the founders of CusDev, âStartup: Founder Handbookâ and Business from scratch: âLean Startup Method for Quickly Testing Ideas and Choosing a Business Model "by Eric Rees, who developed the Lean Startup methodology.
Product metrics as a dashboard in the space shuttle - if you donât measure them, you donât know where the ship is going.
If itâs quite simple:
CPA (Cost Per Acquisition) - the cost of attracting a user to the beginning of the funnel, i.e. on the landing page, sometimes the cost of registration.
ARPU (Average Revenue Per User) - the average income per user attracted.
You earn if ARPU> CPA
You lose money if ARPU <CPA
But here you can rightly argue that there are businesses where an attracted customer can bring in money for a long period, for example, a year, then:
LTV (Life Time Value), also known as ARPU LifeTime, is user revenue over the entire life of the product.
Therefore, in this case, you earn if LTV> CPA
And you lose money if LTV <CPA
Therefore, in the competitive niches of contextual advertising rates often reach several tens of dollars, the advertiser does not always immediately pay for the investment, the client is bought with the expectation that he will bring profit in the future.
In fact, the economy of the product is simple; users enter the input (in B2B leads), the exit is money:
Users flow â Product â Money
User Acquisition is the number of users involved.
The more users you can attract and the lower the attraction price, the greater your profit:
User Acquisition Ă ARPU = Revenue
User Acquisition Ă (âCPA + ARPU) = Profit
How much LTV should be greater than CPA?
As we have already found out, LTV must be higher than CPA, otherwise you spend on attracting more than you earn - the business model does not converge. But we have not figured out how much higher, and most importantly - for how long? After all, in addition to the cost of attracting customers, you pay salaries, rent and other expenses. It is believed that the business model is stable if the income from the attracted user is 3 times higher than the cost of attracting it and the attracted user pays for itself in a maximum of 3-6 months.
LTV> 3 Ă CPA - sustainable business model
In practice, it is more useful to consider the income from the user or lead for the first month (Revenue30) and compare them with the cost of attracting a user (CPA).
If the user does not pay for himself in the first month, then on each attracted user the profit goes into a minus and the risk of a cash gap increases.
And what about c b2b and b2b2c?
With b2b, everything is, in principle, simple: instead of the flow of users of User Acquisition, substitute the flow of potential Lead Acqusition clients.
But in the b2b2c model, as in our project, when users pay us with their attention, viewing banners and switching to partner exchange sites, we should consider ARPU as the ratio of income received from advertisers and partners to the number of attracted users.
It so happened that it is customary to monitor metrics like DAU, MAU, income, total number of registrations and try using them to draw conclusions about the product, the impact of changes and the effectiveness of marketing activities.
But such metrics are growth metrics. It is useful to follow them for a general understanding of the situation, but with regard to working on a product, such metrics are not very useful, since it is impossible to make product decisions based on them.
To continue a more in-depth acquaintance with the product metrics, I recommend the blog gopractice.ru , which is maintained by Oleg Yakubenkov, product manager at Zeptolab.
But first, a few words about our project.
Web-payment.ru is a highly specialized website about payment services, fintech startups and e-commerce with an electronic currency exchange aggregator. The goal of the project is to collect various services and useful information on the subject of electronic payment systems within one site, to create a platform on which both industry experts and ordinary users can meet. We strive to make it easier to work with electronic money.
Web-payment.ru is the most honest monitoring of exchangers , about 10,000 pages, hundreds of news, articles, posts on the forum, interesting author's content.
')
Literature
Those who will take this or a similar course, and generally everyone who is interested in entrepreneurship with a scientific approach, I advise you to read the following books as soon as possible, this is the main literature to which the lecturers referred, and in which the foundation of the modern start-up industry is laid.
Startup: Founder Handbook
Steve Blank, Bob Dorf
Business from scratch: A Lean Startup method for quickly testing ideas and choosing a business model
Eric Rees
Running lean
Ash Maurya ( retelling , the book is not translated into Russian)
Building a business model: Handbook strategist and innovator
Alexander Osterwalder, Yves Pigne
Blue ocean strategy
Chan Kim, Rene Moborn
Purpose. Continuous improvement process
Eliahu Goldratt
Startup Guide: How to start ... and not close your Internet business
Ed. Mr Zobnina
Design thinking in business
Tim Brown
Bridging the abyss
Jeffrey moore
Lean Startup & Customer Development
How does product development usually occur? People gather, come up with an idea, invest money and start to cut the product. Sawing, it happens, a year, sometimes, two, the money starts to run out or a crisis comes and then the question of making money becomes acute, and suddenly it turns out that nobody needs the product and cannot sell it. In such cases, the founders say: âeven though the company failed, but then we gained valuable experience.â However, this âvaluable experienceâ is notorious, you wonât pay salaries to employees, donât return dividends to shareholders, and donât invest in development.
Lean Startup methodology can help to avoid this situation, concentrate on the most important, reduce risks and start earning. For me, Lean turned out to be one of the most interesting topics. Although we do not consider our project to be a classic startup, I wanted to take from this methodology what can be used in Web-payment.ru and adapted as necessary.
So, the main fundamental ideas from Lean:
- 9 out of 10 startups fail. The main reason is that no one needs a product.
The reasons for the failure of startups. CBinsights.com source
- Any of your idea is just a hypothesis that requires verification. You can check differently: through an interview with a client, MVP, Landin page with an advertising company. But you have to check any idea before you spend on it the strength, money and time, so that later it does not turn out that it is not very necessary for you and you have wasted resources.
As Thomas Edison said: âSuccess is determined by the number of experiments that can fit in 24 hours.â Your daily work should take place in the following cycle:
Form a hypothesis -> Think up and conduct an experiment -> get some data, on the basis of these data draw conclusions and correct the hypothesis. Repeat the cycle until the hypothesis is confirmed. The sequence of such actions is also called the HADI cycle.
- Any idea can be tested before product development. Create a landing page on which you describe your product or service, set a price and make the âBuyâ button, which leads to the form where you need to leave an email. Start up targeted traffic, for example, from the context, calculate the conversion by this funnel, and even before developing a product you will be able to estimate the demand and calculate the convergence of the economy (i.e., whether the costs of attracting a client are paid back by the profit it brings).
- Minimal Viable Product - MVP. Before you develop the product itself, you should start with MVP, but this is not just a bad version of the product, it is an experimental process of finding a solution with constant feedback from the client. You must make a minimum version of the product, which is designed to test the activation of its most important objective function. You need to check whether the people you were able to bring to the product really will use its key function, whether it solves their problem, whether they will return. For example, the MVP service of laying the optimal route for the courier service may at first be able to route a route at just three points, or the compilation of the route can be done manually by the founder. Then you will certainly make a very cool product and it will have many useful functions, but for a start, in order to understand whether the idea works or not and figure out what the client needs, the minimum viable product will suffice.
- âGet out of the building!â - Steve Blank. The main principle of Customer Development is that there are no reliable facts in the office or in your head. To test your hypotheses and get to the bottom of some insights and insights, you need to communicate with your potential or actual customers. Only they can push you to the truth, to what they really need.
- Any business model can be described on a special canvas. Alexander Ostervalder and Yves Pigne were the first to develop such a canvas in their book on building business models, which I mentioned at the beginning. The canvas itself can be downloaded from the bookâs website in the original, and itâs easy to find the adaptation in Russian in Google on the âbusiness model canvasâ request. But it is well suited for companies already operating with the established model, and for startups it is recommended to use Lean Canvas variation from Ash Maurya (here is a retelling of the book where it is described). Download in Russian, you can pdf or ready-made template to fill in Google Docs .
These are the most basic principles of Lean Startup and CusDev, for a more detailed study you need to familiarize yourself with the work of Steve Blanc, Bob Dorf, the founders of CusDev, âStartup: Founder Handbookâ and Business from scratch: âLean Startup Method for Quickly Testing Ideas and Choosing a Business Model "by Eric Rees, who developed the Lean Startup methodology.
Product metrics
Product metrics as a dashboard in the space shuttle - if you donât measure them, you donât know where the ship is going.
If itâs quite simple:
CPA (Cost Per Acquisition) - the cost of attracting a user to the beginning of the funnel, i.e. on the landing page, sometimes the cost of registration.
ARPU (Average Revenue Per User) - the average income per user attracted.
You earn if ARPU> CPA
You lose money if ARPU <CPA
But here you can rightly argue that there are businesses where an attracted customer can bring in money for a long period, for example, a year, then:
LTV (Life Time Value), also known as ARPU LifeTime, is user revenue over the entire life of the product.
Therefore, in this case, you earn if LTV> CPA
And you lose money if LTV <CPA
Therefore, in the competitive niches of contextual advertising rates often reach several tens of dollars, the advertiser does not always immediately pay for the investment, the client is bought with the expectation that he will bring profit in the future.
In fact, the economy of the product is simple; users enter the input (in B2B leads), the exit is money:
Users flow â Product â Money
User Acquisition is the number of users involved.
The more users you can attract and the lower the attraction price, the greater your profit:
User Acquisition Ă ARPU = Revenue
User Acquisition Ă (âCPA + ARPU) = Profit
How much LTV should be greater than CPA?
As we have already found out, LTV must be higher than CPA, otherwise you spend on attracting more than you earn - the business model does not converge. But we have not figured out how much higher, and most importantly - for how long? After all, in addition to the cost of attracting customers, you pay salaries, rent and other expenses. It is believed that the business model is stable if the income from the attracted user is 3 times higher than the cost of attracting it and the attracted user pays for itself in a maximum of 3-6 months.
LTV> 3 Ă CPA - sustainable business model
In practice, it is more useful to consider the income from the user or lead for the first month (Revenue30) and compare them with the cost of attracting a user (CPA).
If the user does not pay for himself in the first month, then on each attracted user the profit goes into a minus and the risk of a cash gap increases.
And what about c b2b and b2b2c?
With b2b, everything is, in principle, simple: instead of the flow of users of User Acquisition, substitute the flow of potential Lead Acqusition clients.
But in the b2b2c model, as in our project, when users pay us with their attention, viewing banners and switching to partner exchange sites, we should consider ARPU as the ratio of income received from advertisers and partners to the number of attracted users.
Finally
It so happened that it is customary to monitor metrics like DAU, MAU, income, total number of registrations and try using them to draw conclusions about the product, the impact of changes and the effectiveness of marketing activities.
But such metrics are growth metrics. It is useful to follow them for a general understanding of the situation, but with regard to working on a product, such metrics are not very useful, since it is impossible to make product decisions based on them.
To continue a more in-depth acquaintance with the product metrics, I recommend the blog gopractice.ru , which is maintained by Oleg Yakubenkov, product manager at Zeptolab.
Source: https://habr.com/ru/post/292096/
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