The Lean Startup - Eric Ries [62]
BEFORE OPTIMIZATION AFTER OPTIMIZATION
Registration 17% 17%
Activation 90% 90%
Retention 5% 8%
Referral 4% 6%
David faced the difficult challenge of deciding whether to pivot or persevere. This is one of the hardest decisions entrepreneurs face. The goal of creating learning milestones is not to make the decision easy; it is to make sure that there is relevant data in the room when it comes time to decide.
Remember, at this point David has had many customer conversations. He has plenty of learning that he can use to rationalize the failure he has experienced with the current product. That’s exactly what many entrepreneurs do. In Silicon Valley, we call this experience getting stuck in the land of the living dead. It happens when a company has achieved a modicum of success—just enough to stay alive—but is not living up to the expectations of its founders and investors. Such companies are a terrible drain of human energy. Out of loyalty, the employees and founders don’t want to give in; they feel that success might be just around the corner.
David had two advantages that helped him avoid this fate:
1. Despite being committed to a significant vision, he had done his best to launch early and iterate. Thus, he was facing a pivot or persevere moment just eight months into the life of his company. The more money, time, and creative energy that has been sunk into an idea, the harder it is to pivot. David had done well to avoid that trap.
2. David had identified his leap-of-faith questions explicitly at the outset and, more important, had made quantitative predictions about each of them. It would not have been difficult for him to declare success retroactively from that initial venture. After all, some of his metrics, such as activation, were doing quite well. In terms of gross metrics such as total usage, the company had positive growth. It is only because David focused on actionable metrics for each of his leap-of-faith questions that he was able to accept that his company was failing. In addition, because David had not wasted energy on premature PR, he was able to make this determination without public embarrassment or distraction.
Failure is a prerequisite to learning. The problem with the notion of shipping a product and then seeing what happens is that you are guaranteed to succeed—at seeing what happens. But then what? As soon as you have a handful of customers, you’re likely to have five opinions about what to do next. Which should you listen to?
Votizen’s results were okay, but they were not good enough. David felt that although his optimization was improving the metrics, they were not trending toward a model that would sustain the business overall. But like all good entrepreneurs, he did not give up prematurely. David decided to pivot and test a new hypothesis. A pivot requires that we keep one foot rooted in what we’ve learned so far, while making a fundamental change in strategy in order to seek even greater validated learning. In this case, David’s direct contact with customers proved essential.
He had heard three recurring bits of feedback in his testing:
1. “I always wanted to get more involved; this makes it so much easier.”
2. “The fact that you prove I’m a voter matters.”
3. “There’s no one here. What’s the point of coming back?”1
David decided to undertake what I call a zoom-in pivot, refocusing the product on what previously had been considered just one feature of a larger whole. Think of the customer comments above: customers like the concept, they like the voter registration technology, but they aren’t getting value out of the social networking part of the product.
David decided to change Votizen into a product called @2gov, a “social lobbying platform.” Rather than get customers integrated in a civic social network, @2gov allows them to contact their elected representatives quickly and easily via existing social networks such as Twitter. The customer engages digitally, but @2gov translates that digital contact into paper form. Members of Congress receive old-fashioned printed