InsightSquared is a young company that provides a sales analytics product, designed specifically for small- and medium-sized businesses. In this target market segment, we work with many startups, helping them unleash the power in numbers. Moreover, we are heavy users of sales analytics and marketing metrics for our own internal purposes, and it is that data-driven bent that has helped lead us to where we are today as much as any other single factor. We practice what we preach.
Therefore, it should come as no surprise that we are big believers in the lessons espoused in ‘Lean Analytics: Use Data to Build a Better Startup Faster‘, co-written by Ben Yoskovitz and Alistair Croll. [image source_type=”attachment_id” source_value=”31030″ align=”right” width=”175″ height=”175″ quality=”100″] The book lays out the practical and proven steps of implementing analytics – with more than 30 case studies within – that entrepreneurs and startup leaders need to apply to take their company to the next level. The cover of the book promotes the “use of data to build a better startup faster.” We couldn’t agree more.
We recently had the opportunity to speak with Ben Yoskovitz on the important lessons he has learned from his own entrepreneurial background, his experience writing the book, the ‘One Metric that Matters’ and the meaning of ‘Lean Analytics.’
1) How would you define ‘Lean Analytics’? How does this differ from ‘fat’ or ‘traditional’ analytics?
‘Lean Analytics’ is about the marriage between the ‘lean startup’ and analytics. If you look at the fundamental “Build – Measure – Learn” cycle of a lean startup, then ‘Lean Analytics’ is about really doing a good job of the “Measure – Learn” stages, which most startups still struggle with.
Ultimately, ‘Lean Analytics’ is about measuring very specific things that help you understand whether or not you’re genuinely making progress. I don’t think we’d compare it to traditional analytics or “fat” analytics (although that term is great!), except to say that a lot of people get overwhelmed by the volume of data they track, and ‘Lean Analytics’ is about simplifying that as much as possible.
2) Why did you and Alistair choose to write this book? What about your past experiences led you to pursue this?
Alistair and I have been entrepreneurs for many years. And in 2012, we co-founded (along with 2 other partners) a startup accelerator called Year One Labs. We invested in 5 startups and put them through a Lean Startup program of sorts. It was during this time that it really crystallized for us – most people aren’t sure what to track, when and why. So that was the real inspiration for writing ‘Lean Analytics’.
3) Do startups tend to benefit more from analytics than larger, enterprise companies? Why is this?
I don’t think that’s the case at all. In fact, larger enterprise companies have the advantage of having more data (which may sound counter to what I wrote earlier about being overwhelmed by it). Larger companies are often collecting a lot of stuff and they have more customers, traffic, users etc to test on. Large companies struggle with moving quickly and applying ‘Lean’ principles though, which in turn can hamper their ability to use the data well.
Startups have less data, which can help them focus, but they’re also entities in search of a business model – early-stage startups are scrambling and often floundering, which can make it harder to track the right things and pay attention to the data effectively.
Ultimately, there are opportunities for both startups and large enterprises to apply ‘Lean Analytics’ effectively, and challenges for both as well.
4) What is the ‘One Metric that Matters’?
The premise is this: at any given point in time, given the stage you’re at and the business you’re in, there’s a single metric that you should focus all your efforts on. The entire company (particularly in a startup) should rally around the One Metric that Matters and be working towards improving it. There will still be a number of metrics that you’re tracking beyond the OMTM but they should be bubbling up into the OMTM or put aside as “nice to haves” while you focus.
The goal of the OMTM is focus. Startups struggle with focus a great deal, and having one metric that you know is key to your business – right this very minute! – can help you a great deal with that.
The OMTM changes – you might focus on churn for a single week, move the needle on it enough, and then move to the next metric. So it’s not a static thing, but it’s important to try and pick a single metric and get everyone focused on it.
5) When mentoring entrepreneurs, what is the one important piece of advice you usually share?
I’m not sure there’s one single piece of advice; every situation is a bit different. But there are similarities too. Oftentimes, particularly in the early stages, entrepreneurs think they’re farther ahead than they really are – they’re investing heavily in marketing or sales, for example, before proving that early adopters even care. They’re going after virality before they have engagement. This is quite common because a) entrepreneurs want to move fast and b) they tend to believe their own hype. ‘Lean Analytics’ is about poking holes in entrepreneurs’ reality distortion fields, and so I like to take a step back and really evaluate the business and the focus to see if it’s in the right place.
6) For a company or startup looking to dip their toes into analytics, what is the first step to take?
Start by instrumentation. Get Google Analytics on your site, maybe add some additional tools – like InsightSquared! – as well. Don’t worry about it being perfect or having a fully integrated / streamlined system. Just start collecting some data.
Very quickly after that, you need to identify the number one problem facing your business – and from that, the One Metric that Matters should become much clearer. If you can’t genuinely identify that number 1 problem (trust me: it’s not PR, for example) then you’re in serious, serious trouble.
7) As analytics becomes more popular and mainstream, how do you see it changing or evolving over the next 5 years?
I think we’re going to continue to see more point solutions that handle one thing very well (mobile analytics, for example), but also more integration, because as companies get more sophisiticated, they want to see a holistic view of things. We’re already seeing a big move away from page view-centric analytics to event-based (tracking what people are actually doing) and I think that will continue as well.
More about Ben Yoskovitz
Ben Yoskovitz is a long-time entrepreneur with more than 16 years of experience in web businesses. He co-founded Standout Jobs, a venture-backed startup, in 2007 and exited in 2010. He then started Year One Labs, an early-stage startup accelerator (which invested in 5 startups, 1 of which exited to-date). In 2011, he joined Golnstant, which was subsequently acquired by Salesforce in 2012.
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