Scaling Lean

I often pose the same starting challenge to everyone irrespective of their business model type: “Can you find ten people who will use your product?” The rationale for this challenge is that one of them will turn into a happy customer, which is the first singularity moment in a product’s life cycle.

Again, precision here is not the goal but an estimate. First estimate to an order of magnitude. Is your solution potentially worth $1/month, $10/month, $100/month, $1,000/month, $10,000/month? Then use your knowledge of your customers’ existing alternatives to get more specific. That is how I estimated my $50/month starting price point. The best ev

Products like Facebook, Google, Twitter, and YouTube fall under this group of business models. We’ll use Facebook as an example. Facebook creates and delivers value to its users through its social network—but doesn’t charge its users directly. That said, it still captures some of this value back, albeit through a derivative currency (user attention

We can map the three stages of a business model to this S-curve: 1. The Problem/Solution Fit stage is the flat portion of the curve when you validate customer demand for your value proposition. 2. The Product/Market Fit stage is the inflection point which marks the rapid or exponential growth stage of the business model. 3. Because it is hard to pr

the number of active customers represents the steady state number of customers that you need to maintain to sustain your throughput goal, but it’s not a measure of the rate at which you need to create new customers to replace those who leave.

The first insight is that value in the business model is always defined with respect to customers. It follows that the right traction metric must also track a customer action or behavior.

HAVING A TRACTION ROAD MAP PROVIDES A GUIDING COMPASS

Then identify the key monetizable activity in your business model. A revenue story is the key differentiator between a business model and a hobby.

“A business model is a story about how an organization creates, delivers, and captures value.” —SAUL KAPLAN, THE BUSINESS MODEL INNOVATION FACTORY

Once you can clearly articulate the job your customers hire your product to do, it becomes easier to estimate the average time it might take to accomplish the job. In my example, my target early adopters are early-stage software companies. Statistically, about half of new products fail within their first three years. This gives me a ballpark custom