Reading Ries and Christensen

I’ve done some fascinating reading recently, too. The most influential books I’ve read recently are The Lean Startup by Eric Ries and The Innovator’s Dilemma by Clayton Christensen. Both have left me reeling from ah-ha moments. Chief among these:

  • Ries’s explanation of how a startup’s product — what it aims to produce in its early stages — are not the things it sells, but the lessons it learns. The faster, cheaper, and more specific you can make what he calls ‘cycles of validated learning’ (build, measure, learn), the faster you can produce something that people want.
  • Ries’s description of vanity metrics vs cohort matrics. Vanity metrics are simple growth curves: ‘we signed up 10 free users last month, and 100 free users this month; 1 user upgraded to a paid subscription last month, and 10 this month’. These metrics always look good, because they show growth in every area. Here, tenfold growth in users and paying users. But they aren’t valuable metrics, because what matters — what tells you whether you’re *getting better as a business* is not growth in users or paying users. It’s how fast you’re increasing the *proportion* of paying users to free users. Cohort metrics are more valuable: ‘what percentage of users are paid users, and how fast are we growing that cohort?’ This totally changes the focus of a sales team.
  • I wish I’d read Christensen ten years ago. Big aha: established companies don’t invest in new approaches (like Paperight) not because they’re stupid or evil, but because they’re fundamentally unable to do so, even if they’re the best-run company in the world. Christensen describes how. This totally changed the way I approached large publishers.

Very few people get through a business conversation with me without hearing about these at least once.