What really matters is not the raw numbers or vanity metrics but the direction and degree of progress. – Eric Ries, ‘The Lean Startup’.

Most online services can be cast as having a sticky engine of growth. At it’s heart is the question – “Is the experience rewarding enough for new users to return?”. A model built around this question can help you determine the direction and degree of progress for eCommerce services, creative communities, Saa’Services and many more business models.

Three measures come together in this model – Retention Rate, New Customer Rate and Growth Rate. Each measure has it’s own story to tell. If you’ve read ‘The Lean Startup’, you’ll also learn that the model can reveal if your venture has figured out how to leap forward consistently.

With this honest a metric at hand, you won’t lose your way. I’ve found the model handy in most of the projects that I’ve worked on. Below is an interpretation of the model and how the three measures are derived.

With the model above,

1. Retention rate: ”Customers Retained in Current Period” by “Total Customers”.

2. New Customer Rate: ”New Customers” by “Total Customers”.

3. Churn Rate: “Customers you failed to retain” by “Total Customers”.

4. Growth: is the difference “New Customer Rate” – “Churn Rate”.

5. Total Customers: coming into a period are the Customers Retained in the previous period and New Customers you will engage in the current period.

Key scenarios shown in the test sheet (Google Docs Worksheet) that will help you grasp how the model works,

* When Retention Rate is 100%, Churn Rate is zero.

* When New Customers Added = Customers Retained in the same period, Growth is 100%.

* When Retention Rate is zero, Growth is negative for that period.

* When New Customers Added is zero, Growth is less than or equal to zero depending on the Churn Rate.

Thanks to Mitesh Bohra, CEO at Savetime.com for lending his time to whet iterations of the model. Do leave your feedback in the comments, especially if you have a different interpretation to share.

If you’ve not read the book you could probably get around this paragraph and I’d avoid spoiling it for you. Many book reviewers found it strange that Rendezvous… does not have any alien life-forms in it. I’d say that the book is teeming with ideas, ideas about a different version of life. Life that flourishes in ways we understand but would find too obvious and will discard in the bat of an eyelid. Clarke’s fictional solution to interstellar space travel is to transport consciousness in a literally recyclable world where the life-forms are manufactured. Such life need only exist when an abundant energy source such as our sun is at hand. Now that we’ve got a grip on this central idea, you can ask why not? All we need to do now is to figure out how to sustain this consciousness in a low-energy state through the quiet between star systems.

Nine years ago on this day of 2004, Google first advertised a limited beta release of Gmail. It resonated with initial subscribers on the legs of another absurd idea – a 10GB inbox. Perhaps you’d thought, who’d need so much space? Or, how is it possible to give away so much space? At the time a GB cost a $1 on a hard drive** and most providers would only give away 10′s of MB’s to their millions of free users. I know I thought both those thoughts. I was a graduate student working at RIT’s Lab of Applied Computing. I recall dissecting how it would work with my colleagues at the lab. Obviously we needn’t allocate all that space right away. If we disassociated the inbox with the actual physical storage of an email, we could allocate just a few MB and simply grow the physical storage ahead of usage. This made the ’10GB inbox’ plausible.

Turns out, this idea was enough to spark millions of conversations within the first few weeks and drew several millions of users away from other email providers within it’s first year. Some enthusiastic users even tested the elasticity of their inboxes by growing them successfully all the way to the 10GB limit. It was fascinating to watch it all come together and yet I had more questions. Why were so many making this possible? I probably asked because I still didn’t think I needed that much space.

A few years later at a consulting gig, I’d been given an inbox on a client’s MS Exchange server. Every time I’d get a series of files weighing in at several 100KB’s, my inbox would cross a preset limit and I’d have to reach out to the admin for more space. While I waited, I’d delete older emails off the server or incoming emails would bounce back to senders. It was at this time that I wished dearly for Gmail’s magical expanding inbox and asked is this what drew the early adopters to it?

Many ideas are like that and I think they deserve a closer look. They’re really awaiting a marriage of the right mindsets before they can bloom. Perhaps someone who can see past first impressions to quickly spot the frustration of no solution and the genius beneath the unassuming? Someone who’s willing to put in the time to follow the idea through.

–

** Cost of Hard Drive Storage Space.

I can go without earnings until my venture makes it to revenue.

Have you ever had this thought cross your mind? This morning I woke up to an unfortunate fever and an email from a colleague asking me about how she can get better at planning her financial future. She’s in her early twenties and is getting ready to go back to college. Whatever she’d saved up from her professional life was gone, she lamented. “What can I do now that I’m ready to wake up?” We’ve all been there. After writing to her, the question stayed with me and I knew I had writing left to do. What was I missing in my own plan given my experience with the nature of startups and fevers?

Our eco-system today encourages the image of startup founders who’ve quit everything to startup. Going this way gives you an edge, but it also increases your reliance on sources that are outside of the production focus of your venture; especially if you consider the average timelines and success rates of ventures. As you can imagine, not everyone gets invested in and many need to get by themselves until they hit revenue.

How do you plan for this? Life shouldn’t have to stop at this time, and with life comes needs for nourishment and therefore expenses. How do you resolve the tension between your need to be production and marketing for your home and the need to follow your aspirations that aren’t fulfilled on the job?

Here’s four wise rules that won’t let you down.

Save before you spend. After you’ve put aside your startup working capital, stay smart from there on. If you’re drawing expenses from another active or passive business, from consulting work, or with the help of a spouse, these are all good places to be and will keep you going as long as you follow the simple rule save first, spend later. Geting in to this habit requires that you track your expenses efficiently and that effort won’t go waste. Spending includes any debt installments, scheduled, unscheduled investments that you make into your startup and elsewhere.

Have caution money at hand. The amount depends on the needs and size of your family. Invest where it will not depreciate under any circumstances. Or, you can take on the trader habit and watch it regularly to ensure that the capital does not erode away. Know the withdrawal terms, time to withdrawal and minimum period during which penalties are applicable.

Cover you and your family against the uncertain. When you quit your job, your medical coverage for you and your family goes with the job. Be ready and purchase healthy medical cover before going out on your own. If you haven’t done so already, go in for adequate partial disability, accident cover, and term insurance. Getting these done while you’re still on the job ensures that you’re eligible for coverage within proportion to your existing income.

Hedge Meaningfully.  Founders today are in some way inspired by those ahead who’ve already started. There will always be others around you who will eventually succeed. Some may even have gotten to a public market. Who in your opinion are the Apple’s, Infosys’ and Google’s of your time? You’ll know who they are as you share the industry and can experience the change they bring. Set aside some money to invest in them. Look for the same success indicators that you look for in yourself. For instance, is where they’re going compelling to you? Are they showing traction?

And finally, simply don’t fail until and unless you must.

This post should be useful for you no matter where you are in life, and in your plans. Don’t put them off for later. Take time out to get through them, I know that I would do so. Apart from my circle of influence, here’s some inspirations that helped me pen my thoughts down. If you know of someone who’s starting up, share it with them and do let me know what they think.

• AcuMoney Financial Planning blog.
• Get Rich Slowly.
• Is a Well-Lived Life Worth Anything?
• One Idiot – An IDFC foundation initiative to right our collective attitudes to wealth.
• Before I started my online business – Patt Flynn.

Step #1. Enter your childs’ birthday into this form.

Step #2. Click to open the Nursery and Primary School Calendar. You should see the date you entered in the spreadsheet. Give it a couple of seconds to show up.

Step #3. Simply copy your personalized admission calendar.

Actual admission windows may open up as early as 6 months before the term begins. You will find this calendar as a handy tool to create reminders and have you reach out to playgroups of your choice at the right time.

The calendar considers an age of 3 years as necessary to begin Nursery. I’ve known schools who will accept children at 2.5 years (30 months) so keep that in mind when planning your childs’ academic calendar.

… for startup founders put down roots in 2008. The group started out with the idea of meeting up at a regular time, place to exchange notes and to help each other out. Over time, our identity has changed.

Today, the group is an open platform for events in entrepreneurial education, building ties with the rest of the startup eco-system and encouraging networking. As a community co-founder, I’ve watched our identity morph to better reflect the needs of the community, and my own needs as well. In October of 2012, with a little reflection on how things had worked out so far, we realized our organization needed leadership and succession. Summarized here is the journey and lessons learned in organization building and community engagement.

Importance of Community. The purpose of a community, if nothing else – is to provide a shared context that penetrates the walls of startups. This wider context encourages founders to open up, share know-how and collaborate on projects. When founders learned of the Startups internship mela, where students from prominent Pune colleges were offered internships, that was a tangible benefit. The intangible reverberations of the event continued long after. I’d occasionally bump into founders at cafe’s and events who’d ask me for the resumes we collected. That’d serve as a great conversation starter for more.

At it’s center. We’ve learned early that a clear thought behind every conversation is key to engaging community. In our first two years, the seed group of founders turned itself over completely. As an attendee, you’ll spot different faces at every other event. It has been hard to build loyalty with a regular audience online, and even harder to do so offline. The rational is that our event programming drives greater interest with founders who’re just starting out and in turn lost the interest of the more experienced founders. To be precise, the people who are building startups weren’t always the ones who were doing the talking before the community. On the other hand, what’s kept our momentum going is really a small but dynamic group who believe in the mission of the community and have made time from their busy routines to take events live. I believe that’s a good place to start and develop further.

Getting out of the woods. If at any time we were closest to folding, it was in the first twelve months. The founding members persisted with monthly meetings even when the attendance fell to as little as six. It was in this time that we acquired a regular venue and sealed the fate of the community to grow. A regular meeting schedule and a regular venue proved to be key ingredients.

Volunteerism. For most of our history, we’d had a simple flat hierarchy where volunteers stepped up to drive as many as six to twelve events in a month. I was responsible for filling in the gaps that crept it in from this ad-hoc arrangement. Mid-way through, I realized that this wasn’t a very desirable equation. I was burning out from being involved in practically everything. The rest of the active community weren’t clear on where they could start out to leverage the available resources. As a result, I’d get a whole bunch of new ideas, feedback and I’d rarely have the mental bandwidth to commit. I had become a bottleneck.

A first attempt to breakout. At this point in 2011, I figured that it was time to fill the leadership vacuum by asking others to step up and create local area Pune OpenCoffee Clubs. This offered an ideal combination of ownership, leadership, focus and extended the idea of volunteerism. Moreover, existing resources could be leveraged for all these new clubs, so the thought went. This direction was promising at first, but then the dozen local clubs that got started all failed to cross the chasm that we’d already faced in our own growing years.

Peer recognition. Peer recognition had helped spur the interest to get local clubs going but it wasn’t enough to keep the initiative in the air. At the same time, we still had our small band of volunteers who were driving individual initiatives such as moderation on the Google groups and more. What had not worked was the same personal challenge I had faced – an individual should not have to take on the responsibility of eleven or twelve annual events. Putting together an event requires co-ordination over a span of two weeks with the venue, sponsors and speakers, and spreading the word leading up to the event. Without a clear allocation of events to owners, that one group owner would have to step up every time to put things into motion.

Going by what we’d learned it began to make more sense to reinforce and reward the structure within the group rather than attempt to grow out. We decided that one leadership team of three could work. Since the tacit knowledge of events could be shared within the team, we’d always be ready to step up if an event were to slip through the gaps. Moreover, this time all our resources would be available within this one team, including the money we’d raise through donations, our website and any event partnerships we usually extend to. We’d also assemble a smaller community that can be directly addressed. As the level of ownership and drive in this ‘core’ team of about twenty people is higher than the rest of the community, they’d serve as a ‘conscience’ for the leadership team .

I’m grateful that we’ve negotiated this turn so well. Thanks to timely intervention I’ve been able to take a step back and continue on as an observer. I now believe that I have a share of what is a much bigger pie now thanks to the refreshing energy from the leadership team that comprises of Amod, Ashish, and Jayesh. Thank you to the three of them and Radha, Amit, Prashant, Navin, Nikhil Kadadi, Nikhil Karkare, Mandar, Saurabh, Sushrut, donors, sponsors from the community, and everyone who’ve put in sincere effort to keep the ball rolling through 2012 to get us to this point (About the team).

Pune OCC has started this year on a high note, kickstarting office hours for startups, going from 8,000 uniques to 10,000 uniques in as little as two months, and attracting a lead sponsor in the premier venture capital partner Sequoia Capital. We’ve had a fantastic series of three events. Each of our events have stuck to an exacting standard that includes content quality, audience, and participation. We’ve encouraged Investors to regularly visit Pune and our community for relationship builders, an opportunity founders did not have earlier. Finally, we held a bonus event – an internship mela for students and startup founders. Our potential to develop the Pune Startup eco-system together is ever present and I am excited to see what more the Pune OCC team will achieve this year.

Onward!

A ten slide guide to the Pune OpenCoffee Club for Startups (2012).

The average teenager (US) sends out 3,339 text messages a month and every single text is opened explains Nancy Lublin. Do Something have found it to be 11 times more powerful than email. 

When building BookEazy for movie tickets online, I learned that booking movie tickets lends itself readily to solving on the mobile. We didn’t need a whole lot of users to learn this. At the time and even today, seamless payments are the last obstacle for making this solution a reality.

Designing for Multiple Screen Sizes is About Consistency - NYTimes Bits argues for a consistent design language as one key aspect of creating apps across screen sizes. Jakob Nielsen compares the 7″ and 9″ Kindle Fire HD and how different design sizes make a difference to the same apps on each of the tablets.

Paul Bennett’s TED talk “Design is in the details” and Paul Graham’s How to get Startup Ideas, both point to the notion of ‘Peripheral Vision’ as an organic process where you notice, not think up solutions.

Save Time recently started up out of Pune, India. They’re a healthcare venture working to make lives easier for doctors and patients. They’ve made it easier to find the right doctor and reserve an appointment without the hassle of long wait times on the phone, or in the waiting room.

What is working for the Activity? I’m glad we’ve got some awesome, enthusiastic teachers at Serra who’ve selected and put together the activities. Their experience has helped me catch on to some of the more nuanced assumptions I’ve been making when working with Megh. For instance, when going over colors, I think of introducing colors as a label attached to an object. For instance, here’s a red truck. On the other hand, when the experienced educator looks at the same problem, she starts with matching two objects with the same color to introduce the importance of color. It is only later does she communicate the label for the color.

Besides the experienced teachers we get access to the schools facilities, including their craft supplies, educational material, toys and their physical activity center. When making purchases for home, I tend to underestimate what a toddler can use by simply going by manufacturer age recommendations. In an art session, Megh quickly took to painting his hands with a wide art paintbrush and thick paint. His grip, composure and concentration when painting were surprise firsts to watch. I’d think this blind spot isn’t just limited to me.

What isn’t working out? As you can imagine there aren’t many takers for a facility like this one. The parent-toddler activity isn’t anywhere as viable as a day-cares primary activity which is to take on direct responsibility of the kids. For now, parents get a choice of one session timing set down inconveniently in between work hours.

Overall, I’ve found attending these sessions to be incredibly valuable for parents who want to learn to work better with their kids. Toddlers get the bonus wholistic development of a day-care outside home. Approaching it bottom-up, the activity is a wonderful addition for a pre-school as they already have the infrastructure in place. It would be interesting to figure out how to reconfigure the activity with better viability in mind. For instance, is the activity better suited for a large work-place where employees already have day-care facilities in place?

A Sense of Mission. As a founder you believe you are out to change the world. Or, you have a desire to serve, create wealth multipliers, do good. Or, you just have an idea that you’ve been given and you want to work on it. Each and all of these missions are noble, onerous journeys for one person. As ventures go, this is also what will set you apart from other entrepreneurs who’ve built up and paused when they’ve got a sizable self-owned business.

Considering this ideal, failures are now integral milestones of your journey and you will encounter them when you least expect to. That is also when your sense of mission will begin to crystallize. The clearest I’ve sensed, is a drive to outgrow me. For some getting to this point could be instantaneous, or a long painstaking inquiry of oneself, or both. Whatever the path, once there, simply don’t let go of that direction of inquiry.

We’ve all been through it. Perhaps you’ve been through the ups and downs of the journey to create a venture. Perhaps you’ve held a job, or seen near and dear ones hold jobs, or be entrepreneurial for a life time. You’ve asked yourself how will things work out for me? How can I hack into society’s regulation that adult work-life can’t be enjoyable, meaningful, or better integrated with our holistic sense of life? How can this person grow?

Why is growth on a job not the same? A friend I co-wrote this essay with likened succeeding in a job to building character the same as a skyscraper. You can grow lean, tall and reach far up to the skies and when you are done growing as much as you can, you can feel the wind blow past your face. That’d be a wonderful place to be.

On the other hand, as a founder your aim is to grow as one would build a dam that takes on tons of pressure to convert it into energy quietly. They need to be solid, wide and thick. When you bring on board a founder you can be sure that he brings with him relationships he has nurtured, true insights learned from past struggles, a wholeness of who he is and isn’t.

Danger lurks when founders try to grow too quickly, or try to be skyscrapers. There are many things that can trigger that departure, including the perception of an easy rise, or the glamour of easy money. I’m convinced that this misunderstood perception is what underlies many premature burnouts.

A Sense of Necessity or Survival. The other day I stopped by my favorite Men’s salon to get my haircut. The doors were shut and an ‘under renovation’ sign had been posted on the door. Disappointed, I began to walk away. I was approached by someone who I recognized worked at the salon. He asked me if I was going to the salon? I replied that yes I was. He replied that it had been shut for several months. The frustrated employees had decided not to wait for the management to act and had gotten started on their own a few blocks down the road. Would I be interested in going with them instead? The stylist was the same and apart from the brand and location, nothing had changed. Without hesitation I took him up on his offer.

Lesson learned, we get started because it is in our nature to step up.

So what’s more important? Mission or necessity? Or both?

I know what it is like to wind down a working venture, I’ve been a sounding board for other founders who’ve been caught up between the choice – should they keep going, or close? If a way to break even, to stay afloat, to scale up can’t be uncovered – then what? At that point, opportunity costs are questioned to help make it easier to ignore the other burning question – Can something be done?

I know I’ll need to come back to this one to finally learn how they work together. An idealist to the core, I believe that the need to survive tempers the missionary. I figure from observing others that the only way to make success and failure irrelevant is to get out of the way and let survival be the seed for creativity and endurance. Then you are playing to reveal that which lasts, the mission that matters. Then you are playing from your heart.

The challenges and myths behind Brand and Marketing across the online and offline worlds for eCommerce companies in India – “Online retailers like Zovi, Myntra offer simulating ‘Touch & Feel’ comfort to consumers“, Economic Times India.

Social Commerce.

Napster, Udacity and the Academy. How MOOCs will unbundle the lecture from the educational process thanks to Baumol’s cost disease.

A Honeypot for Recruiters for solving a startup recruiting problem.

Being an always learning Startup student, the theoretical answer is to reframe the problem with the help of Effectual Reasoning. All experienced entrepreneurs will know that while the breakout event is sudden, the journey getting to breakout requires that you have a clear notion of right direction. The guiding principle is then to know how much you can afford to risk before deciding whether or not to invest further. This is all great in theory and I’d like to know more about how it works in the real world.

The role of Principles. Principles will help you transform Vision into Goals and Actions that you can work on now. For instance, Startups may decide to operate frugally, or ignore Venture Capital and bootstrap themselves. Without a clear set of principles the resulting goals a startup pursues will simply be too far apart and any learning will be hard to decode.

A key distinction is that to simply state ‘Think Big’, or even assimilating ‘Think Big’ is not the same as assimilating a driving principle. We are not accountable to thoughts, but we can be accountable to principles in the sense that they are the verity for all our decisions, consciously and otherwise.

Returning to the principle of affordable loss, by first clearly identifying the risk you must and can take, you can then decide if you are indeed going in the right direction as Paul does ahead.

Principle of Big Successes. In an essay on the underlying principles that drive YCombinator’s investment philosophy, Paul Graham lays out these principles (Black Swan Farming),

… the huge scale of the successes means we can afford to spread our net very widely. The big winners could generate 10,000x returns. …

… We can afford to take at least 10x as much risk as Demo Day investors. And since risk is usually proportionate to reward, if you can afford to take more risk you should.

Hmm .. afford to take at least 10x as much risk as Demo Day investors. Afford to spread our net very widely. Sounds familiar? This is by design. YC invests very little time and money in their portfolio startups when compared to a Venture Capitalist. A mentor pointed this article out to me with these lines emphatically highlighted. This is not even the same as saying “Spread your bets” and is something else entirely. It gives YC the freedom to find and invest in companies that are real outliers. Driven by these principles, the learnings Paul gained from the performance of YC are,

The two most important things to understand about startup investing, as a business, are (1) that effectively all the returns are concentrated in a few big winners, and (2) that the best ideas look initially like bad ideas.

He goes on to show how this ought to translate into direction and goals,

We can afford to take at least 10x as much risk as Demo Day investors. And since risk is usually proportionate to reward, if you can afford to take more risk you should. What would it mean to take 10x more risk than Demo Day investors? We’d have to be willing to fund 10x more startups than they would. Which means that even if we’re generous to ourselves and assume that YC can on average triple a startup’s expected value, we’d be taking the right amount of risk if only 30% of the startups were able to raise significant funding after Demo Day.

… frankly the thought of a 30% success rate at fundraising makes my stomach clench. A Demo Day where only 30% of the startups were fundable would be a shambles. Everyone would agree that YC had jumped the shark. We ourselves would feel that YC had jumped the shark. And yet we’d all be wrong.

For better or worse that’s never going to be more than a thought experiment. We could never stand it. How about that for counterintuitive? I can lay out what I know to be the right thing to do, and still not do it.

Principle of Big Success. Thanks to his guiding principle, Paul is aware that adjustments to YC’s selection might be necessary. Unlike Paul, a founder gets to do just one startup. This is not to say you won’t do another Startup again in the future. It just means that you do one venture at a time. The idea you are working on right now is going to be the idea you are working on.

The question is, do you have the Principle of Big Success besides you all the time? Like Paul, use it to find and unlock areas where you will need to take risks.