Startups need to iterate fast till they get product/market fit. They try out a few experiments to see what works and modify approach based on the results. For this they need analytical tools which track progress and get trends.
It’s generally not a good idea to build in-house analytics while you are still figuring out product definition, customer requirements & market opportunities. Here are a few reasons why.
Startups need to focus on insights to run with
The problem a startup faces is not the lack of in-house analytics. It is the inability to see what its data says. The solution is to buy a pair of spectacles (figuratively) instead of building one. By the time you build one, you would have tripped somewhere already. Imagine the time it takes to build something and get the first set of results out. Sketching out product requirements, building mockups, designing modules, coding & testing it out. When all you need is a bunch of meaningful numbers & charts to look at.
Startups have simpler business rules
In-house analytics are built by bigger businesses for a couple of reasons. They have complicated business rules which may not be handled by off-the-shelf tools. They have diverse systems (legacy & cutting edge) spread across departments. Startups don’t suffer from this problem. Use this to your advantage.
But rules change as you grow
As startups grow, they change based on customer needs. If you build analytics in-house, you will need to change it regularly to keep up. It’s a good idea to build tools when you have grown with fairly stable operations and know what to look for in your data. That way you can use the existing setup to grow faster while you take your time to build a solid system for yourself.
Partial solution is better than no solution
I agree there are edge cases in your rules which cannot be handled unless you build something in-house. It takes time & resources to build something in-house. That’s going to delay the changes you could have made if you had caught mistakes earlier. Having partial clue of things is better than being blind sided completely.
So many things to figure out already
Startups are new to their business. They are constantly trying to figure out how to refine their solution and understand market better. Meanwhile, do you really want to also spend time figuring out how to build an analytics product?
Startups need to move fast
Staying lean gives you the agility to move faster. Missing out on simple insights early on can cost you later. The basic requirement to query data and get information on charts is fulfilled by most of the tools. The challenge is the occasional query that is complicated to write. But it’s not a dead-end. It’s faster to get someone from your Dev/IT team to do that for you instead of designing & building a full-fledged tool for it.
Limited time & resources
Startups have limited developers & resources. Will you put your developer time in building new features or in-house tools? Building in-house tools will slow down product development. Adding new features without tracking them won’t give you feedback to move forward.
This is not your business
You are not in the business of analytics, unless you actually are. It is just a means for you to get better results. Even with insights in hand, it takes a lot of time to analyze them, chalk out a strategy and take action.
E.g, Imagine the benefits you got because you used Google Analytics instead of building something similar in-house. It’s not perfect but it gives you information you can use readily!
What do you think? Do share your experience with us as comments.