Startup Metrics for Pirates (SeedCamp, Sept 2009)

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Latest version of Startup Metrics for Pirates (from presentation at SeedCamp Week, Sept 2009, London)

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  • 1. Dave McClure, Founders Fund http://www.foundersfund.com/http://500hats.typepad.com/ http://slideshare.net/dmc500hats/

2. Startup Metrics for Pirates Acquisition: users come to site from various channels Activation: users enjoy 1st visit: "happy experience Retention: users come back, visit site multiple times Referral: users like product enough to refer others Revenue: users conduct some monetization behaviorAARRR! (note: If youre in a hurry, Google Startup Metrics & watch 5m video) 3. 50 Slides + 30 Min = Crap. The Basics Measure Stuff. Keep It Simple. 5 Steps: Startup Metrics for Pirates (AARRR!) 3 Metrics Frameworks + 3 Roles (CEO, Dev/Product, Marketing) Iterate & Optimize. Feedback Loop. (Loop. Loop.) One Step at a Time. The Ass vs. Face Issue. Appendix (we wont have time) Activation Retention Acquisition Referral Revenue 4. Dave McClure2001-2009: Startup Investor: 500 Hats LLC, Founders Fund Tech Marketing: PayPal, Simply Hired, Mint Advisor, Angel Investor: 40+ Startups Conf. Organizer: Web 2.0, OReilly, Startonomics Stanford Visiting Lecturer: Facebook, Startup Metrics 80s & 90s: Entrepreneur: Founder/CEO Aslan Computing (acq.) Developer: Windows Apps / SQL DB Admin User Groups: E-Commerce, Internet, Client-Server Engineer: Johns Hopkins 88, BS Eng / Applied Math 5. Personal Investments (2004-2008) +40x +10x 6. Professional Investments (2009)FF Angel 12 deals @$50-250K fbFund REV 22 deals @ ~$15-75K 7. Web 2.0: Hell Yes, Good Times.1. # Users, Bandwidth = Bigger. 2. Lower Startup Costs = Badder. 3. PPC, E-Com $ Growing = Uncut. Collect Usage Metrics in Real-Time Decisions Based on Measured User Behavior 8. The Startup Metrics Religion Progress Features (Less = More) Focus on User Experience Measure Conversion; Compare 2+ Options Fast, Frequent Iteration (+ Feedback Loop) Keep it Simple & Actionable 9. Minimize TOTAL time through the loopIDEASLEARN BUILD DATACODEMEASURE Source: Eric Ries, The Lean Startup 10. Theres much moreIDEASLearnFasterCodeFaster Split TestsLEARN BUILD Unit Tests Customer InterviewsUsability Tests Customer DevelopmentContinuous Integration Five Whys Root Cause Analysis Incremental Deployment Customer Advisory Board Free & Open-Source Falsifiable Hypotheses Components Product Owner Accountability Cloud Computing Customer Archetypes Cross-functional Teams DATACODE Cluster Immune System Just-in-time Scalability Semi-autonomous Teams Refactoring Smoke TestsDeveloper Sandbox Minimum Viable Product MeasureFasterFunnel AnalysisMEASURE SplitTests Cohort Analysis ClearProductOwner Net Promoter Score Con?nuousDeployment Search Engine UsabilityTests Marketing Real?meMonitoringReal-Time Alerting Source: Eric Ries, CustomerLiaison Predictive MonitoringThe Lean Startup 11. The Startup Pyramid(Sean Ellis, Startup-Marketing.com) GrowthTransition toGrowth Product/Market Fit sean@12in6.com Blog: startup-marketing.com 12. Q: Whats My Business Model?Can be one of the following:1.Get Users (= Acquisition, Referral)2.Drive Usage (= Activation, Retention)3.Make Money (= Revenue*)* ideally profitable revenue Note: eventually need to turn Users/Usage -> Money 13. AARRR!: 5-Step Startup Metrics ModelSEOCampaigns,SEMPR ContestsBizSocial Networks Dev BlogsAffiliatesApps &Direct, Tel,WidgetsEmailTV Domains ACQUISITION Viral Loops Emails&AlertsHomepage / Emails &widgetsLanding PageBlogs,RSS,Product Aliates, NewsFeeds FeaturesContestsAds,LeadGen,Biz Dev SystemEvents& Subscriptions, TimebasedFeatures ECommerceWebsite.com 14. Just Gimme the GOOD Metrics.Users, Pages, Clicks, Emails, $$$...? Q: Which of these is best? How do you know? 1,000,000 one-time, unregistered unique visitorsthe 500,000 visitors who view 2+ pages / stay 10+ sec good 200,000 visitors who clicked on a link or button stuff. 20,000 registered users w/ email address 2,000 passionate fans who refer 5+ users / mo. 1,000 monthly subscribers @ $5/mo 15. Startup ChallengesStartups have problems in 3 key areas: Management: Setting Priorities, Defining Key Metrics,Creating Dashboard, Reporting Progress Product: Building the Right Features, Getting ProductOut Quickly, Testing for User Conversion / Adoption Marketing: Accessing Web 2.0 Channels (Search,Social, Viral, New Media), Cost-Efficient Distribution 16. 3 Core Models:biz model, conversion dashboard, mktg channels Define 1-Page Biz Model: customer segments + desired actions / behaviors Identify critical Conversion Events & Dashboard for each segment & prioritize Test & develop Marketing Channels; measure Volume (#), Cost ($), Conv (%) Optimize product & marketing using Fast Iteration Cycles & A/B Testing 17. Role: Founder/CEO Q: Which Metrics? Why? A: Focus on Critical Few Actionable Metrics(if you dont use the metric to make a decision, its not actionable) Hypothesize Customer Lifecycle Target ~3-5 Conversion Events (tip: Less = More) Test, Measure, Iterate to Improve 18. The 1-Page Business Model(Users + Conversions + Priorities)Q1: What types of people use your website? Visitor = Average User / Buyer Contributor = Content Contributor / Seller Distributor = Passionate Fan (unpaid) / Affiliate (paid)Q2: What actions could they take to help you or them ?VisitorContributorDistributor(aka Share Pimp) Activation WatchSubmit Share/Embed a slideshow a slideshow a slideshow Retention Visit 1x/mo. Submit hi-qual Share/Embed => for 3+ mosppt (=> 1K views/yr)drive 100 visits/mo every mo.for 3+ mos RevenueAd Click; $/mo Premium Sub; DriveQualified LeadPay $$+ for traffic or 10+ Premium users; Generatedleads 1K+ Viewers 19. TeachStreet Metrics v1: Eye Chart Madness 20. TeachStreet 1-Page Business Model:Teachers & StudentsTeachers StudentsActivation laim ProfileC ontact Teacher C dd ClassA iew 3 Pages V Retention isit 1x/mo for 3 mos isit 1x/mo for 3 mosVVReferral equest ReviewR uggest Teacher S 21. TeachStreet: 45-day Claim Rates(Seattle, Portland) 22. Role: Product / Engineering Q: What Features to Build? Why? When are you Done? A: Easy-to-Find, Fun/Useful, Unique Features thatIncrease Conversion (stop iterating when increase decelerates) Wireframes = Conversion Steps Measure, A/B Test, Iterate FAST (daily/weekly) Optimize for Conversion Improvement 80% on existing feature optimization 20% on new feature development 23. Optimize 4 Happiness $$$ (both User + Business) Define States of User + Business Value Prioritize (Estimate) Relative Value of Each State Move Users: Lower Value -> Higher Value Optimize for User Happiness / Business $$$ Achieve Low Cost + High Value @ Scale 24. Discover MeaningKeywords, Images, Call-to-Action Top 10 - 100 words Call-to-Action Your Brand / Products Words Customer Needs / Benefits Images Competitors Brand / Products Context Semantic Equivalents Button/Link Misspellings EmotionRelevant imagesResult People Positive? Products Negative? Problems Neutral (= Death) Solutions A/B test & Iterate 25. Example Conversion Dashboard (note: *not* actuals your mileage may vary) Stage Conversion Status Conv. Est. Value%(*not* cost)Acquisition Visitors -> Site/Widget/Landing Page60%$.05 (2+ pages, 10+ sec, 1+ clicks = dont abandon)ActivationHappy 1st Visit; Usage/Signup 15%$.25 (clicks/time/pages, email/profile reg, feature usage)RetentionUsers Come Back; Multiple Visits5% $1(1-3x visits/mo; email/feed open rate / CTR) ReferralUsers Refer Others1% $5(cust sat >=8; viral K factor > 1; ) RevenueUsers Pay / Generate $$$ 2% $50(first txn, break-even, target profitability) 26. Role: Marketing / SalesQ: What channels? Which users? Why? A: High Volume (#), Low Cost ($), High Conv (%)Design & Test Multiple Marketing Channels + Campaigns Select & Focus on Best-Performing Channels & Themes Optimize for conversion to target CTAs, not just site/landing page Match/Drive channel cost to/below revenue potentialLow-Hanging Fruit: Blogs SEO/SEM Landing Pages Automated Emails 27. Example Marketing Channels PR Email Contest SEO / SEM Biz Dev Blogs / Bloggers Direct Marketing Viral / Referral Radio / TV / Print Affiliate / CPA Dedicated Sales Widgets / Apps Telemarketing LOLCats ;) 28. MAARRRketing PlanMarketing Plan = Target Customer Acquisition Channels 3 Important Factors = Volume (#), Cost ($), Conversion (%) Measure conversion to target customer actions Test audience segments, campaign themes, Call-To-Action (CTAs)[Gradually] Match Channel Costs => Revenue Potential Increase Vol. & Conversion, Decrease Cost, Optimize for Revenue Potential Avg Txn Value (ATV), Ann Rev Per User (ARPU), Cust Lifetime Value (CLV) Design channels that (eventually) cost 80% or more on SUBJECT LINE SystemEvents& < 20% or less on BODY TEXTTimebasedFeaturesWebsite.com 40. Retention How do users come back? How often? Cohort Analysis: Distrib of Visits over Time Rate of Decay Effective Customer LifecycleRetention Methods Automated Emails* Track open rate / CTR / Quantity RSS / News Feeds* Track % viewed / CTR / Quantity Widgets / Embeds* Track impressions / CTR / Quantity 41. RetentionHow do users come back? How often?Example Retention Goals 1 - 3+ visits per month 20% open rate / 2% CTR High deliverability / Low spam rating Long customer life cycle / Low decay Identify fanatics and cheerleadersRetention Tips Email is simple and it works BUT make unsubscribe easy 80% subject line / 20% body text ACTUALLY 99% subject line / 1% body text Fanatics = virality + affiliate channel (bloggers?) 42. RetentionHow do users come back? How often?Key Metrics to TrackSourceQuantityConversionsVisitor LoyaltySession Length 43. Retention ToolsCampaign Monitor / MailChimp (email newsletter software) campaignmonitor.com / mailchimp.comTriggerMail (site-centric email management) triggermail.netLitmus (email and website design testing - clients