Numbers not Napkins: Simple Startup Metrics & Business Models SDForum Business Intelligence SIG Palo Alto, January 2009 Dave McClure, Founders Fund http://www.foundersfund.com/ http://500hats.typepad.com/ http://slideshare.net/dmc500hats/
Measure Stuff. Keep It Simple.
5 Steps: Startup Metrics for Pirates ( AARRR !)
3 Items: Biz Model, Conversion, Mktg Channels
Iterate & Optimize.
One Step at a Time.
The Startup Metrics Religion
Focus on User Experience
Measure Conversion; Compare 2+ Options
Fast & Frequent Iteration
Keep it Simple & Actionable
Be Bold. Be Humble.
Stuff That Matters:
Passion for Problem/Solution + Hypothesis of Customer Lifecycle
1-page Business Model : Prioritized List of (Users + Conversions)
Critical, Few, Actionable Metrics + Dashboard of Measured User Behavior
Watch users, guess problems & solutions from small # of users
Quantitative : Traffic Analysis / User Engagement
Track users, usage, conv %'s for empirical sample # of users
Comparative : A/B, Multivariate Testing
Compare what users do in one scenario vs another
Measure which copy/graphics/UI are most effective
Competitive : Monitoring & Tracking Competitors
Track competitor activity & compare against yours (if possible)
Compare channels, keyword traffic, demographics, user sat, etc.
Passion vs. Precision
Solve a Problem = Passion
Optimize the Solution = Precision
Precision is Illusion; data is fuzzy
Collecting & Interpreting data takes time & effort
Keep Metrics Simple & Actionable
AARRR!: 5-Step Startup Metrics Model Website.com R evenue $$$ Biz Dev Ads, Lead Gen, Subscriptions, ECommerce A CQUISITION SEO SEM Apps & Widgets Affiliates Email PR Biz Dev Campaigns, Contests Direct, Tel, TV Social Networks Blogs Domains R etention Emails & Alerts System Events & Time-based Features Blogs, RSS, News Feeds
Startup Metrics for Pirates
A cquisition: users come to site from various channels
A ctivation: users enjoy 1 st visit: " happy experience
R etention: users come back , visit site multiple times
R eferral: users like product enough to refer others
R evenue: users conduct some monetization behavior
3 Key Metrics Frameworks: 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