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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<ul><li> 1. Dave McClure, Founders Fund http://www.foundersfund.com/http://500hats.typepad.com/ http://slideshare.net/dmc500hats/ </li></ul><p> 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 &amp; 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 &amp; 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 &amp; 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 &amp; 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 &amp; 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 -&gt; Money 13. AARRR!: 5-Step Startup Metrics ModelSEOCampaigns,SEMPR ContestsBizSocial Networks Dev BlogsAffiliatesApps &amp;Direct, Tel,WidgetsEmailTV Domains ACQUISITION Viral Loops Emails&amp;AlertsHomepage / Emails &amp;widgetsLanding PageBlogs,RSS,Product Aliates, NewsFeeds FeaturesContestsAds,LeadGen,Biz Dev SystemEvents&amp; Subscriptions, TimebasedFeatures ECommerceWebsite.com 14. Just Gimme the GOOD Metrics.Users, Pages, Clicks, Emails, $$$...? Q: Which of these is best? How do you know? 1,000,000 one-time, unregistered unique visitorsthe 500,000 visitors who view 2+ pages / stay 10+ sec good 200,000 visitors who clicked on a link or button stuff. 20,000 registered users w/ email address 2,000 passionate fans who refer 5+ users / mo. 1,000 monthly subscribers @ $5/mo 15. Startup ChallengesStartups have problems in 3 key areas: Management: Setting Priorities, Defining Key Metrics,Creating Dashboard, Reporting Progress Product: Building the Right Features, Getting ProductOut Quickly, Testing for User Conversion / Adoption Marketing: Accessing Web 2.0 Channels (Search,Social, Viral, New Media), Cost-Efficient Distribution 16. 3 Core Models:biz model, conversion dashboard, mktg channels Define 1-Page Biz Model: customer segments + desired actions / behaviors Identify critical Conversion Events &amp; Dashboard for each segment &amp; prioritize Test &amp; develop Marketing Channels; measure Volume (#), Cost ($), Conv (%) Optimize product &amp; marketing using Fast Iteration Cycles &amp; A/B Testing 17. Role: Founder/CEO Q: Which Metrics? Why? A: Focus on Critical Few Actionable Metrics(if you dont use the metric to make a decision, its not actionable) Hypothesize Customer Lifecycle Target ~3-5 Conversion Events (tip: Less = More) Test, Measure, Iterate to Improve 18. The 1-Page Business Model(Users + Conversions + Priorities)Q1: What types of people use your website? Visitor = Average User / Buyer Contributor = Content Contributor / Seller Distributor = Passionate Fan (unpaid) / Affiliate (paid)Q2: What actions could they take to help you or them ?VisitorContributorDistributor(aka Share Pimp) Activation WatchSubmit Share/Embed a slideshow a slideshow a slideshow Retention Visit 1x/mo. Submit hi-qual Share/Embed =&gt; for 3+ mosppt (=&gt; 1K views/yr)drive 100 visits/mo every mo.for 3+ mos RevenueAd Click; $/mo Premium Sub; DriveQualified LeadPay $$+ for traffic or 10+ Premium users; Generatedleads 1K+ Viewers 19. TeachStreet Metrics v1: Eye Chart Madness 20. TeachStreet 1-Page Business Model:Teachers &amp; 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 $$$ (both User + Business) Define States of User + Business Value Prioritize (Estimate) Relative Value of Each State Move Users: Lower Value -&gt; Higher Value Optimize for User Happiness / Business $$$ 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 &amp; Iterate 25. Example Conversion Dashboard (note: *not* actuals your mileage may vary) Stage Conversion Status Conv. Est. Value%(*not* cost)Acquisition Visitors -&gt; 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 &gt;=8; viral K factor &gt; 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 &amp; Test Multiple Marketing Channels + Campaigns Select &amp; Focus on Best-Performing Channels &amp; 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 =&gt; Revenue Potential Increase Vol. &amp; 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&amp; &lt; 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 / browsers) litmusapp.com Resources30 free HTML email templates campaignmonitor.com/resources/templates.aspxBest Practices in Writing Email Subject Lines mailchimp.com/resources/best-practices-in-writing-email-subject-lines.phtmlLearning Viral: Viral Emails of Tagged.com okdork.com/2008/04/10/learning-viral-studying-taggedcom/ 44. Startup MetricsAcquisition 45. AcquisitionSEO Campaigns, SEM PRContests BizSocial Networks Dev Blogs Affiliates Apps &amp; Direct, Tel, Widgets EmailTVDomainsMarketing Channels: largest-volume (#) lowest-cost ($) best-performing (%) Website.com 46. Acquisition Where are users coming from? Acquisition Methods SEO / SEM Blogs Email Social Media &amp; Social Networks Domains 47. AcquisitionKeyword Vocabulary Top 10 - 100 words Your Brand / Products Customer Needs / Benefits Competitors Brand / Products Semantic Equivalents MisspellingsThings to analyze Sources Volume Cost Conversion 48. AcquisitionWhere are users coming from?Key Metrics to Track Example Quantity (#) Cost ($) Conversions (%) 49. Acquisition ToolsGoogle Analytics (web analytics) google.com/analyticsGoogle Keyword Tool (keyword research tool) adwords.google.com/select/KeywordToolExternalSEO Book Tools (SEO related tools) tools.seobook.com ResourcesSEO Book Blog seobook.com/blogThe Social Media Manual: Read Before You Play searchengineland.com/071120-144401.phpStrategies to ruthlessly acquire users andrewchen.typepad.com/andrew_chens_blog/2007/04/10_obvious_stra.html 50. Startup MetricsReferral 51. ReferralSEO Campaigns,SEMPRContestsBizSocial NetworksDev BlogsAffiliatesApps &amp; Direct, Tel,WidgetsEmail TVViral Domains Acquisition Loops Emails &amp; widgets Emails&amp;AlertsHomepage /Landing PageAliates, Blogs,RSS,ProductContests NewsFeeds FeaturesFocus on driving referrals SystemEvents&amp; TimebasedFeatures*after* users have ahappy experience;Website.comavg score &gt;= 8 out of 10 52. Referral How do users refer others?Referral Methods Send to Friend: Email / IM Social Media Widgets / Embeds Affiliates 53. ReferralViral Growth FactorViral Growth Factor = X * Y * ZX = % of users who invite other peopleY = average # of people that they invitedZ = % of users who accepted an invitation A viral growth factor &gt; 1 means an exponential organic user acquisition. 54. Referral ToolsGigya (social media distribution &amp; tracking tool) gigya.comShareThis / AddThis (sharing buttons) sharethis.com / addthis.comGetMyContacts (PHP contacts importing &amp; invitation software) getmycontacts.com ResourcesSeven Ways to GO VIRAL lsvp.wordpress.com/2007/03/02/seven-ways-to-go-viral/Whats your viral loop? Understanding the engine of adoption andrewchen.typepad.com/andrew_chens_blog/2007/07/whats-your-vira.htmlMetrics: Where Users Come From slideshare.net/guest2968b8/rockyou-snap-summit-32508 55. Startup MetricsRevenue 56. RevenueSEO Campaigns,SEMPRContests BizSocial NetworksDev BlogsAffiliatesApps &amp; Direct, Tel,WidgetsEmail TV Domains AcquisitionViralLoops Emails&amp;AlertsHomepage /Emails &amp; widgetsLanding PageBlogs,RSS,ProductAliates, NewsFeeds Features Contests Ads,LeadGen,Biz Dev SystemEvents&amp;Subscriptions, TimebasedFeaturesECommerce This is the part *you*Website.comstill have to figure out(we dont know jackabout your business) 57. Revenue How do you make money? Revenue Tips Dont Rely on AdSense (only) Start Free =&gt; 2% Freemium Subscription / Recurring transactions Qualify your customers -&gt; Lead generation (arbitrage) Sell something! (physical or virtual) 58. Revenue Resources &amp; ToolsRevenue Metrics (Andrew Chen) http://tinyurl.com/47r63aHow to Create a Profitable Freemium Startup (Andrew Chen) http://tinyurl.com/8z9ygk2008 Affiliate Marketing Review (Scott Jangro) http://tinyurl.com/86wak4 59. Be Bold. Be Humble. 20% Inspiration + 80% Perspiration Long-term: Audacity + Creative Inspiration Short-term: Humility + Analytic Rigor 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 1-pg Marketing Plan: (Channels + Campaigns) * (Volume, Cost, Conv %) Velocity of (Product Execution + Cycle Time of Testing) * Iteration 60. Passion vs. Precision Solve a Problem = Passion Optimize the Solution = Precision Long-term: Audacity + Creative Inspiration Short-term: Humility + Analytic Rigor BUT: Precision is Illusion; data is fuzzy Collecting &amp; Interpreting data takes time &amp; effort Keep Metrics Simple &amp; Actionable 61. Types of Measurement 1.Qualitative: Usability Testing / Session Monitoring Watch users, guess problems &amp; solutions from small # of users2.Quantitative: Traffic Analysis / User Engagement Track users, usage, conv %'s for empirical sample # of users3.Comparative: A/B, Multivariate Testing Compare what users do in one scenario vs another Measure which copy/graphics/UI are most effective4.Competitive: Monitoring &amp; Tracking Competitors Track competitor activity &amp; compare against yours (if possible) Compare channels, keyword traffic, demographics, user sat, etc....</p>