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Startup Metrics for Pirates
AARRR!

Dave McClure, Master of 500 Hats
http://500hats.typepad.com/
http://www.500hats.com/
h...
AAARRgenda
•
•
•
•
•

Measure Stuff. Keep It Simple.
5 Steps. Pirates. AARRR!*
Don’t Be Teh FAIL. Conversion Matters.
Biz ...
Web 2.0: What’s So Special?
1. Startup Costs = Lower
2. # Users, Bandwidth = Bigger
3. Online Adv / E-Com = Still Growing
...
Just Gimme the GOOD Metrics.
Users, Pages, Clicks, Emails, $$$...?
Q: Which of these is best? How do you know?
• 1,000,000...
Passion vs. Precision
• “Solve a Problem” = Passion
• “Optimize the Solution” = Precision
However…
• “Precision” is Illusi...
AARRR!: 5-Step Startup Metrics Model
SEM
SEM

Social
Social
Networks
Networks

SEO
SEO

Blogs
Blogs

Apps &&
Apps
Widgets
...
Startup Metrics for Pirates
•
•
•
•
•

Acquisition: users come to site from various channels
Activation: users enjoy 1st v...
Don’t Be Teh FAIL.






Business Plans are BULLSHIT
Revenue Projections are Hockey Stick Delusions
Features Don’t Ma...
Be Bold. Be Humble.
 20% Inspiration + 80% Perspiration
 Long-term: Audacity + Creative Inspiration
 Short-term: Humili...
Q: What’s My Business Model?
Can be one of the following:
1. Get Users (= Acquisition, Referral)
2. Drive Usage (= Activat...
Role: Founder/CEO
Q: Which Metrics? Why?
A: Focus on Critical Few Actionable Metrics
(
The 1-Page Business Model
(Users + Conversions + Priorities)
Q1: What types of people use your website?
• Visitor = Averag...
Role: Product / Engineering
Q: What Features to Build? Why?
A: Easy-to-Find, Fun, Useful, Unique Features that
Increase Co...
Example Conversion Metrics
(note: *not* actuals… your mileage may vary)
Stage

Conversion Status

Conv.
%

Est. Value
(*no...
Design, Optimize for Conversion
Role: Marketing / Sales
Q: What channels? Which users? Why?
A: High Volume (#), Low Cost ($), High Conv (%)
•
•
•
•
•

Des...
Example Marketing Channels
disclaimer: estimates of vol, cost/user, time & effort are subjective – actual costs are depend...
One Step at a Time.
1. Make a Good Product: Activation & Retention
2. Market the Product: Acquisition & Referral
3. Make M...
Links & Resources
Additional References:
• “Influence: The Psychology of Persuasion”, Robert Cialdini (book)
• “Putting th...
STARTonomics Sessions
•
•
•
•

AARRR!
Product 101: Killer Apps
Startup Scalability
Fun => Functional

• Designr ❤ Developr...
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Startupmetrics4piratesstartonomicssf08 1222875874203576-9

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Some of the Slide share presentations were created by others. The are all worth looking at and studying. I am also Stephen Darori on Linkedin. If you think we may have some Synergy Now or maybe in the Future, then do send me an Invitation to Connect and then follow it up with an Linkedin inmail and suggest how we can co-operate. 3XC Global Partners Group of which I am Managing Partner is always looking for Outsourced Service Providers , all over the world. Darori Capital Luxembourg invest in Early Stage Startups. As a Linkedin Open Networker, I will never, "I don't know" an Invitation
Stephen Darori
Stephendarori@gmail.com
@stephendarori on Twitter
Stephen Darori on Facebook
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Stephen Darori on Slideshare
Tel 972-52-4182848
( I never take cold phone calls , first contact me by email. I equally never take phone calls unless I can see the numeric number)

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Transcript of "Startupmetrics4piratesstartonomicssf08 1222875874203576-9"

  1. 1. Startup Metrics for Pirates AARRR! Dave McClure, Master of 500 Hats http://500hats.typepad.com/ http://www.500hats.com/ http://slideshare.net/dmc500hats/
  2. 2. AAARRgenda • • • • • Measure Stuff. Keep It Simple. 5 Steps. Pirates. AARRR!* Don’t Be Teh FAIL. Conversion Matters. Biz Model WTF? 3 Q’s for Pirates & Founders. One Step at a Time: The Ass/Face Issue. * with some gusto, please
  3. 3. Web 2.0: What’s So Special? 1. Startup Costs = Lower 2. # Users, Bandwidth = Bigger 3. Online Adv / E-Com = Still Growing  Collect Usage Metrics in Real-Time  Make Decisions Based on User Behavior
  4. 4. Just Gimme the GOOD Metrics. Users, Pages, Clicks, Emails, $$$...? Q: Which of these is best? How do you know? • 1,000,000 one-time, unregistered unique visitors the good stuff. • 500,000 visitors who view 2+ pages / stay 10+ sec • 200,000 visitors who clicked on a link or button • 20,000 registered users w/ email address • 2,000 passionate fans who refer 5+ users / mo. • 1,000 monthly subscribers @ $35/mo
  5. 5. Passion vs. Precision • “Solve a Problem” = Passion • “Optimize the Solution” = Precision However… • “Precision” is Illusion; “data” is fuzzy • Collecting & Interpreting data takes time & effort • Keep Metrics Simple & Actionable
  6. 6. AARRR!: 5-Step Startup Metrics Model SEM SEM Social Social Networks Networks SEO SEO Blogs Blogs Apps && Apps Widgets Widgets PR PR Campaigns, Campaigns, Contests Contests Affiliates Affiliates Email Email Domains Domains ACQUISITION ACQUISITION Biz Biz Dev Dev Direct, Direct, Tel, TV Tel, TV Emails & Alerts Emails & Alerts Blogs, RSS, Blogs, RSS, News Feeds News Feeds R n ntio et e Biz Dev Biz Dev $$ $$$ nue $ enue Reve Rev System Events & System Events & Time-based Features Time-based Features Ads, Lead Gen, Ads, Lead Gen, Subscriptions, Subscriptions, ECommerce ECommerce Website.com
  7. 7. 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 behavior AARRR!! AARRR
  8. 8. Don’t Be Teh FAIL.      Business Plans are BULLSHIT Revenue Projections are Hockey Stick Delusions Features Don’t Matter… Usability + [Measured] Conversion Matters Offline PR, “Big-Bang” Launches are Stupid & Expensive Investors Don’t Know Your Business Any Better Than You Do F AI L .
  9. 9. Be Bold. Be Humble.  20% Inspiration + 80% Perspiration  Long-term: Audacity + Creative Inspiration  Short-term: Humility + Analytic Rigor ! W T F 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
  10. 10. Q: What’s 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
  11. 11. Role: Founder/CEO Q: Which Metrics? Why? A: Focus on Critical Few Actionable Metrics (
  12. 12. 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 ?
  13. 13. Role: Product / Engineering Q: What Features to Build? Why? A: Easy-to-Find, Fun, Useful, Unique Features that Increase Conversion • • • 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
  14. 14. Example Conversion Metrics (note: *not* actuals… your mileage may vary) Stage Conversion Status Conv. % Est. Value (*not* cost) Acquisition Visitors -> Site/Widget/Landing Page (2+ pages, 10+ sec, 1+ clicks = don’t abandon) 60% $.05 Activation “Happy” 1st Visit; Usage/Signup (clicks/time/pages, email/profile reg, feature usage) 15% $.25 Retention Users Come Back; Multiple Visits (1-3x visits/mo; email/feed open rate / CTR) 5% $1 Referral Users Refer Others (cust sat >=8; viral K factor > 1; ) 1% $5 Revenue Users Pay / Generate $$$ (first txn, break-even, target profitability) 2% $10
  15. 15. Design, Optimize for Conversion
  16. 16. Role: Marketing / Sales Q: What channels? Which users? Why? A: High Volume (#), Low Cost ($), 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 potential Low-Hanging Fruit: – Blogs – SEO/SEM – Landing Pages – Automated Emails
  17. 17. Example Marketing Channels disclaimer: estimates of vol, cost/user, time & effort are subjective – actual costs are dependent on your specific business
  18. 18. One Step at a Time. 1. Make a Good Product: Activation & Retention 2. Market the Product: Acquisition & Referral 3. Make Money: Revenue & Profitability “You probably can’t save your Ass and your Face at the same time… choose carefully.” – me
  19. 19. Links & Resources Additional References: • “Influence: The Psychology of Persuasion”, Robert Cialdini (book) • “Putting the Fun in Functional”, Amy Jo Kim (etech 2006 preso) • “Futuristic Play”, Andrew Chen (blog) • “Don’t Make Me Think”, Steve Krug (book) • “A Theory of Fun”, Raph Koster (book, website) • “Designing for the Social Web”, Joshua Porter (book, website)
  20. 20. STARTonomics Sessions • • • • AARRR! Product 101: Killer Apps Startup Scalability Fun => Functional • Designr ❤ Developr • Sit, Stay, Click! = Activation & Retention • • • • • • • Internet Marketing 101 SEO Kung Fu Social Media, Social Objects Arch Viral: Loops & Apps Getting PAID. Customer Service = Hot Sexy Funding Secret$
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