Startup Metrics for Pirates / KILL a Feature (FOWA London, Oct 2009)
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Startup Metrics for Pirates / KILL a Feature (FOWA London, Oct 2009)

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Latest & Greatest Startup Metrics for Pirates, from my talk at FOWA London, October 2009.

Latest & Greatest Startup Metrics for Pirates, from my talk at FOWA London, October 2009.

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  • BUILT TO LEARN This is the core feedback loop that powers startups. Their goal is not to optimize the time it takes to do any one of these steps. There are many specific practices that can power lean startups, and we’ll cover a few in this presentation. But more important than any specific practice is this core idea: startups should be built to learn.

Startup Metrics for Pirates / KILL a Feature (FOWA London, Oct 2009) Startup Metrics for Pirates / KILL a Feature (FOWA London, Oct 2009) Presentation Transcript

  • Startup Metrics for Pirates: AARRR! Future of Web Apps Oct 2009 Dave McClure, Founders Fund http://www.foundersfund.com/ http://500hats.typepad.com/ http://slideshare.net/dmc500hats/
  • Why I’m Here: To Kick Your ASS.
    • The Basics
    • 5 Steps: Startup Metrics for Pirates ( AARRR ! )
    • Iterate, Measure, Optimize. Build a Feedback Loop. ( Loop. Loop. )
    • KILL a FEATURE . Something Sucks. Find It. Kill it. NOW .
    YOUR SILLY FUCKING HOPES & DREAMS, ABOUT TO BE CRUSHED THE REALITY : U SUCK , YOUR PRODUCT SUCKS , & U WILL FAIL … HARD.
  • Dave McClure
      • 2001-2009:
      • Startup Investor: 500 Hats LLC, Founders Fund
      • Tech Marketing : PayPal, Simply Hired, Mint
      • Advisor, Angel Investor : 40+ Startups
      • Conf. Organizer : Web 2.0, O’Reilly, Startonomics
      • Stanford Visiting Lecturer : Facebook, Startup Metrics
      • 80’s & 90’s:
      • 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
    GEEK, CODER, ENTREPRENEUR D-list Blogger, Marketing Hack, Wanna-be Angel/VC
  • Angel Investments (Personal, 13 deals, 2004-2008)
  • Professional Investments (2009) FF Angel – 12 deals @$50-250K fbFund REV – 22 deals @ ~$15-75K
  • Web 2.0: Hell Yes , Good Times.
    • # Users, Bandwidth = Bigger .
    • Lower Startup Costs = Smaller .
    • PPC, E-Com $ Growing = Better .
    • Collect Usage Metrics in Real-Time
    • Decisions Based on Measured User Behavior
  • Be Bold. Be Humble.
    • 20% Inspiration + 80% Perspiration
    • Long-term: Audacity + Creative Inspiration
    • Short-term: Humility + Analytic Rigor
    • READ: To The Smartest Person in the Room
    • (Chris McDonough)
  • 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 $$$
    • Achieve Low Cost + High Value @ Scale
    $$$
  • The Startup Metrics Religion
    • Progress ≠ Features ( Less = More )
    • Focus on User Experience (& Distribution )
    • Measure Conversion ; Compare 2+ Options
    • Fast, Frequent Iteration (+ Feedback Loop )
    • Keep it Simple & Actionable
  • Minimize TOTAL time through the loop LEARN BUILD MEASURE IDEAS CODE DATA Source: Eric Ries, The Lean Startup
  • 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
    (note: If you’re in a hurry, Google “Startup Metrics” & watch 5m video) AARRR !
  • 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
  • The Startup Pyramid (Sean Ellis, Startup-Marketing.com) [email_address] Blog: startup-marketing.com
  • Startup Challenges
    • Startups have problems in 3 key areas:
      • Management : Setting Priorities, Defining Key Metrics, Creating Dashboard, Reporting Progress
      • Product : Building the “Right” Features, Getting Product Out Quickly, Testing for User Conversion / Adoption
      • Marketing : Accessing “Web 2.0” Channels (Search, Social, Viral, New Media), Cost-Efficient Distribution
  • Role: Founder/CEO
    • Q: Which Metrics? Why?
    • A: Focus on Critical Few Actionable Metrics
      • (if you don’t use the metric to make a decision, it’s not actionable)
    • Hypothesize Customer Lifecycle
    • Target ~3-5 Conversion Events (tip: Less = More)
    • Test, Measure, Iterate to Improve
  • Role: Product / Engineering
    • Q: What Features to Build? Why? When are you “Done”?
    • A: Easy-to-Find , Fun / Useful , Unique Features that
    • Increase 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
  • KILL A FEATURE. Something Sucks . Find It. KILL It.
    • STOP ADDING FEATURES.
    • Find the ONE THING that users LOVE .
    • How to figure out? TAKE. SHIT. AWAY .
    • When they SCREAM , you’ve FOUND it.
    • Then Bring it Back … Only Better.
    • Tip: KILL a Feature Every Week .
  • 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
  • One Step at a Time.
      • Make a Good Product : Activation & Retention
      • Market the Product : Acquisition & Referral
      • Make Money : Revenue & Profitability
    “ You probably can’t save your Ass and your Face at the same time… choose carefully .” – DMC
  • 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)
    • Designing for the Social Web Joshua Porter (book, website)
    • Startup Lessons Learned Eric Ries (blog)
    • Customer Development Methodology Steve Blank (presentation, blog )
    • Startup-Marketing.com Sean Ellis (blog)
    • KISSmetrics.com Hiten Shah / Neil Patel (website)
    • How To Pitch a VC Dave McClure (slides, NSFW)