Venture Capital 2.0: The Lean VCPresentation Transcript
Venture Capital 2.0 : The Lean VC Dave McClure 500 Startups ( @DaveMcClure ) http://500startups.com SlideShare ZipCast, Feb 2011 Re-Inventing Venture Capital Investing through Innovation, Incubation, & Iteration
Product/Market Fit Before “Launch” (Sean Ellis, Startup-Marketing.com) [email_address] Blog: startup-marketing.com
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
Q: What is My Business Model?
One of the following:
Drive Usage (= Activation, Retention)
2. Get Users (= Acquisition, Referral)
3. Make Money (= Revenue*)
(Note: eventually need to turn Users/Usage -> Money)
Lean Startup Challenges
Startups have problems in 3 main areas:
Management : Set Priorities, Define Key Metrics, Make Decisions .
Product : Build the “Right” Features. Measure, Iterate .
Marketing : Distribution, Distribution, Distribution .
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
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