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Startup Metrics for Pirates
@DaveMcClure
500 Startups
http://500.co
http://500hats.com
http://slideshare.net/dmc500hats
AA...
Dave McClure

Founding Partner & Troublemaker, 500 Startups
00’s & 10’s:
• VC: Founders Fund, Facebook fbFund, 500 Startup...
• What is 500?
– $250M under management
– 120+ people / 30+ investing partners / 20 Countries
– 3000+ Founders / 250+ Ment...
[ This Talk ]
Topics
• Basic Concepts of “Startup Metrics 4 Pirates”
• 3 Steps to AARRR: Product, Market, Revenue
• Constructing MVP: Ju...
Lean Startup:

Simpler, Faster, Cheaper, Smarter
1. Startup Costs = Lower.
2. # Users, Bandwidth = More.
3. Transaction $$...
Changes in Tech Startups
• LESS Capital required to build product, get to market
– Dramatically reduced $$$ on servers, so...
DO Marketing! 

(It’s Not Evil)
• Marketing is Both Qualitative + Quantitative
• Qualitative: Create Emotion, Drive Action...
[Startup Metrics 4 Pirates]
Just Gimme the GOOD Metrics.
Users, Pages, Clicks, Emails, $$$...?
Q: Which of these is best? How do you know?
• 1,000,000...
Lean Startup -> Startup Metrics
• Talk to Customers; Discover Problems
• Progress ≠ Features (Less = More)
• Fast, Frequen...
Discover Customers

(Steve Blank, SteveBlank.com)
LEARN BUILD
MEASURE
IDEAS
CODE
DATA
Iterate.

(Eric Ries, TheLeanStartup.com)
AARRR!: Startup Metrics Model
Website.com
Revenue $$$
Biz DevAds, Lead Gen,
Subscriptions,
ECommerce
ACQUISITION
SEO
SEM
A...
Startup Metrics for Pirates
• Acquisition: users come to site from various channels
• Activation: users enjoy 1st visit: "...
One Step at a Time.
1. Make a Good Product: Activation & Retention
2. Market the Product: Acquisition & Referral
3. Make M...
Startup Challenges
Startups have problems in 3 key areas:
• Management: Set Priorities, Define Key Metrics
• Product: Buil...
[ Constructing MVP ]
Role: Founder / CEO
Q: Which Customers? Problems? Metrics?
A: Focus on Critical Few Actionable Metrics
(if you don’t use t...
Optimize 4 Happiness 

(both User + Business)
• Define States of User + Business Value
• Prioritize (Estimate) Relative Va...
What is Minimum Viable Product ?
MVP = F(Customer, Problem, Time or $$$)
• Focus on CUSTOMER
– Qualitative Discovery, Quan...
Example Conversion Metrics

(note: *not* actuals… your mileage may vary)
Stage Conversion Status Conv.
%
Est. Value
(*not*...
[ Getting 2 PMF ]
Role: Product / Eng / Design
Q: What Features to Build? Why? When are you “Done”?
A: Easy-to-Find, Fun/Useful, Unique Feat...
What is Product/Market Fit ?
PMF = F(Customer, Solution, Alternatives*)
• Product / Market Fit occurs when:
– Customers li...
[ Testing 4 AUX ]
Discover Meaning

Why Should Users CARE About Your Product?
Kathy Sierra:
“Creating
Passionate
Users”
Discover Meaning

Keywords, Images, Call-to-Action
Top 10 - 100 words
• Your Brand / Products
• Customer Needs / Benefits
...
How To Tell if Design/UX is Good?
AUX = F(Customer, Design/UX, Metrics)
• If Users Use Your Product Then It’s GOOD.
– Defi...
[ Metrics 4 ACQ ]
Role: Marketing / Sales
Q: What channels? Which users? Why?
A: High Volume (#), Low Cost ($), High Conv (%)
• Design & Tes...
Distribution Platforms
Customer Reach: 100M-1B+
• Search: Google, Baidu
• Social: Facebook, SnapChat, Twitter, LinkedIn, T...
MAARRRketing Plan
Marketing Plan = Target Customer Acquisition Channels
• 3 Important Factors = Volume (#), Cost ($), Conv...
[ What is WINNING? ]
Choose #WINNING Metrics
WIN = F(Customer, Usage, Dist, Revenue)
• after MVP functional use, several options:
– better Usag...
Startup 2.0: 

“Lean Investor” Model
Method: Invest in startups using incremental
investment, iterative development. Start...
Investment #1: Incubate

(“Product”)
• Structure
– 1-3 founders
– $0-$100K investment
– Incubator environment: multiple pe...
Investment #2: Seed

(“Market”)• Structure
– 2-5 person team
– $100K-$2M investment
– Syndicate of Angel Investors / Small...
Investment #3: Venture

(“Revenue”)
• Structure
– 5-25 person team
– $1M-$10M investment
– VC Investors
• Make Money, Get ...
Q&A?
» Questions?
» Answers: $1
» Correct Answers: $10
» Stupid Look on my face: FREE!
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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 High Cust Value + Low ACQ$ @ Scale

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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 High Cust Value + Low ACQ$ @ Scale

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