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Startup Metrics


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Session on Metrics delivered to Wayra (early stage) Startups on Bootcamps celebrated in Madrid and Barcelona on March - April 2013.


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Startup Metrics

  1. Startup Metrics Wayra BCN & MAD Bootcamp, March – April 2013 April 2013 Marcos Eguillor @marcoseguillor
  2. @marcoseguillor Startup Metrics20130112 @marcoseguillor
  3. Objectives of the session•  Apprehend the Metrics of a Startup: Why, what, how•  Relate Startup Business Model and Value Proposal to Phasing of a project and Metrics•  Assess Customer Lifecycle in term of Metrics•  Identify and Funnel Metrics for your Business•  Prepare Metrics for pitching Wayra Startup Metrics >3 Bootcamp @marcoseguillor
  4. WHY Startup Metrics @marcoseguillor
  5. your Value Proposal is how you get attention Startup Metrics @marcoseguillor
  6. your Business Model is how you get interest Startup Metrics @marcoseguillor
  7. yourplan is how you getanalyzed Startup Metrics @marcoseguillor
  8. yourteam is how you getcredibility Startup Metrics @marcoseguillor
  9. yourMVP is how you getengagement and validation Startup Metrics @marcoseguillor
  10. yourMetrics is how you get the deal Startup Metrics @marcoseguillor
  11. need any more reasons? Startup Metrics @marcoseguillor
  12. need any more reasons? For the Founding Team1. •  Focus on your design/execution •  Be coherent •  Iterate/pivot based on findings, not just gut feeling Startup Metrics @marcoseguillor
  13. need any more reasons? For your Team2. •  Have a (clear and profitable) goal Startup Metrics @marcoseguillor
  14. need any more reasons? For your Investors3. •  Assess whether know what you’re doing •  Know more about the business •  Reduce uncertainty •  Evaluate the opportunity (current and future) Startup Metrics @marcoseguillor
  15. need any more reasons? #FUD… Fight Fear Uncertainty Doubt Startup Metrics @marcoseguillor
  16. WHAT Startup Metrics @marcoseguillor
  17. Financial MetricsOperational Metrics Startup Metrics @marcoseguillor
  18. Financial Metrics cash flow – ROI – NPV – WACC – 5 year projections … blah blah blah* Startup Metrics* When speaking about Startups in their first heart-beats @marcoseguillor
  19. Financial Metrics Startup Metrics @marcoseguillor
  20. Financial Metrics Revenue rate vs. Burn rate(i.e. When would you run out of cash) Startup Metrics @marcoseguillor
  21. Financial MetricsOperational Metrics Startup Metrics @marcoseguillor
  22. total subscribers – unique monthly users – pages viewed – CPx … blah blah blah Operational Metrics Startup Metrics @marcoseguillor
  23. but, are they really relevant to your business? Operational Metrics Startup Metrics @marcoseguillor
  24. Operational Metrics What is your business about? What is your Value Proposition? What is it that perfectly and accurately defines the core of your business? Startup Metrics @marcoseguillor
  25. Operational Metrics What is a key driver to the business and needs to happen in order to succeed with it? Startup Metrics @marcoseguillor
  26. Operational Metrics Metrics = f(type, stage)business •  Proto – MVP •  B2B, B2C, B2B2C •  Comercially available •  Retail, Banking, Internet, (with REVENUE) Media Biotech, etc. •  Expansion, etc. Startup Metrics @marcoseguillor
  27. Operational Metricsa Good Metric is ? What is a good Metric? Startup Metrics @marcoseguillor
  28. Operational Metricsa Good Metric is relevant Tells you something KEY about YOUR biz at THIS moment. It’s an add-on for your Tweet-Pitch Startup Metrics @marcoseguillor
  29. Operational Metricsa Good Metric isactionable It allows you to decide, take actions, move forward. It ties to specific and repeatable actions Startup Metrics @marcoseguillor
  30. Operational Metricsa Good Metric is x/y A ratio. Truth is relative. Make you Metric relative Startup Metrics @marcoseguillor
  31. Operational Metricsa Good Metric is a<>b Something comparable; now vs. then, here vs. there, this vs. that, they vs. us Startup Metrics @marcoseguillor
  32. Operational Metricsa Good Metric is •  Listen to the outside •  Be humble •  Learn from others a<>b Something comparable; now vs. then, here vs. there, this vs. that, they vs. us Startup Metrics @marcoseguillor
  33. Operational Metricsa Good Metric is KISS SIMPLEdefine, simplemeasure, simpletrack, simpleact-upon, simplecommunicate, simpleunderstand Startup Metrics @marcoseguillor
  34. Operational Metricsa Good Metric is today tomorrow ¤ ¤ Something that moves you forward, helping accurately predict and get your goal Startup Metrics @marcoseguillor
  35. Operational Metricsa Good Metric is changexperiment The one that helps you test and evolve Startup Metrics @marcoseguillor
  36. Operational Metricsa Good Bad Metric is ? What is a bad Metric? Startup Metrics @marcoseguillor
  37. Operational Metricsa Good Bad Metric is vanity How’s your ego doing? Startup Metrics @marcoseguillor
  38. white noise Startup Metrics @marcoseguillor
  39. too many (variables) Metrics INFORMATION ≠ DATA Startup Metrics @marcoseguillor
  40. TOMTMNThe One Metric That Matters Now Startup Metrics @marcoseguillor
  41. Startup Metrics @marcoseguillor
  42. TOMTMNThe One Metric That Matters Now •  It changes throughout the time •  Answers the most important question •  No more noise. No more paralysis by analysis •  It helps the whole Team focusing •  Encourages experimentation Startup Metrics @marcoseguillor
  43. HOW Startup Metrics @marcoseguillor
  44. Don’t cry (yet), it’s not that difficult! Startup Metrics @marcoseguillor
  45. Where do you want to go? Draw a map for the journey! B A Startup Metrics @marcoseguillor
  46. What happens when you push one of the buttons? Startup Metrics @marcoseguillor
  47. As projects evolve and pass through differentphases, Metrics should change according to thegoals and conditions of each phase Startup Metrics @marcoseguillor
  48. Typical conversion funnel But it depends on the business! Startup Metrics @marcoseguillor
  49. Startup Metrics Framework - AARRR Dave McClure Startup Metrics for Pirates Acquisition Activation Retention Referral Revenue Startup Metrics @marcoseguillor
  50. Startup Metric for Pirates - AARRR Acquisition How do you get Users? At what rate? What is the Bounce rate? What is the cost of acquiring these users? Customer Acquisition Cost vs. Customer Lifetime Value** Total revenue a customer has provided while being a customer; i.e. Total number of Months x Revenue/Month, Startup Metricswhere Month can be substituted by Year, Day, Hour, etc @marcoseguillor
  51. Startup Metric for Pirates - AARRR ActivationDo Users go beyond just asking for information,sharing personal/professional details, signing up theservice or newsletter or following in the SocialMedia? Active Users or Subscribers vs. Registered Users Startup Metrics @marcoseguillor
  52. Startup Metric for Pirates - AARRRDo Users come back? Retention•  Found what they were looking for? Met expectations?•  Cohort analysis•  Churn rate Startup Metrics @marcoseguillor
  53. Startup Metric for Pirates - AARRR New Members vs. Existing Members Do Users tell others? •  Viral Coefficient Referral •  Viral Cycle Time •  Net Promoter Score Startup Metrics @marcoseguillor
  54. Startup Metric for Pirates - AARRRHow do you make money?•  Related to Cost•  Lifetime Value; one shot vs. multi-shot•  Cancellation rate Revenue Startup Metrics @marcoseguillor
  55. Startup Metrics @marcoseguillor
  56. Startup Metrics Framework - AARRRExample: OneProfile Tweetpitch: Bio, CV and Certifications personal repository for quick automated sign-up to Social Media and services. Avoid retyping Business Model: Makes money through profile completion signup success to service providers. Per certificate to issuers (professional, educational) + sales/ad channel Startup Metrics @marcoseguillor
  57. Startup Metrics Framework - AARRR Example*: OneProfile Acquisition Visits Sign-up per visit Activation Profiles/Certificates per User Retention Rules per User Profile update per month Referral Requests to Certificate Issuers per User Invites per User Requests to Service Providers per User Revenue Profiles exported per User Profile updates per Serv. Prov. Outbound Sales per Serv. Provider Certif. linked per User Startup Metrics* Not necessarily right; objective is to foster debate @marcoseguillor
  58. Startup Metrics Framework - AARRRExample:AcquisitionActivationRetentionReferralRevenue Startup Metrics @marcoseguillor
  59. HOW Startup Metrics @marcoseguillor
  60. How to present figures (if not graphic) ** TSM Average: Trailing Six Month Compound Growth Rate; (ending_value/starting_value)^(1/num_periods-1)-1 Startup Metrics @marcoseguillor
  61. TOMTMNThe One Metric That Matters Now (at least, keep the focus) Startup Metrics @marcoseguillor
  62. When seeking investment andpitching, objectives of Metrics areshowing:•  there is a business opportunity•  how (well) you’re doing things and getting (positive) results•  you know how to exploit the market opportunity, by proper execution•  your business is scalable > 62 Startup Metrics @marcoseguillor
  63. Do you have a solid Value NO Where the hell are you going!? Keep on Proposal and Business working! Model? YES Stop looking for investment; just bootstrap* and keep on working *Unless your product/service needs hundreds of thousands or millions to be built and there’s no way to test it against your market before moving forwardDo you have a MVP; i.e. Have you NOtested the product/service against Customer Acquisition Cost vs. Customer Lifetime Value the market? Customer Acquisition rate Active vs. Acquired Subscribers (Conversion) YES # Subscribers Bounce rate Burn rate … Do you have a relevant income Metrics now depend (more) on your already? business… Startup Metrics @marcoseguillor
  64. Examples of some Metrics related to GROWTHTomasz Tunguz - Your Startup’s 10 Most Important Metrics•  New users added last month by channel/TSM growth rate: How well are we growing the user base? Which user sources are the best?•  Total user base/TSM growth rate: How important is our monthly growth compared to our total user base?•  Cost of customer acquisition, lifetime value, pay back period: Can we grow faster through paid acquisition? Are we acquiring customers profitably? How much can we afford to spend on new customers? How is this changing over time? Wayra Startup Metrics Bootcamp @marcoseguillor
  65. Examples of some Metrics related toENGAGEMENTTomasz Tunguz - Your Startup’s 10 Most Important Metrics•  Active users (can defined in several different ways depending on your product) by channel/TSM growth rate: Are we getting better at giving our customers what they want/need? Which channels of users are most effective in finding us the right kind of user?•  % of users using top 3 key features in a given month: Are our product initiatives the right ones? Wayra Startup Metrics Bootcamp @marcoseguillor
  66. Examples of some Metrics related to REVENUETomasz Tunguz - Your Startup’s 10 Most Important Metrics•  Revenue / TSM Revenue growth: Are we growing our revenue?•  Conversion to paid rate in that month/by cohort: How many users converted to paid? Are we improving our ability to convert customers to paid?•  Avg spend per paying customer of a managed account vs solo account: What is the impact of the account management team?•  Churn rate/ TSM Churn rate: How well do we retain our customers?•  Burn rate: When are we profitable? When do we run out of cash? When do we need to raise? Wayra Startup Metrics Bootcamp @marcoseguillor
  67. remember Startup Metrics @marcoseguillor
  68. •  It’s about doing it BETTER. So that you need to take DECISIONS, for which you NEED INFORMATION (not just data) extracted from MEASUREMENT•  RELEVANCY. For this Value Proposal and Business Model, for this Product/Market, from here to there, at this moment, with the surrounding conditions•  Substantial IMPROVEMENT•  FOCUS. It’s not about you, it’s about the GOAL, the TEAM and the INVESTOR•  KISS; Automate. Dashboard vs. TOMTMN•  KEEP DOING•  EVOLVE Startup Metrics @marcoseguillor
  69. Well-dones, buhs and takeaways 1.- 1.- 1.- 2.- 2.- 2.- 3.- 3.- 3.- Wayra Startup Metrics > 69 Bootcamp @marcoseguillor
  70. If it can be measure, it can be analyzed, then managed andimprovedVarious sources Startup Metrics Wayra BCN & MAD Bootcamp, March – April 2013 March 2013 Marcos Eguillor @marcoseguillor
  71. References and material•  Dropbox. Startup Lessons Learned. Drew Houston, 2011.•  Guy Kawasaki on startup Metrics, mistakes, and enchantment. Paul Hontz, 2011. enchantment/•  How Startups Can Use Metrics to Drive Success. Mark Suster, 2011. success/•  How to Use a Single Metric to Run Your Startup. Ben Yoskovitz, 2012.•  Lean Startup Metrics. @stueccles, 2012,•  Lean Startup Metrics & Analytics. Nicola Junior Vitto, 2012.•  Startup Metrics 4 Pirates. Dave McClure, 2012.•  Startup Metrics in plain english. Raymond, 2012.•  Your Startup’s 10 Most Important Metrics. Tomasz Tunguz, 2013. Wayra Startup Metrics > 71 Bootcamp @marcoseguillor