NBTC 2014 - Startup Analytics Presentation

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A short presentation covering the essential parts of aalytics for startups.

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  • I’ve worked with Alistair a lot in the past, and many of these slides are ones that he’s created. I want to give him full attribution for this right off the bat.
  • Step 2: acid party an idea.
  • The idea doesn’t need to be innovative. You don’t need to come up with the next Google today. In fact, you won’t be able to.
  • I’d much rather use something existing, or work on a tiny component of something that you’ve been dying to work on.
  • Good ideas are ones that have a single serving purpose. You’ve heard the term minimum viable product thrown around. A product isn’t something that you’ll be able to easily make in the time frame you’re given. Rather, think of a minimum viable feature.
  • Okay, a second big change. Now that you’ve got all the data, you need to act on it.
  • Correlating your metrics to the business makes them relevant. And the key to relevance is to understand your business’s goals, and then to correlate them to your metrics.
  • Amazon: what do they want you to do?
  • Maximize your shopping cart size
  • They’re a transactional site. They make money when people complete a process, usually involving a purchase or subscription, or even entering an email address like you did on bitmakerlabs.com
  • But Amazon also wants you to leave reviews
  • And add something to a wishlist
  • These are forms of collaboration, where communities create content.
  • What about another kind of site. What does gmail want you to do? What happens when gmail goes down?
  • GMail is first and foremost a SaaS site. It wants you to be productive, so you can get work done and keep using the system. A paid SaaS site is the same thing.
  • Of course, GMail is also another kind of site -- a media site. That’s an ad up there.
  • Media sites want you to click on targeted advertising.
  • The reason why this matters is that I just spelt out what every single one of you will be tasked to measure, whether your working for yourself, starting a new company, or joining one.
    One of the most important questions that you can ask yourself or any company you interview with is: “What’s the business model of this company? Is it SaaS? Ecommerce? Media? Collaboration? As soon as you know its main model, you’ll know exactly what the company cares about, how you should talk to them about it.
  • Analytics is about measuring the movement of a business towards its goals. It’s what makes the Lean thing work so well. And now that we expect high visibility on our websites, businesses are demanding it elsewhere.
  • Analytics is about measuring the movement of a business towards its goals. It’s what makes the Lean thing work so well. And now that we expect high visibility on our websites, businesses are demanding it elsewhere.
  • The first one is called Viral Coefficient. VC is basically: “when i get a user, how many others do they tell?”. If it’s more than 1, you’re happy.
  • The best example of this is hotmail because every single mail that people ever sent on hotmail contained a link that infected people that read the message.
  • In fact, the growth of hotmail followed the predictive model built in the 1960s by a guy named Bass, called the Bass Diffusion Curve that shows how viral messages propagate.
  • So, there’s tons of figures for viral messages and you really don’t want to try and figure them out, so I’ll give you a simpler one.
  • Viral coefficient is simply, how many new users you’ve got x the change that they're going to tell someone something, minus the churn or abandonment that you have. And if that's great than 1 you're happy, and if it's less than 1 you're miserable because you'll have to spend money on marketing.
  • And maximize ice cream sales (perhaps by locating them near lifeguard stands just to be sure.)
  • And maximize ice cream sales (perhaps by locating them near lifeguard stands just to be sure.)
  • And maximize ice cream sales (perhaps by locating them near lifeguard stands just to be sure.)
  • And maximize ice cream sales (perhaps by locating them near lifeguard stands just to be sure.)
  • And maximize ice cream sales (perhaps by locating them near lifeguard stands just to be sure.)
  • We can also measure whether our site is working properly. I brought some examples.
  • this might not seem like marketing’s fault.
  • We can measure performance -- which, it turns out, has a huge impact on the effectiveness of our app.
  • Google revealed some interesting stats on performance
  • When they introduced an artificial delay, they found a significant decline in searches per user. Which is quite a lot of money...
  • Microsoft revealed similar data
  • (it turns out slowness affects nearly every KPI in search)
  • Shopzilla did a performance makeover and measured the results.
  • They saw a jump in revenue
  • And an increase in page ranking
  • Other tests we’ve done show optimized sites get more visits, from visitors who return more
  • Have lower bounce rates
  • Have a greater time on site per visitor
  • Have more pageviews per visitor
  • And see a much higher conversion rate and order value
  • You need to know how engaged your users are. This is super important. I had one VC once tell me that they would’ve saved 9 million dollars had they done this analysis in the past on a particular startup.
  • Engagement is basically measured in something like “Days since last visit”. So, I have number of users on the left and i’m plotting this over days since last engagement. That means that roughly 400 users were here yesterday. another 400 were here two days ago, and about 600 were here 3 days ago and so on.
    And then I compare that to february. Wow, that’s actually really good because the number of visitors that came back a few days ago is up. So I can see that more people are coming back more often, and then I do the overall comparision, which is how many people haven’t been back in more than 10 days and I can see that disengagement is up. This is a really painful chart, but a necessary one.
  • There are other things we can watch. Usability, for example, to find out how visitors interact.
  • ...or how they fill in a form and where they stop...
  • NBTC 2014 - Startup Analytics Presentation

    1. 1. Startups & AnalyticsStartups & Analytics A (very) practical guide -A (very) practical guide -
    2. 2. SO YOU WANT TO BUILD A STARTUP ...SO YOU WANT TO BUILD A STARTUP ... ... yolo?
    3. 3. #1 SHOULD YOU?#1 SHOULD YOU? (aka - why building a startup sucks)
    4. 4. •Not very status-oriented •Doesn’t follow rules very well and questions authority •Can handle high degrees of ambiguity or uncertainty •Can handle rejection, being told “no” often and yet still have the confidence in your idea •Very decisive. A bias toward making decisions – even when only right 70% of the time – moving forward & correcting what doesn’t work •A high level of confidence in your own ideas and ability to execute •Not highly susceptible to stress •Have a high risk tolerance •Not scared or ashamed of failure •Can handle long hours, travel, lack of sleep and the trade-offs of having less time for hobbies & other stuff Common attributes of entrepreneurs
    5. 5. ARE YOU SURE YOU WANT TO DO THIS ... ?ARE YOU SURE YOU WANT TO DO THIS ... ? “9 out of 10 startups fail” http://www.quora.com/What-is-the-truth-behind-9-out-of-10-startups-fail
    6. 6. According to the NationalAccording to the National Venture Capitalists AssociationVenture Capitalists Association 3 startups fail, have gone bankrupt or business were closed 3 startups are worse than average, aren’t very profitable, returning less than the invested capital, but are still active 3 startups are a moderate success, are profitable, returning just the invested capital, were not acquired yet and are still active 1 highly successful startup that will pay the investor a multiple return on all of his 10 investments; that startup had an IPO or were a target of a significant acquisition
    7. 7. ““I DIDN’T REALLY HAVE AI DIDN’T REALLY HAVE A CHOICE”CHOICE”
    8. 8. #2 FINDING THE RIGHT PEOPLE#2 FINDING THE RIGHT PEOPLE “It’s like dating all over again, and I can’t wait to find the meat markets”
    9. 9. BUILDING THE RIGHTBUILDING THE RIGHT TEAMTEAM http://solveforinteresting.com/the-three-kinds-of-ceo/ http://steveblank.com/2011/12/13/the-startup-team/
    10. 10. HACKER, HUSTLER,HACKER, HUSTLER, DESIGNER, VISIONARYDESIGNER, VISIONARY
    11. 11. If this is a sea, wtf are theIf this is a sea, wtf are the fish?fish? Fellow Students Founder Dating (http://founderdating.com/about/) Startup Weekend Startup Drinks Bitmaker Labs Make Your Own Tell your friends you’re in the market
    12. 12. WHOLE LOT OF TALENT, WHOLE LOT OF DEMANDWHOLE LOT OF TALENT, WHOLE LOT OF DEMAND (shit.)
    13. 13. #3 FINDING YOUR IDEA#3 FINDING YOUR IDEA
    14. 14. Most startups don’t even knowMost startups don’t even know what problem they solvewhat problem they solve Paypal first built for Palmpilots Freshbooks was invoicing for a web design firm Wikipedia was to be written by experts only Mitel was a lawnmower company Hotmail was a database company Flickr was going to be an MMO (it’s back to being one now) Twitter was a podcasting company Autodesk made desktop automation software
    15. 15. #4 THE LEGAL SHIT#4 THE LEGAL SHIT IANAL (sounds worse than it is - it just means that I’m not a lawyer)
    16. 16. THANKFULLY, THIS PART ISTHANKFULLY, THIS PART IS EASYEASYEnter Dave Weekly
    17. 17. http://dweek.ly/stock/http://dweek.ly/stock/ Stock The Board Equity Liquidity Investors Fundraising Options
    18. 18. #5 THE PROTOTYPE#5 THE PROTOTYPE
    19. 19. LEARN FASTER WITH CUSTOMER DEVELOPMENTLEARN FASTER WITH CUSTOMER DEVELOPMENT by Hiten Shah http://www.slideshare.net/startuplessonslearned/hiten-shah-the-leanstartupsxsw-736
    20. 20. #5 THE PRODUCT#5 THE PRODUCT or Finding Product/Market Fit
    21. 21. #6 THE MONEY#6 THE MONEY What you need to know about fundraising
    22. 22. BEFORE YOU DO ANYTHINGBEFORE YOU DO ANYTHING
    23. 23. Some rules of thumbSome rules of thumb You have paying flagship customers or loyal high profile individual evangelists You’ve reached 10k registered / active users (if you’re b2c) Fundraising takes about a year and gives you about a year
    24. 24. Some rules of thumbSome rules of thumb Begin to get to know investors in the Toronto area now (OMERS, MaRS, iNovia, BDC, Mantella) Spend as much time as you can in the valley, and get valley interest first Come back to Toronto investors with something to show
    25. 25. Measure the rightMeasure the right things.things. Act 2Act 2
    26. 26. Understanding yourUnderstanding your goals.goals. http://www.flickr.com/photos/itsgreg/446061http://www.flickr.com/photos/itsgreg/446061
    27. 27. Analytics is theAnalytics is the measurementmeasurement of movementof movement towardstowards business goalsbusiness goals.. http://www.flickr.com/photos/itsgreg/44http://www.flickr.com/photos/itsgreg/44
    28. 28. 56
    29. 29. NEWNEW VISITORSVISITORS GROWTHGROWTH BOUNCEBOUNCE RATERATE LOSSLOSS CONVERSIONCONVERSION RATERATE GOALGOAL VALUEVALUE x TIMETIME ONON SITESITE PAGESPAGES PERPER VISITVISIT NUMBERNUMBER OF VISITSOF VISITS SEARCHESEARCHE SS TWEETSTWEETS MENTIONMENTION SS ADS SEENADS SEEN ATTENTIO N ENGAGEMEN T CONVERSIO N
    30. 30. In a startup, the purposeIn a startup, the purpose of analytics is toof analytics is to iterateiterate to a product/market fitto a product/market fit before the money runsbefore the money runs out.out. If you remember only one thing...If you remember only one thing...
    31. 31. Message reachMessage reachMessage reachMessage reach InfrastructureInfrastructure healthhealth InfrastructureInfrastructure healthhealth Market sentimentMarket sentimentMarket sentimentMarket sentiment User engagementUser engagementUser engagementUser engagement Business modelBusiness modelBusiness modelBusiness model SustainabilitySustainabilitySustainabilitySustainability Viral coefficientViral coefficient AmplificationAmplification PerformabilityPerformability Customer researchCustomer research Community sentimentCommunity sentiment Time since last visitTime since last visit Core goalsCore goals Extended funnel abandonmentExtended funnel abandonment Movement towards goalsMovement towards goals Cost per engaged visitorCost per engaged visitor Peak to average ratioPeak to average ratio Minimum sustainable burnMinimum sustainable burn
    32. 32. Viral coefficientViral coefficient On average, for each message they hear,On average, for each message they hear, how many people does someone tell?how many people does someone tell? 11
    33. 33. ------------------------------------------------------------------------------------------------------------ Get your free private email atGet your free private email at http://www.hotmail.comhttp://www.hotmail.com ------------------------------------------------------------------------------------------------------------
    34. 34. v 1, p≠ t = pδ 0 (1 – vt+1 ) / (1 – v) + p0 http://robert.zubek.net/blog/2008/01/30/viral-coefficient-calculation/http://robert.zubek.net/blog/2008/01/30/viral-coefficient-calculation/
    35. 35. Or simplerOr simpler UsersUsersUsersUsers ViralViral coefficientcoefficient ViralViral coefficientcoefficient Churn &Churn & abandonmenabandonmen tt Churn &Churn & abandonmenabandonmen tt xx -- >> 11 http://www.quora.com/Viral-Growth-and-Analytichttp://www.quora.com/Viral-Growth-and-Analytic
    36. 36. How well are messagesHow well are messages being amplified?being amplified? 22
    37. 37. 50%50% 75%75% 100%100% 50%50% = 4= 4 22 33 11 = 6= 6 14.514.5 Downstream reach (aggregate followers) Downstream reach (aggregate followers) Amplification chance (how relevant the content is + what the recipient thinks of the sender) Amplification chance (how relevant the content is + what the recipient thinks of the sender) 25%25% .5.5 50%50% 22 50%50% 11 = 3.5= 3.5
    38. 38. RepurposingRepurposing (spread to other(spread to other communities)communities) AmplificationAmplification (virality and(virality and message spread)message spread) ConversionsConversions VisitVisit ss ShoppingShopping cartcart PaymentPayment optionsoptions SeedSeed (starting(starting community)community) ReachReach (impressions)(impressions)
    39. 39. Viral message spreadViral message spread ConversionsConversions VisitVisit ss ShoppingShopping cartcart PaymentPayment optionsoptions ReachReach (impressions)(impressions) Emphasis onEmphasis on getting viralgetting viral ratio above 1ratio above 1 (Retweeting,(Retweeting, Fan, EmailFan, Email forward, Redditforward, Reddit upvote, otherupvote, other loops)loops) Emphasis onEmphasis on getting viralgetting viral ratio above 1ratio above 1 (Retweeting,(Retweeting, Fan, EmailFan, Email forward, Redditforward, Reddit upvote, otherupvote, other loops)loops)
    40. 40. Megablogger proponentsMegablogger proponents ConversionsConversions VisitVisit ss ShoppingShopping cartcart PaymentPayment optionsoptions SeedSeed (starting(starting community)community) ReachReach (impressions)(impressions) Emphasis on convincing highly-Emphasis on convincing highly- followed, highly acted-uponfollowed, highly acted-upon seedseed groupgroup to spread the word.to spread the word. Emphasis on convincing highly-Emphasis on convincing highly- followed, highly acted-uponfollowed, highly acted-upon seedseed groupgroup to spread the word.to spread the word.
    41. 41. A call to actionA call to action ConversionsConversions VisitVisit ss ShoppingShopping cartcart PaymentPayment optionsoptions ReachReach (impressions)(impressions) Emphasis onEmphasis on maximizingmaximizing impression-to-clickimpression-to-click ratioratio within thewithin the communitycommunity Emphasis onEmphasis on maximizingmaximizing impression-to-clickimpression-to-click ratioratio within thewithin the communitycommunity
    42. 42. Long funnel: Beers forLong funnel: Beers for CanadaCanada 700,000s 1,642 150 RT 32 77 1010 1515 xx $100$100xx $20$20xx $7$7 20 Seed ratio:Seed ratio: 35,000:135,000:1 FollowerFollower ss Visitors:Visitors: 0.23%0.23% ConversionsConversions :: 1.95%1.95% Revenues:Revenues: Average: $39.54Average: $39.54 Median: $20Median: $20 Total:Total: $1,005$1,005 Amplification:Amplification: 2.9%2.9% 2 RepurposingRepurposing 2,000
    43. 43. How performable areHow performable are we?we? Health of the infrastructure (uptime,Health of the infrastructure (uptime, latency)latency) 33
    44. 44. Impact of page load time onImpact of page load time on average daily searches peraverage daily searches per useruser
    45. 45. Impact of additional delayImpact of additional delay on business metricson business metrics
    46. 46. Shopzilla’s makeoverShopzilla’s makeover
    47. 47. 5-5- 12%12%
    48. 48. Traffic levelsTraffic levels
    49. 49. Bounce rateBounce rate
    50. 50. Average time onAverage time on sitesite
    51. 51. Pages per visitPages per visit
    52. 52. Conversion rateConversion rate and order valueand order value and order valueand order value
    53. 53. 11 22 33 44 55 66 77 88 99 11 00 11 11 11 22 11 33 11 44 11 55 11 66 00 5,005,00 00 UniquepageviewsUniquepageviews >4s or>4s or errorerror 2-2- 4s4s <2<2 ss ConversionConversion ss $$ 00 $10,00$10,00 00 Revenue(totalsales)Revenue(totalsales)
    54. 54. What do visitors think ofWhat do visitors think of us?us? Both on the site (VoC) and in the worldBoth on the site (VoC) and in the world (community monitoring)(community monitoring) 4&54&5
    55. 55. How engaged areHow engaged are users?users? Time since last visit, as a histogram, not anTime since last visit, as a histogram, not an average, compared to baselines.average, compared to baselines. 66
    56. 56. Days since lastDays since last visitvisit 120120 00 100100 00 8080 00 6060 00 4040 00 2020 00 00 11 22 33 44 55 66 77 88 99 Days since lastDays since last engagementengagement JanuarJanuar yy FebruarFebruar yy DisengagedDisengaged (>10 days)(>10 days) 25002500 00 20002000 00 15001500 00 10001000 00 500500 00 00 NumberofNumberof usersusers
    57. 57. Core goals driving theCore goals driving the businessbusiness Pick the 3-4 tasks you’ve set for users.Pick the 3-4 tasks you’ve set for users. Always know what these are and whyAlways know what these are and why they correlate to business growth.they correlate to business growth. 77
    58. 58. Localmind snapshotLocalmind snapshot
    59. 59. Extended funnelExtended funnel abandonmentabandonment Not just on the site: Email open rateNot just on the site: Email open rate 88
    60. 60. In the last build, whatIn the last build, what moved us towards &moved us towards & away from goals?away from goals? Requires knowing the goalsRequires knowing the goals andand the keythe key features addedfeatures added 99
    61. 61. Cost per visitorCost per visitor Operations costs per site visitorOperations costs per site visitor 1010
    62. 62. Peak-to-average ratioPeak-to-average ratio How much busier are you at busy times?How much busier are you at busy times? What premium do you pay for thatWhat premium do you pay for that surplus?surplus? Can you decommission well?Can you decommission well? 1111
    63. 63. http://community.microsoftadvertisinghttp://community.microsoftadvertising
    64. 64. Minimum sustainableMinimum sustainable burnburn 1212
    65. 65. http://www.flickr.com/photos/dougww/83312http://www.flickr.com/photos/dougww/83312
    66. 66. Message reachMessage reachMessage reachMessage reach InfrastructureInfrastructure healthhealth InfrastructureInfrastructure healthhealth Market sentimentMarket sentimentMarket sentimentMarket sentiment User engagementUser engagementUser engagementUser engagement Business modelBusiness modelBusiness modelBusiness model SustainabilitySustainabilitySustainabilitySustainability Viral coefficientViral coefficient AmplificationAmplification PerformabilityPerformability Customer researchCustomer research Community sentimentCommunity sentiment Time since last visitTime since last visit Core goalsCore goals Extended funnel abandonmentExtended funnel abandonment Movement towards goalsMovement towards goals Cost per engaged visitorCost per engaged visitor Peak to average ratioPeak to average ratio Minimum sustainable burnMinimum sustainable burn 1212 thingsthings toto watchwatch
    67. 67. UsabilityUsability +1+1
    68. 68. THANK YOUTHANK YOU sean@bitmakerlabs.com

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