Dave McClure, profile picture
Uploaded byDave McClure
PDF, PPTX50,293 views

Startup Metrics for Pirates (Nov 2015, Platzi)

The document discusses startup metrics and provides an overview of the AARRR framework for measuring key metrics. It introduces the AARRR acronym which stands for Acquisition, Activation, Retention, Referral, and Revenue. It emphasizes measuring metrics that are simple, actionable and help optimize the product, marketing and business model based on user behavior data.

Embed presentation

Download as PDF, PPTX
Startup Metrics for Pirates @DaveMcClure Founding Partner, 500 Startups http://500.co http://500hats.com http://slideshare.net/dmc500hats AARRR!
Dave McClure
 Founding Partner & Troublemaker, 500 Startups 00’s & 10’s: • VC: Founders Fund, Facebook fbFund, 500 Startups • Angel: Mashery, Mint.com, SlideShare, Twilio • Marketing: PayPal, Simply Hired, Mint.com, O’Reilly 80’s & 90’s: • Entrepreneur: Aslan Computing (acq’d by Servinet/Panurgy) • Developer: Windows / SQL DB consultant (Intel, MSFT) • Engineer: Johns Hopkins‘88, BS Eng / Applied Math
• What is 500? – $200M under management – 100+ people / 30 investing partners / 18 Countries – 2500+ Founders / 250+ Mentors • 1300+ Portfolio Co’s / 50+ Countries – Wildfire (acq GOOG, $350M) – MakerBot (acq SSYS, $400M) – Viki (acq Rakuten, $200M) – Simple (acq BBVA, $117M) – Credit Karma (~$3.5B) – GrabTaxi ($1B+) – Twilio ($1B+) – Ipsy – SendGrid – VivaReal – Udemy – Zozi – The RealReal – Virool – BarkBox – Tradesy 500 Startups
 Global Seed Fund & Startup Accelerator
[ This Talk ]
Topics • Basic Concepts of “Startup Metrics 4 Pirates” • 3 Steps to AARRR: Product, Market, Revenue • Constructing MVP: Just ONE Feature? • Design (UX) & Distribution (MKTG) • Winning = Users, Revenue, Profit?
Lean Startup:
 Simpler, Faster, Cheaper, Smarter 1. Startup Costs = Lower. 2. # Users, Bandwidth = More. 3. Transaction $$$ = Better. Building Product => Cheaper, Faster, Better Getting Customers => Easier, More Measurable Iterative Product & Marketing Decisions based on Measured User Behavior
Platforms 2.0
 Search, Social, Mobile, Video, Messaging
Changes in Tech Startups • LESS Capital required to build product, get to market – Dramatically reduced $$$ on servers, software, bandwidth – Crowdfunding, KickStarter, Angel List, Funders Club, etc – Cheap access to online platforms for 100M+ consumers, smallbiz, etc • MORE Customers via ONLINE platforms (100M+ users) – Search (Google, Baidu) – Social (Facebook, Twitter, LinkedIn) – Mobile (Apple, Android) – ECom (Amazon, Alibaba, eBay/PayPal) – Media (YouTube, Pinterest, Instagram) – Comm (Email, IM/Chat, Voice, SMS, etc) • LOTS of little bets: Accelerators, Angels, Angel List, Small Exits – Y Combinator, TechStars, 500 Startups – Funding + Co-working + Mentoring -> Design, Data, Distribution – “Fast, Cheap Fail”, network effects, quantitative + iterative investments
DO Marketing! 
 (It’s Not Evil) • Marketing is Both Qualitative + Quantitative • Qualitative: Create Emotion, Drive Action • Quantitative: Measure Results of Action • Design (UX) & Distribution (MKTG) Matter • Volume (#), Cost ($), Conversion (%)
[Startup Metrics 4 Pirates]
Just Gimme the GOOD Metrics. Users, Pages, Clicks, Emails, $$$...? Q: Which of these is best? How do you know? • 1,000,000 one-time, unregistered unique visitors • 500,000 visitors who view 2+ pages / stay 10+ sec • 200,000 visitors who clicked on a link or button • 20,000 registered users w/ email address • 2,000 passionate fans who refer 5+ users / mo. • 1,000 monthly subscribers @ $5/mo the good stuff.
Lean Startup -> Startup Metrics • Talk to Customers; Discover Problems • Progress ≠ Features (Less = More) • Fast, Frequent Iteration (+ Feedback Loop) • Focus on Product/Market Fit • Measure Conversion (compare 2+ alternatives) • Track Metrics that are Simple & Actionable
Discover Customers
 (Steve Blank, SteveBlank.com)
LEARN BUILD MEASURE IDEAS CODE DATA Iterate.
 (Eric Ries, TheLeanStartup.com)
AARRR!: Startup Metrics Model Website.com Revenue $$$ Biz DevAds, Lead Gen, Subscriptions, ECommerce ACQUISITION SEO SEM Apps & Widgets Affiliates Email PR Biz Dev Campaigns, Contests Direct, Tel, TV Social Networks Blogs Domains Retention Emails & Alerts System Events & Time-based Features Blogs, RSS, News Feeds
Startup Metrics for Pirates • Acquisition: users come to site from various channels • Activation: users enjoy 1st visit: "happy” experience • Retention: users come back, visit site multiple times • Referral: users like product enough to refer others • Revenue: users conduct some monetization behavior AARRR! (note: If you’re in a hurry, Google “Startup Metrics” & watch 5m video)
One Step at a Time. 1. Make a Good Product: Activation & Retention 2. Market the Product: Acquisition & Referral 3. Make Money: Revenue & Profitability
Startup Challenges Startups have problems in 3 key areas: • Management: Set Priorities, Define Key Metrics • Product: Build “Right” Features. Measure, Iterate. • Marketing: Distribution, Distribution, Distribution. (Search, Social, Mobile)
[ Constructing MVP ]
Role: Founder / CEO Q: Which Customers? Problems? Metrics? 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 • Test, Measure, Iterate to Improve
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 $$$ • Achieve High Cust Value + Low ACQ$ @ Scale
What is Minimum Viable Product ? MVP = F(Customer, Problem, Time or $$$) • Focus on CUSTOMER – Qualitative Discovery, Quantitative Validation • Get to know habits, problems, desires (FUN MATTERS) – what causes pain? what causes pleasure? • Ship the simplest, fastest solution that solves the problem; better or cheaper or faster than the available competition. • Define 1-5 TESTABLE Conversion Metrics of Value – Attention/Usage (session time, clicks) – Customer Profle Data (email, connect, profile) - Revenue (direct or indirect) - Retention (visits over time, cohort behavior) - Referral (users evangelize to other users)
Example Conversion Metrics
 (note: *not* actuals… your mileage may vary) Stage Conversion Status Conv. % Est. Value (*not* cost) Acquisition Visitors -> Site/Widget/Landing Page (2+ pages, 10+ sec, 1+ clicks = don’t abandon) 60% $.05 Activation “Happy” 1st Visit; Usage/Signup (clicks/time/pages, email/profile reg, feature usage) 15% $.25 Retention Users Come Back; Multiple Visits (1-3x visits/mo; email/feed open rate / CTR) 5% $1 Referral Users Refer Others (cust sat >=8; viral K factor > 1; ) 1% $5 Revenue Users Pay / Generate $$$ (first txn, break-even, target profitability) 2% $50
[ Getting 2 PMF ]
Role: Product / Eng / Design Q: What Features to Build? Why? When are you “Done”? A: Easy-to-Find, Fun/Useful, Unique Features that Increase Conversion (stop iterating when increase decelerates) • Wireframes = Conversion Steps • Measure, A/B Test, Iterate FAST (daily/weekly) • Optimize for Conversion Improvement – 80% on existing feature optimization – 20% on new feature development
What is Product/Market Fit ? PMF = F(Customer, Solution, Alternatives*) • Product / Market Fit occurs when: – Customers like your stuff better than other options – Not static, Not optimal – just Local Max F(customers, solution, time) – make sure you’re moving in optimal direction 2 local max • Q: what competitive solutions are available? – … that your customers know about? – how are you diff/same? – in ways that people care about? (will pay for)
[ Testing 4 AUX ]
Discover Meaning
 Why Should Users CARE About Your Product? Kathy Sierra: “Creating Passionate Users”
Discover Meaning
 Keywords, Images, Call-to-Action Top 10 - 100 words • Your Brand / Products • Customer Needs / Benefits • Competitor’s Brand / Products • Semantic Equivalents • Misspellings Relevant images • People • Products • Problems • Solutions Call-to-Action • Words • Images • Context • Button/Link • Emotion Result • Positive? • Negative? • Neutral (= Death) • A/B test & Iterate
How To Tell if Design/UX is Good? AUX = F(Customer, Design/UX, Metrics) • If Users Use Your Product Then It’s GOOD. – Define Metrics, Measurability for Design / UX – Focus on Psychology of User – Relative to Competitive Alternatives (that your customers know about) – Keep Testing 4 Awesomeness • RAMP Mktg & $$$ AFTER it’s clear your MVP is: – Functional = useful for >1 customers – Awesome (enough, see above) – Differentiated = better than other stuff availabile
[ Metrics 4 ACQ ]
Role: Marketing / Sales Q: What channels? Which users? Why? A: High Volume (#), Low Cost ($), High Conv (%) • Design & Test Multiple Marketing Channels + Campaigns • Seek out channels with positive unit economics, scalability • Select & Focus on Best-Performing Channels & Themes • Optimize for conversion to target CTAs, not just site/landing page • Match/Drive channel cost to/below revenue potential • Low-Hanging Fruit: – Blogs – SEO/SEM – Landing Pages – Automated Emails
Distribution Platforms Customer Reach: 100M-1B+ • Search: Google, Baidu, Yahoo/Bing, Yandex • Social: Facebook, Twitter, LinkedIn, TenCent/QQ, WeChat • Mobile: Apple (iOS), Android • Media: Video (YouTube), Photos (Instagram, Pinterest), Blogs • Comm: SMS, IM (WeChat, WhatsApp), Skype, Phone/Voice, etc
MAARRRketing Plan Marketing Plan = Target Customer Acquisition Channels • 3 Important Factors = Volume (#), Cost ($), Conversion (%) • Measure conversion to target customer actions • Test audience segments, campaign themes, Call-To-Action (CTAs) [Gradually] Match Channel Costs => Revenue Potential • Increase Vol. & Conversion, Decrease Cost, Optimize for Revenue Potential • Avg Txn Value (ATV), Ann Rev Per User (ARPU), Cust Lifetime Value (CLV) • Design channels that (eventually) cost <20-50% of target ATV, ARPU, CLV Consider Costs, Scarce Resource Tradeoffs • Actual $ expenses • Marketing time & resources • Product/Engineering time & resources • Cashflow timing of expense vs. revenue, profit ACQ = F(Customer, Campaign, Vol, Cost, Conv)
[ What is WINNING? ]
Choose #WINNING Metrics WIN = F(Customer, Usage, Dist, Revenue) • after MVP functional use, several options: – better Usage – Activation & Retention (AUX) – more Users -- Distribution / Acquisition – more Money --- Monetization – more Profit — Margin • understand ACQ$ vs REV$, optimize 4 short-term – higher volume usually a priority – costs may change as volume increases
[ The Lean Investor ]
Startup 2.0: 
 “Lean Investor” Model Method: Invest in startups using incremental investment, iterative development. Start with lots of small experiments, filter out failure, and expand investment upon success. • Incubator: $0-100K (“Product Viability”) • Seed: $100K-$2M (“Expand Distribution”) • Venture: $1M-$10M (“Maximize Revenue”)
Investment #1: Incubate
 (“Product”) • Structure – 1-3 founders – $0-$100K investment – Incubator environment: multiple peers, mentors/advisors • Build Functional Prototype / “Minimum Viable Product” (MVP): – Concept->Alpha, ~3-6 months – Develop Minimal Critical Feature Set => Get to “It Works” – Instrument Basic Dashboard, Conversion Metrics – Test Cust. Adoption (10-1000 users) / Cust. Satisfaction (Scale: 1-10) • Demonstrate Concept, Reduce Product Risk, Test Functional Use • Develop Metrics & Filter for Follow-on Investment
Investment #2: Seed
 (“Market”)• Structure – 2-5 person team – $100K-$2M investment – Syndicate of Angel Investors / Small VC Funds • Improve Product, Expand Market, Test Revenue: – Alpha->Beta, ~6-12 months – Customer Sat ≥ 6 => Get to “Doesn’t Suck” – Setup A/B Testing Framework, Optimize Conversion – Test Marketing Campaigns, Cust Acqstn Channels • Prove Solution/Benefit, Assess Market Size • Test Channel Cost, Revenue Opportunity • Determine Org Structure, Key Hires
Investment #3: Venture
 (“Revenue”) • Structure – 5-25 person team – $1M-$10M investment – VC Investors • Make Money, Get to Sustainability: – Beta->Production, 12-18 months – Customer Sat ≥ 8 => “It Rocks, I’ll Tell My Friends” – MktgPlan => Predictable Channels / Campaigns + Budget – Scalability & Infrastructure, Customer Service & Operations – Connect with Distribution Partners • Prove/Expand Market, Operationalize Business • Future Milestones: Profitable/Sustainable, Exit Options
Q&A? Âť Questions? Âť Answers: $1 Âť Correct Answers: $10 Âť Stupid Look on my face: FREE!
Appendix (note the following slides are a bit old and i haven’t updated them in quite a while… sorry ;)
Startup Metrics Activation
Website.com Activation Criteria: • 10-30+ seconds • 2-3+ page views • 3-5+ clicks • 1 key feature usage do LOTS of landing page & A/B tests – make lots of dumb guesses & iterate FAST SEO SEM Apps & Widgets Affiliates Email PR Biz Dev Campaigns, Contests Direct, Tel, TV Social Networks Blogs Domains Activation
Activation
 What do users do on their first visit? Example Activation Goals • Click on something! • Account sign up / Emails • Referrals / Tell a friend • Widgets / Embeds • Low Bounce Rate Activation Tips • Less is more • Focus on user experience / usability • Provide incentives & call to actions • Test and iterate continuously
Activation
 What do users do on their first visit? Key Metrics to Track ✓ Pages per visit ✓ Time on site ✓ Conversions
Activation Tools Crazy Egg (Visual Click Mapping) http://crazyegg.com Google Website Optimizer (A/B & Multivariate Testing) http://google.com/websiteoptimizer Marketo.com (B2B Lead Generation Management) http://marketo.com Resources Experimentation and Testing: A Primer kaushik.net/avinash/2006/05/experimentation-and-testing-a-primer.html Landing Page Design Toolbox: 100 Tips & Tools http://tinyurl.com/326co6 Landing Page Tutorials & Case Studies http://www.copyblogger.com/landing-pages/ 101 Easy Easy to use Google Website Optimizer http://conversion-rate-experts.com/articles/101-google-website-optimizer-tips/
Startup Metrics Retention
Website.com SEO SEM Apps & Widgets Affiliates Email PR Biz Dev Campaigns, Contests Direct, Tel, TV Social Networks Blogs Domains Emails & Alerts System Events & Time-based Features Blogs, RSS, News Feeds Automated emails: • lifecycle emails @ +3, +7, +30d • status / “best of” weekly/monthly • “something happened” emails BUT: • make it easy to unsubscribe Tip on emails: • > 80% or more on SUBJECT LINE • < 20% or less on BODY TEXT Retention
Cohort Analysis: • Distrib of Visits over Time • Rate of Decay • Effective Customer Lifecycle Retention Methods ✓ Automated Emails * Track open rate / CTR / Quantity ✓ RSS / News Feeds * Track % viewed / CTR / Quantity ✓ Widgets / Embeds * Track impressions / CTR / Quantity Retention
 How do users come back? How often?
Example Retention Goals • 1 - 3+ visits per month • 20% open rate / 2% CTR • High deliverability / Low spam rating • Long customer life cycle / Low decay • Identify fanatics and cheerleaders Retention Tips • Email is simple and it works • BUT make unsubscribe easy • 80% subject line / 20% body text • ACTUALLY 99% subject line / 1% body text • Fanatics = virality + affiliate channel (bloggers?) Retention
 How do users come back? How often?
Retention
 How do users come back? How often? Key Metrics to Track ✓ Source ✓ Quantity ✓ Conversions ✓ Visitor Loyalty ✓ Session Length
Retention Tools Campaign Monitor / MailChimp (email newsletter software) campaignmonitor.com / mailchimp.com TriggerMail (site-centric email management) triggermail.net Litmus (email and website design testing - clients / browsers) litmusapp.com Resources 30 free HTML email templates campaignmonitor.com/resources/templates.aspx Best Practices in Writing Email Subject Lines mailchimp.com/resources/best-practices-in-writing-email-subject- lines.phtml Learning Viral: Viral Emails of Tagged.com okdork.com/2008/04/10/learning-viral-studying-taggedcom/
Startup Metrics Acquisition
Website.com Marketing Channels: • largest-volume (#) • lowest-cost ($) • best-performing (%) Acquisition SEO SEM Apps & Widgets Affiliates Email PR Biz Dev Campaigns, Contests Direct, Tel, TV Social Networks Blogs Domains
Acquisition
 Where are users coming from? Acquisition Methods ✓ SEO / SEM ✓ Blogs ✓ Email ✓ Social Media & Social Networks ✓ Domains
Acquisition
 Keyword Vocabulary Top 10 - 100 words • Your Brand / Products • Customer Needs / Benefits • Competitor’s Brand / Products • Semantic Equivalents • Misspellings Things to analyze • Sources • Volume • Cost • Conversion
Acquisition
 Where are users coming from? Key Metrics to Track ✓ Quantity (#) ✓ Cost ($) ✓ Conversions (%) Example
Acquisition Tools Google Analytics (web analytics) google.com/analytics Google Keyword Tool (keyword research tool) adwords.google.com/select/KeywordToolExternal SEO Book Tools (SEO related tools) tools.seobook.com Resources SEO Book Blog seobook.com/blog The Social Media Manual: Read Before You Play searchengineland.com/071120-144401.php Strategies to ruthlessly acquire users andrewchen.typepad.com/andrew_chens_blog/ 2007/04/10_obvious_stra.html
Startup Metrics Referral
Website.com Acquisition SEO SEM Apps & Widgets Affiliates Email PR Biz Dev Campaigns, Contests Direct, Tel, TV Social Networks Blogs Domains Retention Emails & Alerts System Events & Time-based Features Blogs, RSS, News Feeds Focus on driving referrals *after* users have a “happy” experience; avg score >= 8 out of 10 Referral
Referral
 How do users refer others? Referral Methods ✓ Send to Friend: Email / IM ✓ Social Media ✓ Widgets / Embeds ✓ Affiliates
Referral
 Viral Growth Factor Viral Growth Factor = X * Y * Z X = % of users who invite other people Y = average # of people that they invited Z = % of users who accepted an invitation A viral growth factor > 1 means an exponential organic user acquisition.
Referral Tools Gigya (social media distribution & tracking tool) gigya.com ShareThis / AddThis (sharing buttons) sharethis.com / addthis.com GetMyContacts (PHP contacts importing & invitation software) getmycontacts.com Resources Seven Ways to GO VIRAL lsvp.wordpress.com/2007/03/02/seven-ways-to-go-viral/ What’s your viral loop? Understanding the engine of adoption andrewchen.typepad.com/andrew_chens_blog/2007/07/whats-your- vira.html Metrics: Where Users Come From slideshare.net/guest2968b8/rockyou-snap-summit-32508
Startup Metrics Revenue
Website.com Revenue $$$ Biz DevAds, Lead Gen, Subscriptions, ECommerce Acquisition SEO SEM Apps & Widgets Affiliates Email PR Biz Dev Campaigns, Contests Direct, Tel, TV Social Networks Blogs Domains Retention Emails & Alerts System Events & Time-based Features Blogs, RSS, News Feeds Revenue This is the part *you* still have to figure out…
Revenue
 How do you make money? Revenue Tips • Don’t Rely on AdSense (only) • Start Free => 2% “Freemium” • Subscription / Recurring transactions • Qualify your customers -> Lead generation (arbitrage) • Sell something! (physical or virtual)
Revenue Resources & Tools Revenue Metrics (Andrew Chen) http://tinyurl.com/47r63a How to Create a Profitable “Freemium” Startup (Andrew Chen) http://tinyurl.com/8z9ygk 2008 Affiliate Marketing Review (Scott Jangro) http://tinyurl.com/86wak4

 Links & Resources Additional References: • Influence: The Psychology of Persuasion Robert Cialdini (book) • The Mating Mind Geoffrey Miller (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) • Understanding Comics Scott McCloud (book)

More Related Content

PPT
Startup Metrics 4 Pirates (Wildfire Interactive, May 2012)
byDave McClure
 
PPT
Silicon Valley 2.0: The Lean VC
byDave McClure
 
PDF
Startup Metrics for Pirates (FounderX, May 2016)
byDave McClure
 
PPT
Startup Metrics 4 Pirates (July 2010)
byDave McClure
 
PDF
Building 500 Startups + Changes in VC
byDave McClure
 
PPT
Startup 2.0: From Silicon Valley to Hong Kong
byDave McClure
 
PPT
Startup Metrics for Pirates (Sept 2010, Vancouver)
byDave McClure
 
PPT
Startup Metrics 4 Pirates (May 2010)
byDave McClure
 
Startup Metrics 4 Pirates (Wildfire Interactive, May 2012)
byDave McClure
 
Silicon Valley 2.0: The Lean VC
byDave McClure
 
Startup Metrics for Pirates (FounderX, May 2016)
byDave McClure
 
Startup Metrics 4 Pirates (July 2010)
byDave McClure
 
Building 500 Startups + Changes in VC
byDave McClure
 
Startup 2.0: From Silicon Valley to Hong Kong
byDave McClure
 
Startup Metrics for Pirates (Sept 2010, Vancouver)
byDave McClure
 
Startup Metrics 4 Pirates (May 2010)
byDave McClure
 

What's hot

PPT
The Lean VC, Global Edition (March 2011, London)
byDave McClure
 
PPT
The Lean VC: a Silicon Valley 2.0 Story
byDave McClure
 
PPTX
Changes in Venture Capital & Startup Ecosystem (#H2Osummit)
byDave McClure
 
PPT
Hong Kong 2.0: The Lean VC
byDave McClure
 
PDF
Building Startup Ecosystems (Berlin, June 2015)
byDave McClure
 
PPT
Startupmetrics 4 Pirates (Haas April, 2010)
byDave McClure
 
PPT
Startup Metrics for Pirates (Foo Camp 2008)
byDave McClure
 
PPT
Startup Metrics For Pirates: AARRR! (Startonomics SF Oct 2008)
byDave McClure
 
PDF
Building Startup Ecosystems (Riyadh, Nov 2014)
byDave McClure
 
PDF
Changes in Venture Capital & Tech Startups (Nov 2013, Mumbai)
byDave McClure
 
PPT
Startup Metrics for Pirates (Nov 2010)
byDave McClure
 
PPT
Metrics-Driven Marketing Strategy
byDave McClure
 
PPT
Startup Metrics for Pirates (March 2009)
byDave McClure
 
PDF
Lean, Little Cockroach Startup
byDave McClure
 
PDF
Silicon Valley 2.0: Make Lots of Little Bets.
byDave McClure
 
PDF
Startup Ecosystems: Local vs. Global?
byDave McClure
 
PDF
Building Startup Ecosystems & The Rise of Micro-VCs
byDave McClure
 
PPT
US Startup Investment Market (Startonomics Tokyo, June 2009)
byDave McClure
 
PPT
The Lean VC (Sapporo, May 2011)
byDave McClure
 
PDF
Build Your Own Valley: Engineering Startup & Investor Ecosystems in Emerging ...
byDave McClure
 
The Lean VC, Global Edition (March 2011, London)
byDave McClure
 
The Lean VC: a Silicon Valley 2.0 Story
byDave McClure
 
Changes in Venture Capital & Startup Ecosystem (#H2Osummit)
byDave McClure
 
Hong Kong 2.0: The Lean VC
byDave McClure
 
Building Startup Ecosystems (Berlin, June 2015)
byDave McClure
 
Startupmetrics 4 Pirates (Haas April, 2010)
byDave McClure
 
Startup Metrics for Pirates (Foo Camp 2008)
byDave McClure
 
Startup Metrics For Pirates: AARRR! (Startonomics SF Oct 2008)
byDave McClure
 
Building Startup Ecosystems (Riyadh, Nov 2014)
byDave McClure
 
Changes in Venture Capital & Tech Startups (Nov 2013, Mumbai)
byDave McClure
 
Startup Metrics for Pirates (Nov 2010)
byDave McClure
 
Metrics-Driven Marketing Strategy
byDave McClure
 
Startup Metrics for Pirates (March 2009)
byDave McClure
 
Lean, Little Cockroach Startup
byDave McClure
 
Silicon Valley 2.0: Make Lots of Little Bets.
byDave McClure
 
Startup Ecosystems: Local vs. Global?
byDave McClure
 
Building Startup Ecosystems & The Rise of Micro-VCs
byDave McClure
 
US Startup Investment Market (Startonomics Tokyo, June 2009)
byDave McClure
 
The Lean VC (Sapporo, May 2011)
byDave McClure
 
Build Your Own Valley: Engineering Startup & Investor Ecosystems in Emerging ...
byDave McClure
 

Viewers also liked

PDF
Venture Capital 2.0 (Delhi, Feb 2016)
byDave McClure
 
PDF
10 Challenges for Emerging Market Startup Ecosystems (Cairo)
byDave McClure
 
PDF
500 Startups Update + VC 101 (Investor Education)
byDave McClure
 
PDF
Building Startup Ecosystems (Guadalajara, July 2015)
byDave McClure
 
PDF
500 Startups #DemoDay #Batch15
byDave McClure
 
PDF
10 Challenges for Emerging Market Startup Ecosystems
byDave McClure
 
PDF
500 Startups corporate overview deck (2.23.2016)
by500 Startups
 
PDF
From 500 Startups to 500 VCs
byDave McClure
 
PDF
Startup & VC Tech Trends
byDave McClure
 
PDF
Venture Capital Unlocked (Stanford) / Venture Capital 2.0
byDave McClure
 
PDF
Bringing Silicon Valley to LatAm: Startup Ecosystems & Investment
byDave McClure
 
PDF
10 Challenges for Emerging Market Startup Ecosystems
byDave McClure
 
PDF
Investment Thesis Fundamentals (April 2016)
byDave McClure
 
Venture Capital 2.0 (Delhi, Feb 2016)
byDave McClure
 
10 Challenges for Emerging Market Startup Ecosystems (Cairo)
byDave McClure
 
500 Startups Update + VC 101 (Investor Education)
byDave McClure
 
Building Startup Ecosystems (Guadalajara, July 2015)
byDave McClure
 
500 Startups #DemoDay #Batch15
byDave McClure
 
10 Challenges for Emerging Market Startup Ecosystems
byDave McClure
 
500 Startups corporate overview deck (2.23.2016)
by500 Startups
 
From 500 Startups to 500 VCs
byDave McClure
 
Startup & VC Tech Trends
byDave McClure
 
Venture Capital Unlocked (Stanford) / Venture Capital 2.0
byDave McClure
 
Bringing Silicon Valley to LatAm: Startup Ecosystems & Investment
byDave McClure
 
10 Challenges for Emerging Market Startup Ecosystems
byDave McClure
 
Investment Thesis Fundamentals (April 2016)
byDave McClure
 

Similar to Startup Metrics for Pirates (Nov 2015, Platzi)

PPT
Startup Metrics for Pirates (Brazil, Nov 2011)
byDave McClure
 
PPT
Startup metrics for entrepreneurs
byNeolo Hosting
 
PPT
DO Marketing (It's Not Evil)
byDave McClure
 
PPT
Startup Metrics for Pirates (KAUST, Nov 2013)
byDave McClure
 
PPT
Startup Metrics 4 Pirates (London, March 2011)
byDave McClure
 
PPT
Startup Metrics 4 Pirates (Brazil, April 2011)
byDave McClure
 
PPT
Startup Metrics 4 Pirates (July 2011)
byDave McClure
 
PDF
Startupmetrics4pirates dave mcclure
byYounghwan Cheon
 
PPT
Startup Metrics 4 Pirates 2.0 (March 2011, SXSW)
byDave McClure
 
PPT
Startup Metrics for Pirates (Chicago, Aug 2010)
byDave McClure
 
PPT
Startup Metrics for Pirates (Twiistup, Jan 2010)
byDave McClure
 
PPT
Startup Metrics for Pirates (SF, Jan 2010)
byDave McClure
 
PPT
Marketing Metrics 4 Pirates (July 2010)
byDave McClure
 
PPT
Startup Metrics for Pirates / KILL a Feature (FOWA London, Oct 2009)
byDave McClure
 
PPT
Startup Metrics 4 Pirates (DogPatch Labs, Boston, March 2010)
byDave McClure
 
PPT
Silicon Valley 2.0: The Startup Metrics Revolution (Tokyo, December 2008)
byDave McClure
 
PPT
Startup Metrics for Pirates (Aug 2010)
byDave McClure
 
PPT
Startup Metrics 4 Pirates (Montreal, May 2010)
byDave McClure
 
PPT
Startup Metrics for Pirates (Startonomics Beijing, June 2009)
byDave McClure
 
PPT
Startup Metrics for Pirates (Startonomics Hawaii Nov 2009)
byDave McClure
 
Startup Metrics for Pirates (Brazil, Nov 2011)
byDave McClure
 
Startup metrics for entrepreneurs
byNeolo Hosting
 
DO Marketing (It's Not Evil)
byDave McClure
 
Startup Metrics for Pirates (KAUST, Nov 2013)
byDave McClure
 
Startup Metrics 4 Pirates (London, March 2011)
byDave McClure
 
Startup Metrics 4 Pirates (Brazil, April 2011)
byDave McClure
 
Startup Metrics 4 Pirates (July 2011)
byDave McClure
 
Startupmetrics4pirates dave mcclure
byYounghwan Cheon
 
Startup Metrics 4 Pirates 2.0 (March 2011, SXSW)
byDave McClure
 
Startup Metrics for Pirates (Chicago, Aug 2010)
byDave McClure
 
Startup Metrics for Pirates (Twiistup, Jan 2010)
byDave McClure
 
Startup Metrics for Pirates (SF, Jan 2010)
byDave McClure
 
Marketing Metrics 4 Pirates (July 2010)
byDave McClure
 
Startup Metrics for Pirates / KILL a Feature (FOWA London, Oct 2009)
byDave McClure
 
Startup Metrics 4 Pirates (DogPatch Labs, Boston, March 2010)
byDave McClure
 
Silicon Valley 2.0: The Startup Metrics Revolution (Tokyo, December 2008)
byDave McClure
 
Startup Metrics for Pirates (Aug 2010)
byDave McClure
 
Startup Metrics 4 Pirates (Montreal, May 2010)
byDave McClure
 
Startup Metrics for Pirates (Startonomics Beijing, June 2009)
byDave McClure
 
Startup Metrics for Pirates (Startonomics Hawaii Nov 2009)
byDave McClure
 

More from Dave McClure

PDF
How to VC: Creating a VC fund portfolio model
byDave McClure
 
PDF
VC Marketing and Branding Strategies
byDave McClure
 
PDF
The Helpful VC (June 2019)
byDave McClure
 
PDF
Skip the J-Curve: An Intro to Venture Capital Secondary
byDave McClure
 
PDF
Tech and Venture Capital in the Time of Corona
byDave McClure
 
PDF
The Helpful VC
byDave McClure
 
PDF
Building #500STRONG
byDave McClure
 
PDF
Take a Walk on the Dark Side: Branding for Startups & Sith Lords
byDave McClure
 
PDF
Farming Unicorns: Building Startup & Investor Ecosystems for Emerging Markets
byDave McClure
 
PDF
Farming Unicorns in Emerging Markets (Dubai, Oct 2016) #Gitex
byDave McClure
 
PDF
The Unicorn Hedge: Why Are Corporations Buying Unicorns? (Madrid, Oct 2016)
byDave McClure
 
PDF
Farming Unicorns: Building Startup & Investor Ecosystems
byDave McClure
 
PDF
500 Startups #Batch17 #DemoDay: "Beauty and the GEEK"
byDave McClure
 
PDF
Farming Unicorns: Building Startup & Investor Ecosystems (Stanford, June 2016)
byDave McClure
 
PDF
Dinosaurs vs Unicorns aka "Bubble My Ass, All Dinosaurs Gonna Die" (London, J...
byDave McClure
 
PDF
Farming Unicorns: Building Startup & Investor Ecosystems (Madrid, June 2016)
byDave McClure
 
PDF
Farming Unicorns: Building Startup & Investor Ecosystems (Dublin, June 2016)
byDave McClure
 
PPTX
500 Startups / Batch 16 Demo Day (Q1/2016 update)
byDave McClure
 
PDF
Farming Unicorns: Building Startup & Investor Ecosystems in Emerging Markets ...
byDave McClure
 
PDF
Build Your Own Valley: Engineering Startup & Investor Ecosystems in Emerging ...
byDave McClure
 
How to VC: Creating a VC fund portfolio model
byDave McClure
 
VC Marketing and Branding Strategies
byDave McClure
 
The Helpful VC (June 2019)
byDave McClure
 
Skip the J-Curve: An Intro to Venture Capital Secondary
byDave McClure
 
Tech and Venture Capital in the Time of Corona
byDave McClure
 
The Helpful VC
byDave McClure
 
Building #500STRONG
byDave McClure
 
Take a Walk on the Dark Side: Branding for Startups & Sith Lords
byDave McClure
 
Farming Unicorns: Building Startup & Investor Ecosystems for Emerging Markets
byDave McClure
 
Farming Unicorns in Emerging Markets (Dubai, Oct 2016) #Gitex
byDave McClure
 
The Unicorn Hedge: Why Are Corporations Buying Unicorns? (Madrid, Oct 2016)
byDave McClure
 
Farming Unicorns: Building Startup & Investor Ecosystems
byDave McClure
 
500 Startups #Batch17 #DemoDay: "Beauty and the GEEK"
byDave McClure
 
Farming Unicorns: Building Startup & Investor Ecosystems (Stanford, June 2016)
byDave McClure
 
Dinosaurs vs Unicorns aka "Bubble My Ass, All Dinosaurs Gonna Die" (London, J...
byDave McClure
 
Farming Unicorns: Building Startup & Investor Ecosystems (Madrid, June 2016)
byDave McClure
 
Farming Unicorns: Building Startup & Investor Ecosystems (Dublin, June 2016)
byDave McClure
 
500 Startups / Batch 16 Demo Day (Q1/2016 update)
byDave McClure
 
Farming Unicorns: Building Startup & Investor Ecosystems in Emerging Markets ...
byDave McClure
 
Build Your Own Valley: Engineering Startup & Investor Ecosystems in Emerging ...
byDave McClure
 

Recently uploaded

PPT
software-security-intro in information security.ppt
byismaeelsahib032
 
PDF
Our Digital Tribe_ Cultivating Connection and Growth in Our Slack Community 🌿...
bysanjeetmishra30
 
PDF
Day 3 - Data and Application Security - 2nd Sight Lab Cloud Security Class
by2nd Sight Lab
 
PDF
December Patch Tuesday
byIvanti
 
PPTX
AI's Impact on Cybersecurity - Challenges and Opportunities
byYasir Naveed Riaz
 
PPTX
Chapter 3 Introduction to number system.pptx
byGetachewAbera9
 
PDF
Day 2 - Network Security ~ 2nd Sight Lab ~ Cloud Security Class ~ 2020
by2nd Sight Lab
 
PDF
Decoding the DNA: The Digital Networks Act, the Open Internet, and IP interco...
byCSUC - Consorci de Serveis Universitaris de Catalunya
 
PPTX
Cybercrime in the Digital Age: Risks, Impact & Protection
byYasir Naveed Riaz
 
PPTX
Data Privacy and Protection: Safeguarding Information in a Connected World
byYasir Naveed Riaz
 
PPTX
Cybersecurity Best Practices - Step by Step guidelines
byYasir Naveed Riaz
 
PDF
Dev Dives: AI that builds with you - UiPath Autopilot for effortless RPA & AP...
byUiPathCommunity
 
PDF
Energy Storage Landscape Clean Energy Ministerial
bySurajitBanerjee38
 
PDF
The year in review - MarvelClient in 2025
bypanagenda
 
PDF
Data Virtualization in Action: Scaling APIs and Apps with FME
bySafe Software
 
PDF
Day 1 - Cloud Security Strategy and Planning ~ 2nd Sight Lab ~ Cloud Security...
by2nd Sight Lab
 
PDF
Making Sense of Raster: From Bit Depth to Better Workflows
bySafe Software
 
PPTX
wob-report.pptxwob-report.pptxwob-report.pptx
byssuser0d171c
 
PPTX
cybercrime in Information security .pptx
byismaeelsahib032
 
PPTX
From Backup to Resilience: How MSPs Are Preparing for 2026
byMSP360
 
software-security-intro in information security.ppt
byismaeelsahib032
 
Our Digital Tribe_ Cultivating Connection and Growth in Our Slack Community 🌿...
bysanjeetmishra30
 
Day 3 - Data and Application Security - 2nd Sight Lab Cloud Security Class
by2nd Sight Lab
 
December Patch Tuesday
byIvanti
 
AI's Impact on Cybersecurity - Challenges and Opportunities
byYasir Naveed Riaz
 
Chapter 3 Introduction to number system.pptx
byGetachewAbera9
 
Day 2 - Network Security ~ 2nd Sight Lab ~ Cloud Security Class ~ 2020
by2nd Sight Lab
 
Decoding the DNA: The Digital Networks Act, the Open Internet, and IP interco...
byCSUC - Consorci de Serveis Universitaris de Catalunya
 
Cybercrime in the Digital Age: Risks, Impact & Protection
byYasir Naveed Riaz
 
Data Privacy and Protection: Safeguarding Information in a Connected World
byYasir Naveed Riaz
 
Cybersecurity Best Practices - Step by Step guidelines
byYasir Naveed Riaz
 
Dev Dives: AI that builds with you - UiPath Autopilot for effortless RPA & AP...
byUiPathCommunity
 
Energy Storage Landscape Clean Energy Ministerial
bySurajitBanerjee38
 
The year in review - MarvelClient in 2025
bypanagenda
 
Data Virtualization in Action: Scaling APIs and Apps with FME
bySafe Software
 
Day 1 - Cloud Security Strategy and Planning ~ 2nd Sight Lab ~ Cloud Security...
by2nd Sight Lab
 
Making Sense of Raster: From Bit Depth to Better Workflows
bySafe Software
 
wob-report.pptxwob-report.pptxwob-report.pptx
byssuser0d171c
 
cybercrime in Information security .pptx
byismaeelsahib032
 
From Backup to Resilience: How MSPs Are Preparing for 2026
byMSP360
 

Startup Metrics for Pirates (Nov 2015, Platzi)

  • 1.
    Startup Metrics forPirates @DaveMcClure Founding Partner, 500 Startups http://500.co http://500hats.com http://slideshare.net/dmc500hats AARRR!
  • 2.
    Dave McClure
 Founding Partner& Troublemaker, 500 Startups 00’s & 10’s: • VC: Founders Fund, Facebook fbFund, 500 Startups • Angel: Mashery, Mint.com, SlideShare, Twilio • Marketing: PayPal, Simply Hired, Mint.com, O’Reilly 80’s & 90’s: • Entrepreneur: Aslan Computing (acq’d by Servinet/Panurgy) • Developer: Windows / SQL DB consultant (Intel, MSFT) • Engineer: Johns Hopkins‘88, BS Eng / Applied Math
  • 3.
    • What is500? – $200M under management – 100+ people / 30 investing partners / 18 Countries – 2500+ Founders / 250+ Mentors • 1300+ Portfolio Co’s / 50+ Countries – Wildfire (acq GOOG, $350M) – MakerBot (acq SSYS, $400M) – Viki (acq Rakuten, $200M) – Simple (acq BBVA, $117M) – Credit Karma (~$3.5B) – GrabTaxi ($1B+) – Twilio ($1B+) – Ipsy – SendGrid – VivaReal – Udemy – Zozi – The RealReal – Virool – BarkBox – Tradesy 500 Startups
 Global Seed Fund & Startup Accelerator
  • 4.
  • 5.
    Topics • Basic Conceptsof “Startup Metrics 4 Pirates” • 3 Steps to AARRR: Product, Market, Revenue • Constructing MVP: Just ONE Feature? • Design (UX) & Distribution (MKTG) • Winning = Users, Revenue, Profit?
  • 6.
    Lean Startup:
 Simpler, Faster,Cheaper, Smarter 1. Startup Costs = Lower. 2. # Users, Bandwidth = More. 3. Transaction $$$ = Better. Building Product => Cheaper, Faster, Better Getting Customers => Easier, More Measurable Iterative Product & Marketing Decisions based on Measured User Behavior
  • 7.
    Platforms 2.0
 Search, Social,Mobile, Video, Messaging
  • 8.
    Changes in TechStartups • LESS Capital required to build product, get to market – Dramatically reduced $$$ on servers, software, bandwidth – Crowdfunding, KickStarter, Angel List, Funders Club, etc – Cheap access to online platforms for 100M+ consumers, smallbiz, etc • MORE Customers via ONLINE platforms (100M+ users) – Search (Google, Baidu) – Social (Facebook, Twitter, LinkedIn) – Mobile (Apple, Android) – ECom (Amazon, Alibaba, eBay/PayPal) – Media (YouTube, Pinterest, Instagram) – Comm (Email, IM/Chat, Voice, SMS, etc) • LOTS of little bets: Accelerators, Angels, Angel List, Small Exits – Y Combinator, TechStars, 500 Startups – Funding + Co-working + Mentoring -> Design, Data, Distribution – “Fast, Cheap Fail”, network effects, quantitative + iterative investments
  • 9.
    DO Marketing! 
 (It’sNot Evil) • Marketing is Both Qualitative + Quantitative • Qualitative: Create Emotion, Drive Action • Quantitative: Measure Results of Action • Design (UX) & Distribution (MKTG) Matter • Volume (#), Cost ($), Conversion (%)
  • 10.
  • 11.
    Just Gimme theGOOD Metrics. Users, Pages, Clicks, Emails, $$$...? Q: Which of these is best? How do you know? • 1,000,000 one-time, unregistered unique visitors • 500,000 visitors who view 2+ pages / stay 10+ sec • 200,000 visitors who clicked on a link or button • 20,000 registered users w/ email address • 2,000 passionate fans who refer 5+ users / mo. • 1,000 monthly subscribers @ $5/mo the good stuff.
  • 12.
    Lean Startup ->Startup Metrics • Talk to Customers; Discover Problems • Progress ≠ Features (Less = More) • Fast, Frequent Iteration (+ Feedback Loop) • Focus on Product/Market Fit • Measure Conversion (compare 2+ alternatives) • Track Metrics that are Simple & Actionable
  • 13.
  • 14.
  • 15.
    AARRR!: Startup MetricsModel Website.com Revenue $$$ Biz DevAds, Lead Gen, Subscriptions, ECommerce ACQUISITION SEO SEM Apps & Widgets Affiliates Email PR Biz Dev Campaigns, Contests Direct, Tel, TV Social Networks Blogs Domains Retention Emails & Alerts System Events & Time-based Features Blogs, RSS, News Feeds
  • 16.
    Startup Metrics forPirates • Acquisition: users come to site from various channels • Activation: users enjoy 1st visit: "happy” experience • Retention: users come back, visit site multiple times • Referral: users like product enough to refer others • Revenue: users conduct some monetization behavior AARRR! (note: If you’re in a hurry, Google “Startup Metrics” & watch 5m video)
  • 17.
    One Step ata Time. 1. Make a Good Product: Activation & Retention 2. Market the Product: Acquisition & Referral 3. Make Money: Revenue & Profitability
  • 18.
    Startup Challenges Startups haveproblems in 3 key areas: • Management: Set Priorities, Define Key Metrics • Product: Build “Right” Features. Measure, Iterate. • Marketing: Distribution, Distribution, Distribution. (Search, Social, Mobile)
  • 19.
  • 20.
    Role: Founder /CEO Q: Which Customers? Problems? Metrics? 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 • Test, Measure, Iterate to Improve
  • 21.
    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 $$$ • Achieve High Cust Value + Low ACQ$ @ Scale
  • 22.
    What is MinimumViable Product ? MVP = F(Customer, Problem, Time or $$$) • Focus on CUSTOMER – Qualitative Discovery, Quantitative Validation • Get to know habits, problems, desires (FUN MATTERS) – what causes pain? what causes pleasure? • Ship the simplest, fastest solution that solves the problem; better or cheaper or faster than the available competition. • Define 1-5 TESTABLE Conversion Metrics of Value – Attention/Usage (session time, clicks) – Customer Profle Data (email, connect, profile) - Revenue (direct or indirect) - Retention (visits over time, cohort behavior) - Referral (users evangelize to other users)
  • 23.
    Example Conversion Metrics
 (note:*not* actuals… your mileage may vary) Stage Conversion Status Conv. % Est. Value (*not* cost) Acquisition Visitors -> Site/Widget/Landing Page (2+ pages, 10+ sec, 1+ clicks = don’t abandon) 60% $.05 Activation “Happy” 1st Visit; Usage/Signup (clicks/time/pages, email/profile reg, feature usage) 15% $.25 Retention Users Come Back; Multiple Visits (1-3x visits/mo; email/feed open rate / CTR) 5% $1 Referral Users Refer Others (cust sat >=8; viral K factor > 1; ) 1% $5 Revenue Users Pay / Generate $$$ (first txn, break-even, target profitability) 2% $50
  • 24.
  • 25.
    Role: Product /Eng / Design Q: What Features to Build? Why? When are you “Done”? A: Easy-to-Find, Fun/Useful, Unique Features that Increase Conversion (stop iterating when increase decelerates) • Wireframes = Conversion Steps • Measure, A/B Test, Iterate FAST (daily/weekly) • Optimize for Conversion Improvement – 80% on existing feature optimization – 20% on new feature development
  • 26.
    What is Product/MarketFit ? PMF = F(Customer, Solution, Alternatives*) • Product / Market Fit occurs when: – Customers like your stuff better than other options – Not static, Not optimal – just Local Max F(customers, solution, time) – make sure you’re moving in optimal direction 2 local max • Q: what competitive solutions are available? – … that your customers know about? – how are you diff/same? – in ways that people care about? (will pay for)
  • 27.
  • 28.
    Discover Meaning
 Why ShouldUsers CARE About Your Product? Kathy Sierra: “Creating Passionate Users”
  • 29.
    Discover Meaning
 Keywords, Images,Call-to-Action Top 10 - 100 words • Your Brand / Products • Customer Needs / Benefits • Competitor’s Brand / Products • Semantic Equivalents • Misspellings Relevant images • People • Products • Problems • Solutions Call-to-Action • Words • Images • Context • Button/Link • Emotion Result • Positive? • Negative? • Neutral (= Death) • A/B test & Iterate
  • 30.
    How To Tellif Design/UX is Good? AUX = F(Customer, Design/UX, Metrics) • If Users Use Your Product Then It’s GOOD. – Define Metrics, Measurability for Design / UX – Focus on Psychology of User – Relative to Competitive Alternatives (that your customers know about) – Keep Testing 4 Awesomeness • RAMP Mktg & $$$ AFTER it’s clear your MVP is: – Functional = useful for >1 customers – Awesome (enough, see above) – Differentiated = better than other stuff availabile
  • 31.
  • 32.
    Role: Marketing /Sales Q: What channels? Which users? Why? A: High Volume (#), Low Cost ($), High Conv (%) • Design & Test Multiple Marketing Channels + Campaigns • Seek out channels with positive unit economics, scalability • Select & Focus on Best-Performing Channels & Themes • Optimize for conversion to target CTAs, not just site/landing page • Match/Drive channel cost to/below revenue potential • Low-Hanging Fruit: – Blogs – SEO/SEM – Landing Pages – Automated Emails
  • 33.
    Distribution Platforms Customer Reach:100M-1B+ • Search: Google, Baidu, Yahoo/Bing, Yandex • Social: Facebook, Twitter, LinkedIn, TenCent/QQ, WeChat • Mobile: Apple (iOS), Android • Media: Video (YouTube), Photos (Instagram, Pinterest), Blogs • Comm: SMS, IM (WeChat, WhatsApp), Skype, Phone/Voice, etc
  • 34.
    MAARRRketing Plan Marketing Plan= Target Customer Acquisition Channels • 3 Important Factors = Volume (#), Cost ($), Conversion (%) • Measure conversion to target customer actions • Test audience segments, campaign themes, Call-To-Action (CTAs) [Gradually] Match Channel Costs => Revenue Potential • Increase Vol. & Conversion, Decrease Cost, Optimize for Revenue Potential • Avg Txn Value (ATV), Ann Rev Per User (ARPU), Cust Lifetime Value (CLV) • Design channels that (eventually) cost <20-50% of target ATV, ARPU, CLV Consider Costs, Scarce Resource Tradeoffs • Actual $ expenses • Marketing time & resources • Product/Engineering time & resources • Cashflow timing of expense vs. revenue, profit ACQ = F(Customer, Campaign, Vol, Cost, Conv)
  • 35.
    [ What isWINNING? ]
  • 36.
    Choose #WINNING Metrics WIN= F(Customer, Usage, Dist, Revenue) • after MVP functional use, several options: – better Usage – Activation & Retention (AUX) – more Users -- Distribution / Acquisition – more Money --- Monetization – more Profit — Margin • understand ACQ$ vs REV$, optimize 4 short-term – higher volume usually a priority – costs may change as volume increases
  • 37.
    [ The LeanInvestor ]
  • 38.
    Startup 2.0: 
 “LeanInvestor” Model Method: Invest in startups using incremental investment, iterative development. Start with lots of small experiments, filter out failure, and expand investment upon success. • Incubator: $0-100K (“Product Viability”) • Seed: $100K-$2M (“Expand Distribution”) • Venture: $1M-$10M (“Maximize Revenue”)
  • 39.
    Investment #1: Incubate
 (“Product”) •Structure – 1-3 founders – $0-$100K investment – Incubator environment: multiple peers, mentors/advisors • Build Functional Prototype / “Minimum Viable Product” (MVP): – Concept->Alpha, ~3-6 months – Develop Minimal Critical Feature Set => Get to “It Works” – Instrument Basic Dashboard, Conversion Metrics – Test Cust. Adoption (10-1000 users) / Cust. Satisfaction (Scale: 1-10) • Demonstrate Concept, Reduce Product Risk, Test Functional Use • Develop Metrics & Filter for Follow-on Investment
  • 40.
    Investment #2: Seed
 (“Market”)•Structure – 2-5 person team – $100K-$2M investment – Syndicate of Angel Investors / Small VC Funds • Improve Product, Expand Market, Test Revenue: – Alpha->Beta, ~6-12 months – Customer Sat ≥ 6 => Get to “Doesn’t Suck” – Setup A/B Testing Framework, Optimize Conversion – Test Marketing Campaigns, Cust Acqstn Channels • Prove Solution/Benefit, Assess Market Size • Test Channel Cost, Revenue Opportunity • Determine Org Structure, Key Hires
  • 41.
    Investment #3: Venture
 (“Revenue”) •Structure – 5-25 person team – $1M-$10M investment – VC Investors • Make Money, Get to Sustainability: – Beta->Production, 12-18 months – Customer Sat ≥ 8 => “It Rocks, I’ll Tell My Friends” – MktgPlan => Predictable Channels / Campaigns + Budget – Scalability & Infrastructure, Customer Service & Operations – Connect with Distribution Partners • Prove/Expand Market, Operationalize Business • Future Milestones: Profitable/Sustainable, Exit Options
  • 42.
    Q&A? Âť Questions? Âť Answers:$1 Âť Correct Answers: $10 Âť Stupid Look on my face: FREE!
  • 43.
    Appendix (note the followingslides are a bit old and i haven’t updated them in quite a while… sorry ;)
  • 44.
  • 45.
    Website.com Activation Criteria: • 10-30+seconds • 2-3+ page views • 3-5+ clicks • 1 key feature usage do LOTS of landing page & A/B tests – make lots of dumb guesses & iterate FAST SEO SEM Apps & Widgets Affiliates Email PR Biz Dev Campaigns, Contests Direct, Tel, TV Social Networks Blogs Domains Activation
  • 46.
    Activation
 What do usersdo on their first visit? Example Activation Goals • Click on something! • Account sign up / Emails • Referrals / Tell a friend • Widgets / Embeds • Low Bounce Rate Activation Tips • Less is more • Focus on user experience / usability • Provide incentives & call to actions • Test and iterate continuously
  • 47.
    Activation
 What do usersdo on their first visit? Key Metrics to Track ✓ Pages per visit ✓ Time on site ✓ Conversions
  • 48.
    Activation Tools Crazy Egg (VisualClick Mapping) http://crazyegg.com Google Website Optimizer (A/B & Multivariate Testing) http://google.com/websiteoptimizer Marketo.com (B2B Lead Generation Management) http://marketo.com Resources Experimentation and Testing: A Primer kaushik.net/avinash/2006/05/experimentation-and-testing-a-primer.html Landing Page Design Toolbox: 100 Tips & Tools http://tinyurl.com/326co6 Landing Page Tutorials & Case Studies http://www.copyblogger.com/landing-pages/ 101 Easy Easy to use Google Website Optimizer http://conversion-rate-experts.com/articles/101-google-website-optimizer-tips/
  • 49.
  • 50.
    Website.com SEO SEM Apps & Widgets Affiliates Email PR BizDev Campaigns, Contests Direct, Tel, TV Social Networks Blogs Domains Emails & Alerts System Events & Time-based Features Blogs, RSS, News Feeds Automated emails: • lifecycle emails @ +3, +7, +30d • status / “best of” weekly/monthly • “something happened” emails BUT: • make it easy to unsubscribe Tip on emails: • > 80% or more on SUBJECT LINE • < 20% or less on BODY TEXT Retention
  • 51.
    Cohort Analysis: • Distribof Visits over Time • Rate of Decay • Effective Customer Lifecycle Retention Methods ✓ Automated Emails * Track open rate / CTR / Quantity ✓ RSS / News Feeds * Track % viewed / CTR / Quantity ✓ Widgets / Embeds * Track impressions / CTR / Quantity Retention
 How do users come back? How often?
  • 52.
    Example Retention Goals •1 - 3+ visits per month • 20% open rate / 2% CTR • High deliverability / Low spam rating • Long customer life cycle / Low decay • Identify fanatics and cheerleaders Retention Tips • Email is simple and it works • BUT make unsubscribe easy • 80% subject line / 20% body text • ACTUALLY 99% subject line / 1% body text • Fanatics = virality + affiliate channel (bloggers?) Retention
 How do users come back? How often?
  • 53.
    Retention
 How do userscome back? How often? Key Metrics to Track ✓ Source ✓ Quantity ✓ Conversions ✓ Visitor Loyalty ✓ Session Length
  • 54.
    Retention Tools Campaign Monitor /MailChimp (email newsletter software) campaignmonitor.com / mailchimp.com TriggerMail (site-centric email management) triggermail.net Litmus (email and website design testing - clients / browsers) litmusapp.com Resources 30 free HTML email templates campaignmonitor.com/resources/templates.aspx Best Practices in Writing Email Subject Lines mailchimp.com/resources/best-practices-in-writing-email-subject- lines.phtml Learning Viral: Viral Emails of Tagged.com okdork.com/2008/04/10/learning-viral-studying-taggedcom/
  • 55.
  • 56.
    Website.com Marketing Channels: • largest-volume(#) • lowest-cost ($) • best-performing (%) Acquisition SEO SEM Apps & Widgets Affiliates Email PR Biz Dev Campaigns, Contests Direct, Tel, TV Social Networks Blogs Domains
  • 57.
    Acquisition
 Where are userscoming from? Acquisition Methods ✓ SEO / SEM ✓ Blogs ✓ Email ✓ Social Media & Social Networks ✓ Domains
  • 58.
    Acquisition
 Keyword Vocabulary Top 10- 100 words • Your Brand / Products • Customer Needs / Benefits • Competitor’s Brand / Products • Semantic Equivalents • Misspellings Things to analyze • Sources • Volume • Cost • Conversion
  • 59.
    Acquisition
 Where are userscoming from? Key Metrics to Track ✓ Quantity (#) ✓ Cost ($) ✓ Conversions (%) Example
  • 60.
    Acquisition Tools Google Analytics (webanalytics) google.com/analytics Google Keyword Tool (keyword research tool) adwords.google.com/select/KeywordToolExternal SEO Book Tools (SEO related tools) tools.seobook.com Resources SEO Book Blog seobook.com/blog The Social Media Manual: Read Before You Play searchengineland.com/071120-144401.php Strategies to ruthlessly acquire users andrewchen.typepad.com/andrew_chens_blog/ 2007/04/10_obvious_stra.html
  • 61.
  • 62.
    Website.com Acquisition SEO SEM Apps & Widgets Affiliates Email PR BizDev Campaigns, Contests Direct, Tel, TV Social Networks Blogs Domains Retention Emails & Alerts System Events & Time-based Features Blogs, RSS, News Feeds Focus on driving referrals *after* users have a “happy” experience; avg score >= 8 out of 10 Referral
  • 63.
    Referral
 How do usersrefer others? Referral Methods ✓ Send to Friend: Email / IM ✓ Social Media ✓ Widgets / Embeds ✓ Affiliates
  • 64.
    Referral
 Viral Growth Factor ViralGrowth Factor = X * Y * Z X = % of users who invite other people Y = average # of people that they invited Z = % of users who accepted an invitation A viral growth factor > 1 means an exponential organic user acquisition.
  • 65.
    Referral Tools Gigya (social mediadistribution & tracking tool) gigya.com ShareThis / AddThis (sharing buttons) sharethis.com / addthis.com GetMyContacts (PHP contacts importing & invitation software) getmycontacts.com Resources Seven Ways to GO VIRAL lsvp.wordpress.com/2007/03/02/seven-ways-to-go-viral/ What’s your viral loop? Understanding the engine of adoption andrewchen.typepad.com/andrew_chens_blog/2007/07/whats-your- vira.html Metrics: Where Users Come From slideshare.net/guest2968b8/rockyou-snap-summit-32508
  • 66.
  • 67.
    Website.com Revenue $$$ Biz DevAds,Lead Gen, Subscriptions, ECommerce Acquisition SEO SEM Apps & Widgets Affiliates Email PR Biz Dev Campaigns, Contests Direct, Tel, TV Social Networks Blogs Domains Retention Emails & Alerts System Events & Time-based Features Blogs, RSS, News Feeds Revenue This is the part *you* still have to figure out…
  • 68.
    Revenue
 How do youmake money? Revenue Tips • Don’t Rely on AdSense (only) • Start Free => 2% “Freemium” • Subscription / Recurring transactions • Qualify your customers -> Lead generation (arbitrage) • Sell something! (physical or virtual)
  • 69.
    Revenue Resources & Tools RevenueMetrics (Andrew Chen) http://tinyurl.com/47r63a How to Create a Profitable “Freemium” Startup (Andrew Chen) http://tinyurl.com/8z9ygk 2008 Affiliate Marketing Review (Scott Jangro) http://tinyurl.com/86wak4
  • 70.
    
 Links & Resources AdditionalReferences: • Influence: The Psychology of Persuasion Robert Cialdini (book) • The Mating Mind Geoffrey Miller (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) • Understanding Comics Scott McCloud (book)