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Startup Metrics for Pirates (Nov 2012)
1. Startup Metrics 4 Pirates
Tel Aviv, Israel
Nov 2012 - #AARRR
Dave McClure @DaveMcClure
http://500.co
http://500hats.typepad.com
http://slideshare.net/dmc500hats
17. Just Gimme the GOOD Metrics.
Users, Pages, Clicks, Emails, $$$...?
Q: Which of these is best? How do you know?
⢠1,000,000 one-time, unregistered unique visitors
⢠500,000 visitors who view 2+ pages / stay 10+ sec
the
good ⢠200,000 visitors who clicked on a link or button
stuff.
⢠20,000 registered users w/ email address
⢠2,000 passionate fans who refer 5+ users / mo.
⢠1,000 monthly subscribers @ $5/mo
18. The Lean Startup
⢠Talk to Customers; Discover Problems
⢠Progress â Features (Less = More)
⢠Fast, Frequent Iteration (+ Feedback Loop)
⢠Measure Conversion; Compare 2+ Options
⢠Focus on Product/Market Fit (donât âlaunchâ b4)
⢠Keep it Simple & Actionable
21. Product/Market Fit b4 âLaunchâ
(Sean Ellis, Startup-Marketing.com)
Startup-Marketing.com
22. AARRR!: Startup Metrics Model
SEO
SEO Campaigns,
Campaigns,
SEM
SEM PR
PR Contests
Contests Biz
Social
Social Biz
Networks
Networks Dev
Dev
Blogs
Blogs Affiliates
Affiliates
Apps &&
Apps Direct,
Direct,
Widgets
Widgets Email
Email Tel, TV
Tel, TV
Domains
Domains
ACQUISITION
ACQUISITION
Emails & Alerts
Emails & Alerts
Blogs, RSS,
Blogs, RSS,
n
ntio
News Feeds
News Feeds
R et e
Ads, Lead Gen, Biz Dev
Biz Dev
Ads, Lead Gen,
System Events &
System Events & Subscriptions,
Subscriptions,
Rev
Reve
Time-based Features
Time-based Features ECommerce
ECommerce
enue
nue $
Website.com $$$
$$
23. Startup Metrics for Pirates
⢠Acquisition: users come to site from various channels
⢠Activation: users enjoy 1st visit: "happyâ experience
⢠Retention: users come back, visit site multiple times
⢠Referral: users like product enough to refer others
⢠Revenue: users conduct some monetization behavior
AARRR!!
AARRR
(note: If youâre in a hurry, Google
âStartup Metricsâ & watch 5m video)
24. One Step at a Time.
1. Make a Good Product: Activation & Retention
2. Market the Product: Acquisition & Referral
3. Make Money: Revenue & Profitability
âYou probably canât save your Ass and your Face
at the same time⌠so choose carefully.â â DMC
28. Role: Founder / CEO
Q: Which Customers? Problems? Metrics? Why?
A: Focus on Critical Few Actionable Metrics
(
29. Optimize 4 Happiness
(both User + Business) $$$
⢠Define States of User + Business Value
⢠Prioritize (Estimate) Relative Value of Each State
⢠Move Users: Lower Value -> Higher Value
⢠Optimize for User Happiness + Business $$$
⢠Achieve High Cust Value + Low ACQ$ @ Scale
30. What is Minimum Viable Product?
MVP = F(Customer, Problem, Time or $$$)
⢠Focus on CUSTOMER
â Qualitative Discovery, Quantitative Validation
⢠Get to know habits, problems, desires (FUN MATTERS)
â what causes pain? what causes pleasure?
⢠Define 1-5 TESTABLE Conversion Metrics of Value
â Attention/Usage (session time, clicks)
â Customer Data (email, connect, profile)
- Revenue (direct or indirect)
- Retention (visits over time, cohort behavior)
- Referral (users evangelize to other users)
⢠Note: Paid Solutions drive FOCUS (& pay rent)
31. Example Conversion Metrics
(note: *not* actuals⌠your mileage may vary)
Stage Conversion Status Conv. Est. Value
% (*not* cost)
Acquisition Visitors -> Site/Widget/Landing Page 60% $.05
(2+ pages, 10+ sec, 1+ clicks = donât abandon)
Activation âHappyâ 1st Visit; Usage/Signup 15% $.25
(clicks/time/pages, email/profile reg, feature usage)
Retention Users Come Back; Multiple Visits 5% $1
(1-3x visits/mo; email/feed open rate / CTR)
Referral Users Refer Others 1% $5
(cust sat >=8; viral K factor > 1; )
Revenue Users Pay / Generate $$$ 2% $50
(first txn, break-even, target profitability)
32. KILL A FEATURE.
Something Sucks. Find It. KILL It.
⢠STOP ADDING FEATURES.
⢠Find the ONE THING that users LOVE.
⢠How to figure out? TAKE. SHIT. AWAY.
⢠When they SCREAM, youâve FOUND it.
⢠Then Bring it Back⌠Only Better.
⢠Tip: KILL a Feature Every Week.
34. Role: Product / Eng / Design
Q: What Features to Build? Why? When are you âDoneâ?
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
â 80% on existing feature optimization
â 20% on new feature development
35. What is Product/Market Fit?
PMF = F(Customer, Solution, Alternatives*)
⢠Product / Market Fit occurs when:
â Customers like your stuff better than other options
â Not static, Not optimal â just Local Max 4 F(customers, solution, time)
â make sure youâre moving in optimal direction 2 local max
⢠Q: what competitive solutions are available?
â ⌠that your customers know about?
â how are you diff/same?
â in ways that people care about? (will pay for)
⢠KILL a FEATURE regularly (or rotate 1% tests)
â Q: what is MOST $ cust pay 4 LEAST func MVP relative 2 BEST alt?
⢠NICHE 2 WIN: RE-define cust + DIFFerentiated features
48. Startup 2.0:
âLean Investorâ 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: $0-250K (âProduct Viabilityâ)
⢠Seed: $100K-$2M (âExpand Distributionâ)
⢠Venture: $1M-$5M (âMaximize Revenueâ)
53. 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)
⢠Donât 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)
⢠KISSmetrics.com Hiten Shah / Neil Patel (website)
⢠How To Pitch a VC Dave McClure (slides, NSFW)
⢠Understanding Comics Scott McCloud (book)