metrics for startups - tetuan valley startup school fall session, 2013
Post on 21-Oct-2014
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DESCRIPTION
Presentation given to Tetuan Valley startup school students during the fall of 2013. Introduction to metrics for startups, with examples from 24symbolsTRANSCRIPT
Denodo Presentation
TAKE YOUR READINGS WHEREVER YOU GO
Metrics: because everything countsJusto Hidalgo@justohidalgo
Hi!
Co-founder, Worry about metrics
Data Integration and Management, Product Strategy and Innovation
Ph.D. in Computer Science on Data Integration and Web Automation
Ergo: Love Data
@justohidalgo
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A service to read and discover digital books that works on any device
discovery
+
reading
+
any device
+
mobile
@justohidalgo
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Metrics
A/B Testing (if we have time!)
Some tools
Conclusions
Eat pizza
My goals today
Qualitative measurementCompetitive landscape, UX quality,
Standard financial metricsRevenue, Balance, Burn rate, Runway,
All possible metrics in the worldAs many as asses
What I wont talk about
Lets talk about metrics and startups!
Watch this
500startups Dave McClure
and this
Carsonifieds Ryan Carson
and read this!
http://www.slideshare.net/dmc500hats/startup-metrics-101-367863
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AARRR
Acquire
Activate
Retain
Refer
Get Revenue
SEOSEMCampaignsEmailBlogs
Landing PageProduct Features
Content (blogs, articles, )EmailsAlerts
CampaignsEmails
Shopping cartSubscriptionsLead Gen
traffic
social
business
Based on Dave McClures AARRR metrics model (http://500hats.typepad.com/500blogs/2007/09/startup-metrics.html)
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Traffic Metrics
http://www.flickr.com/photos/hktang/4243300265/
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How do people find your site?
Acquisition
How you bring people to your siteSEO, SEM, Social Networks, Blogs, Email, Find those channels that bring you the LARGEST QUALIFIED volume, at the LOWEST costwith the best PERCENTAGE
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@justohidalgo
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15 seconds in La 1
http://www.youtube.com/watch?v=YSRlDqRUizg
Metrics
Number of visits
Distributions (per browser, region, )
Number of page views
Bounce rate
How sticky is your site?
AActivation
Metrics
Time per page
Time on site
# Sign ins!!!
Recency (time since user did something meaningful)
(and churn as well!!!)
Biggest Apple Reseller in Spain
1-year subscription to 24s per iPad/Mac purchased
@justohidalgo
And (3) by searching for alternative channels. Ill mention two of them. K-Tuin is the biggest Apple reseller in Spain, and theyre currently offering a 1-year subscription to 24s to every Mac or iPad buyer. Another one is the deal weve reached with a major telco in Spain to offer a similar subscription to their new customers coming from portability.
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Why do users come back?
AARetention
How to make your users coming back
Automated emailsAs personalized as possible but up to a limitNon intrusive (easy to unsubscribe)As less commercial-ish as possible
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Number of unique/returning visitors
Visits over time
Average session time
Metrics. The standard ones
D/WAU: Daily/Weekly Active Users
MAU: Monthly Active Users
Stickiness =
engagement
D/WAU
MAU
This is related to the retention stats: active readers in our case. Stickyness is quite related to social gaming. Dont expect the same degree of stickyness as Facebook or Zynga!!! This is more profound that try to keep it highFaceboks ratio seems to have been > 50% all of the timeAmazons seems to be around 17%24symbols is between 6 and 10% right now.Games and communication apps should have a high ratio as wellE-commerce and other categories have a much lower ratio
http://www.flickr.com/photos/lucasjames123/5040993203/
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# Active readers# Books read per userPages read per active reader per month
but also domain-specific!!!
Pages read per paid user per month
Social Metrics
http://www.flickr.com/photos/anirudhkoul/3786725982/
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Do people talk about your site?
AARReferral
Visitor
Contributor
Distributor
Types of users
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Curation the unbeatable experience of a bookstore
Curation bookshelves
Every user, a librarian
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Amplification rate: (#shares, #RTs, )
K-Factor = AR * conversion rate= 1: steady state> 1: growth 1.4 < x < 2.1 => hot & viral!!!< 1: decline
Virality
http://www.flickr.com/photos/twenty_questions/2192450204/
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% viral hosts
Contact rate per active host
Duration of each active hosts infectious time period
Infection conversion
Source: http://framethink.wordpress.com/2008/01/15/the-four-viral-app-objectives-aka-social-network-application-virality-101/
The Four Viral App Objectives
% viral hosts: give them every opportunity to share your app
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@justohidalgo
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Business Metrics
http://www.flickr.com/photos/76657755@N04/6921689726/
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Do you make money?
AARRRevenue
CMRR
LTV
CACR
3 (main) metrics for SaaS
http://thenounproject.com/noun/handshake/#icon-No767http://thenounproject.com/noun/life-stage/#icon-No2979http://thenounproject.com/noun/price-tag/#icon-No422http://thenounproject.com/noun/announcement/#icon-No1186
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Source: Lean Analytics Alistair Croll, Ben Yoskovitz
Churn
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SaaS = recurring revenuesCMRR = Committed Monthly Recurring RevenueRecurring + new accounts + new upsells churn
CMRR
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Lifetime Value = 100%
LTV
Source: http://blog.kissmetrics.com/how-to-calculate-lifetime-value/
Churn rate
ARPU *
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CAC Ratio=
Bessemer: average ratio of SaaS companies = 0.6
Customer Acquisition Cost
gross margin per customer
sales/marketing costs per customer
divide the NEW annualized net gross margin added during the quarter (gross new CMRR x your average Gross Margin % x 4 quarters; forget the effect of churn for now), by the sales and marketing costs of the previous quarter excluding any account management costs attributed to your "farmer" organization
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Of course, LTV > CACBut, moreover: LTV > 3x CAC
LTV vs CAC
Time
Users
Delayed subscription(test the service & engage)
Free
Premium
Conversion Rate
@justohidalgo
Freemium. Conversion Rate
Transform this slide into traction. Numbers.
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time/conversion rate
Price/page
Growth
Profit threshold
Consolidation
Freemium for Books. Price per page
@justohidalgo
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Source: Startup Metrics, a love story - @andreasklinger
Source: Lean Analytics Alistair Croll, Ben Yoskovitz
6. A/B Testing
One key question for the whole AARRR cycle
How effective is a web page compared to another?
?
Whats A/B Testing?
Version A
Version B
Visitors are randomly distributed
time
1200 new users
1000 new users
Version A is better than B
What should you test?
The call to actions (i.e. the buttons) wording, size, color and placement, Headline or product description, Forms length and types of fields, Layout and style of website, Product pricing and promotional offers, Images on landing and product pages, Amount of text on the page (short vs. long)
anything that you think it might affect your Key Metrics.
http://www.smashingmagazine.com/2010/06/24/the-ultimate-guide-to-a-b-testing/
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Very good for ONE-SINGLE-GOAL projects where the KPI can be measured by counting actionsE.g. Downloads vs Quality perceivedGranularity of the A/B test is paramountIf A better than B or is it just that the headline in B is horrible, but the rest is much much much better than A?A/B testing is suboptimal*
* Recommended: http://untyped.com/untyping/2011/02/11/stop-ab-testing-and-make-out-like-a-bandit/
Is A/B testing perfect?
7. Tools
AnalyticsHeatmapsSocial media
Conclusions
1. Measure from Day 1
@justohidalgo
2. Have someone taking care of it
3. Only measure what you truly care about
@justohidalgo
http://www.flickr.com/photos/qualityandstyle/4628275080/
Ockhams razor,also spelledOccams razor, also calledlaw of economyorlaw of parsimony, principle stated byWilliam of Ockham(12851347/49), a Scholastic, thatPluralitas non est ponenda sine necessitate, Plurality should not be posited without necessity. The principle gives precedence to simplicity; of two competing theories, the simplerexplanationof an entity is to be preferred. The principle is also expressed as Entities are not to be multiplied beyond necessity.
All metrics are ACTIONABLEIf you dont plan to do anything with a metric, DONT MEASURE IT!i.e. Dont waste your valuable and limited time
Kill useless metrics.
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But again, choose right
4. Beware vanity metrics
they may hide an awful truth
Thanks for your time!
@justohidalgo
Justo Hidalgohttp://www.loscuentosdelabuelo.com
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Credits
Olivier Guin, from The Noun ProjectDima Yagnyuk, from The Noun ProjectRedesign from Otl Aichers icon, from The Noun ProjectAxsys, from The Noun ProjectMonika Ciapala, from The Noun ProjectRob Schill, from The Noun ProjectMartin Karachorov, from The Noun ProjectAlexandre Mendes, from The Noun Project
All other icons from The Noun Project
Publishers trademarks, logos and brands belong to their respective companies.