startup metrics 4 pirates 2.0 (march 2011, sxsw)

Download Startup Metrics 4 Pirates 2.0 (March 2011, SXSW)

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Really rough version of updated Startup Metrics 4 Pirates talk @ Lean Startup SXSW. (sorry, this is gonna be a shitshow... too much partying, not enough prep. lots of random bullets & incoherent fonts... sorry, mofos).

TRANSCRIPT

  • Startup Metrics for Pirates 2.0 Lean Startup SXSW Austin, TX March 2011 #LeanSxsw Dave McClure @DaveMcClure http://www.500startups.com http://500hats.typepad.com http://slideshare.net/dmc500hats AARRR !
  • # TigerBlood 4 Startups # WINNING
  • [ Bullets Kill ]
  • Topics
    • Basic Concepts of Startup Metrics 4 Pirates
    • Thoughts on Sequencing AARRR
    • Thoughts on Constructing MVP
    • Iterate on Design (UX) & Distribution (MKTG)
    • Make Marketing [more] Analytical
  • Disclaimers
    • Im not really a metrics guy
    • This is mostly high-concept bullshit
    • Several Things Are WRONG (give me feedback)
    • but I promise to be entertaining
    • & the subsequent panel will be educational
    • (ps sorry about the colors & swearing .)
  • Key Concepts (Acronyms)
    • MVP = F(Customer, Problem, Time or $$$)
    • PMF = F(Customer, Solution, Alternatives)
    • AUX = F(Customer, Design/UX, Metrics)
    • ACQ = F(Customer, Campaign, Vol, Cost, Conv)
    • WIN = F(Customer, Usage, Revenue)
  • [ Important Shit ]
  • Read Geoffrey Miller Sex + Evolution + Consumer Mktg = Awesome Sauce
  • Other Great Shit. Psychology + Comics
  • [Startup Metrics 4 Pirates ]
  • Just Gimme the GOOD Metrics. Users, Pages, Clicks, Emails, $$$...?
    • 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.
  • Startup Metrics for Pirates
    • A cquisition: users come to site from various channels
    • A ctivation: users enjoy 1 st visit: " happy experience
    • R etention: users come back , visit site multiple times
    • R eferral: users like product enough to refer others
    • R evenue: users conduct some monetization behavior
    (note: If youre in a hurry, Google Startup Metrics & watch 5m video) AARRR !
  • AARRR! : 5-Step Startup Metrics Model Website.com R evenue $$$ Biz Dev Ads, Lead Gen, Subscriptions, ECommerce A CQUISITION SEO SEM Apps & Widgets Affiliates Email PR Biz Dev Campaigns, Contests Direct, Tel, TV Social Networks Blogs Domains R etention Emails & Alerts System Events & Time-based Features Blogs, RSS, News Feeds
  • One Step at a Time.
      • Make a Good Product : Activation & Retention
      • Market the Product : Acquisition & Referral
      • Make Money : Revenue & Profitability
    You probably cant save your Ass and your Face at the same time choose carefully . DMC
  • [ Constructing MVP ]
  • Role: Founder / CEO
    • Q: Which Customers? Problems? Metrics? Why ?
    • A: Focus on Critical Few Actionable Metrics
      • (if you dont use the metric to make a decision, its not actionable)
    • Hypothesize Customer Lifecycle
    • Target ~3-5 Conversion Events (tip: Less = More)
    • Test, Measure, Iterate to Improve
  • What is Minimum Viable Product?
    • MVP = F(Customer, Problem, Time or $$$)
    • Focus on CUSTOMER(s) FIRST
      • TTYFU : Qualitative Discovery, Quantitative Validation
    • Get to know habits, problems, desires ( FUN MATTERS )
      • what causes pain?
      • what causes pleasure?
    • Define 1-5 TESTABLE Conversion Metrics of Value
      • Attention/Usage (session time, clicks)
      • Customer Data (email, connect, profile)
      • Revenue (direct or indirect)
      • Retention (visits over time, cohort behavior)
      • Referral (users evangelize to other users)
    • Note: Paid solutions enable FOCUS (& pay rent)
  • Discover Meaning Why Should Users Give a SHIT About You? Kathy Sierra: Creating Passionate Users
  • Discover Meaning Keywords, Images, Call-to-Action
    • Top 10 - 100 words
      • Your Brand / Products
      • Customer Needs / Benefits
      • Competitors 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
  • 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 , youve FOUND it.
    • Then Bring it Back Only Better.
    • Tip: KILL a Feature Every Week .
  • 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 $$$
    • Achieve High Value + Low ACQ$ @ Scale
    $$$
  • 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 = dont abandon) 60% $.05 Activation Happy 1 st 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* )
    • not a single event; can evolve, change, grow
      • at best, local max 4 set of customers & point in time
      • hope yr moving in optimal direction 2 local max
    • what competitive solutions are available?
      • do your customers know about them?
      • how are you diff/same?
      • in ways that people care about? (will pay for)
    • KILL a FEATURE regularly (or rotate 1% tests)
      • Q: MOST they will pay 4 LEAST func MVP relative 2 BEST alt?
    • NICHE 2 WIN : RE-define cust + DIFFeren