Metrics for Startups - Tetuan Valley Startup School Fall Session, 2013
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DESCRIPTIONPresentation given to Tetuan Valley startup school students during the fall of 2013. Introduction to metrics for startups, with examples from 24symbols
TAKE YOUR READINGS WHEREVER YOU GO
Metrics: because everything countsJusto Hidalgo@justohidalgo
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
A service to read and discover digital books that works on any device
A/B Testing (if we have time!)
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!
500startups Dave McClure
Carsonifieds Ryan Carson
and read this!
Landing PageProduct Features
Content (blogs, articles, )EmailsAlerts
Shopping cartSubscriptionsLead Gen
Based on Dave McClures AARRR metrics model (http://500hats.typepad.com/500blogs/2007/09/startup-metrics.html)
How do people find your site?
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
15 seconds in La 1
Number of visits
Distributions (per browser, region, )
Number of page views
How sticky is your site?
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
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.
Why do users come back?
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
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
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
# Active readers# Books read per userPages read per active reader per month
but also domain-specific!!!
Pages read per paid user per month
Do people talk about your site?
Types of users
Curation the unbeatable experience of a bookstore
Every user, a librarian
Amplification rate: (#shares, #RTs, )
K-Factor = AR * conversion rate= 1: steady state> 1: growth 1.4 < x < 2.1 => hot & viral!!!< 1: decline
% viral hosts
Contact rate per active host
Duration of each active hosts infectious time period
The Four Viral App Objectives
% viral hosts: give them every opportunity to share your app
Do you make money?
3 (main) metrics for SaaS
Source: Lean Analytics Alistair Croll, Ben Yoskovitz
SaaS = recurring revenuesCMRR = Committed Monthly Recurring RevenueRecurring + new accounts + new upsells churn
Lifetime Value = 100%
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
Of course, LTV > CACBut, moreover: LTV > 3x CAC
LTV vs CAC
Delayed subscription(test the service & engage)
Freemium. Conversion Rate
Transform this slide into traction. Numbers.
Freemium for Books. Price per page
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?
Visitors are randomly distributed
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.
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?
1. Measure from Day 1
2. Have someone taking care of it
3. Only measure what you truly care about
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.
But again, choose right
4. Beware vanity metrics
they may hide an awful truth
Thanks for your time!
Olivier Guin, from The Noun ProjectDima Yagnyuk, from The Noun ProjectRedesign from Otl Aichers ico