startups metrics by murat aktihanoglu
TRANSCRIPT
Background EE Undergrad
CS Grad
ERA 2 sessions a year
10 companies per session
$40,000 with follow-on investment ($50,000 to $100,000)
4 month program
Free collaborative 10,000sf office space (includes other ERA alumni companies)
250+ mentors (investors, domain experts, successful entrepreneurs and industry executives)
Free legal services, free software services, free hosting, free flights from American Airlines
Demo Day in New York and California – 70 alumni companies
Strong online alumni network platform (ERA Bot)
Today
Things you should always know and track
How to make constant progress
What to track, always:
Revenue Run Rate Current month’s revenue x 12
Monthly Revenue Growth ( (Current month’s revenue - Last month’s revenue) / Last month’s revenue )x100
Good target to raise Series A: 15-20%
Runway Cash in the bank/Burn Rate Just after a raise: 12 to 18 months
What to track, always:
Customer Acquisition Cost
Total spend on marketing/Number of acquired customers
CAC should be recovered from the customer in less than 12 months
Lifetime Value of a Customer
LTV > 3 x CAC
Salesforce, ConstantContact – 5 x CAC
What to track, always: Conversion rates
What to track, always:
Churn Rate
(Number of customers that quit/Total number of customers) x 100
Acceptable: 5-7% annually (or 0.42 – 0.58% monthly churn)
Viral coefficient ( K-Value )
Average number of invitations sent per customer * Acceptance rate of these invitations
>1 for viral growth
Making progress
Pick one metric that is a good overall indicator of the area to make progress on
Present it to your peers, collaborate and come up with target numbers for the next 6 months
Focus and optimize the heck out of them and try to hit your target numbers every month
Re-evaluate every 3 months
Bad examples
Page views (out of how many unique visitors?)
Interactions between users (out of how many users, resulting in what?)
Shopping cart actions (by how many people, how many actual purchases?)
Good examples
Revenue – no substitute for this, all-time best metric
CAC
Number of new customers
Virality coefficient
For example
Revenue
Month 1: $10,000
Month 2: $15,000
Month 3: $25,000
Month 4: $50,000
Track and re-adjust strategies, SEM and other marketing channels accordingly
Murat [email protected]://eranyc.com
Blog: http://muratak.com