Startup Metrics For Pirates Startup Weekend Sao Paulo November 2011 - #SWSP Dave McClure @DaveMcClure http://www.500startups.com http://500hats.typepad.com http://slideshare.net/dmc500hats AARRR !

Dave McClure

• • 2001-2010:

• • Startup Investor: 500 Startups, Founders Fund

• • Tech Marketing : PayPal, Simply Hired, Mint.com

• • Advisor, Angel Investor : 200+ Startups

• • Conferences : Warm Gun, Lean Startup, SMASH

• • Stanford Lecturer : Facebook, Startup Metrics

• • 80 s & 90s:

• • Entrepreneur : Founder/CEO Aslan Computing (acq.)

• • Developer : Windows Apps / SQL DB Admin

• • User Groups : E-Commerce, Internet, Client-Server

• • Engineer : Johns Hopkins 88, BS Eng / Applied Math

GEEK, CODER, ENTREPRENEUR Blogger, Marketing, Angel/VC Investor

500 Startups Seed Fund & Accelerator (230+ companies, 10+ countries )

[ This Talk ]

Topics

• Basic Concepts of Startup Metrics 4 Pirates

• 3 Steps to AARRR: Product, Market, Revenue

• Constructing MVP: Just ONE Feature?

• Design (UX) & Distribution (MKTG)

• Winning : Market, Revenue, Profit?

Key Concepts

• 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, Dist, Revenue)

Geek Renaissance

• Tech Innovation

• Finance Innovation

• Design Innovation

• Social Innovation

• Global Innovation

Platforms 2.0 Search, Social, Mobile

Whats a Platform? Successful Platforms have 3 Things: 1) Features 2) Users 3) Money Users . . Money Features Growth Profit Profitable Growth Awesome

Distribution Platforms

• • Customer Reach: 100M+

• • • Search : Google (SEO/SEM)

• • • Social : Facebook, Twitter, Zynga, LinkedIn

• • • Mobile : Apple (iPhone, iPad), Android

• • • Media : YouTube (Video), Blogs, Photos

• • • Comm : Email, Chat, SMS, Voice

DO Marketing! (Its Not Evil )

• Marketing is Both Qualitative + Quantitative

• Qualitative: Create Emotion, Drive Action

• Quantitative: Measure Results of Action

• Design (UX) & Distribution (MKTG) Matter

• Volume (#), Cost ($), Conversion (%)

[ Interesting Shit. ]

Read Geoffrey Miller Sex + Evolution + Consumer Mktg = Awesome Sauce

More Great Shit. Psychology + Comics

[The Lean Startup] [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.

The Lean Startup

• Talk to Customers ; Discover Problems

• Progress Features ( Less = More )

• Fast, Frequent Iteration (+ Feedback Loop )

• Measure Conversion ; Compare 2+ Options

• Focus on Product/Market Fit (don t launch b4)

• Keep it Simple & Actionable

Discover Customers (Steve Blank, SteveBlank.com)

Iterate , Dammit. (Eric Ries, StartupLessonsLearned.com) LEARN BUILD MEASURE IDEAS CODE DATA

Product/Market Fit b4 Launch (Sean Ellis, Startup-Marketing.com) Startup-Marketing.com

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

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 you re in a hurry, Google Startup Metrics & watch 5m video) AARRR !

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

Startup Challenges

• Startups have problems in 3 key areas:

• • Management : Set Priorities, Define Key Metrics

• • Product : Build Right Features. Measure, Iterate.

• • Marketing : Distribution, Distribution, Distribution.

• • ( Search , Social , Mobile )

Key Concepts

• 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, Dist, Revenue)

[ Constructing MVP ]

Role: Founder / CEO

• Q: Which Customers? Problems? Metrics? Why ?

• A: Focus on Critical Few Actionable Metrics

• • (if you don t 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

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

$$$

What is Minimum Viable Product?

• MVP = F(Customer, Problem, Time or $$$)

• Focus on CUSTOMER

• • 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 drive FOCUS (& pay rent)

Example Conversion Metrics (note: *not* actuals your mi