Slides for a workshop on analytics for startups at Nestholma accelerator programs

1. Startup Analytics
Topi Järvinen

2. You? Instincts
rule
Data-
aware
drivenData-

3. Looks great!
0
1000
2000
3000
1 2 3 4 5
Active users
0
2000
4000
6000
8000
1 2 3 4 5
Sign-ups (cum)

4. Or not?
0%
20%
40%
60%
80%
100%
2 3 4 5
Active users (existing)
0%
20%
40%
60%
80%
100%
1 2 3 4 5
Active users by cohort
months after they registered

5. Disaster or good business?
500
1000
1500
2000
1 2 3 4 5
New monthly sign-ups
• In this fictional case, good flow of
new sign-ups keeps the general
metrics looking good
• These numbers could mean a
disaster for some businesses (for
ex. monthly subscription)
• They can also be OK for certain
revenue models (for ex. one-time
fee + upsell), but in that case
you’d need to look at the
acquisition cost

6. Vanity Metrics
They make you feel
good, but they don’t
offer clear guidance for
what to do.
-Eric Ries

7. The right way to use analytics: case Twitter
Analytics: Twitter learned that
users that follow 5-10 others,
are more likely to come back.
Solution: re-engineered the
whole site to get users to
follow when they sign up
Confidential7

8. What does your
success look like?

9. Where’s the value?
Measure it and the
preceeding steps

10. Use spreadsheet models
to understand the logic
Useful for finding what to validate,
not for proving the success

11. Quick’n’Dirty guide to choosing metrics
Not very useful
by itself
Are we creating value
for our customers?
Are our users
willing to pay for it
1. Anything
happening?
2. What works,
what doesn’t
3. Is it a
business?
Sign-ups,
downloads,
visitors etc.
Conversions, active
users, cart size, viral
co-efficient etc.
Revenue,
Customer lifetime
value etc.
Forexample

12. Read this
http://leananalyticsbook.com
Croll & Yoskovitz

13. Good metrics
are actionable and
give focus

14. A good metric is:
Comparative Understandable Ratio or a rate Changes behavior
Helps you to
understand how
different areas
are progressing
(time, groups of
competitors or
users etc.)
If your team
doesn’t
understand the
metric, they
won’t be able to
act on it.
Ratios and rates
are comparative
and usually
easier act on.
Metric are for
learning what is
working and
how to do
better.

15. Pick
One Metric That Matters
relevant for your business and stage you’re at
Lean Analytics

16. One Metric That Matters
It answers the most
important question
you have
It forces you to
draw a line in
the sand
It focuses the
entire company
It inspires a
culture of
experimentation

17. Where to focus?
Think about your
company stage

18. Lean Analytics by Croll & Yoskovitz
Empathy
Stickiness
Virality
Revenue
Scale

19. Focus on things important to the company stage
Empathy Problem and solution validation: discover real needs you can solve.
Stickiness Engage with customers in a meaningful, valuable way.
Virality Grow adoption through virality (inherent, artificial word-of-mouth).
Revenue Convince users to pay with optimal pricing
Scale
Growing through customer acquisition, channel relationships,
finding efficiencies, and participating in a market ecosystem.

20. Questions for different stages and business types
Business type
E-commerce
Two-sided
marketplace
Software
as a Service
Free
mobile app Media
User-
generated
content
The really big question
Empathy
Will they buy
enough for enough
money from you?
Will it solve a pain
they’ll pay for?
Will they engage with
content in a
repeatable manner
Interviews, qualitative results, quantitative scoring, surveys
StageMetrics

21. Questions for different stages and business types
Will it grow?
Stickiness Will they find you
and tell others?
Will they sign up,
stick around, and tell
others?
Can you grow traffic
to a level that can be
profitably monetized?Virality
Business type
Stickiness
Loyalty,
conversion
Inventory,
listings
Engagement,
churn
Downloads,
churn, virality
Content,
spam
Traffic, visits,
returns
Virality
CAC, shares,
reactivation
SEM, sharing
Inherent
virality, CAC
WoM, app
ratings, CAC
Invites,
sharing
Content
virality, SEM
Stage
E-commerce
Two-sided
marketplace
Software
as a Service
Free
mobile app Media
User-
generated
content
Metrics

22. Questions for different stages and business types
Primary source of money
Revenue
Transactions Active users Ad revenue
Scale
Business type
Revenue
Transaction,
CLV
Transactions,
commission
Upselling,
CAC, CLV
CLV,
ARPDAU
Ads,
donations
CPE, affiliate
%, eyeballs
Scale
Affiliates,
white-label
Other
verticals
API, magic #,
mktplace
Spinoffs,
publishers
Analytics,
user data
Syndication,
licenses
Stage
E-commerce
Two-sided
marketplace
Software
as a Service
Free
mobile app Media
User-
generated
content
Metrics

23. Know your baseline
ie. don’t make stupid
decisions based on data

24. Some interesting benchmarks
• Growth: 5-7% per week (Y Combinator)
• User engagement/day: 10% (see Fred Wilson’s 30/10/10 rule)
• Monthly churn: 2% (=22% annual churn)
• Mailing list effectiveness: 20-30% open rate, 5% click-through rate
• Freemium: 2% of your users will actually sign up for the full offering
• ARPDAU: $0.01-$0.05 for puzzle, caretaking and simulation games.
• Lots of benchmarks, for example, in Lean Analytics book
• Find yours!

25. Use funnels
to understand and drive
your customers’ actions

26. Startup Metrics for Pirates by Dave McClure
A Acquisition (how do users find you?)
A Activation (do they have a great first experience?)
R Retention (do they return?)
R Revenue (how do you make money?)
R Referral (do users tell others?)

27. Use cohorts
to find out what’s
really happening

28. Cohort
group of people who share something in common
For example,
• Conversion rate of people that signed up in week 3
• Retention rate of users after five months
• Cart size of people that came via an email campaign
• Retention rate of men
• Cancelation rate for customer after one week vs. one month
• Users based on engagement level (for ex. how many time they use the
service, how many service features they use etc.)

29. Growth hacking
New marketing

30. Mindset of data, creativity, and
curiosity allows a growth hacker to
accomplish the feat of growing a user
base into the millions
-Aaron Ginn

31. Growth hackers asks “How do I get
customers for my product?” and answers
with A/B tests, landing pages, viral factor,
email deliverability, and Open Graph.
Growth hackers make sure virality is
embedded at the core of a product.
- Andrew Chen

32. Airbnb made it really easy to post
the listing on craigslist.com
Accessed instantly millions of
potential customers
Note. Craigslist had no public API
Confidential34

33. Mailbox application
download wait list showed
users how many others were
in front of them
In six weeks, million users
signed up
Confidential35

34. Dropbox made a referral
program with incentives
100k to 4M users in under
two years
Confidential36

35. Hotmail put a tagline in each message sent
through the service.
After five weeks they had 2M users
Confidential37
--------
Get your free email at Hotmail.com

36. Linkedin gave users an
option to create public
profiles.
Went from 2M users to
200M
Confidential38

37. Facebook, for example,
enabled users to put FB
widgets on other sites
Comments, activity,
recommendations, feed, etc.
Confidential39

38. Twitter learned that users that
follow 5-10 others, are more
likely to come back.
They re-engineered the whole
site to get users to follow
when they sign up
Confidential40

39. Youtube has made it really
easy to share Youtube
videos and embed them on
other sites
Confidential41

40. Growth hacking
This is what you do
Pick a metric
to change
Find
correlation
Test
causality
Optimize
the causal
factor
Does either of the
correlated variables
really have an impact
on the other?
Two variables that seem
to be associated with
each other
Metric that is relevant
for your company’s
stage and model
Use the causality to
make improvements.

41. And always remember
correlation doesn’t necessarily mean causality!
Source: www.tylervigen.com

42. Contact
Topi Järvinen
+358 40 754 3131
topi.jarvinen@nestholma.com
http://www.nestholma.com