nbtc 2014 - startup analytics presentation

Startups & AnalyticsStartups & AnalyticsA (very) practical guide - abridgedA (very) practical guide - abridged

SO YOU WANT TO BUILD A SO YOU WANT TO BUILD A STARTUP ...STARTUP ...

... yolo?

#1 SHOULD YOU?#1 SHOULD YOU?(aka - why building a startup sucks)

• Not very status-oriented• Doesn’t follow rules very well and questions authority• Can handle high degrees of ambiguity or uncertainty• Can handle rejection, being told “no” often and yet still have the confidence in your idea• Very decisive. A bias toward making decisions – even when only right 70% of the time – moving forward & correcting what doesn’t work• A high level of confidence in your own ideas and ability to execute• Not highly susceptible to stress• Have a high risk tolerance• Not scared or ashamed of failure• Can handle long hours, travel, lack of sleep and the trade-offs of having less time for hobbies & other stuff

Common attributes of entrepreneurs

ARE YOU SURE YOU WANT TO DO THIS ARE YOU SURE YOU WANT TO DO THIS ... ?... ?

“9 out of 10 startups fail”

http://www.quora.com/What-is-the-truth-behind-9-out-of-10-startups-fail

According to the National According to the National Venture Capitalists Venture Capitalists

AssociationAssociation3 startups fail, have gone bankrupt or business were closed

3 startups are worse than average, aren’t very profitable, returning less than the invested capital, but are still active

3 startups are a moderate success, are profitable, returning just the invested capital, were not acquired yet and are still active

1 highly successful startup that will pay the investor a multiple return on all of his 10 investments; that startup had an IPO or were a target of a significant acquisition

““I DIDN’T REALLY HAVE A I DIDN’T REALLY HAVE A CHOICE”CHOICE”

#2 FINDING THE RIGHT #2 FINDING THE RIGHT PEOPLEPEOPLE“It’s like dating all over again, and I can’t wait to find the meat

markets”

BUILDING THE RIGHT BUILDING THE RIGHT TEAMTEAM

http://solveforinteresting.com/the-three-kinds-of-ceo/http://steveblank.com/2011/12/13/the-startup-team/

HACKER, HUSTLER, HACKER, HUSTLER, DESIGNER, VISIONARYDESIGNER, VISIONARY

If this is a sea, wtf If this is a sea, wtf are the fish?are the fish?

Fellow Students

Founder Dating (http://founderdating.com/about/)

Startup Weekend

Startup Drinks

Bitmaker Labs

Make Your Own

Tell your friends you’re in the market

WHOLE LOT OF TALENT, WHOLE LOT OF WHOLE LOT OF TALENT, WHOLE LOT OF DEMANDDEMAND

(shit.)

#3 FINDING YOUR IDEA#3 FINDING YOUR IDEA

Most startups don’t even Most startups don’t even know what problem they know what problem they

solvesolvePaypal first built for Palmpilots

Freshbooks was invoicing for a web design firm

Wikipedia was to be written by experts only

Mitel was a lawnmower company

Hotmail was a database company

Flickr was going to be an MMO (it’s back to being one now)

Twitter was a podcasting company

Autodesk made desktop automation software

#4 THE LEGAL SHIT#4 THE LEGAL SHITIANAL (sounds worse than it is - it just means that I’m not a lawyer)

THANKFULLY, THIS PART IS THANKFULLY, THIS PART IS EASYEASY

Enter Dave Weekly

http://dweek.ly/stock/http://dweek.ly/stock/Stock

The Board

Equity

Liquidity

Investors

Fundraising

Options

Pricing

Pools

Ownership

Advisors

Acceleration & Allocations

#5 THE PROTOTYPE#5 THE PROTOTYPE

LEARN FASTER WITH CUSTOMER LEARN FASTER WITH CUSTOMER DEVELOPMENTDEVELOPMENT

by Hiten Shah

http://www.slideshare.net/startuplessonslearned/hiten-shah-the-leanstartupsxsw-7365813

#5 THE PRODUCT#5 THE PRODUCTor Finding Product/Market Fit

#6 THE MONEY#6 THE MONEYWhat you need to know about fundraising

BEFORE YOU DO BEFORE YOU DO ANYTHINGANYTHING

Some rules of thumbSome rules of thumb

You have paying flagship customers or loyal high profile individual evangelists

You’ve reached 10k registered / active users (if you’re b2c)

Fundraising takes about a year and gives you about a year

Some rules of thumbSome rules of thumb

Begin to get to know investors in the Toronto area now (OMERS, MaRS, iNovia, BDC, Mantella)

Spend as much time as you can in the valley, and get valley interest first

Come back to Toronto investors with something to show

Measure the right Measure the right things.things.

Act 2Act 2

Understanding your Understanding your goals.goals.

http://www.flickr.com/photos/itsgreg/446061432/

Analytics is the Analytics is the measurement of measurement of movementmovement towards towards business goalsbusiness goals..

http://www.flickr.com/photos/itsgreg/446061432/

56

NEWNEWVISITORSVISITORS

GROWTHGROWTH

BOUNCEBOUNCERATERATE

LOSSLOSS

CONVERSICONVERSIONON

RATERATE

GOALGOALVALUEVALUE

xTIMETIMEONONSITESITE

PAGEPAGESSPERPERVISITVISIT

NUMBERNUMBEROF OF VISITSVISITS

SEARCHSEARCH

ESES

TWEETSTWEETS

MENTIOMENTIO

NSNS

ADS ADS

SEENSEEN

ATTENTION

ENGAGEMENT

CONVERSION

In a startup, the In a startup, the purpose of analytics is purpose of analytics is to to iterate to a iterate to a product/market fitproduct/market fit before the money runs before the money runs out.out.

If you remember only one thing...If you remember only one thing...

Message reachMessage reachMessage reachMessage reach

Infrastructure Infrastructure healthhealth

Infrastructure Infrastructure healthhealth

Market Market sentimentsentiment

Market Market sentimentsentiment

User User engagementengagement

User User engagementengagement

Business modelBusiness modelBusiness modelBusiness model

SustainabilitySustainabilitySustainabilitySustainability

Viral coefficientViral coefficientViral coefficientViral coefficient

AmplificationAmplificationAmplificationAmplification

PerformabilityPerformabilityPerformabilityPerformability

Customer researchCustomer researchCustomer researchCustomer research

Community sentimentCommunity sentimentCommunity sentimentCommunity sentiment

Time since last visitTime since last visitTime since last visitTime since last visit

Core goalsCore goalsCore goalsCore goalsExtended funnel Extended funnel abandonmentabandonmentExtended funnel Extended funnel abandonmentabandonmentMovement towards goalsMovement towards goalsMovement towards goalsMovement towards goals

Cost per engaged visitorCost per engaged visitorCost per engaged visitorCost per engaged visitor

Peak to average ratioPeak to average ratioPeak to average ratioPeak to average ratio

Minimum sustainable burnMinimum sustainable burnMinimum sustainable burnMinimum sustainable burn

Viral coefficientViral coefficientOn average, for each message they hear, On average, for each message they hear, how many people does someone tell?how many people does someone tell?

11

------------------------------------------------------------------------------------------------------------Get your free private email at Get your free private email at http://www.hotmail.com------------------------------------------------------------------------------------------------------------

v ≠ 1, pt  = δp0 (1 – vt+1) / (1 – v) + p0 

http://robert.zubek.net/blog/2008/01/30/viral-coefficient-calculation/

Or simplerOr simpler

UsersUsersUsersUsers ViralViralcoefficientcoefficient

ViralViralcoefficientcoefficient

Churn &Churn &abandonmenabandonmen

tt

Churn &Churn &abandonmenabandonmen

ttxx -- >> 11

http://www.quora.com/Viral-Growth-and-Analytics/What-is-the-definitive-way-to-calculate-viral-coefficient-for-a-social-game

How well are messages How well are messages being amplified?being amplified?

22

5050%%

7575%%

100100%%

5050%%

= = 44

22 33 11 = = 66

14.14.55

Downstream reach (aggregate followers)

Downstream reach (aggregate followers)

Amplification chance(how relevant the

content is + what the recipient thinks of the

sender)

Amplification chance(how relevant the

content is + what the recipient thinks of the

sender)

2525%%

..55

5050%%

22

5050%%

11= =

3.53.5

RepurposingRepurposing(spread to (spread to otherothercommunities)communities)

AmplificationAmplification(virality and(virality andmessage message spread)spread)

ConversioConversionsns

VisitVisitss

Shopping Shopping cartcart

Payment Payment optionsoptions

Seed Seed (starting(starting

communitcommunity)y)Reach Reach

(impressions)(impressions)

Viral message spreadViral message spread

ConversioConversionsns

VisitVisitss

Shopping Shopping cartcart

Payment Payment optionsoptions

Reach Reach (impressions)(impressions)

Emphasis on Emphasis on getting viral getting viral ratio above 1ratio above 1(Retweeting, (Retweeting, Fan, Email Fan, Email

forward, Reddit forward, Reddit upvote, other upvote, other

loops)loops)

Emphasis on Emphasis on getting viral getting viral ratio above 1ratio above 1(Retweeting, (Retweeting, Fan, Email Fan, Email

forward, Reddit forward, Reddit upvote, other upvote, other

loops)loops)

Megablogger proponentsMegablogger proponents

ConversioConversionsns

VisitVisitss

Shopping Shopping cartcart

Payment Payment optionsoptions

Seed Seed (starting(starting

communitcommunity)y)Reach Reach

(impressions)(impressions)Emphasis on convincing highly-Emphasis on convincing highly-

followed, highly acted-upon followed, highly acted-upon seed seed groupgroup to spread the word. to spread the word.

Emphasis on convincing highly-Emphasis on convincing highly-followed, highly acted-upon followed, highly acted-upon seed seed

groupgroup to spread the word. to spread the word.

A call to actionA call to action

ConversioConversionsns

VisitVisitss

Shopping Shopping cartcart

Payment Payment optionsoptions

Reach Reach (impressions)(impressions)

Emphasis on Emphasis on maximizing maximizing

impression-to-click impression-to-click ratioratio within the within the

communitycommunity

Emphasis on Emphasis on maximizing maximizing

impression-to-click impression-to-click ratioratio within the within the

communitycommunity

Long funnel: Beers for Long funnel: Beers for CanadaCanada

700,000s

1,642

150RT

3277

1010

1515

x x $100$100x x $20$20x x $7$7

20Seed Seed ratio:ratio:

35,000:135,000:1FolloweFollowe

rsrs

VisitorVisitors:s:

0.23%0.23%

ConversioConversions:ns:

1.95%1.95%

Revenues:Revenues:Average: $39.54Average: $39.54Median: $20Median: $20

Total: Total: $1,005$1,005

AmplificatioAmplification:n: 2.9% 2.9%

2RepurposinRepurposingg

2,000

How performable are How performable are we?we?Health of the infrastructure (uptime, Health of the infrastructure (uptime, latency)latency)

33

Impact of page load time on Impact of page load time on average daily searches per average daily searches per

useruser

Impact of additional Impact of additional delay on business delay on business

metricsmetrics

Shopzilla’s makeoverShopzilla’s makeover

5-5-12%12%

Traffic levelsTraffic levels

Bounce rateBounce rate

Average time on Average time on sitesite

Pages per visitPages per visit

Conversion rateConversion rateand order valueand order value

11 22 33 44 55 66 77 88 991100

1111

1122

1133

1144

1155

1166

00

5,05,00000

Un

iqu

e p

ag

e

Un

iqu

e p

ag

e

vie

ws

vie

ws

>4s or >4s or errorerror2-2-4s4s<2<2ss

ConversiConversionsons

$$00

$10,0$10,00000

Reven

ue (to

tal

Reven

ue (to

tal

sale

s)sa

les)

What do visitors think of What do visitors think of us?us?Both on the site (VoC) and in the world Both on the site (VoC) and in the world (community monitoring)(community monitoring)

4&54&5

How engaged are How engaged are users?users?Time since last visit, as a histogram, not Time since last visit, as a histogram, not an average, compared to baselines.an average, compared to baselines.

66

Days since last Days since last visitvisit

12012000

10010000

808000

606000

404000

202000

0011 22 33 44 55 66 77 88 99

Days since last Days since last engagementengagement

JanuarJanuaryy

FebruaFebruaryry

DisengagDisengageded

(>10 (>10 days)days)

2502500000

2002000000

1501500000

1001000000

50050000

00

Nu

mb

er

of

Nu

mb

er

of

use

rsu

sers

Core goals driving the Core goals driving the businessbusinessPick the 3-4 tasks you’ve set for users. Pick the 3-4 tasks you’ve set for users. Always know what these are and why Always know what these are and why they correlate to business growth.they correlate to business growth.

77

Localmind snapshotLocalmind snapshot

Extended funnel Extended funnel abandonmentabandonmentNot just on the site: Email open rateNot just on the site: Email open rate

88

In the last build, what In the last build, what moved us towards & moved us towards & away from goals?away from goals?Requires knowing the goals Requires knowing the goals andand the key the key features addedfeatures added

99

Cost per visitorCost per visitorOperations costs per site visitorOperations costs per site visitor

1100

Peak-to-average ratioPeak-to-average ratioHow much busier are you at busy times?How much busier are you at busy times?

What premium do you pay for that What premium do you pay for that surplus?surplus?

Can you decommission well?Can you decommission well? 1111

http://community.microsoftadvertising.com

Minimum sustainable Minimum sustainable burnburn

1122

http://www.flickr.com/photos/dougww/833127501/

Message reachMessage reachMessage reachMessage reach

Infrastructure Infrastructure healthhealth

Infrastructure Infrastructure healthhealth

Market Market sentimentsentiment

Market Market sentimentsentiment

User User engagementengagement

User User engagementengagement

Business modelBusiness modelBusiness modelBusiness model

SustainabilitySustainabilitySustainabilitySustainability

Viral coefficientViral coefficientViral coefficientViral coefficient

AmplificationAmplificationAmplificationAmplification

PerformabilityPerformabilityPerformabilityPerformability

Customer researchCustomer researchCustomer researchCustomer research

Community sentimentCommunity sentimentCommunity sentimentCommunity sentiment

Time since last visitTime since last visitTime since last visitTime since last visit

Core goalsCore goalsCore goalsCore goalsExtended funnel Extended funnel abandonmentabandonmentExtended funnel Extended funnel abandonmentabandonmentMovement towards goalsMovement towards goalsMovement towards goalsMovement towards goals

Cost per engaged visitorCost per engaged visitorCost per engaged visitorCost per engaged visitor

Peak to average ratioPeak to average ratioPeak to average ratioPeak to average ratio

Minimum sustainable burnMinimum sustainable burnMinimum sustainable burnMinimum sustainable burn

1212thingsthings

totowatchwatch

UsabilityUsability

++11

THANK YOUTHANK YOU

sean@bitmakerlabs.com