Analytics for Startups - 500 Startups Accelerator Marketing Hell Week

1. Andy Young // @andyy // andy@500.co
How do I Analytics?
a practical guide for
pragmatic startups

2. Andy Young // @andyy // andy@500.co
Hi, I’m Andy!
@andyy
#fb
PhotobyDanTaylor-dan@heisenbergmedia.com

3. Andy Young // @andyy // andy@500.co
Wait what, why?
Analytics?

4. Andy Young // @andyy // andy@500.co
What do we measure, and why?
Vanity metrics
Revenue metrics
Conversion rate metrics
Pirate metrics..
We need to know how we’re doing.

5. Andy Young // @andyy // andy@500.co
If you're not keeping score
there's no point playing the game -
you'll never know if you're
winning or not
- @distrodom

6. Andy Young // @andyy // andy@500.co
Today’s tools make it
super-easy to track
things
Google Analytics
Mixpanel
Localytics
KissMetrics
Branch Metrics..

7. Andy Young // @andyy // andy@500.co
Today’s tools make it
super-easy to track
things
BUT they also make it really easy to
- become overwhelmed with data
- focus on the wrong things

8. Andy Young // @andyy // andy@500.co
Typical analytics challenges/pitfalls
Drowning in too much data
Failure to select + focus on the top metrics that
matter
Not tracking the data you need to answer key
questions

9. Andy Young // @andyy // andy@500.co
Why analytics?
1. How are we doing?
- are KPIs on the right track?
2. What are the results of our experiments?
- so we can learn
3. What’s happening right now?
- did something great or terrible just happen?

10. Andy Young // @andyy // andy@500.co
How are we doing?

11. Andy Young // @andyy // andy@500.co
How’re we doing?
1. Identify top-level KPI

12. Andy Young // @andyy // andy@500.co
Identify top-level KPI
it’s hard.

13. Andy Young // @andyy // andy@500.co
Identify top-level KPI
if you pick the wrong KPIs, you're screwed.
If you pick KPIs and then ignore them, you're
screwed.
If you pick and monitor KPIs diligently, but don't
assess everything you and your whole team does
on the basis of whether your tasks are the most
effective way to grow your KPIs, you're screwed.

14. Andy Young // @andyy // andy@500.co
Identify top-level KPI
How?

15. Andy Young // @andyy // andy@500.co
Identify top-level KPI
Keep it simple!
The good news: there’s probably a
pre-determined answer
for
what drives your business

16. Andy Young // @andyy // andy@500.co
Identify top-level KPI
There’s probably a pre-determined
answer for what drives your business
Spoiler: ultimately it’s $$$

17. Andy Young // @andyy // andy@500.co
How’re we doing?
There’s probably a pre-determined
answer for what drives your business
Commerce: # sales
Subscription / SaaS: # subscribers
Marketplace: # transactions

18. Andy Young // @andyy // andy@500.co
How’re we doing?
1. Identify top-level KPI

19. Andy Young // @andyy // andy@500.co
How’re we doing?
1. Identify top-level KPI
2. Next, add nuance

20. Andy Young // @andyy // andy@500.co
How’re we doing?
Nuance behind your top level KPI
E.g. for commerce: # sales
Nuance: average sale $; # customers

21. Andy Young // @andyy // andy@500.co
How’re we doing?
1. Identify top-level KPI
2. Add nuance
3. Add drivers

22. Andy Young // @andyy // andy@500.co
How’re we doing?
Drivers behind your top level KPI
E.g. for marketplaces: # transactions
Drivers: # suppliers, # customers

23. Andy Young // @andyy // andy@500.co
How’re we doing?
1. Identify top-level KPI
2. Add nuance
3. Add drivers
4. Add funnel for these drivers

24. Andy Young // @andyy // andy@500.co
How’re we doing?
1. Identify top-level KPI
2. Add nuance
3. Add drivers
4. Add funnel for these drivers
End up with AARRR

25. Andy Young // @andyy // andy@500.co
How’re we doing?
1. Identify top-level KPI
2. Add nuance
3. Add drivers
4. Add funnel for these drivers
Put in a spreadsheet
(Template Google Sheet: http://bit.ly/kpi-sheet)

26. Andy Young // @andyy // andy@500.co
- How’re we doing? -
it.ly/kpi-sheet -

27. Andy Young // @andyy // andy@500.co
How’re we doing?
Put in a spreadsheet
- key KPI at the top, nuance and drivers below,
finally the detailed funnel below for reference
- columns for weekly numbers, w/w growth

28. Andy Young // @andyy // andy@500.co
How’re we doing?
Put in a spreadsheet
- review weekly
- share with whole team
- set targets
- use as a model to predict and prioritize

29. Andy Young // @andyy // andy@500.co
Weekly/Monthly reporting
% week-on-week or month-on-month growth
in your
One Metric That Matters
Focus. Set a target.
How to choose? Read this Lean Analytics post

30. Andy Young // @andyy // andy@500.co
Other key metrics
CAC, LTV, churn

31. Andy Young // @andyy // andy@500.co
Other key metrics
Customer Acquisition Cost (CAC)
how much you spend (on average) to acquire a
customer
Lifetime Value (LTV)
How much revenue $$ an average customer
brings you in all time

32. Andy Young // @andyy // andy@500.co
If your
LTV
is greater than your
CAC
then you’re in business

33. Andy Young // @andyy // andy@500.co
If your
LTV
is greater than 3x your
CAC
then you’re in a good business

34. Andy Young // @andyy // andy@500.co
CAC & LTV: nuances
Payback period: time to recoup CAC
Magnitude of your numbers
e.g. enterprise vs. social

35. Andy Young // @andyy // andy@500.co
Calculating CAC
Simple approach: total spend / total signups
“50% of the money I spend on advertising
is wasted - the problem is
I don't know which half”
- John Wanamaker
Eventual goal: calculate CAC per channel

36. Andy Young // @andyy // andy@500.co
Calculating LTV
Problem!
You don’t have a lifetime of data
Measured LTV vs. estimated LTV
Measure actual LTV per cohort
Extrapolate revenue curve over time

37. Andy Young // @andyy // andy@500.co
Calculating LTV
Know your definitions!
MRR?! GMV?!
A16Z blog posts:
16 Startup Metrics & 16 MOAR Startup Metrics

38. Andy Young // @andyy // andy@500.co
Analysing your data

39. Andy Young // @andyy // andy@500.co

40. Andy Young // @andyy // andy@500.co

41. Andy Young // @andyy // andy@500.co

42. Andy Young // @andyy // andy@500.co
How not to do Metrics
Outdated information
Just 1 view of your data
Manual calculations
Bad metrics lead you astray

43. Andy Young // @andyy // andy@500.co
Growth Accounting
wha..?

44. Andy Young // @andyy // andy@500.co
Growth Accounting

45. Andy Young // @andyy // andy@500.co
Growth Accounting

46. Andy Young // @andyy // andy@500.co
Cohort analysis?

47. Andy Young // @andyy // andy@500.co

48. Andy Young // @andyy // andy@500.co

49. Andy Young // @andyy // andy@500.co
Analytics = Knowledge

50. Andy Young // @andyy // andy@500.co
Knowledge = power
confidence
sanity

51. Andy Young // @andyy // andy@500.co
Good luck!

52. Andy Young // @andyy // andy@500.co
● A16Z: 16 Startup Metrics - and 16 MOAR
● Lean Analytics Book - Choosing your OMTM
● Josh Elman - The only metric that matters
● Dave McClure's Startup Metrics for Pirates
● Eric Ries’s Three Engines of Growth
● Mark Suster - Why misunderstanding startup
metrics can cost you your business
● Intercom - SaaS metrics for fundraising
● Social Capital - Accounting for User Growth
● Sarah Tavel: Engagement Hierarchy-Core Actions
Further references..