Analytics For Startups

How do I Analytics?
a practical guide for

pragmatic startups
Andy Young // @andyy // andy@500.co

Hi, I’m Andy!
@andyy
Photo by Dan Taylor - dan@heisenbergmedia.com

#fb

Analytics?
Wait what, why?

What do we measure, and why?
Vanity metrics
Revenue metrics
Conversion rate metrics
Pirate metrics..
We need to know how we’re doing.

If you're not keeping score
there's no point playing the game -
you'll never know if you're
winning or not
- @distrodom

Today’s tools make it
super-easy to track
things
Google Analytics
Mixpanel
Localytics
KissMetrics
Branch Metrics..

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

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

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?

How are we doing?

How’re we doing?
1. Identify top-level KPI

Identify top-level KPI
it’s hard.

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.

How?

Keep it simple!
The good news: there’s probably a

pre-determined answer
for
what drives your business

There’s probably a pre-determined

answer for what drives your business
Spoiler: ultimately it’s $$$

How’re we doing?
There’s probably a pre-determined

answer for what drives your business
Commerce: # sales
Subscription / SaaS: # subscribers
Marketplace: # transactions

How’re we doing?

How’re we doing?

2. Next, add nuance

How’re we doing?
Nuance behind your top level KPI
E.g. for commerce: # sales

Nuance: average sale $; # customers

How’re we doing?

2. Add nuance
3. Add drivers

How’re we doing?
Drivers behind your top level KPI
E.g. for marketplaces: # transactions

Drivers: # suppliers, # customers

How’re we doing?

2. Add nuance
3. Add drivers
4. Add funnel for these drivers

How’re we doing?

2. Add nuance
3. Add drivers
End up with AARRR

How’re we doing?

2. Add nuance
3. Add drivers
Put in a spreadsheet
(Template Google Sheet: http://bit.ly/kpi-sheet)

- How’re we doing? -
e t -
i- s h e
Andy Young // ti .ly
@andyy //
/kp
andy@500.co
How’re we doing?
- key KPI at the top, nuance and drivers below,

finally the detailed funnel below for reference
- columns for weekly numbers, w/w growth

How’re we doing?
- review weekly
- share with whole team
- set targets
- use as a model to predict and prioritize

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

Other key metrics
CAC, LTV, churn

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

If your
LTV
is greater than your
CAC
then you’re in business

If your
LTV
is greater than 3x your
CAC
then you’re in a good business

CAC & LTV: nuances
Payback period: time to recoup CAC
Magnitude of your numbers

e.g. enterprise vs. social

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

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

Calculating LTV
Know your definitions!
MRR?! GMV?!
A16Z blog posts:

16 Startup Metrics & 16 MOAR Startup Metrics

Analysing your data

How not to do Metrics
Outdated information
Just 1 view of your data
Manual calculations
Bad metrics lead you astray

Growth Accounting
wha..?

Growth Accounting

Growth Accounting

Cohort analysis?

Analytics = Knowledge

Knowledge = power
confidence
sanity

Good luck!

Further references..
● 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

Analytics For Startups

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How do I Analytics?

a practical guide for

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

Photo by Dan Taylor - dan@heisenbergmedia.com

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

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

We need to know how we’re doing.

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

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

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

- become overwhelmed with data

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

Drowning in too much data

Failure to select + focus on the top metrics that

Not tracking the data you need to answer key

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

1. How are we doing?

2. What are the results of our experiments?

3. What’s happening right now?

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

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

1. Identify top-level KPI

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

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

if you pick the wrong KPIs, you're screwed.

If you pick KPIs and then ignore them, you're

If you pick and monitor KPIs diligently, but don't

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

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

The good news: there’s probably a

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

There’s probably a pre-determined

Spoiler: ultimately it’s $$$

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

There’s probably a pre-determined

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

1. Identify top-level KPI

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

1. Identify top-level KPI

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

Nuance behind your top level KPI

E.g. for commerce: # sales

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

1. Identify top-level KPI

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

Drivers behind your top level KPI

E.g. for marketplaces: # transactions

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

1. Identify top-level KPI

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

1. Identify top-level KPI

End up with AARRR

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

1. Identify top-level KPI

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

- key KPI at the top, nuance and drivers below,

- columns for weekly numbers, w/w growth

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

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

% week-on-week or month-on-month growth

Focus. Set a target.

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

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