What’s the best way to measure product usage?

Josh Elman (Partner at Greylock Partners)
The only metric that matters — Medium

I always ask the same question: How many people are really using your product? You need a metric that specifically answers this. It can be “x people did 3 searches in the past week”. Or “y people visited my site 9 times in the past month”. Or “z people made at least one purchase in the last 90 days. ” But whatever it is, it should be a signal that they are using their product in the way you expected and that they use it enough so that you believe… (read more)

What’s the best way to get more customers for your product?

Josh Elman (Partner at Greylock Partners)
Building your growth model and Ladder of Engagement — Medium

Purpose: What is the core purpose of the product? Users: Who will care about that core purpose? Inception: How can I get people to hear about this product for this purpose? Adoption: What does someone need to do to get the product to fulfill this purpose for them? Habit: How frequently should the person use the product, and how can we get them to adopt the habit?

What’s the best way to measure product usage?

David Jackson (Founder, Seeking Alpha)
Chartbeat’s suggestion for how to measure content quality | A Founder’s Notebook

Sites that optimize for pageviews inevitably publish provocative headlines and populist content. But time on page isn’t a solution, because shorter articles aren’t necessarily lower quality or less valuable.

Ben Erez (Product at Breeze)
22 Mistakes I Made as a First Time Founder — Viabilify

In hindsight, seeking positive feedback was toxic. It was toxic because it was giving us the impression we were on the right track. I mean, we were on the right track, but we were moving at 1 mph on a track built for bullet trains. Now I know that shipping product, getting sales and not running out of money are the most important things for a B2B startup.

Danielle Morrill (Co-Founder & CEO at Mattermark)
Revenue vs. Value | Danielle Morrill

While revenue is a useful signal to founders, indicating they are creating something people want, it is also a lagging indicator of success. By the time a startup has a predictable and steadily growing revenue stream that means it has built a product and brought it to market successfully.

Brian Balfour (Co-Founder, CMO @ Boundless)
Avoiding The Wheel Of Meaningless Growth

There is a cycle that plagues a lot of companies. It typically works like this: 1. A startup wants some press, so they look for some bloated number to give the writer (downloads, registrations, visits, etc). 2. The startup then celebrates that press article, internally supporting the message that the bloated metric is worth pursuing. 3. In order to get additional press hits, the startup needs to increase that bloated number, so they focus on incr… (read more)

Alistair Croll (Founder of UEM, Author of Lean Analtyics)
The One Metric That Matters | Lean Analytics Book

Transactional sites are about shopping cart conversion, cart size, and abandonment.
Collaboration is about the amount of good content versus bad, and the percent of users that are lurkers versus creators.
SaaS is about time-to-complete-a-task, SLA, and recency of use; and maybe uptime and SLA refunds.
Media is about time on page, pages per visit, and clickthrough rates.
Game startups care about Average Revenue Per User Per Month and Lifetime … (read more)

Josh Kopelman (Partner at First Round)
Founder Office Hours With Chris Dixon And Josh Kopelman: Schedit | TechCrunch

“The real data is retention and repeat usage. ” Startups that focus on the real metrics can make their products better, attract more customers, and make them happier.

Brian Balfour (Co-Founder, CMO @ Boundless)
Avoiding The Wheel Of Meaningless Growth

The one metric that guides us like our north star is Weekly Active Users. We defined this as our authentic growth metric using a few criteria: 1. Retention. In the consumer world things like Daily Active User (DAU) and Weekly Active User (WAU) are most commonly used. Celebrating metrics such as total registrations or downloads over time tell you nothing about whether or not you are building real value. 2. Meaningful interaction. Qualifying events… (read more)

David Jackson (Founder, Seeking Alpha)
The key metric for your startup must satisfy these 4 criteria | A Founder’s Notebook

Reporting metrics as growth rates (or absolute growth) focuses the company on growth, and encourages everyone to think big.

Donald T. Campbell (American social scientist)
There’s a Name for the Big Flaw in Our Obsession With Assessment and Metrics

The more a given metric—say, a national college ranking—is used to evaluate performance in some domain, the less reliable it becomes as a measure of overall success. Why? The people whose performance is being measured will neglect other parts of their job just to focus on boosting the relevant numbers, sometimes to the point of cheating.

Josh Elman (Partner at Greylock Partners)
The only metric that matters — Medium

I always ask the same question: How many people are really using your product? You need a metric that specifically answers this. It can be “x people did 3 searches in the past week”. Or “y people visited my site 9 times in the past month”. Or “z people made at least one purchase in the last 90 days. ” But whatever it is, it should be a signal that they are using their product in the way you expected and that they use it enough so that you believe… (read more)

Mariya Yao (Founder at Xanadu)
The key success metric for mobile apps | A Founder’s Notebook

A popular metric for measuring retention in the mobile games industry is DAU / MAU, or daily active users divided by monthly active users, and I highly recommend that consumer-facing mobile app developers keep track of that metric as well.

David Jackson (Founder, Seeking Alpha)
The corrosive impact of pageviews as the target metric for content websites | A Founder’s Notebook

While quality positively impacts pageviews, there are cheaper levers that are far more powerful. This leads to volumes of low quality content, with no attempt to create or surface the “great stuff”.

David Jackson (Founder, Seeking Alpha)
Why websites shouldn’t optimize for page views | A Founder’s Notebook

Our key metric at Seeking Alpha is daily, direct users. “Daily” gives you credit for returning visitors, and “direct” only counts people who come for your product and brand, not people who came because they were enticed to click on a syndicated or shared headline.

David Jackson (Founder, Seeking Alpha)
The best startup metric: Share of habit? | A Founder’s Notebook

Tom Tunguz argues that share of habit is a better metric for startups to focus on than engagement. Share of habit, however, has disadvantages. You can’t measure it if you don’t have access to accurate market size data and who has that? And its not a good operating metric, as its impacted by external factors out of your control. In that respect, its a vanity metric.

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
30/10/10 – AVC

I call this ratio 30/10/10 and so many services that we see exhibit it within a few percentage points here and there. Here’s how it works: 30% of the registered users or number of downloads (if its a mobile app) will use the service each month. 10% of the registered users or number of downloads (if its a mobile app) will use the service each day. The max number of concurrent users of a real-time service will be 10% of the number of daily users.

Paul Graham (Co-Founder & Partner at Y Combinator)
Do Things that Don’t Scale

We encourage every startup to measure their progress by weekly growth rate.

Paul Graham (Co-Founder & Partner at Y Combinator)
Do Things that Don’t Scale

Focusing on hitting a growth rate reduces the otherwise bewilderingly multifarious problem of starting a startup to a single problem. You can use that target growth rate to make all your decisions for you; anything that gets you the growth you need is ipso facto right.

Paul Graham (Co-Founder & Partner at Y Combinator)
Startup = Growth

A good growth rate during [Y Combinator] is 5-7% a week. If you can hit 10% a week you’re doing exceptionally well. If you can only manage 1%, it’s a sign you haven’t yet figured out what you’re doing. We usually advise startups to pick a growth rate they think they can hit, and then just try to hit it every week.

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
Social Commerce Is Commerce With A Social Layer – AVC

Conversion rates are critical. They tell you what systems perform best for the end user. When a system converts north of 5% of users visits to a transaction, it is working extremely well for the end user. When a system converts 0.1% of user visits to a transaction, it doesn’t work as well for the end user.

Anamitra Banerji (Partner @ Foundation Capital)
The Shape Of The Curve — Medium

Most consumer software products have a DAU:MAU of 20% or lower. Zero products get to 100% but some rare ones come close to this ceiling (like Facebook 65% and Whatsapp 72%) [i.e. you should be getting better than 20% DAU:MAU]

Eric Ries (Author, The Lean Startup)
The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to … – Eric Ries – Google Books

The most important thing to measure is behavior: would the early participants actively spread the word?

Paul Graham (Co-Founder & Partner at Y Combinator)
Do Things that Don’t Scale

That’s a reasonable proxy for revenue growth because whenever the startup does start trying to make money, their revenues will probably be a constant multiple of active users

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
Having Empathy For Your Users – AVC

I feel like the companies we meet with and work with generally do a good job of instrumenting their products and collecting on data on what is working and what is not working. But they often don’t have good answers for why the behavior they are seeing is happening. It’s hard to fix something you know is broken unless you understand why it is broken.

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
The Behavior Of Your Users Normally Doesn’t Change Overnight – AVC

I tell this story because we all encounter this sort of thing along the way of building and launching and growing a product. We make tweaks and something changes right away. That immediate change is usually related to something that brought traffic (google, twitter, rss, email, appstore) and not a design change. More gradual changes (up or down) are usually because of design changes. There’s a difference between these two kinds of effects and it … (read more)

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
Growth vs Retention – AVC

Entrepreneurs always ask what the one number they should focus on for raising money. I always say “90 day retention numbers for your acquisition cohorts”. There’s a common view in silicon valley and around the tech sector that growth is the one thing you should focus on. But it’s hard to grow if you are churning your users. And if you are paying for user acquisition, as many startups do in search of growth, then retention/churn becomes even more … (read more)

Vasu Vadlamudi (Director of Product, Oscar Insurance)
Growth vs Retention – AVC

For early retention, if your product can be used by a normal user on a daily basis, the “40/20/10” bar is a solid goal. (Of 100 installs on D0, 40 return on D1, 20 on D7, and 10 on D28.)

What’s the best way to get more customers for your product?

David Jackson (Founder, Seeking Alpha)
The three steps to building a great company, and why most startups fail on the first step | A Founder’s Notebook

Why do we move prematurely from “build a product people love” to growth? (i) It’s easier to measure user or revenue growth than it is to measure how much users love your product. (ii) Since sustainable growth is impossible without a successful product, growth metrics assume product success; so we think we can measure product success by measuring growth. (iii) Growth is the true measure of startup success, and entrepreneurs (and particularly VCs) … (read more)

David Jackson (Founder, Seeking Alpha)
If you have low retention, don’t scale and keep your costs low | A Founder’s Notebook

If you have low 90 day retention, then you don’t have product-market fit. But 90 day retention might not be sufficient on its own to demonstrate product-market fit. Consider also user engagement, your net promoter score, whether your product is liked or loved, and the ease of closing sales.

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
Growth vs Retention – AVC

It’s hard to grow if you are churning your users. You might think you have product market fit and so you scale up your hiring, your marketing, your sales, and your capital raising and spending. But if you can’t retain a healthy percentage of your users past ninety days, you don’t have product market fit yet and all the investment you make in your business is just money down the drain. So focus first on retention, then scale.

Jason Lemkin (Managing Director at Storm Ventures, SaaStr.com)
Jason Lemkin: The Right Metrics For Your SaaS Startup | InsightSquared

Overinvest in customer success – that’s my #1 growth hack. That doesn’t get you to your first 10 or 20 or 100 customers, but that’s the best way to turn those 100 customers into 1,000.

Josh Elman (Partner at Greylock Partners)
Building your growth model and Ladder of Engagement — Medium

Purpose: What is the core purpose of the product? Users: Who will care about that core purpose? Inception: How can I get people to hear about this product for this purpose? Adoption: What does someone need to do to get the product to fulfill this purpose for them? Habit: How frequently should the person use the product, and how can we get them to adopt the habit?

David Jackson (Founder, Seeking Alpha)
Sustainable growth vs. growth hacking | A Founder’s Notebook

Most people think about growth in terms of Acquisition and Activation: “How many signups and activations have we had?” “How can we get more signups and activations?” But they should focus on Retention and Referral: “How can I retain an insanely high percentage of my users?” (= product-market fit); “How can I get them to refer their contacts to my product?” (= virality)

Paul Graham (Co-Founder & Partner at Y Combinator)
Default Alive or Default Dead?

In practice there is surprisingly little connection between how much a startup spends and how fast it grows. When a startup grows fast it’s usually because the product hits a nerve, in the sense of hitting some big need straight on.

David Cancel (CEO, Co-Founder at Drift)
3 Warning Signs That Your Product Sucks

If you repeatedly hear any of the following comments, chances are you are not solving a critical problem [for your customer]: “If you made your app easier to use I would start using it. ” “I’m really busy right now but I’ll start using your app soon. ” “If your app was cheaper I would start using it. “

David Jackson (Founder, Seeking Alpha)
Sustainable growth vs. growth hacking | A Founder’s Notebook

If your growth is all based on hacks, then your growth is a function of how much effort you can keep putting into these hacks. If your growth, which is a derivative of customer base, is itself a function of your customer base, you will grow exponentially. And that growth curve comes without you having to spend money.

Seth Godin (Founder at Yoyodyne Entertainment)
Seth’s Blog: Word of mouse

…at the heart of real growth is a simple idea: People decide to tell other people.

Andy Johns (Current VP of Growth at Wealthfront. Formerly growth at Facebook, Twitter, Quora. Ex-EIR Greylock)
Real Engines Of Growth Have Nothing To Do With Growth Hacking | TechCrunch

Understand where your success is coming from today and double down on what is already working. If these channels are working for you without any real effort on your part, then there are huge opportunities to expand on them.

Andy Johns (Current VP of Growth at Wealthfront. Formerly growth at Facebook, Twitter, Quora. Ex-EIR Greylock)
Real Engines Of Growth Have Nothing To Do With Growth Hacking | TechCrunch

Real growth is about finding and removing friction. The opportunities to eliminate friction are usually huge… they can take years to fully uncover.

David Jackson (Founder, Seeking Alpha)
Andy Johns on how to build a winning product | A Founder’s Notebook

Be clear about your target user. Force yourself to articulate your value proposition. Double down on what’s working by removing frictions.

David Jackson (Founder, Seeking Alpha)
The three steps to building a great company, and why most startups fail on the first step | A Founder’s Notebook

In my experience, the most common fatal error made by entrepreneurs (often encouraged by their VCs) is to focus insufficiently on building a product users love. We move from core product development to growth — prematurely. This is a mistake we’ve made numerous times in Seeking Alpha.

David Sacks (CEO at Zenefits)
New Sales Models – David Sacks, Founder and CEO of Yammer – YouTube

You have to innovate on distribution, not just product. Do you have a viral strategy? Do you have a platform strategy? Do you have an embed strategy? At PayPal, we had a viral strategy for acquisition through email. We bootstrapped off the eBay platform, and we embedded PayPal logos on eBay auctions.

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
Winback Campaigns vs New Customer Acquisition – AVC

As mobile becomes a more difficult environment to grow in (maturing market, more competition, growing dominance of the leaders), we see companies spending more and more money on new customer acquisition. While that is necessary, it is not likely the most capital efficient way to grow. Winning back churned out users can be a lot more cost effective if done right.

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
Retention – AVC

You can email or spam in some other way your inactive users and that might work. But what you do once they come back is way more important. You have to figure out how to make the experience better than it was when they used it previously. Some of that will likely be that the product is much better because your and your team have improved it a lot. But some of that should be an engaging experience that somehow they did not get before.

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
The Fallacy Of Zero Sum Game Thinking – AVC

The cool thing about these marketplaces is that the sellers (or project creators in Kickstarter’s case) are the primary marketing engine. Sellers bring the first time buyers. And then many of them stick around and transact again and again, often with sellers other than the one that brought them in the first place. It is a commons where everyone (or most everyone) benefits from the expansion of the marketplace.

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
Search Vs Social – AVC

At some point, I became convinced that websites would eventually see more acquisition traffic coming from social than they were seeing from search, which was the king dog of Internet traffic at the time. It was a hotly debated issue but, again maybe because of how long we were on Twitter, I was convinced social would be king some day. It’s kind of funny to think that we wondered and debated about such things back in 2008 and 2009. It’s not a deba… (read more)


Fred Wilson (Co-Founder and Partner at Union Square Ventures)
OccupyAppStore – AVC

“”We can’t figure out how to get on the leaderboards. The app stores aren’t working for us as a distribution channel.””
To which I replied “”All the app stores use a leaderboard model which makes the rich richer and everyone else poorer. We are in the 99%, wishing we were in the 1%.””

Seth Godin (Founder at Yoyodyne Entertainment)
Seth’s Blog: “Our biggest problem is awareness”

If your startup, your non-profit or your event is suffering because of a lack of awareness, the solution isn’t to figure out some way to get more hype, more publicity or more traffic. …the solution lies in re-organizing your systems, in re-creating your product or service so that it becomes worth talking about…you can dramatically impact the ‘more awareness’ problem by investing heavily in a funnel that doesn’t leak, in a story that’s worth s… (read more)

Sam Altman (President at Y Combinator)
Startup Playbook

Ask your [power user and really good] customers where you can find more people like them.

Rob Go (Co-Founder and Partner at NextView Ventures)
Very Basic Startup Marketing – ROBGO.ORG

The best marketing is customer success. That’s why I think it’s incredibly important that the functions of product and marketing not be thought of as two silos. The job is not done when you’ve gotten someone to pay. It is done when you have delighted a customer to the point that they can’t help but tell others about you.

Rob Go (Co-Founder and Partner at NextView Ventures)
Ain’t Nothing Like The Real Thing – ROBGO.ORG

I’ve been on a bit of a quiet campaign to meet a bunch of really strong user-acquisition folks at different startups in Boston and New York. One thing that is surprising is that many of these people have limited marketing experience. What they do have is a highly analytical background and a mentality around experimentation. On the flip side, more experienced marketers often enter a startup setting wanting to employ an older playbook to stick to t… (read more)

Sam Altman (President at Y Combinator)
Startup Playbook

Experiment with different user acquisition methods like SEO/SEM, ads, mailings, etc. , but try to repay your customer acquisition cost (CAC) in 3 months.

Avrom Gilbert (COO Seeking Alpha)
Israel’s Subscription Challenge

It’s likely that at some point you will reach a point with your customer acquisition cost where it will be hard to improve it significantly. However, if you keep improving your product then your lifetime user value can keep growing indefinitely, which keeps growing your net lifetime user value. This in turn means that you can choose to increase profit or, more likely, spend more to take more market share (even at the risk of increasing your custo… (read more)

Tomasz Tunguz (Partner at Redpoint Ventures)
How Customer Success Meaningfully Reduces Cost of Customer Acquisition

When discussing customer success for SaaS startups, the conversation focuses mostly on retaining customers and reducing churn. These are two fantastic benefits with meaningful return-on-investment. But great customer success organizations can meaningfully impact another critical part of the customer lifecycle, customer acquisition, by catalyzing evangelists to refer new customers.

Sam Altman (President at Y Combinator)
Premature optimization – Sam Altman

The most sustainable (and cheapest) kind of growth is word-of-mouth growth. It’s dangerous to spend all your mental energy on incremental improvements when what you really need is a step change.

Sam Altman (President at Y Combinator)
Startup Playbook

If you have a free product, don’t plan to grow by buying users. that’s really hard for ad-supported businesses. You need to make something people share with their friends.

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
The Mobile Downturn (continued) – AVC

So if you want to launch a new consumer mobile app, what do you do? The best answer I have heard to that question came at breakfast yesterday with an entrepreneur. He said he plans to build mobile web experiences that can go viral and build adoption of his product and use that as a funnel to drive adoption, over time, to his native apps. I’ve seen that work.

Sachin Rekhi (Group Product Manager at LinkedIn)
How to Find Your Ideal Customer | Sachin Rekhi

Take an inward look at your existing customers, using available customer registration data, your analytics tool’s demographic segmentation capabilities, customer surveys, tools like FullContact, Clearbit, Pipl, ZoomInfo, and MaxMind’s IP Address database, and interviews with sales reps, account managers, and customer service reps.

Sachin Rekhi (Group Product Manager at LinkedIn)
How to Find Your Ideal Customer | Sachin Rekhi

Determine the most meaningful attributes by which you can segment and cluster your candidate customers. Some of the most common segmentation attributes include use case, role, demographics, firm characteristics, and psychographic

Sachin Rekhi (Group Product Manager at LinkedIn)
How to Find Your Ideal Customer | Sachin Rekhi

Evaluate the attractiveness of each of your determined customer segments based on attributes that you’ve developed. Typical evaluation criteria include segment size, resonance with value proposition, willingness to pay, strongest delivered value, acquisition strategy, and strategic fit.

David Jackson (Founder, Seeking Alpha)
Why mobile traction is getting harder, not easier | A Founder’s Notebook

It’s hard to acquire meaningful numbers of new app users from app stores and other marketing channels. In contrast, over 500,000 dedicated users of our website downloaded our app in 2013, and we expect that number to increase in 2014.

David Sacks (CEO at Zenefits)
New Sales Models – David Sacks, Founder and CEO of Yammer – YouTube

I believe in the law of successful distribution arbitrage. Successsful distribution techniques are copied until they are no longer unusally effective. That’s why this is such a tough problem. Overtime users get used to techniques and they become less effective. The same techniques that got LinkedIn or Facebook to millions of users would not work today.

Paul Graham (Co-Founder & Partner at Y Combinator)
Default Alive or Default Dead?

Founders tell themselves they need to hire in order to grow. In fact the large staffs of successful startups are probably more the effect of growth than the cause. And partly because when founders have slow growth they don’t want to face what is usually the real reason: the product is not appealing enough.

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
Bootstrap Your Network With A High Value Niche Use Case – AVC

So if you want to build a peer to peer network, you have to find the use case that is high enough value that some people will do things (like put content into your application) that most people won’t. If you nail that, and win the hearts and minds and activity of that small high value user base, then you will have to opportunity to go mainstream. If you aim for the mainstream users first, you are setting yourself up for failure.

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
Mobile Web Is Top Of Funnel, Mobile App Is Bottom Of Funnel – AVC

Mobile web unique visitor growth is faster than mobile app visitor growth and the lines are diverging. This is because your mobile website is the top of the funnel for your user acquisition on mobile. It is where people land when coming from search, email, social media, text links, etc, etc.
The mobile web scales much better. You can build a large audience on mobile web much more easily than via mobile apps.