Presentation on cohort analysis as a better alternative to growth metrics for startups that are pre-market fit. Presented at Imperial College, London in Feb 2012.
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Cohort analysis the basics
1. Measuring success: Cohorts and
Product/Market Fit
a.k.a WTF are we doing and why!?
@stephenrapoport | Crashpadder.com | @londonFAIL
2. A bit about me
• Founder - Crashpadder.com (Sold to Airbnb)
• Organiser – Failboat London
http://www.meetup.com/Failboat-London/
@stephenrapoport | Crashpadder.com | @londonFAIL
3. Summary
• What is a startup?
• What is your startup?
• How do most measure success?
• How should you measure success?
• Corhort analysis?
@stephenrapoport | Crashpadder.com | @londonFAIL
4. What is a startup?
• “Organisation trying to create value in an
environment of extreme uncertainty.”
• Eric Ries, The Lean Startup
If you’re a disruptive startup, uncertainty is x10:
– Product fit
– Model
– Value Hypothesis
@stephenrapoport | Crashpadder.com | @londonFAIL
5. What are you doing?
• Name?
• Model/elevator?
• Stage?
• Founders – Tech/Commercial/Other
@stephenrapoport | Crashpadder.com | @londonFAIL
6. Measuring progress
What is usual?
• Users
• Revenue
• Basket value
• Dwell/stickiness
@stephenrapoport | Crashpadder.com | @londonFAIL
7. What are you measuring?
Who’s feeling brave?
Be honest – NOT what should you be measuring.
@stephenrapoport | Crashpadder.com | @londonFAIL
8. Measuring progress
Revenue
140
What does this actually
tell us about the
120 company’s growth?
100
80
What might better
60 metrics be?
40
20
0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
@stephenrapoport | Crashpadder.com | @londonFAIL
9. Product/market fit
“Being in a good market with a product that
satisfies the needs of that market.”
- Marc Andreessen
Users
3500
3000
2500
2000
1500 Users Aka ‘The Hockey Stick’
1000
500
0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
@stephenrapoport | Crashpadder.com | @londonFAIL
10. Problem/solution hypothesis
• Who is this for?
• What pain are you solving?
• What is their current solution?
• Why is yours better?
• Do they care?
@stephenrapoport | Crashpadder.com | @londonFAIL
11. What should you be measuring?
• Lifetime value of new users
• How has that changed since new features
were added?
• Is our problem/solution hypothesis holding
true?
@stephenrapoport | Crashpadder.com | @londonFAIL
12. What is the user’s value chain?
Track the lifetime journey of one of your users.
• Register?
• Transact?
• Review?
• Share on social networks?
• Refer/Resell?
@stephenrapoport | Crashpadder.com | @londonFAIL
13. Cohorts
Segmenting your users as a means to assess
whether you are getting better rather than
simply bigger.
- Dan Hill, Technical Ninja @ Crashpadder.com
@stephenrapoport | Crashpadder.com | @londonFAIL
14. E.g. Cohort Analysis
250
200
150
Jan
Feb
100 Mar
50
0
Visit Register Purchase Recommend
@stephenrapoport | Crashpadder.com | @londonFAIL
15. Summary
Get BETTER, then get BIGGER
(whilst still getting better…..)
@stephenrapoport | Crashpadder.com | @londonFAIL