Startup Metrics

Murat Aktihanoglu ERA

http://eranyc.com murat@eranyc.com

Background EE Undergrad

CS Grad

ERA 2 sessions a year

10 companies per session

$40,000 with follow-on investment ($50,000 to $100,000)

4 month program

Free collaborative 10,000sf office space (includes other ERA alumni companies)

250+ mentors (investors, domain experts, successful entrepreneurs and industry executives)

Free legal services, free software services, free hosting, free flights from American Airlines

Demo Day in New York and California – 70 alumni companies

Strong online alumni network platform (ERA Bot)

Today

Things you should always know and track

How to make constant progress

What to track, always:

Revenue Run Rate Current month’s revenue x 12

Monthly Revenue Growth ( (Current month’s revenue - Last month’s revenue) / Last month’s revenue )x100

Good target to raise Series A: 15-20%

Runway Cash in the bank/Burn Rate Just after a raise: 12 to 18 months

What to track, always:

Customer Acquisition Cost

Total spend on marketing/Number of acquired customers

CAC should be recovered from the customer in less than 12 months

Lifetime Value of a Customer

LTV > 3 x CAC

Salesforce, ConstantContact – 5 x CAC

What to track, always: Conversion rates

What to track, always:

Churn Rate

(Number of customers that quit/Total number of customers) x 100

Acceptable: 5-7% annually (or 0.42 – 0.58% monthly churn)

Viral coefficient ( K-Value )

Average number of invitations sent per customer * Acceptance rate of these invitations

>1 for viral growth

Making progress

Pick one metric that is a good overall indicator of the area to make progress on

Present it to your peers, collaborate and come up with target numbers for the next 6 months

Focus and optimize the heck out of them and try to hit your target numbers every month

Re-evaluate every 3 months

Bad examples

Page views (out of how many unique visitors?)

Interactions between users (out of how many users, resulting in what?)

Shopping cart actions (by how many people, how many actual purchases?)

Good examples

Revenue – no substitute for this, all-time best metric

CAC

Number of new customers

Virality coefficient

For example

Revenue

Month 1: $10,000

Month 2: $15,000

Month 3: $25,000

Month 4: $50,000

Track and re-adjust strategies, SEM and other marketing channels accordingly

Murat Aktihanoglumurat@eranyc.comhttp://eranyc.com

Blog: http://muratak.com