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Quantitative approaches to consumer internet


(Stolen from Uncov)

After the Techcrunch Bump

Josh Kopelman writes a great post titled "After the Techcrunch Bump" where he talks about some key quantitative measures of how your site is doing:

  • usage growth
  • viral coefficient
  • engagement level
  • cohort analysis

Absolutely worth reading in more detail, particularly for folks who primarily focus on blog "buzz" or PR in order to generate traffic…

My position on this topic

I’ve written on some similar issues, taking a more extreme viewpoint here, where the point is to say, forget Techcrunch, just focus on metrics and building your business.

My take on it is that if you can quantitatively measure user acquisition, retention, and monetization to your site, and optimize towards that, then the entire decision whether or not you want to talk to press and bloggers is an independent decision. What are the advantages and disadvantages of making what you’re doing public? And for the most part, until you’ve perfected your traction, why alert your potential competitors on what you’re up to?

Instead, it strikes me that one of the smartest things to do is to keep a low-profile, gather millions of customers, and go from there. The caveat to this being that you can often find interesting partners, investors, and employees by going public.

How quantitative are consumer startups?
The heart of the issue in Josh’s post, however, is that consumer internet startups are very very quantitative. Another smart VC, Vineet Buch from Bluerun, recently remarked to me over coffee:

It’s a myth that enterprise companies are more metrics-driven than consumer companies – in fact it’s the other way around.

I totally agree with this, because when you have millions of users driving billions of pageviews, that’s actually trillions of datapoints to track, analyze, and act upon.

Companies like Amazon and Google, with real revenue streams attached to their businesses, track a ton fo data and optimize. But for a small startup, it’s often overlooked even though the process of validating user-traction is often the #1 job of a seed-stage company.

An alternative approach
I’d like to see more startups actually start with a wonderful, artistic idea for a consumer product, but then spend the first 4-6 weeks working on an analytics architecture around that idea. It’s something that very few companies are willing to do – stats often ain’t fun – but is obviously hugely useful.

Know of anyone doing this??

PS. Cutest thing ever!

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