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Startup Growth: Resources Cheat Sheet

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Startup Growth: Resources Cheat Sheet STARTUP GROWTH RESOURCES CHEAT SHEET CONTENTS. 01 STARTUP GLOSSARY 02 BLOGS 03 RESOURCE LIBRARY 2 Startup Glossary. Curious about some of the startup and growth hacking terminology commonly used? Refer to the glossary below for definitions to these key phrases. General Phrases Growth Hacking – Coined in 2010 by Sean Ellis, growth hacking uses a combination of creativity, analytical thinking, experimentation and metrics tracking to sell products, gain exposure and encourage rapid growth within a company. Dropbox and AirBNB are two companies that have popularized the use of growth hacking techniques. Analytics – Analytics is a broad term encompassing all of the different metrics a startup might track, as well as the programs that provide this data. Google Analytics is a popular free program that many entrepreneurs use to generate metrics data. Conversion Rate Optimization (CRO) – CRO refers to the process of making changes to a website or landing page with the goal of increasing the number of online visitors that take a specific conversion action (for example, completing a lead generation form or purchasing a product). Split Testing – The two types of split testing – A/B split testing and multivariate testing – involve conducting controlled, randomized website tests that present website visitors with different combinations of text and images in order to uncover the winning combination that improves a specific website metric. For example, a website using A/B split testing might randomly deploy two versions of a landing page with different headlines to see which contributes to more purchases. 3 Startup Glossary. Call-to-Action (CTA) – A call-to-action is a piece of text or an image that exhorts visitors to take a specific action. A “Buy Now’ button is a CTA, as is a closing paragraph to a blog post that reads, “Take advantage of this special offer now by completing the form below.” Pivot – According to Steve Blank, a pivot is a fundamental change in a business’s customer segment, channel, revenue model/pricing, resources, activities, costs, partners or customer acquisition strategy. Pivots occur when untested business hypotheses are disproven, requiring a change in one or more elements underpinning these assumptions. Product/Market Fit – Essentially, product/market fit refers to the extent to which a given product satisfies a market demand. An improved fishing pole has a good product/market fit with fisherman, while a new set of work gloves does not. Software as a Service (SaaS) – SaaS is the name given to software products that are centrally hosted by a vendor and made available to customers over the internet. Dropbox, Quickbooks, Microsoft Office 365 and Adobe Creative Cloud are all popular examples of SaaS programs. Disruption – Though the term has become a bit overused, a “disruptive” product is one that challenges traditions in an existing market. A product that offers a significantly different pricing model, appeals to a new set of target customers or displaces older technology can be considered disruptive. 4 Startup Glossary. Metrics Terminology Key Performance Indicators (KPIs) – KPIs are a set of metrics that a business tracks to assess its ongoing performance. A startup may track one KPI or 20, but what’s important is that the selected metrics provide an overall picture of the startup’s health and viability. One Metric That Matters (OMTM) – As an alternative to a set of KPIs, some growth hackers prefer to focus on “one metric that matters.” This OMTM might be any of the metrics listed below, or it could be any other data point that provides an overall snapshot of the business’s progress. Churn Rate – Churn rate refers to the percentage of customers that stop subscribing to a service. If your business involves a free trial or a month-to-month subscription, your churn rate would be the percentage of prospects that fall out of your trial period without subscribing, or the percentage of customers that cancel their paid subscriptions during any given month. Customer Acquisition Cost (CAC) – Depending on the complexity of the calculation, CAC can include everything from paid ad spends to the overhead costs accrued during the time it takes a lead to go from prospect to customer. CAC is best used when compared to LTV to ensure that the startup isn’t spending more to get new customers than it’s receiving in revenue from new users. Lifetime Value of Customer (LTV) – LTV involves the net profit a single customer can be expected to contribute to a business throughout his or her lifetime. If, for example, your startup sells a monthly subscription at $300/month, your average customer cancels after 27 months and you have a CAC of $1,450 per new user, your LTV would be $6,650. 5 Startup Glossary. Average Order Volume (AOV) – Another metric that some startups use to measure progress is the average size of each order that goes out. If your AOV was $100 in October 2013 and $200 in October 2014, this could indicate that your business’s performance is improving. Monthly Recurring Revenue (MRR) – MRR – or, the amount of recurring revenue a business generates month over month – is a metric that’s popular with Sean Ellis, Hiten Shah and other well-known growth hackers. Points in this metric’s favor include its ability to take new business, churn, upgrades and downgrades into effect, as well as its compounding nature. Net Promoter Score (NPS) – A less commonly used growth metric is a business’s NPS, which is a score falling between -100 and 100 that measures customers’ willingness to recommend a company to others. This score can be helpful in detecting changes in consumer sentiment, but does not always directly tie to revenue or growth. Daily Active Users (DAU)/Monthly Active Users (MAU) – DAU and MAU measure the “stickiness” of an internet product by determining the number of users that visit during a given day or month. When DAU or MAU metrics are trending upwards, it can be assumed that the product is gaining traction among its target user base. AARRR – “AARRR” is a startup metrics model that incorporates five key data points: acquisition, activation, retention, referrals and revenue. Focusing on all five is more complex than tracking a single OMTM, but can give a more comprehensive look at a business’s health. 6 Startup Glossary. Fundraising Phrasing Angel investor – An angel investor is a single person who offers capital to a startup in exchange for an equity/ownership stake. Angel investment is usually sought and offered early in a startup’s life and typically precedes seed round fundraising. Burn rate – Burn rate refers to the speed at which an entrepreneur or startup spends its money. As an example, if Startup A earns a $500,000 fundraising round and spends an average of $10,000/month on everything from paid ads to paperclips, its $10,000/month burn rate gives it approximately 50 months of capital. Due diligence – Before an investor contributes capital to a company, the “due diligence” process occurs, during which investors analyze the startup’s current financial situation and future potential. This detailed analysis helps investors estimate the ROI they might receive on their contributions. Seed round – A seed round is typically the first fundraising round a startup will pursue. Funds from these efforts are often used to prove a concept or build a prototype, rather than fuel an existing product line’s expansion. Venture capital – Venture capital is money that comes from venture capitalists (VCs), who may be individual investors or firms that invest in particular markets or sectors. Venture capital is typically provided to companies with high growth potential in exchange for equity/ownership stakes. Fundraising rounds – Capital fundraising efforts made by startups are typically labeled as follows: Seed, Series A, Series B and Series C. Further alphabetically- labeled rounds may be carried out, though investors must be certain that potential profit still remains based on the equity already given out and the product’s likelihood of significant market success. 7 Blogs. Want to put your newly-learned startup lingo to work? Add these 20 blogs to your RSS feed reader and check in regularly for insight from top entrepreneurs: 1. Sean Ellis Insight from the man who coined the phrase “growth hacking” 2. Both Sides of the Table A great all-around startup blog based on the experiences of VC Mark Suster 3. Startup Lessons Learned Self-explanatory blog by Eric Ries, author of the book The Lean Startup 4. Work Awesome Tips on working and living better for entrepreneurs and startups at all stages of growth 8 Blogs. 5. OnStartups A self-described “site for entrepreneurs,” including discussions, resource articles and more 6. Seth Godin The godfather of modern marketing techniques 7. Tomasz Tunguz A venture capitalist who writes on topics of interest to entrepreneurs 8. Matt Cutts Get updates on SEO straight from the mouth of Google’s web spam team leader 9. Rand Fishkin More great SEO wisdom comes from Rand Fishkin, founder of Moz 10. 500 Startups Lessons learned from a team of 500 startup founders, mentors and investors 9 Blogs. 11. Avinash Kaushik The web’s go-to expert for all things analytics 12. Noah Kagan Great blog posts on marketing, startups, life hacks and more from the founder of AppSumo and Okdork 13. Jason Cohen “Startups + marketing + geekery” from Jason Cohen, founder of WP Engine and Smart Bear Software 14. Adam Nash Tips and tricks from a former LinkedIn executive who blogs on everything from personal finance to growth hacking 15. Nabeel Hyatt Startup lessons from a former Zynga exec, now working as a VC 16. Chamath Palihapitiya Growth hacking tips from a former growth lead at Facebook 10 Blogs.
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