How To Make Money From Apps: Pirate metrics & growth hacking

@polvallssoler!

How to make money from apps: Pirate Metrics & Growth Hacks

Pol  Valls  Soler  

@polvallssoler!

Before 2000!•  Sun Servers!•  Oracle DB!•  Exodus Hosting!•  12-24mo dev cycle!•  6-18mo sales cycle!•  <100M people online!•  $1-2M seed round!•  $3-5M Series A!•  Sand Hill Road crawl!•  Big, Fat, Dinosaur Startup!

After 2008!•  AWS, Google, PayPal, FB, TW!•  Cloud + Open Source SW!•  Lean Startup / Startup Wknd!•  3-90d dev cycle!•  SaaS / online sales!•  >3B people online!•  <$100K incub + <$1M seed!•  $1-3M Series A!•  Angel List global visibility!•  Lean, Little, Cockroach Startup!

Some context: Before & After 2 Dot-Com Crashes

Source:500startups!

Daft Punk Startup: !Simpler, Faster, Cheaper, Smarter  

@polvallssoler!

•  LESS Capital required to build product, get to market –  Dramatically reduced $$$ on servers, software, bandwidth –  Crowdfunding, KickStarter, Angel List, Funders Club, etc –  Cheap access to online platforms for 100M+ consumers, smallbiz, etc

•  MORE Customers via ONLINE platforms (100M+ users) –  Search (Google) –  Social (Facebook, Twitter) –  Mobile (Apple, Android) –  Local (Yelp, Groupon, Living Social) –  Media (YouTube, Pinterest, Instagram, Tumblr) –  Comm (Email, IM/Chat, Voice, SMS, etc)

•  LOTS of little bets: Accelerators, Angels, Angel List, Small Exits –  Y Combinator, TechStars, 500 Startups –  Funding + Co-working + Mentoring -> Design, Data, Distribution –  “Fast, Cheap Fail”, network effects, quantitative + iterative investments

Source:500startups!

Some context: Changes in Tech Startups

@polvallssoler! Source: Kleiner Perkins (KPCB)!

Some context: Evolution of mobile

@polvallssoler!

@polvallssoler! Source: Kleiner Perkins (KPCB)!

Some context: Evolution of mobile

@polvallssoler! Source: Kleiner Perkins (KPCB)!

Some context: Evolution of mobile

@polvallssoler! Source: Kleiner Perkins (KPCB)!

Some context: Evolution of tablets

@polvallssoler!

@polvallssoler!

Some context: Full stack startups based on mobile

@polvallssoler!

@polvallssoler!

Some context: Full stack startups based on mobile

@polvallssoler!

@polvallssoler!

Some context: Mobile-­‐Enabled  Commerce  Will  Yield  The  Next  $100B  Startup  

@polvallssoler! Source: Trinity Ventures!

@polvallssoler!

Metrics for pirates…AARRR!

@polvallssoler!

MAARRRketing for startups

@polvallssoler!

ACQUISITION !

Users come to the site; you have their attention  

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ACTIVATION !

User performs some key activity that indicates a good first visit  

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RETENTION!

User continues to do that key activity indicating they like your product  

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REFERRAL!

User gets other users to join  

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REVENUE!

User pays you  

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AARRR Funnel: Customer Lifecycle / Conversion Behavior!

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@polvallssoler!

Emails  &  

Alerts  

Blogs,  Conten

t  

System  Events

 &  Time-­‐

based  Featur

es  

Biz  Dev  

Ads,  Lead  Gen,  

SubscripMons,  etc  

Emails  &  

widgets  

Campaigns,  

Contests  

Homepage  /  Landin

g  

Page  

Product  

Features  

SEO   SEM  

Apps  &  Widgets  

Affiliates  

Email  

PR  

Biz  Dev  Campaigns,  Contests  

Direct,  Tel,  TV  

Social  Networks   Blogs  

Domains  

AARRR Funnel: Customer Lifecycle / Conversion Behavior!

@polvallssoler!

@polvallssoler!

BLOG EXAMPLE!

Acquisition - users come to the site from a search engine!

Activation - user signs up for RSS/newsletter or stays for at least 5 minutes

Retention - user reads at least one post a week or opens the newsletter

Referral - user promotes your blogs contests and drives traffic

Revenue - user buys your ebook !

@polvallssoler!

SAAS EXAMPLE!

Acquisition - user signs up for the service

Activation - user successfully makes a document

Retention - user continues to make documents. As long as they're !

successfully making documents they will continue to use the service.

Referral – Users send other users to our web, possibly with a coupon code

Revenue - yay! money! !

(Web-­‐based  app  to  convert  HTML  to  PDF  or  Excel  documents)  

@polvallssoler!

MOBILE EXAMPLE!(Smartphone  videogame)  

AcquisiMon   AcMvaMon   RetenMon   Revenue  

Referral  Social  Share  

10%  

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AND…

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if CLV > CAC, then PROFIT !

@polvallssoler!

AARRR Funnel: Customer Lifecycle / Conversion Behavior!

Emails  &  

Alerts  

Blogs,  Conten

t  System

 Events  &  Tim

e-­‐

based  Featur

es  

Biz  Dev  

Ads,  Lead  Gen,  

SubscripMons,  etc  

Emails  &  

widgets  

Campaigns,  

Contests  

Homepage  /  Landin

g  

Page  

Product  

Features  

SEO   SEM  

Apps  &  Widgets  

Affiliates  

Email  

PR  

Biz  Dev  Campaigns,  Contests  

Direct,  Tel,  TV  

Social  Networks   Blogs  

Domains  

@polvallssoler!

@polvallssoler!AARRRP!

@polvallssoler!

Example  Conversion  Metrics  (note:  your  mileage  may  vary…)    

Category User Status Conv % Est. Value Acquisition Visit Site

(or landing page, or external widget) 100% $.01

Acquisition Doesn't Abandon (views 2+ pages, stays 10+ sec, 2+ clicks)

70% $.05

Activation Happy 1st Visit (views X pages, stays Y sec, Z clicks)

30% $.25

Activation Email/Blog/RSS/Widget Signup (anything that could lead to repeat visit)

5% $1

Activation Acct Signup (includes profile data)

2% $3

Retention Email Open / RSS view -> Clickthru 3% $2 Retention Repeat Visitor

(3+ visits in first 30 days) 2% $5

Referral Refer 1+ users who visit site 2% $3 Referral Refer 1+ users who activate 1% $10 Revenue User generates minimum revenue 2% $5 Revenue User generates break-even revenue 1% $25

@polvallssoler!

Example  Conversion  Metrics  (note:  your  mileage  may  vary…)    

Category User Status Conv % Est. Value Acquisition Visit Site

(or landing page, or external widget) 100% $.01

Acquisition Doesn't Abandon (views 2+ pages, stays 10+ sec, 2+ clicks)

70% $.05

Activation Happy 1st Visit (views X pages, stays Y sec, Z clicks)

30% $.25

Activation Email/Blog/RSS/Widget Signup (anything that could lead to repeat visit)

5% $1

Activation Acct Signup (includes profile data)

2% $3

Retention Email Open / RSS view -> Clickthru 3% $2 Retention Repeat Visitor

(3+ visits in first 30 days) 2% $5

Referral Refer 1+ users who visit site 2% $3 Referral Refer 1+ users who activate 1% $10 Revenue User generates minimum revenue 2% $5 Revenue User generates break-even revenue 1% $25

@polvallssoler!

Example  Conversion  Metrics  (note:  your  mileage  may  vary…)    

Category User Status Conv % Est. Value Acquisition Visit Site

(or landing page, or external widget) 100% $.01

Acquisition Doesn't Abandon (views 2+ pages, stays 10+ sec, 2+ clicks)

70% $.05

Activation Happy 1st Visit (views X pages, stays Y sec, Z clicks)

30% $.25

Activation Email/Blog/RSS/Widget Signup (anything that could lead to repeat visit)

5% $1

Activation Acct Signup (includes profile data)

2% $3

Retention Email Open / RSS view -> Clickthru 3% $2 Retention Repeat Visitor

(3+ visits in first 30 days) 2% $5

Referral Refer 1+ users who visit site 2% $3 Referral Refer 1+ users who activate 1% $10 Revenue User generates minimum revenue 2% $5 Revenue User generates break-even revenue 1% $25

@polvallssoler!

KEY METRICS TO TRACK !

@polvallssoler!

@polvallssoler!

ACQUISITION !Key Metrics To Track:!

•  Volume(#) !•  Cost ($)!•  Conversion (%)!!

Acquisition tips (for the top 10 - 100 words)!•  Your brand / Products!•  Customer needs / Benefits!•  Competitor’s brand / Products (Steal traffic)!•  Semantic equivalents!•  Misspellings !

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ACQUISITION !

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ACQUISITION !Extra tip: Reverse Engineered App Store’s ranking algorithm

(approximation)!

AppStore  Ranking  =  H +  D +  R + E +  S  !!H = # of installs weighted for the past few hours!!D = # of installs weighted for the past few days!!R = Reviews (star rating + number of reviews)!!E = Engagement (# of times app opened etc.) !!S = Sales ($)!

!!

@polvallssoler!

Extra tip: Reverse Engineered App Store’s ranking algorithm (approximation)!

AppStore  Ranking  =  H +  D +  R + E +  S  !!H = # of installs weighted for the past few hours!!D = # of installs weighted for the past few days!!R = Reviews (star rating + number of reviews)!!E = Engagement (# of times app opened etc.) !!S = Sales ($)!

!!

Luck?  AppStore  Bot?  Dark  pa]ern?  

ACQUISITION !

@polvallssoler!

ACQUISITION !Extra tip: How to get your first 100 users!

1)  What  exisMng  soluMon  do  you  believe  your  product  is  be]er  than?  

2)  Where  can  you  find  a  criMcal  mass  of  people  who  use  the  exisMng  soluMon?  

3)  Go  there.  Talk  to  them.  Show  them  your  product.  

@polvallssoler!

ACTIVATION !Key metrics to track:!

•  Pages per visit (2-3+ page views)!•  Time on site (10-30+ seconds)!•  Conversions (1 key feature usage)!•  Clicks (3-5+ clicks)!•  Bounce rate (low)!

Activation Tips:!•  Less is more!•  Focus on UX / Usability!•  Provide incentives & call to actions!•  Perform A/B tests and iterate fast!

@polvallssoler!

ACTIVATION !

@polvallssoler!

@polvallssoler!

RETENTION!Key metrics to track:!

•  Source (email, RSS, affiliates…)!•  Volume (Low spam rating)!•  Conversions (20% open rate / CTR)!•  Visitor Loyalty (1–3+ visits per month)!•  Session Length!•  Long customer life cycle / Low decay!•  Identify fanatics and cheerleaders!

@polvallssoler!

@polvallssoler!

RETENTION!

@polvallssoler!

@polvallssoler!

RETENTION!Retention Tips:!

•  Email is simple and it works!•  But make Unsubscribe easy!

•  80% subject line / 20% body text!

•  Actually… 99% subject line / 1% body text!

•  Status / “best of” weekly/monthly emails!

•  “Something happened” emails!

•  Lifecycle emails @ +3, +7, +30 days !

•  RSS / News feeds!

•  Widgets / Embeds!

•  Gamification!

•  Fanatics = Virality + affiliate channels (like bloggers)!

@polvallssoler!

REFERRAL!Key metrics to track:!

Viral Growth Factor = X * Y * Z!!

!X = % of users who invite other people!!Y = average # of people that they invited!!Z = % of users who accepted an invitation!

A viral growth factor > 1 means an exponential organic user acquisition.!

@polvallssoler!

REFERRAL!

@polvallssoler!

REFERRAL!Referral Tips:!

•  Personal send to friend (Email / IM)!•  Social Media!•  Widgets / Embeds!•  Affiliates!

@polvallssoler!

@polvallssoler!

REVENUE!Key metrics to track:!

•  Conversion to revenue (%)!

•  Volume ($$$)!

Revenue Tips:!

•  Don’t just rely on AdSense, iAd…!

•  Offer something free (at least when starting out)!

•  Subscription / Recurring transactions!

•  Qualify your customers / Traffic for lead generation.!

•  Sell somethig (physical or virtual)!

@polvallssoler!

REVENUE!

@polvallssoler!

@polvallssoler!

PROFIT !

…  

@polvallssoler!@polvallssoler!

@polvallssoler!

CAC (Customer Acquisition Cost) !

Take  only  a  porMon  of  those  salaries  and  expenses  in  the  early  days  to  give  a  be]er  indicaMon  of  how  

CAC  will  look  when  you  are  at  scale.  

@polvallssoler!

CLV or LTV (Customer Lifetime Value) !

if  the  Customer  Churn  rate  is  a  monthly  %  or  yearly  %,  then  the  Customer  LifeMme  will  be  for  the  same  Mme  period.    

@polvallssoler!

CLV or LTV (Customer Lifetime Value) !

In  most  SaaS  businesses,  the  gross  margin  %  is  high  (above  80%),  and  it’s  quite  common  to  use  the  simpler  version  of  

the  formula  that  is  not  Gross  Margin  adjusted.  

To  truly  get  an  accurate  picture  of  LTV,  you  should  take  into  consideraMon  Gross  Margin:  

@polvallssoler!

a  =  iniMal  ARPA  per  month  (  x  GM  %,  if  you  prefer)  m  =  monthly  growth  in  ARPA  per  account  c  =  Customer  Churn  Rate  (in  months)  

CLV or LTV in a More Complex Scenario (Where  you  expect  ARPA  to  change  over  the  lifespan  

of  the  customer  due  to  expansion  revenue)  

(This  formula  makes  an  assumpMon  that  revenue  increases  at  a  roughly  fixed  rate  every  month  for  the  enMre  lifeMme  of  the  customer)  

@polvallssoler!

if  1  <  LTV/CAC  <  3        if  LTV/CAC  <  1    

LTV : CAC Ratio Awesomeness !

> 3 if  

(It’s  ok.  As  a  startup,  don’t  worry  iniMally  about  LTV>3*CAC)  

your  business  model  is  broken!  

@polvallssoler!

Tools for metrics analysis

…

@polvallssoler!

Tools for testing

…

@polvallssoler!

Less Budget, More Creativity, More Automation -> Maximize Output

Growth Hacking

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REVENUE & PROFIT !

@polvallssoler!

@polvallssoler!

REVENUE & PROFIT !

@polvallssoler!

REVENUE & PROFIT !

@polvallssoler!

REVENUE & PROFIT !

Unlock  all  books  is  the  clear  top  revenue  generator.  

@polvallssoler!

ACQUISITION !

hack    

Caution! Use at your own risk! This is cloaking!!

-­‐>   -­‐>  

@polvallssoler!

ACQUISITION !

1-­‐  Setup  domain  with  a  WordPress  news  theme.  2-­‐  Hire  writers  to  rewrite  news  arMcles  for  $2  each.  (Avoid  copying  to  ensure  “journalisMc  quality”.)  3-­‐  Start  with  150  back-­‐dated  arMcles  to  show  that  the  site  has  some  momentum.  4-­‐  Setup  a  nice  logo  and  real  phone  number.  5-­‐  Double  check  that  the  site  complies  with  the  Google  webmaster  guidelines.  6-­‐  Submit  for  approval.    

@polvallssoler!

Different landing pages according to traffic source!(Search Engines for SEO –> Footer vs Direct !Traffic -> No footer)!

Groupon ACQUISITION !

Caution! Use at your own risk! This is cloaking!!

@polvallssoler!

Groupon ACTIVATION & RETENTION!!

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Groupon RETENTION!!

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Groupon REFERRAL!!Sharing is in Groupon’s DNA

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Linkedin ACTIVATION !!

Gamification example:

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Linkedin RETENTION & REFERRAL!!

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Linkedin REVENUE!!

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Linkedin ACQUISITION & REFERRAL!!

This person passed away about a year ago. For the majority of her life, she ran a small hardware shop and she barely understood email, let alone LinkedIn.

From Linkedin’s People You May Know page…

(NOT THE BEST THING TO DO… people can hate you)

@polvallssoler!

Dropbox ACQUISTION !!Signup driven homepage:

before   aqer  

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Dropbox REFERRAL!!Sharing simplicity and availability on Multiple Devices & Platforms:

@polvallssoler!

Dropbox REFERRAL & REVENUE!!

Get more space

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Dropbox ACQUISTION & REFERRAL!!Dropbox Great Space Race!

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Dropbox REFERRAL & REVENUE!!

Dropbox growth hack in numbers…

1.  September 2008: 100,000 registered users!

2.  January 2010 (15 months later): 4,000,000!

3.  Mostly from word-of-mouth and viral:!

• 35% of daily signups from referral program!

• 20% from shared folders, other viral features!

• Sustained 15-20%+ month-over-month growth since launch!

@polvallssoler!

Panda 4.0

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@polvallssoler!

Panda 4.0 victim

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Panda 4.0 victim

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It doesn’t need to be online (initially)!

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It doesn’t need to be online (initially)!

@polvallssoler!

It doesn’t need to be online (initially)!

@polvallssoler!

@polvallssoler!

It doesn’t need to be online (initially)!

@polvallssoler!

It doesn’t need to be online (initially)!  -­‐  1  Private  domain  (forwarded  to  affiliate  link)  -­‐  made  a  very  easy  domain  name  -­‐  $23  -­‐  1,000  copies  (cut  into  4  =  4,000  flyers)  -­‐  $40  -­‐  2  custom  tshirts  -­‐  $50  -­‐  2  promo  girls  ($20/hr  each  x  4  hrs  =  8  hours  total)  -­‐  $160  -­‐  2  accounts  on  the  hook  up  site  (trial)  -­‐  $10      Total  AdverMsing  Cost  =  $283    Hand  out  all  4,000  flyers  +  do  some  heavy  flir=ng    

@polvallssoler!

It doesn’t need to be online (initially)!  -­‐  1  Private  domain  (forwarded  to  affiliate  link)  -­‐  made  a  very  easy  domain  name  -­‐  $23  -­‐  1,000  copies  (cut  into  4  =  4,000  flyers)  -­‐  $40  -­‐  2  custom  tshirts  -­‐  $50  -­‐  2  promo  girls  ($20/hr  each  x  4  hrs  =  8  hours  total)  -­‐  $160  -­‐  2  accounts  on  the  hook  up  site  (trial)  -­‐  $10      Total  AdverMsing  Cost  =  $283    Hand  out  all  4,000  flyers  +  do  some  heavy  flir=ng    Got  118  conversions  (2,95%  conversion  rate)  -­‐>    118  x  $45  payout  =  $5,310  Revenue  -­‐  $283  cost        

=  $5,027  PROFIT!    

@polvallssoler!

ACQUISITION: SEO hacks !

@polvallssoler!

ACQUISITION !

@polvallssoler!

ACQUISITION & REFERRAL!

From  adverMsing  here…  

@polvallssoler!

PS: I Love You. Get Your Free Email at Hotmail

ACQUISITION & REFERRAL!

To  simply  wriMng  this  footer  on  each  email…  

@polvallssoler!

ACQUISITION & REFERRAL!

And  here  are  the  results:  

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ACQUISITION & REFERRAL (Through viral content)!

@polvallssoler!

@polvallssoler!

ACQUISTION, ACTIVATION, RETENTION & REFERRAL!

ACQUISTION, ACTIVATION & RETENTION!

@polvallssoler!@polvallssoler!

@polvallssoler!

ACQUISITION & PROFIT !

@polvallssoler!

@polvallssoler!@polvallssoler!

@polvallssoler!

@polvallssoler!

REFERRAL!

@polvallssoler!

@polvallssoler!

REFERRAL!

@polvallssoler!

@polvallssoler!

REFERRAL!

@polvallssoler!

@polvallssoler!

REVENUE & PROFIT !

The  $144,146,165  BuOon  

@polvallssoler!

@polvallssoler!

REVENUE & PROFIT ! The  $144,146,165  BuOon  

When  cabs  were  cash  only,  the  average  Mp  was  roughly  10%.  Aqer  the  introducMon  of  this  system,  the  Mp  percentage  jumped  to  22%.  Those  three  bu]ons  resulted  in  $144,146,165  of  addi=onal  =ps  per  year.  

@polvallssoler!

When  Growth  Hacking  Goes  Fail  Hacking  

@polvallssoler!@polvallssoler!

@polvallssoler!

Path Facebook  blocked  Path’s  “Find  Friends”  access  following  spam  controversy  

@polvallssoler!

Path Path  texts  your  enMre  phonebook  

@polvallssoler!

Glide Same…  

@polvallssoler!

Tinder Same…  

@polvallssoler!

Rap Genius: No SEO Genius

@polvallssoler!

Rap Genius: No SEO Genius

Rap Genius fell from around 700,000 uniques a day to around 100,000.!

@polvallssoler!

Rap Genius: No SEO Genius Google recommends a 4-step approach to fixing the problem:!1. Download a list of links to your site from Webmaster Tools.!2. Check this list for any links that violate our guidelines on linking.!

3. For any links that violate our guidelines, contact the webmaster !of that site and ask that they either remove the links or prevent them!

from passing PageRank, such as by adding a rel="nofollow" attribute.!4. Use the Disavow links tool in Webmaster Tools to disavow any links !you were unable to get removed.!

But they had a MASSIVE problem… so they had to write a scraper to!analyze 178k  URLs  using concurrency on a Heroku cloud. #NOTBAD!

@polvallssoler!

Facebook Fraud

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Facebook Fraud

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Talleres  de  Lean  Startup  

pvalls@technovabarcelona.org  

@polvallssoler!

" "linkedin.com/in/polvallssoler!

" "slideshare.net/polvallssoler!"!

Thanks!  

Reddit for spanglish geeks: zumogeek.com!iOS app for discovering people nearby: joinerapp.com!

Advising entrepreneurs at La Salle Technova Barcelona!

Pol Valls Soler !  

Currently creating:!

Co-creator of:!

Moneda Catalana (Catalan Cryptocurrency): moneda.cat !Barcelona real estate agency: feelrealestate.com !