Metrics and analytics for startups: The 20 best essays and videos

To help founders effectively set up and monitor metrics for their startup, we’ve compiled a list of the 20 best links we’ve found on the topic.

Also to save you hours of reading, we’ve attempted to weave the key ideas of these resources into a single essay here:

Setting up metrics for growth and best practices

1. How to Measure Your Product by Suhail Doshi. In this Y Combinator lecture, the founder of Mixpanel distills startup growth down to a simple formula and explains how to measure each part of it.

2. Analytics for startups by Ilya Volodarsky. Another great Y Combinator lecture from one of he cofounders of Segment. Ilya walks through a tactical approach for setting up analytics for your MVP and using those metrics to guide your company and product.

3. Startup Metrics for Pirates: AARRR!!! by Dave McClure. Dropbox founder Drew Houston says he managed to the company to the metrics outlined in this presentation. It’s an in-depth guide to the five key metrics of he customer lifecycle: Acquisition, Activation, Retention, Referral, and Revenue (AARRR!).

4. How to measure by Adam D’Angelo. Starting at minute 24, Quora founder and CEO Adam D’Angelo provides an awesome explanation of why it’s so important to solve retention. He then discusses some other best practices for startup metrics.

5. Startup = Growth by Paul Graham. In this essay, the founder of Y Combinator recommends picking a growth rate you think you can hit and then just trying to hit it every week: “Focusing on hitting a growth rate reduces the otherwise bewilderingly multifarious problem of starting a startup to a single problem.”

6. Why the best way to drive viral growth is to increase retention and engagement by Andrew Chen. Another great post from Andrew on the relationship between viral growth and retention. He argues against aggressive, one-time viral tactics and explains why retention and strong product/market fit is actually the key to growing virally.

7. The red flags and magic numbers that investors look for in your startup’s metrics by Andrew Chen. An 80-page slide deck from Andrew’s interview process at a16z on how to use growth ideas to evaluate startups.

8. The one line split-test, or how to A/B all the time by Eric Ries. The author of The Lean Startup shares his approach to split-testing. He tries to make it easy in two ways: incredibly easy for the implementers to create the tests and incredibly easy for everyone to understand the results. Also see How to use A/B testing for better product design by Andrew Chen.

9. After the Techcrunch Bump by Josh Kopelman. The founder of First Round Capital explains the four simple things he looks for in a post-launch consumer Internet startup: 1) Usage Growth, 2) Virality, 3) Engagement Level, 4) Repeat Usage. On the subject of consumer internet startups, Andrew Chen’s Why consumer product metrics are all terrible is also worth reading.

Common mistakes

1. The Next Feature Fallacy by Andrew Chen. In this awesome blog post, the a16z partner highlights the precipitous drop-off most products face between initially attracting a user versus the difficulty of retaining them over the first month. Because a lot of founders do not understand this funnel, the majority of features they build aren’t targeting the important parts.

2. Why vanity metrics are dangerous by Eric Ries. The author of The Lean Startup explains why metrics that aren’t actionable can be dangerous. a16z partner Chris Dixon also warns of Vanity milestones.

3. Data Informed, Not Data Driven by Adam Mosseri. In this 2010 talk, the Head of Instagram talks about how Facebook uses data to inform certain types of decisions but is also skeptical of being overly data driven. Also see Metrics Versus Experience by Julie Zhuo and Know the difference between data-informed and data-driven by Andrew Chen.

Important individual metrics

1. 16 Startup Metrics by a16z. A list of the most common or confusing startup metrics with notes on why investors focus on them.

2. Choosing Your North Star Metric by Lenny Rachitsky. Data and case studies on choosing a North Star Metric with a great chart of the North Star Metrics for 40+ growth-stage tech companies. Andrew Chen’s Benefit-Driven Metrics is also a good read on this topic.

3. The Most Powerful Internet Metric of All by Bill Gurley. The Benchmark partner explains why if you are running a web business and can only focus on one metric, it should be conversion rate “by a landslide.” And he reiterates this view in a follow-up blog post 13 years later. YC Partner Kevin Hale’s lecture How to Improve Conversion Rates is worth watching too.

4. The Burn Multiple by David Sacks. A great article on how to measure the efficiency of growth so that founders can make sure that burn isn’t getting ahead of traction.

5. How To (Actually) Calculate CAC by Brian Balfour. Customer Acquisition Cost is a key metric for paid marketing. Brian details how to think about this nuance calculation which has a lot of gotchas. And you can’t talk about CAC without LTV, so I’d also recommend reading The Dangerous Seduction of the Lifetime Value (LTV) Formula by Bill Gurley.

6. The Power User Curve: The best way to understand your most engaged users by Li Jin. Li explains one of the common frameworks a16z uses to analyze investments and the advantages it has over DAU/MAUs. Commonly called the activity histogram or the “L30” (coined by the Facebook growth team), it’s a histogram of users’ engagement by the total number days they were active in a month.

7. What is Good Retention? by Lenny Rachitsky and Casey Winters. Retention is widely considered the most important metric to get right when building a startup. This post provides a great overview of what good and great retention looks like across most business types.

8. A Practitioner’s Guide to Net Promoter Score by Sachin Rekhi. In this post, the founder of Notejoy and former Director of Product at LinkedIn provides a great overview of using Net Promoter Score as a key performance indicator to understand customer loyalty and making it an actionable metric for enhancing your product experience.

Startup Archive posts on metrics and measurement

1. Facebook VP of Growth Alex Schultz: “Retention is the single-most important thing for growth”

2. Quora founder Adam D’Angelo explains cohort retention and other startup metrics you should track

3. Sam Altman on why you shouldn’t track absolute user growth in the early days of a startup

4. Jeff Bezos on having a skeptical view of proxies and the problem with managing to metrics

5. Michael Seibel explains why metrics are so important and how to set them up correctly

6. Chamath Palihapitiya’s framework for finding your product’s magic moment

7. Facebook VP of Growth Alex Schultz explains how to estimate a good retention target for your startup

8. Michael Seibel’s approach to running a product development cycle at an early stage startup

9. The virality model Sean Parker taught the early Facebook team

10. Mark Zuckerberg on the value of a growth team

11. Rahul Vohra on how to measure product/market fit

12. Zynga founder Mark Pincus explains why engagement metrics don’t always tell the full story

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