Learn about the three most common ways that startups grow.

Hey there, start-up enthusiasts! Ready for a quick yet info-packed read? 🚀 In this newsletter, we'll cover:

• The 3️⃣ growth engines to consider for your start-up

• Vanity metrics: the sneaky numbers you should avoid 🙅‍♀️

• Core metrics: your business compass 🎯

💡 Estimated read time: 4 minutes

So, buckle up and let's dive in. You'll soon be navigating your start-up journey like a pro! 🌟Grow

Engines of growth

So, you've got three main growth engines to choose from, and each has its own charm. But here's the kicker: focus on just one at first. Yep, you heard me right. Let's dive in and see why.

1️⃣ The Sticky Engine: You've got loyal customers who love what you offer, so why not give them more reasons to stick around? Instead of splurging on marketing, pour your resources into new features or top-notch service. Happy customers are repeat customers!

Take Netflix, for example. Remember when they were just a DVD rental service? They adapted and evolved to offer online streaming, then started creating their own shows. This kept their existing customers hooked and craving more. 📺

2️⃣ The Viral Engine: Word-of-mouth marketing is gold, my friend! Let your customers do the talking and watch your start-up spread like wildfire. Make it super easy for them to share the love.

Hotmail, back in the day, nailed this with their sneaky yet brilliant email signature: "P.S. Get your free e-mail at Hotmail." Talk about a viral hit! 📧

3️⃣ The Paid Engine: Ah, the classic route - spending on marketing. Sure, it costs a pretty penny, but it can pay off if you play your cards right. Just make sure the revenue from existing customers outweighs the costs of acquiring new ones.

Look at Dollar Shave Club's hilarious and memorable ads. They invested in marketing and gained a loyal following who were tired of overpriced razors. 💈

Now, I know what you're thinking: "Why not use all three engines at once?" Well, focusing on one at first helps you hit the gas pedal and accelerate faster. Plus, it makes evaluating new features a breeze. If they rev up your chosen engine, they're a winner; if not, toss 'em aside.

So, start-up superstar, pick your engine, and let's get growing! 🌱

Vanity Metrics

Let's talk about a common pitfall that might be lurking in your start-up's data: vanity metrics. You know, those seductive numbers that look oh-so-good but don't really help you reach your goals. 📊

Every start-up needs a roadmap to success, and that means keeping an eye on the right metrics. But beware! Vanity metrics are like a siren's call, luring you into a false sense of progress.

Think of vanity metrics as the business world's version of Instagram filters: they make everything look fabulous, but they're not showing you the real picture. 🤳

For example, it's super exciting to see your Facebook fan count skyrocket or to bask in the glow of media attention. But let's get real – likes and headlines don't pay the bills. So don't get too caught up in chasing these numbers, or you'll risk losing sight of what truly matters.

Other vanity metrics might include how many hours you've spent on a project or how many milestones you've reached. Sure, it's great to hit those targets, but they don't guarantee success. Even if you're pulling 100-hour weeks, you could still be spinning your wheels on something that won't pan out in the long run. ⏳

To make your start-up dreams a reality, focus on finding a sustainable business model and growing a loyal customer base. And remember, you can't do that if you're obsessing over the wrong numbers.

Core metrics

Let's talk about the compass that'll guide your business to success: core metrics. Yep, you need to pinpoint those golden numbers that'll show you whether you're on track to achieve your goals. 🎯

Now, core metrics aren't one-size-fits-all. Every start-up's got its own unique blend. But hey, don't stress! Some common core metrics might include the number of paying customers, average session length per user, or how many recommendations you're getting per thousand customers.

Your mission, should you choose to accept it, is to identify the core metrics that'll give your start-up direction and an honest view of its progress. 🧭

When it's time to dive into the data, consider using the nifty technique known as cohort analysis. Instead of just glancing at overall revenue or user growth, compare how new customers behave versus the old-timers.

Imagine your core metric is the recommendation rate. To see how it's evolving, ask yourself questions like: How often did customers who signed up six months ago recommend your product? What about those who joined four months ago? Or two months ago?

By examining cohorts (groups of users who signed up at different times) and their recommendation rates, you'll get a crystal-clear picture of whether you're moving toward your goal. If the metric's improving, you're on the up-and-up; if not, you've hit a plateau. 📈

So, start-up whiz, it's time to define your core metrics and analyze them like a pro. Happy data-crunching! 🧪

In conclusion

Start-ups should adopt a semi-scientific approach to test their core assumptions and build a sustainable business model based on validated hypotheses. By developing product prototypes rapidly and refining them through customer feedback and build-measure-learn loops, start-ups can ensure they're on the right track. It's essential to focus on one engine of growth, avoid misleading vanity metrics, and identify the core metrics relevant to the business. With this agile and iterative approach, start-ups can propel themselves towards success and sustainability.