Last Minute Ramblings

2012 was a great year - one of many transitions. We moved from a house we spent the last 8.5 years in to a new town nearby, and I wrapped up my first full year in venture. I have gotten to know a lot of amazing people that I think will be long term friends and colleagues. Overall, it feels like I have laid a number of new foundations to build on this year and I am pretty excited for what is ahead. But I also have a lot of things I want to improve to make sure I am getting the most out of life, work, and family.

Here are a few things I hope to do better this year.

1) Be present when I am present

There is always a lot happening in the world, but when I am around family, friends, and working with companies, entrepreneurs, and my team, I need to do even more to focus on them. Time with others is special and cannot be replaced, so I want to do more to cherish it and save things for later that can be done later.

2) Better my health

As I get older, i realize I can’t just take my body and health for granted. So it is time for me to take my diet and exercise a bit more seriously. Will be a work in progress but I know I can make some this year.

3) Remember to be patient

Things always happen much faster in the long term than it feels like in the short term. I tend to get caught up in the short term pace and can get frustrated when things aren’t happening faster. Being in venture forces you to think long term about every company you may get involved with and I am learning a better balance between patience and urgency. This year I hope to apply this to work and a lot more of my life too.

Happy new year!

I posted this on Medium a few days ago and wanted to preserve it here.  Please “recommend” it there if you like it :)  

https://medium.com/what-i-learned-building/ab24a585b5ea

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I’ve been lucky to be part of the early growth of several really interesting and now important networks including LinkedIn, Facebook, and Twitter. One of the things that I felt working on each of these is that we never looked at numbers or metrics in the abstract — total page views, logged in accounts, etc, but we always talked about users. More specifically, what they were doing and why they were doing it. At LinkedIn we didn’t talk about “total page views”, but instead “profile views” - how many people were using LinkedIn to search for and find other people, and how many people were on LinkedIn being viewed. At Twitter while we had (and they still have) crazy page view numbers, we talked instead about how many people were looking at their timeline and reading tweets or tweeting.

When I meet new companies today, I often hear things like “We have 10M uniques with 30M page views per month.” Or “We have a 25% DAU/MAU with a 2-cent ARPDAU”. All of these sound pretty interesting in the abstract. But when you really dig in you start to find out nearly all of the 10M uniques all come in from search engines, click on 2-3 pages, and never come back. Or that the 25% DAU/MAU is because the app is spammy and drawing new users in very quickly but hardly any come back for a second session and no one ever pays.

While big numbers are a nice signal of, well, big numbers, I don’t think they are an indicator at all for whether a product is really working. Whenever I hear some of these stats, I always ask the same question:

How many people are really using your product?

You need a metric that specifically answers this. It can be “x people did 3 searches in the past week”. Or “y people visited my site 9 times in the past month”. Or “z people made at least one purchase in the last 90 days.” But whatever it is, it should be a signal that they are using their product in the way you expected and that they use it enough so that you believe they will come back to use it more and more.

Once you can define a metric to answer this, then you can really track your growth on a day-to-day, week-over-week, month-over-month basis. And from there, you can identify the key supporting metrics that show you how likely it is more people will convert to using your product on a frequent basis, how likely they are to stay on your product vs churn out, etc.

At Twitter, we found that if you visited Twitter at least 7 times in a month, then it was likely you were going to be visiting Twitter in the next month, and the next month, and the next month. And we decided this was enough initially to be “really using it”, though of course I think Twitter gets even better when people use Twitter every day or more.

More about the next most important metric — what data shows you that more people will be using your product in the future, and how to use this focus to then refine your roadmap to get more people converted to using the product in another post.

Tonight I was reading more articles trumpeting a few company’s “amazing growth” and then saw a bunch of blowback responses “but what are your real numbers?”. My first thought was “yeah, what are your real numbers like dau?” but my second reaction was “it’s fine to say growth is great, but how do you know it is meaningful growth and why should we believe that?”

When you are an early or growing startup, everyone wants to know your numbers. Investors, press, potential employees, partners all ask and almost browbeat people into giving numbers to make a quick judgment. And lots of people try to use the numbers to make a soundbite-ready comparison to something else (“up to 2% of facebook in half the time!” or “they only have 5% engagement rate of twitter, it will never work”)

I hear frequent questions about DAU, MAU, DAU/MAU, 2-day retention, 30-day retention, k-factor, invite rate, open graph impressions, conversion to pay, ARPU, ARPDAU, ARPWAU, ARPWOW, DARPA (ok I made the last two up). Most of the charts I have seen presented look the same - up and to the right at a nice fast rate. But it is sometimes quite creative how the x-axis and y-axis are tailored to get there. Often when I ask why someone decided to show their numbers in a specific way, eg something like a 2-day active chart, the answer is often because some advisor or investor asked for that or said it looked the best for growth.

What I feel is missing in a lot of this is getting to the meaning behind the numbers. The most important question to me for any of the products i’ve worked on or am looking at from investment side is: “What do today’s metrics tell you about how you think more and more people will be using the product in the future?”

If we just compare everyone’s DAU we have no idea which companies have the same users coming back every day with little growth, which are massively churning with new people coming every day and just as many leaving, which are growing with a solid base of addicted users that grows more and more each day through organic use of the product (this is the awesome case).

It takes a lot more than a sound bite to understand what real habitual behavior is for a product and to identify which users have gotten that habit, which are on the way, which are on the way out, and how the various vectors of growth are getting users to that point. At Twitter, we identified a group of “core users” which we expected over 90% of them to keep using the product in similarly active ways month after month, and modeled our growth towards helping more users get there. It didn’t matter what overall numbers we reported because as long as we grew this group, we believed the whole pie would get a lot bigger (and ultimately it has).

When comparing everything by dau, mau, dau/mau, etc, we should recognize that only tells us a snapshot of size today. Hopefully going forward we can we all (investors, press, etc) ask questions to understand what are the right core patterns and growth of different products and start rating sustained and direct growth differently.

I would love to hear your ideas. Also if you are interested in working on growth, please ping me - josh at greylock.

Also should give a shoutout to John Lilly with whom I have this same conversation with after almost every meeting we share…

I just wrote this in a quick email to a friend and thought I’d post here too.  

A lot of people ask whether they need a deck when pitching to a VC.  I don’t think a deck is required, most important is telling your story. But a deck often helps in framing and structuring the story and making sure that you get through all of the key points you want to cover.  Here is what I wrote him:

My basic advice to people building decks is to use it to help tell a story for why you are doing this and how big you think it can be.  I like a structure for something like this:

1) The problem in the world we’re going to go and solve (problem / space)

2) Our solution and why it uniquely addresses the problem (product)

3) How many people have the problem and why they will adopt it (market size / go-to-market)

4) Why we are the exact right people to go tackle this now (team)

5) How we will get there in the future! (fundraising and future plans / use of funds)

Some people put team first as way of introductions which is also good, and then you can transition from team to problem by telling a personal story around why you started this.