Over the years we’ve seen a number of frameworks emerge that help us understand startups and the changes they undergo as they grow, find their markets, and acquire customers and revenue. Each of them offers a different perspective on the startup lifecycle, and each suggests a set of metrics and areas on which to focus.
After comparing and contrasting a number of these frameworks, we’ve created our own way to think about startups, and in particular the metrics that you use to measure your progress. We’ll use this new framework throughout the book—but first, let’s take a look at some of the existing frameworks and how they fit into Lean Analytics.
Pirate Metrics—coined by venture capitalist Dave McClure—gets its name from the acronym for five distinct elements of building a successful business. Dave McClure categorizes the metrics a startup needs to watch into acquisition, activation, retention, revenue, and referral—AARRR.
Here’s our interpretation of Dave’s model, which describes the five steps through which a user, customer, or visitor must progress in order for your company to extract all their value from them. Value comes not only from a transaction (revenue) but also from their role as a marketer (referral) and content creator (retention).
Figure 5-1. Even pirates need metrics, says Dave McClure
These five elements aren’t ...