Metric based business decisions

Every week we take half an hour to talk just about any topic that crossed our minds during the last days and create a podcast for you (Listen to it in Spanish here and subscribe to our feed). We call it an Open Mic Podcast as we want to invite different people to participate, new ideas to take form and to shed light on various experiences and perspectives on business development.

You will hear Bernat, CEO at itnig, César, Product Director at Factorial and Jordi, CEO at Factorial discussing different topics with guests from our start-up ecosystem in Barcelona. This week Pau Ramon, CTO at Factorial, joins us.

This podcast #16 is special in the sense that we have three Factorial team members with us and will be able to learn more about how they measure and make use of metrics in their business decisions.

Pau and Jordi started working on Factorial a bit over a year ago but the idea was already formed a while earlier, while talking over a beer with Bernat. At this time they were working at Redbooth and thought it to be a good moment for change, to start something new, to create a team and to have sense of ownership that they no longer felt at Redbooth.

Pau Ramon has been working in tech for over 10 years, he studied multimedia and then dove right into web. Fascinated by internet companies, he started helping a Barcelona company that was creating a social network for models. He was working alone at the time, had to start creating a team — Almost by accident he became CTO. Through this experience he learned a lot and decided to continue in this direction.

He went to the West Coast of the US for a conference, missed the flight back on purpose and stayed looking to start something himself.

There he met Pablo whom we would later work with at Redbooth and that’s how we actually got started talking about metrics today.

“My role is not CEO, I like to do the product behind the business.”

At Redbooth I learned how to measure the success or failure of a business, to undo decisions that have been taken. I like to have one metric as indicator for the whole business and then segment it further based on funnel. We assign one metric to one function within the business or one person within the company. It’s important that marketing, product, sales, support…have their own metric and that they can see that the work they are doing are impacting the business positively. At Factorial for example, all metrics are always visible and every Friday we make a point of going through them together at our all-hands meeting.

“Metrics — a complex topic summarized in one number.”

When we started out building the product at Factorial and were not yet at the stage of customer acquisition, we took ‘activation’ of our companies as our main measure. It’s somewhat of a North Star — Something to guide you when you take a decision.

“I prefer an approximation to no orientation.”

To learn more about how they use metrics, what tool they use to measure and how they base their decisions on these numbers, listen to this week’s podcast here:

Podcast #16 with Pau Ramon

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Podcast #15: Ubaldo Huerta talking about another kind of entrepreneurship

Every week we take half an hour to talk just about any topic that crossed our minds during the last days and create a podcast for you (Listen to it in Spanish here and subscribe to our feed). We call it an Open Mic Podcast as we want to invite different people to participate, new ideas to take form and to shed light on various experiences and perspectives on business development.

This week’s Podcast #15 is opened by Masumi with our regular participants Bernat and Jordi, whom you already know. As a special guest today we welcome Ubaldo Huerta and talk about another kind of entrepreneurship, a slow growth that is not VC fueled. Listen to our podcast on Youtube or subscribe to our RSS to be always up to date.

Ubaldo Huerta, a young entrepreneur who learned to program at home thanks to his mother, left Cuba in the beginning of the 90s to San Francisco to live the early years of .com companies. In this new industry everybody was looking for developers, companies growing like mushrooms but also closing again. After a few years in this frenetic environment Ubaldo decides to leave on a sabbatical and — burned-out — wanders through Europe. He arrives in the Raval neighborhood of Barcelona and is mesmerized. Quickly he decides to stay and migrates from the US just as he had years earlier from Cuba. In Barcelona he felt right at home:

“An organized place with ticks of a third world country.”

In Barcelona Ubaldo becomes an entrepreneur out of necessity: “I was earning a lot of money, but in Spain the job market was more complicated as there was no need for software developers at that moment. It was also the time of transition to dedicated servers, when you could get a server for a few dollars and build it up yourself. You could start out, try something without a high investment for infrastructure.”

Ubald started Loquo, a kind of Craigslist, a classified site from his living room. He starts with scraping email addresses from forums, sending out emails to these accounts and commenting on all kinds of threads. He starts out working on his own, with his own resources:

“I prefer to do something with my hands, spend my time writing code even though it might take time, I don’t need to live in the times of venture capital.”


“Everybody should do what he does best. If I had to spend my time raising money, talking to investors, I would go crazy.”

And after a while eBay becomes interested and ends up buying Loquo to expand their own service of auctions. Since then Ubaldo has moved on to many more interesting projects and is now busy with Fonoma.

When I create something I need to connect with my environment.

If you are curious to know what Ubaldo is up to now, go ahead and listen to the full Podcast #15: Youtube — iTunes — RSS

How to start a business from scratch

Every week we take half an hour to talk just about any topic that crossed our minds during the last days and create a podcast for you (Listen to it in Spanish here and subscribe to our feed). We call it an Open Mic Podcast as we want to invite different people to participate, new ideas to take form and to shed light on various experiences and perspectives on business development.

Photo: Jonathan Velasquez

You will hear Bernat, CEO at itnig, César, Product Director at Factorial and Masumi, Content Media Strategist at itnig discussing different topics with guests from our startup ecosystem in Barcelona. This week Roger, Product Manager at Quipu and Jordi, Growth Hacker at Factorial join us.

Our podcast #14 starts with an inspiration: Cesar was listening to a talk of the founders of the Segment — a customer data platform — and how they started out with a completely different product and only later created what is now known as Segment.

“In the process of creating one product, the need for another product was born.”

Similar to Segment, Quipu was born out of the need to manage the administration for different projects. What first started out as a personal need was then transformed into a business (now known as Quipu) by Roger. In this week’s podcast we want to focus on exactly this: How to start a business from scratch.

How to bring a new product to market with a 0€ budget?

Jordi has experienced this very initial stage of every company many times and today he joins us to talk about how to reach customers with a new product and how to create the first traction with a marketing budget of 0€. Throughout the podcast we explore initial SEO strategies, influencer marketing, offline customer acquisition and crowdfunding as possible options to generate the first sales.

Influencer Marketing

Getting somebody to endorse your product, to present it and to vow for it in front of your target audience. Do you remember the craze around fidget spinners earlier in the spring of this year? It’s the perfect example of a product that went viral through youtube videos, social media shares and word of mouth. As far as we were able to find out, ‘nobody’ was behind it pushing the toy out in the world, yet it is a great inspiration for marketing departments of any physical product. Who wouldn’t want their product to sell itself and create such a hype?

Offline customer acquisition

Go out and meet possible customers. In the case of Quipu, Roger went to talk to small companies, individual freelancers or even accountants to better understand how they work and what they are dreaming of. Similarly to developing a MVP at the initial stage, going out to approach customers directly was an enriching experience and an important step in the growth of Quipu.

In the beginning of Camaloon, an e-Commerce for custom products, we tried different ways of acquiring customers from participating at events like Design Conferences or Comic Conventions in Spain and Italy, sponsoring artist groups or even being part of flash mobs. Looking back, now we laugh about those actions but at the time they were a good way of reaching a niche audience and getting first traction.

Crowdfunding

If you are developing a physical product, crowdfunding can be a smart way to receive funding and your first customers. It’s a way to market your product to a very specific audience and tap into the potential of established platforms and networks like Kickstarter and Indiegogo.

You reach your first customers and you have the opportunity to establish a special bond with them, when your company grows.

Marketplaces & other eCommerces

With a physical product one of the more traditional ways of placing it in front of possible customers is using existing structures like other e-commerce stores or marketplaces. These could be self-service like Amazon or even more selected marketplaces that feature and sell your product for you.

No matter how you start out, Jordi cannot say enough how important measurement is:

“Measure from the start. Even though at the beginning you might be measuring very low numbers, you still need to know whether you are going in the right direction.”

If you are curious to find out more and listen to some of our examples, subscribe to our channel here and listen to the Podcast #14 right now.

The mechanics of growth with ex-Gmail product manager Itamar Gilad

Exponential growth is what most startups are searching for, and something most entrepreneurs never experience.

Itamar Gilad has spent seven years at Google managing products at Youtube and Gmail and have in both cases experienced what most entrepreneurs are dreaming about: seeing growth in the hundreds of millions of users that genuinely love your product (you’re probably one of them).

This is not an in-depth post on growth, so if you feel you got the basics covered, I suggest you book a private lesson with Itamar. But if that’s not you, please continue reading.

The one metric that matters

The first things Itamar suggests is that you pick one metric to grow.

One of the biggest mistakes companies does, is not choosing exactly what to grow. You have to find the one metric that matter.

Facebook uses MAU’s, Gmail has WAU’s, Whatsapp measures “sent messages”, Airbnb “nights booked”, etc. Find your own metric, and choose it wisely. But make sure that the metric you’re measuring is connected to how much value you’re providing to the users.

1st, 2nd and 3rd tier metrics

When you’ve found the one metric that matter to you and learned how to properly measure it, you should try to discover your KPI’s and your proxy metrics.

The KPI’s (2nd tier metric) include measuring CLV, MRR, CTR, etc. The 3rd tier metric is tougher because it’s very company specific.

As you probably can imagine, it’s a bit tough to ask a team of developers: improve monthly active users, you need to figure out what smaller things are driving growth for your product?

All successful companies have these pivotal moments when they discover a proxy metric that ends up driving much more growth than they anticipated.

The only way to find these magic elements is by deep diving into your product, into what you call a discovery phase, and when you find your product market fit, you hopefully know the most effective triggers to your growth.

Find and start your growth engine

So how does this loop of positive feedback from your users look like? And how do you start your growth engine?

First, you got (1.) retention: People that goes through your acquisition funnel, becoming active users and coming back for more. This means that people are finding value in your product.

Then you got (2.) referrals: People that like your product so much that they’ll recommend it to other people in their network. This, word of mouth, is very powerful.

The third one is (3.) revenue: Everything from subscriptions to in-product purchases, etc. That you can sell to your users. The important factor here is that each user generates more revenue than what it costs to get that person through the acquisition funnel.

The only good way to start this engine and get it to run fast is by producing a product that instantly gives value to your users.

Itamar Gilad has worked with products at Gmail, Youtube, Microsoft and several other tech companies.

A fourth part of the virtues loop is something very few companies manage to really utilize, which is (4.) learning: While the engine is running, you use data from your users and your qualitative insights to learn how people go through the funnel, and how to optimize it to make more people slide through your funnel in a better way.

Template for growth

  • Choose one metric that matters to you and your team — let it be your north star.
  • Identify proxy metrics and build a growth model
  • Picture right growth engines (like above: retention+referrals+revenue)
  • Optimize for your OMTM with research and experiments
  • Focus on (demonstrable) value to user

REMEMBER: This was a brief rundown of Itamar’s talk, full talk here.


Continue reading startup stories?

https://blog.itnig.net/how-a-small-group-of-in-house-product-designers-killed-cabifys-corporate-brand-and-made-it-purple-cb5c5ddf0fb0

How to develop truly conversational bots

Have you ever had a pleasant conversation with a bot? Chances are high that you have, as chatbots are getting smarter and better at helping us deal with the products we’re dealing with everyday.

Barcelona startup Caravelo is at the moment developing six chatbots for some of the biggest airlines in the world. The chatbots they build help millions of travelers to book and reschedule flights, provide customer service, act as personal concierges and much more.

Even though all their bots use NLU (natural language understanding), they’re not building their own solution, but are using existing NLU solutions to cope with all the different languages airlines need to speak with their customer, according to co-founder JoseLuis Vilar:

“If we would try to build an NLU solution for all the languages our client’s needs, we would be dead.”

Not replacing apps

Caravelo says beyond the hype, that the bots they’re building are not replacing apps, they just doing the same things very differently in terms of UX and UI, but also in terms of use cases.

“We won’t build bots for everything, only where it’s natural to have one.”

After being live with several chatbots for nearly 3 months, collecting thousands of interactions, they’ve already learned a lot of valuable lessons, the biggest being not ask the same questions over and over again.

According to the startup the distance between success and failure is quite short, so you need to get things right the first time around. And according to Vilar, even though the risk for failure is high, the reward for the customer when things go right is much higher.

Repeating answers is the worst a bot can do to a customer according to Caravelo.

Work on building a solid knowledge base

After tracking their bots conversations the latest months, Caravelo has found that 20 percent of the inventory of intents (Q&A’s) makes up around 80 percent of the total value. So you need to focus on that part first, building a really strong inventory to start all conversations, the right username and contact, pictures, etc.

The next 15 percent of value is based on the inventory of questions and answer (intents) where you need to build a solid knowledge base for your specific industry. In Caravelo’s case, they’ve built a database of 1000 FAQ’s related to the airline and travel industry, and this is based on interactions the airlines have had with their customers over the years.

The last five percent of value are from the questions a bot cannot answer, and the idea is this is the place where we get the human take-over, and a customer service agent will serve any remaining problem.

The three different categories of value provided to the customer, either by a bot or a human.

Key learnings

The most important learning Caravelo has done the last months is to avoid user loops, like shown in the pictures above. There are few things as annoying for a user to go through the same questions over and over again.

So far Caravelo’s solution to bugs like this one has been to build a small fix where the bot only can ask the same question a certain amount of times.

Caravelo co-founder and CIO JoseLuis Vilar.

Another key learning is to use, but not abuse the NLU (natural language understanding). So for example, today they have some answers that go through the back-end from their database, and some answers that go through the NLU, but they classify the easy answers, like affirmations, to not go through the NLU.

Just as with any product, the on-boarding of the user is crucial to keep people talking to the bots. In the case of chatbots, you need to tell them what you’ll be doing for them, and give the user clear options.

The last take-away the Caravelo team has learned over the course of using bots in real life, is to not take too much advantage of bot trainers (external services), as they’re not building a natural language understanding themselves, and it’s easy to get too dependent on them.

To get the full value of Caravelo’s learnings, take a look at the video at the top.


If you want to learn more, take a look at our latest podcast about the European VC industry:

https://blog.itnig.net/first-rule-of-talking-to-vcs-show-metrics-that-support-the-story-you-re-telling-3d31160db889