Why Web Entrepreneurs Are Like Robot Vacuum Cleaners
So here’s a fun quiz to see how good a communicator I am: What’s my favorite key phrase for my new companies? If you said “data-driven development and user metrics”, you win! Next time we have coffee together, I’ll pour the creamer for you.
Yes, data driven, data driven, say that 10 times fast. After 10 years of experience chaperoning web-based businesses, I can say this for sure: those that succeed have one thing in common: they measure, and adjust, measure and adjust. Have you ever seen those robotic vacuum cleaners looking for their home base? I was just over at a friend’s house, playing with the robot, and I’d push the “go home” button. The robot would orient itself towards the base, drive an inch, readjust, and repeat. As long as it kept up that cycle, it always got back to the base. But sometimes it seemed to stop adjusting, and just drove across the floor until it hit something. And you know what? Once that started happening, it didn’t make it back to base for a long time.
You, Mr/Ms startup entrepreneur, are a little robotic vacuum cleaner. You can drive your product until you hit a wall, and have to change something, or you can measure and adjust constantly, pointing at base. No points for figuring out which one I think you should do. Metrics are going to make or break your business. Back when we all started out, metrics were an afterthought, especially in the dark ages of the Web up to, say, 1994. You built the site first, and then – oh, yeah, those marketing people want metrics! Okay, let’s add that in. Thinks have gotten better – more and more , web entrepreneurs realize that they need analytics. So they turn to Google Analytics because, shoot, you’re using Google for everything else, right?
The reality is, Google Analytics is better than no analytics. But not much. What you really need to know is the answer to that key question “how is my business doing?” Which, in web-entrepreneur land, closely correlates with “is my website doing its job?” There are a plethora of analytics packages out there, some better than others, but I can’t wholeheartedly endorse any one, because none of them are as complete as you need. And now I come to the core of my article:
You need to build your analytics along with the site itself,
Unlike big companies that can afford huge analytic implementations, we scrappy start-up folks need a different perspective. The reporting must be built custom, by the engineering team or one of the two programmers. Smart data-driven people like Andrew Chen have this to say about it: "I generally prioritize this as a peer to the product experience, perhaps even higher, since I often overrule product functionality based on real data." *. You will be well served by building an integral reporting system that allows you to quickly extract the Key Performance Indicators for your site and business.
I try to avoid throwing around buzzwords like “key performance indicators”, but I think that the concept is so important that it can’t be helped. (For a brief overview of KPIs in general, see The Accounting Blog). Indicators are events or aggregate numbers that give us an indication of whether we have obtained our goal. KPI’s are not a web-specific thing, but in our case we need specific indicators for our website. Each website and business will have unique indicators appropriate to our business model. E.g. a KPI for a site that hosts users’ photos might be one of the following:
It’s crucial that you keep your list of KPIs to a manageable number – no more than a dozen and ideally ones you can take action on. Choosing this dozen will be an involved and evolving task, but it’s more important that you do it, than that you get it completely right. Once you’ve found your set of Indicators, you will quickly realize that few-to-no off-the-shelf analytics packages will meet your needs. You just have to make it part of the development process.
Yes, data driven, data driven, say that 10 times fast. After 10 years of experience chaperoning web-based businesses, I can say this for sure: those that succeed have one thing in common: they measure, and adjust, measure and adjust. Have you ever seen those robotic vacuum cleaners looking for their home base? I was just over at a friend’s house, playing with the robot, and I’d push the “go home” button. The robot would orient itself towards the base, drive an inch, readjust, and repeat. As long as it kept up that cycle, it always got back to the base. But sometimes it seemed to stop adjusting, and just drove across the floor until it hit something. And you know what? Once that started happening, it didn’t make it back to base for a long time.
You, Mr/Ms startup entrepreneur, are a little robotic vacuum cleaner. You can drive your product until you hit a wall, and have to change something, or you can measure and adjust constantly, pointing at base. No points for figuring out which one I think you should do. Metrics are going to make or break your business. Back when we all started out, metrics were an afterthought, especially in the dark ages of the Web up to, say, 1994. You built the site first, and then – oh, yeah, those marketing people want metrics! Okay, let’s add that in. Thinks have gotten better – more and more , web entrepreneurs realize that they need analytics. So they turn to Google Analytics because, shoot, you’re using Google for everything else, right?
The reality is, Google Analytics is better than no analytics. But not much. What you really need to know is the answer to that key question “how is my business doing?” Which, in web-entrepreneur land, closely correlates with “is my website doing its job?” There are a plethora of analytics packages out there, some better than others, but I can’t wholeheartedly endorse any one, because none of them are as complete as you need. And now I come to the core of my article:
You need to build your analytics along with the site itself,
as an integral part of the site design and implementation.
Unlike big companies that can afford huge analytic implementations, we scrappy start-up folks need a different perspective. The reporting must be built custom, by the engineering team or one of the two programmers. Smart data-driven people like Andrew Chen have this to say about it: "I generally prioritize this as a peer to the product experience, perhaps even higher, since I often overrule product functionality based on real data." *. You will be well served by building an integral reporting system that allows you to quickly extract the Key Performance Indicators for your site and business.I try to avoid throwing around buzzwords like “key performance indicators”, but I think that the concept is so important that it can’t be helped. (For a brief overview of KPIs in general, see The Accounting Blog). Indicators are events or aggregate numbers that give us an indication of whether we have obtained our goal. KPI’s are not a web-specific thing, but in our case we need specific indicators for our website. Each website and business will have unique indicators appropriate to our business model. E.g. a KPI for a site that hosts users’ photos might be one of the following:
- The frequency with which a new unique user uploads a photo.
- The number of pages a user visits before uploading a photo.
- Abandonment data – what percentage of unique visitors start an upload, but quit the site without uploading anything? On average, what path do they take and where do they abandon?
It’s crucial that you keep your list of KPIs to a manageable number – no more than a dozen and ideally ones you can take action on. Choosing this dozen will be an involved and evolving task, but it’s more important that you do it, than that you get it completely right. Once you’ve found your set of Indicators, you will quickly realize that few-to-no off-the-shelf analytics packages will meet your needs. You just have to make it part of the development process.
posted by Philip at
2:35 PM
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