‘The best consumer companies incorporate both virality and network effect which are different concepts but very closely related in order to grow their user base organically.’ – Tom Blomfield
YC Group Partner Tom Blomfield dives into the metrics that matter most for consumer startups. He discusses various aspects such as growth rates, organic vs paid growth, unit economics, net promoter scores and the ‘magic moment’ in your product.
Table of Contents
- Growth Rates are Crucial
- Organic vs Paid Growth
- Importance of Virality and Network Effect
- Paid Referral Schemes
- Tracking in Paid Growth Strategies
- Focus on Organic Growth
- Unit Economics
- Measuring Retention
- Magic Moment
- Net Promoter Score (NPS)
- Consistent NPS Data Collection
- Qualitative Data from NPS Score
Growth Rates are Crucial
Consumer startups should aim for a significant growth rate; ideally 15% month over month.
This allows a business to multiply its user base by five annually.
A 10% per month is also acceptable as it triples the user base each year.
However, anything below 5% per month is unlikely to lead to substantial success.
Organic vs Paid Growth
Understanding the difference between organic and paid growth is vital.
Organic growth refers to users acquired not through paid marketing or advertising efforts but through strategies like virality and network effect.
On the other hand, paid growth involves direct spending on marketing or advertising efforts.
