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Growth Hacking

Getting Started With the Pirate Funnel (AAARRR)

In my previous post I talked all about the Pirate Funnel, and how it will help your start up. Now enough with the theory, time to apply the AAARRR-framework to your own business.

As a growth hacker you’ll put al your time and effort in finding the bottleneck of your company, because these are the most important for rapid growth. Filling in the Pirate Funnel will easily reveal your bottleneck. Let’s do it!

  1. Define the steps

So before you can fill in the AAARRR-framework, you have to define the steps. Take a look at your own business and write down the most important actions customers can take. This can be logging in, adding something to their basket, or simply adding a task.

Make these actions measurable. Then, make sure you got all the steps written down. Having a lot of steps is good, but limit it to ten maximum. This way, you won’t lose focus on the numbers that matter.

2. Fill in the AAARRR-steps

Ready for the confrontation? These numbers won’t lie. Find the right number for every step and write them down. You’ll find these numbers in Google Analytics, Adwords, Facebook Ads, …

If you can’t find the right number, you can make an estimate if you want to. Remember: progress > perfection.

Don’t forget to pick a timeframe for these numbers. This can be the last 30 days, but you can also write down last years numbers. Unless you made some big changes, like a new website, it is best to pick the biggest timeframe.

3. Find that bottleneck

This one’s pretty easy. Just look at the percentages of customers surviving a step.

Now find the lowest percentage. This is where most people gave up.

Voilà, your bottleneck!

4. What now?

You found the problem, well done. Now, find out why the customers disappear. Talk to the customers, send them a survey. The conversation with the customer is vital, as only they hold the key to solve the bottleneck.

Time to call a meeting: gather around and put your minds together. You have succesfully allocated the problem, now you can come up with a solution!

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Growth Hacking Marketing Tech Venture Capital

How to build a cash machine: what matters in VC

It’s quite easy to build a business that generates $1 billion in yearly revenue. In fact, I can do it right now on the spot. Just look for a commodity like gold, buy $1 billion worth of that commodity and sell it immediately on the market below the spot price. For commodities with a lot of liquidity you can probably move it within the day. I don’t need to explain to you why that would be a very bad idea. It would be fundamentally unprofitable and there would be no perspective on how this could possibly change in the future. Yet in venture capital, we often see deals where massive funding rounds get allocated to startups that are operating at a negative gross margin. In VC there is a trade-off that needs to be made between growth on one hand and financial sustainability on the other hand. Policies of central banks worldwide that flooded the markets with cheap money have tipped this balance to the extreme of ‘growth at all costs’ while completely disregarding financial sustainability. This is not always the wrong approach. For example when customer stickiness is high and a couple of startups with a similar value proposition are battling for market share, it makes sense to disregard sustainability for a while and just aggressively acquire customers. However, it can only make sense when keeping in mind that at some point you need to drastically increase prices again. When you have a shot at establishing a monopoly, or when switching costs for the consumer are really high, you can go down this road.

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However, the current Covid-19 crisis is highly likely to cause a decrease in available capital to be deployed and will rebalance the trade-off back to financial sustainability. That’s okay, the trends in VC move like a pendulum between these two extremes. As a founder you just need to be aware that you will be assessed based on dollar-efficiency. Basically, the ultimate metric to guide VC’s here is your LTV/CAC ratio. It’s simply the total profits a customer generates on average for your startup in his entire lifecycle, divided by the total costs associated with acquiring him. I will list the obvious strategies to optimize this ratio below:

1) Increase acquisition efficiency
This one is obvious. If you bring down the average acquisition cost per user, your LTV/CAC metric will improve. You can do this in 5 ways: 1) find the right audience for your product or service, 2) target them via the right channels, 3) optimize your marketing strategy, 4) launch referral campaigns and 5) remove all frictions to signup.

It has never been easier to do this. Point 1 to 3 can be optimized by applying growth hacking strategies in your digital marketing. Especially if you’re a consumer startup, test all possible channels and target difference audiences. It’s easy to set up different marketing campaigns across all channels. You can segment based on demographics and check where you get most signups from. Once you know your best audience, just try out different campaigns and keep track of your metrics to determine where your ad spent per customer won is the lowest. Point 4 and 5 can be tackled by testing your landing page. Add a referral program and keep track of the points where you experience a drop-off in customers. The key is to have a data-driven approach and pivot fast. The faster you can implement changes, the faster you can get feedback and adapt. The faster you can iterate, the bigger your advantage over your customer.

2) Decrease churn
Your churn is the % of customers you lose, often measured on a monthly basis (the basis should be the basis you bill your clients on). Obviously, it’s cheaper to keep an existing customer than it is to convince a new one. Your churn is an important metric that is often used by VC’s to determine whether you have product-market fit (we’ll write about this later). When it comes to minimizing churn, all strategies are fair game. If you’re a monopolist it’s very easy since customers have nowhere to go. If not, your pricing is an important aspect. However, try not to go too far in undercutting your competitors since this will decrease your LTV as well. You can increase switching costs, whether by doing this contractually or by making it very inconvenient. The champion of high switching costs is Hubspot. Want to use a different CRM? Say goodbye to all your data. There is a reason you can start using it at a 95% discount. They practically make it free so you start putting in data and at one point you find yourself locked in for the lifetime of your company. The easiest -and arguably the most customer-centric- way to decrease churn is to obsessively track customer satisfaction. Amazon is an example of a company that does this and I heard they are doing pretty well.

3) Up-sell or cross-sell

Increasing the amount of profit a customer generates can also be achieved by up-selling or cross-selling. Up-selling is when a customer upgrades to a better -more expensive- plan. Cross-selling is when you sell a complementary product or service. It’s closely related to customer satisfaction, but also to understanding what your customers need or want and their willingness-to-pay.

4) Increase usage
This one is closely related to up-selling and works when you charge on a pay-per-use basis. Again, it’s related to your customer satisfaction. I listed this separately because it’s an important one because it directly impacts a different metric that is often used to assess a startup and that is based on your CAC: the CAC payback period. This one is relevant if your startup operates in a highly competitive environment. When a VC allocates capital for you to deploy in order to acquire customers. If it takes a customer on average 1 month to generate profits equal to your CAC and it takes your competitor 2 months, you can deploy that capital twice as fast to acquire your next customer and you will grow twice as fast. This is something to keep in mind. Notice how in the example I started this article with, you will never get there. Even if your CAC is €0 (which is a fair assumption in a transparent commodity market where the only differentiator is price), you only make losses so your LTV will be negative.

What to benchmark it with?
In general a LTV/CAC ratio of 3 or higher is considered good by VC’s. However, it will be benchmarked with your industry and the most relevant competitors. The same holds for the CAC payback period. VC’s are often pitched similar ideas by different founding teams simultaneously. These metrics are often crucial in deciding which startup they will ultimately back.

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Growth Hacking

AAARRR! This is the Pirate Funnel

Getting started with Growth Hacking can be quite overwhelming. One easy starting point is the AAARRR-framework, otherwise known as the Pirate Funnel. This important model is one of the fundamental skills in Growth Hacking. Let me explain.

The Pirate Funnel will show your startup what your focus should be. The letters AAARRR stand for:

Awareness – how many people do you reach?

Acquisition – how many of them visit your website?

Activation – how many of them subscribe/install the app/post a reaction?

Retention – how many of them revisit?

Revenue – how many of them become paying customers?

Referral – how many of them refer others?

Note: Not all business models require the same flow. It’s your call to change things up. Activation could also just be the wow-moment of the customer, and sometimes it’s better to switch retention and revenue. The Pirate Funnel was developed by Dave McClure, and the awareness was added by Growth Tribe in 2016.

How does this model help your startup?

Well, it’s pretty obvious. The Pirate Funnel is used by Growth Hackers to find the weak point of any company. This is where you need to focus. Customers will have to go trough all steps to be of any value to your company, and the Pirate Funnel will reveal the weak link.

Let’s say nobody registers for your app. Where did you go wrong? Maybe a ton of customers saw the ad, but nobody clicked on it. Maybe they all got to the site, but the interface wasn’t appealing. By filling in a Pirate Funnel Canvas, you will probably find a big drop in numbers in between steps. 

Are you ready to do some Growth Hacking yourself? In my next post you can read how to get started with your Pirate Funnel, and I will also add a Pirate Funnel Canvas!

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Growth Hacking Marketing Tech Venture Capital

NoCode: a gamechanger

This week, I sat down with a founder of a startup that was raising funding and wanted to give my fund allocation. To give you some background, I work for a fund that participates in rounds between €50k and €250k at valuations between €0,5M and €2,5M (pre-seed and seed rounds). I agreed to have a meeting with him because I liked the problem he was working on and the industry size (enterprise software).

Big was my disappointment when he elaborated on the amount of funding he was looking for and -what’s more- the use of funds he had planned. He was looking for a €450k round just to complete his product. Apart from some interviews he had conducted with potential clients, no market research had been done. When challenged on his approach, he told me he felt insecure about going to market with a product that is not perfectly polished and free from glitches. This is completely the wrong mindset to start a business. With the tools out there, it’s so easy to test the market while keeping your burn rate at a minimum.

I actually know great companies that started out as a Whatsapp or Facebook group and worked from there. Was it perfect? Not by a long stretch. Were their customers happy? Happy with the solution but frustrated with the implementation. When the problem you’re solving is a pain point big enough, the pull factor from the market is often so big that an imperfect product doesn’t stop customers. Many startups even prove the market before having a complete product, by building a waiting list and charging customers to sign up. The opposite also holds true. When you’re building something nobody is waiting for, a super polished product won’t save you.

It has never been easier to build
NoCode solutions, where building a landing page or website is as easy as drag-and-dropping whatever it is you need, have completely leveled the playing field and have enabled everyone to start on online business. This has caused a shift in the investor community from looking for people that can build (app and web developers) to looking for people that know how to execute.



Common wisdom states that it takes 10,000 hours of practice to excel at something. This is factually incorrect. Do 10,000 hours of the same thing and you won’t improve a lot. It actually takes 10,000 iterations. With this in mind, it’s impossible to build a startup by relying on third parties for building your product. The time it takes to get customer feedback, communicate it clearly to a web development agency (that has no background information on your industry), wait for a price and time estimate, agree to the proposal and then wait for them to find the capacity to build it is simply too long. Even if you have the financial resources to outsource this development, you should still consider NoCode solutions.

Additionally, a NoCode solution signals to investors that you know how entrepreneurship works and handle your resources strategically. When a founder walks in and tells me he got 1000 customers to signup for his service and charged them already (proving willingness-to-pay), it blows my mind and makes me curious to see what that founder can achieve when he has substantial resources to build his product and launch a marketing offensive.

I could compile a complete list of services that can get you started, but the guys from Nocode.tech pretty much nailed it here.

I have seen founding teams pull off some pretty incredible stuff with the following tools:

Webflow for building complete apps
Stacker to build apps based on Google spreadsheets
Bubble for web applications
Voiceflow to build voice apps
Wix, Tilda, Squarespace to create websites

There are plenty of options to integrate payments and social media, find your first users, translate your website to test new markets, etc.

A bit of research can go a long way in creating your MVP in a matter of moments at almost no cost. Combine it with growth hacking tactics and you can go to investors with a lot of valuable data already.

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Growth Hacking

5 steps to find your “North Star Metric”

As previously explained, finding your North Star Metric can help you and your startup find the right focus and goal to stay on track. It’s also the key to long term growth. But how do you find your North Star Metric? Here are five steps to help you out.

1. Your NSM is the succes of the customer

Pleasing the customer is key for this metric. Your product or software is helping your client with a certain problem, and you want to measure how good of a job you’re doing. Airbnb want their clients easily book a night. Spotify ables its users to listen to the biggest collection of online music. Your NSM will be somewhere in this core mission.

2. Your NSM expresses the value for the customers

With a good North Star Metric, you still have to keep an eye on the other metrics as well. Don’t forget retention and referrals, but don’t just focus on your marketing KPI’s as well. The answer is somewhere in the middle. “placed orders” for example, is way too marketing-specific, and says nothing about client satisfaction. Your client might not like the order, so focussing on this one metric might lead you down the wrong path. A good NSM would be “delivered packages without complaints”. This metric is perfectly balanced between customer satisfaction that is still measurable.

3. The NSM is measurable

Talking about measurable: “satisfaction” is not something you can measure. Make sure your NSM is something you can see: number of times an order is placed, amount of minutes someone used your service.

4. The NSM is timebound and within your control.

Don’t choose an all-time metric. “Total subscriptions” will give you a false idea of growth, and the realisation that the ship is sinking will come too late. Choose a number that updates frequently, not even yearly. It’s also about you and the customer, so pick a number that’s not a subject to external factors. “amount of booked holidays/month” for a travel organization would be a bad idea, as you can’t control the weather, delays, locals, …

5. The NSM is a direct reflection of your growth.

This might be the most important rule, which makes the NSM a metric to worship. Make it undeniable, make it absolute. If the number is going down, so is your startup. Make sure you have no excuses. It should be impossible to say “yes, but…”. 

If you choose “amount of time my software is downloaded” as your NSM, you might be happy with the results. But what if people keep downloading it, because the download just keeps failing? You have no way to track this whatsoever, so it makes for a pretty shitty North Star Metric.

Hopefully these steps help you to find your North Start Metric. Once you have it figured out, you can prove your growth to employees and investors. Time to grow!

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Growth Hacking

Introduction to the “North Star Metric”

The North Star Metric is a powerful, and often misunderstood product strategy framework. Growth hackers can lose themselves in their mission to grow as fast as possible. Ofcourse, rapid growth can be rewarding, but it’s not always equal to maximal growth. If you want to utilize your maximal growth potential as a startup, you will need a North Star Metric. Let me tell you why this relatively unknown term should be the center of your growth strategy.

What is the North Star Metric?

The North Star Metric (NSM) is the key measure of success and growth for the product team in your startup. It defines the relationship between the problems of the customer that the product team is trying to solve, and the revenue that your business aims to generate by doing so. It also gives direction to the growth of your startup in the long term. 

Some examples of the NSM:

  • Spotify: time spent listening.
  • Airbnb: nights booked.
  • WhatsApp: Number of messages a user sends.

The idea behind the NSM is this: if your company brings more value to your customers, it is growing. Your customers, in return to the added value, will stay with you longer and buy more. Needless to say they will refer their friends and colleagues to your product. The NSM will help you understand your customers, and build a long term relationship with them.

How the NSM will influence your startup

If you ask Buckley Barlow, the reason Myspace failed and Facebook succeeded has mostly to do with the North Star Metric they were focussing on. Facebook was quick to realize they had to focus on Monthly Active Users as their NSM. Meanwhile, Myspace was still focussed on Registered Users – a vanity metric. Now, Registered Users is not an unimportant number. It just doesn’t tell the whole story. If the customer doesn’t receive enough value from the product, he won’t continue to use the platform. By tracking Monthly Active Users, Facebook could easily monitor the changes in user numbers and see which users found value from using their platform.

The NSM will clearly help your startup in a lot of different ways. First, it creates a main focus. Every team will focus on different numbers, but the endgame is crystal clear. The NSM also makes the growth of your company easily trackable. With just this one metric, everyone can see how well the company is doing. Lastly, it puts the customer in a key position. By focussing on the NSM, you’re automatically bringing value to your customers. Results: your startup is more focussed, efficient, and ready for long term growth.

The following weeks I’ll be digging deeper into this subject, providing tools to find your own North Star Metric, and some useful do’s and don’ts to stay on track.