👇Thread.

Published a new essay: The red flags and magic numbers that investors look for in your startup’s metrics – 80 slide deck included!

This was a deck that I created on my (longish) interview process with @a16z. It was a long path, starting with meeting folks at the firm 10 years ago. But the purpose of the deck was to explain how I would use my superpower in an investing context
Here's what I explain in the deck. As investors (whether angel or VC) we're often confronted with an up-and-to-the-right graph. Is it going to go up? Or down?
One solution to forecast these growth curves is the Growth Accounting Framework, where you add up New+Reactivated and subtract churned users. In each time period that gives you the difference in monthly actives.
The problem with this is that it's a lagging metric, not a leading one. We need to go one level deeper and look at the underlying loops that drive these numbers, to understand the quality.
For acquisition loops, I go through a number of different models. SEO+UGC, Viral, and Paid marketing.
In the deck, I break down how to get more granular on each step, and case studies for how to optimize the loop.d
From a metrics standpoint, it's important to analyze the acquisition mix, the quality of the signups, and the platform dependencies. In the deck, I talk through a bunch of the red flags I'm looking for.
I go through the same discussion for the Engagement Loop too. Examples, Upside, Metrics, and Forecasting.
Two kinds of engagement loops- Social Feedback and Content Personalization. There's obviously many others, but these are two that are particularly useful to think about.
I use examples from Pinterest, Twitter, and Uber. Both increasing the activation of users to get them pinning more, how to build a network, and unblocking users who've lost their password.
From a metrics perspective on engagement loops, I'll look at cohort retention curves, frequency analyses, and analyzing notifications too. I don't mention it, but the Power User Curve is important too: https://t.co/kdgO8PIspq
Once you have the Acquisition and Engagement Loops mapped out, and the potential upside, then you can build a forecast for MAUs. This lets you answer the questions you want to answer - where will this curve go?
Hope you enjoy the deck! Again, here's the link:
https://t.co/Kp7YSHTTs6
Thank you @bbalfour @ShaunMClowes @onecaseman @bubba @aatif_awan and the other folks who helped me along the way.

More from Andrew Chen

More from Startups

You May Also Like

So the cryptocurrency industry has basically two products, one which is relatively benign and doesn't have product market fit, and one which is malignant and does. The industry has a weird superposition of understanding this fact and (strategically?) not understanding it.


The benign product is sovereign programmable money, which is historically a niche interest of folks with a relatively clustered set of beliefs about the state, the literary merit of Snow Crash, and the utility of gold to the modern economy.

This product has narrow appeal and, accordingly, is worth about as much as everything else on a 486 sitting in someone's basement is worth.

The other product is investment scams, which have approximately the best product market fit of anything produced by humans. In no age, in no country, in no city, at no level of sophistication do people consistently say "Actually I would prefer not to get money for nothing."

This product needs the exchanges like they need oxygen, because the value of it is directly tied to having payment rails to move real currency into the ecosystem and some jurisdictional and regulatory legerdemain to stay one step ahead of the banhammer.