Metrics for Measuring a Product

Metrics Turn Vague Ideas into Great Ideas

• A rough estimate is sufficient
• Focus on how to evaluate a great product
• Note, do not worry about the overall market size
  • Simply asking "Will it ultimately be large?" is enough

What Should We Measure About the Product?

• Are users receiving value?
  • Active users
  • Profit
  • Transaction volume
  • Retention

Retention is Important

The chart below shows the retention rate over time for each annual cohort.

If the cohort retention rate keeps declining without a lower limit, your growth will be like a fire ring in a field that cannot sustain itself because

• Old users will be burned out
• New users will become fewer

You should keep the retention rate above a certain line.

Conversely, if the cohort retention rate increases over time, it indicates that your product is excellent. For example:

1. Whatsapp
2. Uber
3. Facebook

Tom Tunguz: High Retention Means High Valuation

Growth

If you have high expectations and want to achieve exponential growth, then assess your weekly growth rate. Strive to keep this weekly growth rate steady, and you will experience exponential growth.

Iteration Speed

• Smaller companies have an advantage in iteration speed
• Metrics are key to guiding the direction of iterations
• Measure the speed of the iterations themselves

How Much Should You Value Metrics?

1. Not enough emphasis
   • Easy to deceive oneself and hit a wall
2. Very high emphasis
   • Your decisions will be cautious
3. Overemphasis
   • You increase numbers but do not add value

Reality Can Be Painful

• Metrics can shatter illusions, and sometimes it can be a bit painful
• Most leaders attract subordinates through illusions
• You should
  • Learn from the past
  • Clarify the present
  • Smile at the future