Human Capital Trumps Monthly Visits
Startup founders and early stage investors are blinded by explosive user growth numbers (user attention). To be honest I can think of little else at this pre-traction stage of Victus Media. Although I know there's much more that needs to happen after the first signs of user adoption, without it the project is dead in the water. User excitement, utility, and retention are all factors that drive growth rate. The mistake we make as founders and investors is boiling down human capital to a few coarse metrics.
With any early service you're much better off with a handful of fanatics than hundreds or thousands of apathetic visitors. Uber fans are committed to your vision for the long haul (they'll give you months instead of seconds) and will be patient as you ramp up revenue, resources, and a handful of brilliantly executed features (tune in to veteran entrepreneur/investor Steve Blank on features).
Here's why apathetic visitors are death to your early stage startup:
- disinterested visitors are transients and won't return to your service
- they won't provide much needed feedback
- if apathetic users do give feedback, it will mislead a startup. Their interests have no concern for the startup's success, and diverges greatly from the "best" user base. Each startup has to define and understand who is their ideal market
- they won't zealously get their friends to try out the service
- they consume resources (time more than server costs) that should be dominated by early adopting uber fans
Power of Numbers
After getting your startup laser focused on over satisfying leading edge fans, you can begin to use the metrics. The value that matters is: Traction which for me is (new users X user retention rate). If you get 100 new users and they don't return, it's a obvious signal that you haven't locked into real traction yet. All the hard work for hypothesizing, refactoring, and exploring value propositions pays off as soon as you see a smoothly growing Traction value week to week (last year I would have said month to month, but trends move faster now).
The true strength of human capital is when you have a sizeable level of satisfied users. The threshold population for enterprise applications may be a single satisfied customer. But for web services bigger is better. Numbers like 50 thousand to 1 million users show real impact. At this level your startup can begin influencing large scale social behavior, and disrupting existing markets. The power of human capital is such that embedded market titans like Microsoft, Google, and Apple have cause for alarm. For evidence look how Facebook, Twitter, and other social media is dominating link sharing and discovery. While buying intent is still highly correlated to BigCo search (Google, Bing), a drastic behavior change may be only a feature away.