How to fool VCs into thinking you have traction, Part 4
OK Go with point #3
Finally, here’s point 3 of a multi-post series on the question, "How can you fool VCs into thinking you have traction?" Here are links to older posts:
- Introduction
- Widget pageviews versus destination site pageviews
- Automatic page refreshing
- "Standards" and metrics like date ranges
- Counting hits versus pageviews versus ad impressions
- Search engine marketing
- SEO and page proliferation
- TechCrunch and other one-time traffic spikes
"Standards" and metrics like date ranges
Today, we’re going to talk about manipulating standards and metrics – in fact, let me roll in hits versus pageviews and ad impressions, since it’s all part of a similar issue. Basically this sleight of hand has to do with the fact that people treat $0.99 as much cheaper than $1 when they are both only a cent off. So if you pick the right metrics to measure yourself by, you can get a big boost in credibility.
Here’s what you say
When someone asks you what kind of traction you’re seeing, say something like this:
"Since we started public beta, we’ve served over 300 million ad impressions on the site"
I also love "peak" numbers or "run rate" info:
"We currently have a peak run-rate of 240 million pageviews"
This sounds great right? It’s actually more complicated than that.
What’s weird with these stats?
Even though they are a bunch of equivalent numbers, people really perceive the bigger numbers a lot differently than the smaller ones.
What’s misleading?
People don’t have a good sense of the ratios
to translate between these numbers – some numbers sound bigger than they really are!
What’s a typical set of ratios? Every site is different, but these would all be reasonable:
- 1 registered user = 10 unique users
- 1 user = 10 pageviews
- 1 pageview = 2 ad impressions
- 1 pageview = 10 hits (or transactions)
- 1 dollar = 1000 ad impressions
What this means is that rather than giving a number like 500k registered users, you could in fact give a number closer to 500k x 10 x 10 x 2 = 100 million pageviews. And if your site is growing 20% a month, growing 500k users 20% a month is a lot less impressive sounding than 100 million pageviews growing 20% a month.
Even worse is giving someone a dollar amount for your advertising. 100 million pageviews doesn’t sound so great when it’s monetizing at $1 CPM or less.
Another way to compound this is by giving big numbers based on non-fixed time intervals. For example:
- "We’re hitting a run-rate of 100 million pageviews"
- "Our peak run-rate is 200 million pageviews"
This also includes what I wrote about earlier with "Since we did X, we got Y." It’s very confusing what these numbers entail. If you wanted a great peak run-rate number, just take the HIGHEST number of pageviews you’ve ever had in ANY time interval – let’s say the 10 minutes right after you get a Techcrunch spike, and multiply that out to a month. You’d get a ridiculous number.
How do you figure out the truth?
It’s hard to figure this stuff out, but ultimately you want to heavily bound the problem. Rather than waiting for them to spit out a crazy metric, instead you should ask a very specific question:
"In the last month, what did your analytics tell you in terms of # of pageviews to the site?"
Asking a question like that, and not accepting a cryptic number, will give you the best chance at understanding what’s really happening on their site.
Ideally, you want to be able to open up their metrics and understand:
- How long is the average session length?
- How many unique users come to the site per month?
- How many pageviews did the site receive?
- How many ads are on each site?
- What’s the average CPM of the site?
The trick, of course, is understanding what typical metrics might look like for each of these.
The best case scenario is when you’re doing something a little weird and not a typical consumer internet site. For example, if you have a publisher ad network, you’d roll up a bunch of stats from sites you really don’t own or control. Or just disclose certain stats (like peak stats) but not the rest.
PS. Get new updates/analysis on tech and startupsI write a high-quality, weekly newsletter covering what's happening in Silicon Valley, focused on startups, marketing, and mobile.
Views expressed in âcontentâ (including posts, podcasts, videos) linked on this website or posted in social media and other platforms (collectively, âcontent distribution outletsâ) are my own and are not the views of AH Capital Management, L.L.C. (âa16zâ) or its respective affiliates. AH Capital Management is an investment adviser registered with the Securities and Exchange Commission. Registration as an investment adviser does not imply any special skill or training. The posts are not directed to any investors or potential investors, and do not constitute an offer to sell -- or a solicitation of an offer to buy -- any securities, and may not be used or relied upon in evaluating the merits of any investment.
The content should not be construed as or relied upon in any manner as investment, legal, tax, or other advice. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment. Any projections, estimates, forecasts, targets, prospects and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others. Any charts provided here are for informational purposes only, and should not be relied upon when making any investment decision. Certain information contained in here has been obtained from third-party sources. While taken from sources believed to be reliable, I have not independently verified such information and makes no representations about the enduring accuracy of the information or its appropriateness for a given situation. The content speaks only as of the date indicated.
Under no circumstances should any posts or other information provided on this website -- or on associated content distribution outlets -- be construed as an offer soliciting the purchase or sale of any security or interest in any pooled investment vehicle sponsored, discussed, or mentioned by a16z personnel. Nor should it be construed as an offer to provide investment advisory services; an offer to invest in an a16z-managed pooled investment vehicle will be made separately and only by means of the confidential offering documents of the specific pooled investment vehicles -- which should be read in their entirety, and only to those who, among other requirements, meet certain qualifications under federal securities laws. Such investors, defined as accredited investors and qualified purchasers, are generally deemed capable of evaluating the merits and risks of prospective investments and financial matters. There can be no assurances that a16zâs investment objectives will be achieved or investment strategies will be successful. Any investment in a vehicle managed by a16z involves a high degree of risk including the risk that the entire amount invested is lost. Any investments or portfolio companies mentioned, referred to, or described are not representative of all investments in vehicles managed by a16z and there can be no assurance that the investments will be profitable or that other investments made in the future will have similar characteristics or results. A list of investments made by funds managed by a16z is available at https://a16z.com/investments/. Excluded from this list are investments for which the issuer has not provided permission for a16z to disclose publicly as well as unannounced investments in publicly traded digital assets. Past results of Andreessen Horowitzâs investments, pooled investment vehicles, or investment strategies are not necessarily indicative of future results. Please see https://a16z.com/disclosures for additional important information.
