I went to the Growth Hackers conference in Menlo Park last Friday. Among the speakers were people who had headed up growth teams at Facebook, Twitter, LinkedIn, Zynga, and Dropbox.
One of the themes that came up a lot was the idea of the growth team finding a leading indicator of a user who would turn into an engaged user later on. The growth team would then focus on optimizing for that metric.
Here are how the companies thought about that leading indicator.
Chamath Palihapitiya, who used to run Facebook’s growth team, said that Facebook’s leading indicator of an engaged user later on was the user reaching 7 friends within 10 days of signing up.
Nabeel Hyatt, a VC at Spark Capital, and formerly a GM at Zynga, running a 40m monthly active user game there, said that Zynga focuses on D1 retention (day 1 retention). Zynga has found that if someone comes back a day after signing up for a game, that is a leading indicator of them becoming an engaged and paying user.
ChenLi Wang, who runs the growth team at Dropbox, said that the leading indicator of an engaged Dropbox user is when they put at least one file in one Dropbox folder on one device.
Josh Elman, a VC at Greylock, and a former growth lead at Twitter, said that the leading indicator of engagement at Twitter was related to Facebook’s metric: the user following a certain number of people, and a certain percentage of those people following the user back.
Elliot Schmukler, who leads the growth team at LinkedIn, said that the leading indicator of engagement at LinkedIn is also similar to Facebook’s: the user getting to X connections in Y days. He didn’t say what the X and the Y were.
Characteristics of leading indicator metrics
The various leading indicators fit into three categories:
- Network density: friend or following connections made in a time frame
- Content added: files added to a Dropbox folder
- Visit frequency: D1 retention
Nabeel Hyatt mentioned that it’s really useful for a growth team to focus on one operational metric, and then have a number of KPIs (key performance indicators) that they also track.
He said that it’s important for the operational metric to be concrete, and also relatively early in the funnel of the user’s experience of the site. As the funnel continues, drop-off becomes high, and you want to find a leading indicator as close as possible to the top of the funnel that you can work on to minimize the drop-off.
Chamath spoke about how his growth team discovered the “7 friends in 10 days” leading indicator. He said that they looked at cohorts of users that became engaged, and cohorts of users that did not become engaged, and the pattern that emerged was that the engaged cohorts had hit at least 7 friends within 10 days of signing up.
Other points from the speakers
A few other interesting things were mentioned at the conference. Josh Elman mentioned that Twitter has two degrees of an active user:
- a plain “active user” is someone who has visited their timeline at least once in the last 28 days
- a ‘retained’ or ‘core’ user is someone who has visited their timeline at least 7 times in 28 days.
Chamath said that, when he was running the growth team at Facebook, he focused on four things:
- Acquisition: how to acquire users.
- Activation: how to get users to their ‘Aha’ moment as quickly as possible
- Engagement: how to ensure users experience the core product value as often as possible
- Virality: how to get people to get more people onto the platform
He said there had been a tendency in growth teams he was aware of to measure the time to the “Aha” moment in days. His view is that it should be measured in hours, and ideally minutes and seconds. The idea is that a user should get an “Aha” moment as soon as humanly possible after signing up.