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The Red Flags and Magic Numbers That Investors Look For in Your Startup’s Metrics
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The Red Flags and Magic Numbers That Investors Look For in Your Startup’s Metrics

Andrew Chen
Andrew Chen, 2018
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Editorial Rating

9

Qualities

  • Analytical
  • Innovative
  • Applicable

Recommendation

Entrepreneurs and investors base decisions on user growth forecasts. But common models for user growth rely on lagging indicators. In this clever article, venture capitalist Andrew Chen details a method for understanding and predicting growth via user “acquisition loops” and “engagement loops.” Start-up investors and entrepreneurs will appreciate Chen’s authoritative take on this crucial subject, as well as his emphasis on sustainability and quality.

Take-Aways

  • Investors and entrepreneurs can build a predictive model of user growth by examining customer “acquisition loops” and “engagement loops.”
  • These loops reveal how gaining a cohort of new users leads to bringing in more new users and how current engagement leads to future engagement.
  • “Acquisition mix” represents a key performance indicator.

About the Author

Andrew Chen is a general partner at the venture capital firm Andreessen Horowitz.

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