Unlocking the Potential of Social Apps: Benchmarking Growth and Building the Right Team

Unlocking the Potential of Social Apps: Benchmarking Growth and Building the Right Team

Introduction:
Creating a successful social app can often feel like trying to catch lightning in a bottle. However, assessing its performance and potential can be a more scientific process than one might think. In this article, we will explore how to benchmark the growth of social apps and build the right team for seed-stage startups. By understanding key metrics and hiring the right individuals, entrepreneurs can increase their chances of success in the competitive social app landscape.

Benchmarking Growth:
When benchmarking the growth of a social app, it is crucial to define the core metric. For most consumer social apps, this metric is daily active users (DAUs). The trend of DAUs should be consistently growing, indicating a positive trajectory. Additionally, monthly user growth is an important indicator, with growth rates of 20% considered okay, 35% good, and 50% great.

Organic Growth and Virality:
Ideally, social apps should exhibit inherent virality, with users naturally inviting their friends to enhance the experience. If a significant portion of users is coming from paid sources (more than 10-20%) at the early stages, it may be necessary to reconsider the acquisition strategy. Organic growth is vital for sustained success in the social app space.

Engagement and Retention:
Engagement ratios, such as DAU/MAU (daily active users divided by monthly active users), provide insights into how frequently users interact with the app. A benchmark of 25% for DAU/MAU is considered okay, 40% good, and 50%+ great.

The L-ness curve, which examines the distribution of users by the number of days active over a specific period, offers further insights into user behavior. Best-in-class social apps have an L-ness curve that "smiles" or skews right, indicating regular usage. A benchmark of 30% for L5+ performance is okay, 40% good, and 50%+ great.

Retention is another crucial aspect to consider. N-day retention, or bounded retention, provides valuable insights into user loyalty. Benchmarks for n-day retention are d1 (day 1) 50%, d7 35%, and d30 20% considered okay; d1 60%, d7 40%, and d30 25% considered good; and d1 70%, d7 50%, and d30 30% considered great. Additionally, observing how quickly the retention curve flattens out can indicate long-term retention potential.

Building the Right Team:
Finding the perfect candidates for a seed-stage startup team can be challenging. It is essential to hire individuals who are execution-focused and possess a T-shaped skill set, with broader knowledge in various areas and deep expertise in a specific domain. Avoid overspecialized candidates who may struggle to adapt to changing startup directions.

Interviewing candidates and working together for a trial period of two months can provide valuable insights into their compatibility with the team and their commitment to hard work. Understanding their motivations, work style preferences, and long-term goals can help ensure a good fit from the beginning.

While it may be tempting to hire individuals solely based on their analytical skills, it is more effective to find people with a passion for the specific product being brought to market. Training them to be metrics-oriented can lead to a better alignment with the company's goals and objectives.

Conclusion:
Benchmarking the growth of social apps and building the right team are critical steps in the journey towards success. By understanding key metrics such as daily active users, engagement ratios, and retention rates, entrepreneurs can gauge their app's performance and make informed decisions. Additionally, hiring individuals with a broad skill set, execution focus, and a passion for the product can contribute to the team's success. Remember, success in the social app space may be challenging, but with the right strategies and team, it is possible to catch lightning in a bottle.

Actionable Advice:

1. Focus on organic growth: Strive to create a social app that naturally encourages users to invite their friends, resulting in organic growth. This can be achieved by enhancing the user experience and making it easy for users to share the app with others.

2. Prioritize engagement and retention: Monitor key metrics such as DAU/MAU ratio and retention rates to ensure that users are regularly using and deriving value from your app. Continuously improve the user experience and address any issues that may hinder engagement and retention.

3. Build a well-rounded team: Look for individuals who possess a T-shaped skill set, with a broad range of knowledge and deep expertise in a specific area. Prioritize execution-focused candidates who are adaptable and willing to contribute to various aspects of the startup. Conduct trial periods to assess compatibility and motivation levels.

By implementing these actionable advice and consistently monitoring key metrics, entrepreneurs can increase their chances of success in the competitive social app landscape.