The Evolution of Social Apps: Benchmarking Growth and the Inevitability of Clubhouse

The Evolution of Social Apps: Benchmarking Growth and the Inevitability of Clubhouse

Introduction:
The rise of social apps has revolutionized the way we connect and share information. From blogs to Twitter, Instagram to TikTok, each platform has brought unique features and capabilities. In this article, we will explore the key metrics for benchmarking growth in social apps and discuss the inevitability of Clubhouse, a live audio conversation platform.

Defining Core Metrics for Growth:
When benchmarking growth in social apps, it is crucial to define your core metric. For most consumer social apps, daily active users (DAUs) are the key metric as it indicates regular usage. However, apps with a less frequent use case can start with weekly active users (WAUs). The ideal monthly user growth for seed-stage consumer social companies is as follows:

• OK: 20%
• Good: 35%
• Great: 50%
  Organic growth is essential for social apps, as they often cannot monetize until later stages. Paid marketing should be limited, and if more than 10-20% of users are coming from paid sources, it's time to rethink acquisition strategies.

Measuring Engagement:
To gauge the level of engagement, the DAU / MAU (Daily Active Users / Monthly Active Users) ratio is crucial. It provides insights into how many users are regularly using the app. The benchmark for DAU / MAU ratio is as follows:

• OK: 25%
• Good: 40%
• Great: 50% or more
  Best-in-class social apps have an "L-ness curve" that skews right, indicating that users are making the app a regular part of their lives. Weekly L-ness curve, measured by the percentage of users in the app five, six, or seven days a week (L5+), indicates near-daily use behavior. The benchmark for L5+ performance is as follows:
• OK: 30%
• Good: 40%
• Great: 50% or more

Retention and Cohort Analysis:
Retention is a critical aspect of measuring the success of a social app. N-day retention, focusing on the percentage of an original cohort entering the app on specific days (d1, d7, d30), provides insights into user stickiness. The benchmark for n-day retention is as follows:

• OK: d1 50%, d7 35%, d30 20%
• Good: d1 60%, d7 40%, d30 25%
• Great: d1 70%, d7 50%, d30 30%
  It's important to note that the slope of the retention curve tends to flatten between d7 - d14 and plateaus by d20. For companies transitioning from a tool to a network, weekly retention (w1, w4) can also be relevant. The benchmark for weekly retention is as follows:
• OK: w1 40%, w4 20%
• Good: w1 55%, w4 30%
• Great: w1 75%, w4 50%

The Inevitability of Clubhouse:
Clubhouse, a live audio conversation platform, represents the next step in the evolution of social apps. It follows the pattern of transformation seen from blogs to Twitter, website publishing to Instagram, and YouTube to TikTok. Clubhouse distinguishes itself with its live and easily accessible conversations, allowing users to engage while multitasking. The platform's algorithm will play a crucial role in recommending conversations tailored to users' interests, addressing the issue of overwhelming choice.

Actionable Advice:

1. Focus on organic growth: Prioritize product-driven growth over paid marketing to ensure sustained success.
2. Analyze cohort performance: Track metrics over time and aim for stable or improving results cohort by cohort.
3. Optimize user experience: Invest in refining algorithms and recommendations to enhance user engagement and retention.

Conclusion:
Benchmarking growth in social apps requires a deep understanding of core metrics, engagement, and retention. The success of social apps lies in their ability to provide value, leverage network effects, and adapt to evolving user preferences. As Clubhouse gains popularity, it showcases the power of live audio conversations and the importance of personalized recommendations. By following the actionable advice and staying attuned to the changing landscape, social app developers can unlock the potential of their platforms and create lightning in a bottle.