Edited excerpt from How We Got off the Addiction to Venture Capital and Created Our Own Way to Profits by Skift co-founder and CEO Rafat Ali:
We gave up chasing scale. We took out *all* goals on traffic on the site, for everyone. We could do this because we didn’t have tons of outside money pumping through our veins, and this was a useless pressure we created for ourselves in an effort to show the illusion of growth to investors. And since we weren’t chasing investors, we didn’t need to chase what they would consider scale. It was a vanity metric.
We cut back on spending any money on getting users through Outbrain/Facebook/Twitter. We cut back on the number of stories we were doing on a daily basis, on chasing the tail on disposable news stories. We also cut back on syndicating our stories — in which we put in a lot of effort at the start, publishing on NBC News, CNN, Quartz, Fox News, Business Insider, Mashable and many others, to zero effect on our revenues — and also cut back on publishing useless filler syndicated stories we got from a third party syndication service.
In an era where everyone is tripping over each other to call themselves a “distributed media platform”, we decided to focus solely on building direct channels to our users, which for us meant email. Email, despite all its shortcomings, is that direct promise day in and day out to our users, you see us the first thing in the morning, in the intimacy of your inbox.
(1) Rafat’s rejection of broad traffic growth as Skift’s key metric is similar to the approach I took with Seeking Alpha: I made our key metric daily direct uniques, (“DDUs”). Daily uniques captures loyalty via frequency of daily visits, and direct visitors focuses you on people who value your brand and content, rather than those allured by link-bait. As a result, making DDUs your key metric pushes you to create genuine value for your users.
(2) Once you measure success by the number of direct visitors, you’ll almost inevitably focus on converting readers to email subscribers, as Rafat describes he did. We’ve did the same: Seeking Alpha has over three million email subscribers, most of whom are subscribed to email alerts on stocks in their portfolio. (The free alerts let you know about breaking articles and news stories on your stocks. Subscribers include individual investors, most public company managements, and thousands of hedge funds.)
(3) This does not mean that broader audience metrics like monthly uniques, which include indirect and infrequent visitors, are unimportant. You should view them as the top of your funnel, as a means to an end. Your job is to attract indirect or infrequent visitors so you can convert them to frequent, direct users. You should have a team (and owner) responsible for conversion to frequent, direct users. And you should report DDUs (or maybe the ratio of DAUs/MAUs) as the key metric for the company.
(4) On key metrics, see (i) Growth rate in revenue or active users is the paramount startup metric, (ii) The key metric for your startup must satisfy these 4 criteria, and (iii) Why you shouldn’t optimize for social sharing.
(5) On using email subscriptions to convert infrequent to frequent users, see De Correspondent’s use of email subscriptions to convert Facebook users to loyal readers.