HotelTonight Founder: Find Your 'One Metric to Rule Them All'
Sam Shank, founder of HotelTonight, advises startup founders to identify and focus on a single metric that best predicts retention and product-market fit. He argues that most failed apps dilute their focus by optimizing for too many metrics at once. Prioritizing one core user behavior, such as a specific repeat action, can unlock compounding retention and growth.
- In its early stages, HotelTonight's single guiding metric was "total transactions," a measure of the number of hotel bookings made through the app. - As the company matured and sought profitability, its North Star metric evolved from transactions to Gross Booking Value (GBV), and eventually to EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) to ensure the business was self-sufficient. - This singular focus is a common strategy among successful consumer apps. For instance, Airbnb's "one metric" is "nights booked," which reflects value for both guests and hosts, while early Facebook famously focused on "number of users adding seven friends in the first ten days" to drive network effects. - For a news app like SocialRadar, a key metric could be the "stickiness ratio" (Daily Active Users divided by Monthly Active Users), which indicates habitual usage and how often users return for their personalized briefings. - AI-powered personalization can directly impact a news app's core metric by analyzing user behavior to deliver tailored content, which has been shown to increase engagement and audience retention. - For news and media apps, focusing on a core metric is crucial as the average 30-day user retention rate is around 11.3%, one of the highest among app categories, indicating a strong potential for habit formation. - The practice of focusing on a single metric is rooted in the psychology of habit formation; research shows that focusing on one specific new behavior at a time makes it more likely to become an automatic habit. - Sam Shank's later strategy at HotelTonight included identifying and focusing on their most profitable customer segment—frequent business travelers they called "legends"—who booked often and came back directly to the app.
