Building the Most Loved Analytics Tool ($1.05B, $100M ARR, 60+ NPS) | Mixpanel, Amir Movafaghi | EO

Mixpanel fixed churn by making NPS the leading indicator

Mixpanel grew past $100m in revenue while churning almost half its customers every year. The cause was not one flaw but many, so the company segmented customer behavior to find the real drivers. Because retention is a lagging indicator, it managed to user NPS instead, lifting NPS from single digits to nearly 60 and retention from 50% to close to 90%.

Takeaways

• Churn had no single cause. Mixpanel was churning almost half its customers every year while still growing. Easy fixes failed, including treating churn as a segment problem and moving upmarket to enterprise. Diligent segmentation revealed a set of many different things to fix.
• NPS became the leading indicator. Retention is a lagging indicator, so Mixpanel focused on user NPS instead. It moved NPS 10 points a year from single digits to 50 by its Series C and nearly 60 recently. Retention rose from 50% to close to 90%.
• Scaling has brutal drop-offs. Companies pass through stages, including a $10m milestone and a $50m milestone, with huge drop-offs at each. Most signal comes from existing paying customers. Past $50-100m, maturing companies must also learn from the customers they do not have.
• The CEO job changes with scale. A 10-person startup operates very differently from a larger company. Past a certain scale, a CEO must create leverage, autonomy, ownership and modularity within the organization so it can run without constant intervention.
• Mixpanel's values drive accountability. Openness to feedback, leading change, customer focus, results orientation and one team. Results orientation holds the company accountable through willingness to pay and top-line ARR growth. Mixpanel expects to be fundamentally different every six months.
• Fix problems by centering why they matter. Movafaghi says fixing a problem starts with centering on why it matters and why it takes priority over the other 99 problems a company has. Then rally people with clarity on how they can contribute.

From Tehran to Twitter

1. Movafaghi was born in Tehran and spent about seven years in Istanbul from age eight before moving to the United States at 15.
2. During an uprising in Iran he could not reach his parents because phone lines and email were down.
3. Twitter was the only platform reporting from Tehran, which led him to join the company in 2010.
4. Twitter then had a little over 100 employees and no ad revenue.
5. When he left, it had grown to 4,500 employees and about $2bn in revenue.
6. His biggest lesson there was the impact of user experience on a company's success.