Hey, What’s Your Number?
Determining the one metric that matters for your start-up.
Blog Poster: Elissa Prichep
Numbers are pervasive in our lives. We know how many hours of sleep we need each night to feel rested. We know how many steps we should walk each day to be healthy. We know how much money we are supposed to save each month. And we pretty much have a tool to measure all of it.
Depending on the goal, there is one metric that matters. You pick it and track against it. That is how you know what to push yourself toward. That is how you know you are making progress.
Sounds simple, right? Not quite. When the goal is different for everyone, how do you identify the goal? This past week at the PSLU Accelerator, Adam Kearney — founder of the PSLU Accelerator and CEO of Props — helped the start-up founders tackle just that issue.
He started by talking about survival training. When you are lost in the woods, you run the risk of walking in circles and never getting anywhere. To find your way out, pick a direction and walk in a straight line until the destination is reached. Survivalists are taught to find a light tree and hold it as they walk. The tree prevents them from making any drastic turns. It becomes their compass.
For start-ups, the compass is 5–10% growth every week. Much like traveling through the wilderness without a guide, the first steps are the easiest. Growth of 5–10% over a low number is not nearly as difficult as over a high number. Tracking sales? Selling 55 products the week after selling 50 products is not nearly as daunting as selling 550 the week after selling 500. Every 10% is going to get harder.
If you can’t hit the goal in a week, you need to scale back your product. Start smaller. Force yourself to evaluate yourself every week. Too many founders trap themselves by thinking building more will solve their problems when the opposite is the case.
If you’re hitting those numbers, keep going! Adam advises going until you feel like you can’t sustain yourself. Then it’s time to build and automate. If you’re not even hitting 5%, your business has issues. Barely missing that target — say you’re in the 3–4% range — means you may have a solvable problem. Work with your mentors, advisory board, and customers to figure out corrective steps. If you are in the 0–3% range, take a step back a reevaluate the market and your product. Pivot if necessary.
So you are now walking on a straight path through the woods, but where are you pointed? 5–10% growth of what? The “what” is the one metric that matters.
Here’s how you can help identify what that metric is, or pressure test whether you’ve chosen your metric correctly. Ask yourself, “What is the most important thing about my product?” To help you answer that question, what does your product do 10x better than the current solution? Focus on that. If you name more than one thing, you are not focused.
Now take your most important thing and measure the direct action to get there. Analytics platform? Track the number of users that connect a source. Mobile app? Track downloads. Physical product? Track sales or pre-sales. Two-sided marketplace? Tricky. Follow Airbnb, Uber, and Half.com by focusing on the most important side first. For these three, it’s the supplier.
What about revenue, you ask? Adam explained that start-ups typically don’t jump straight to earning revenue. It has happened and that is a great thing. More typically, however, start-ups begin with engagement. Engagement leads to users, and users lead to revenue.
You are now ready for your first steps in the right direction. Be sure to track the one metric that matters against your 5–10% weekly growth goal. Adjust your approach as needed. And grow.
To apply for the 2017 PSL Accelerator click here.
Elissa Prichep is dedicated to helping people live longer, healthier lives. She works in healthcare and spends her spare time as a political participant, start-up friend, and intrepid traveler. You can find her walking her two amazing rescue dogs around Rittenhouse @eprichep
Adam Kearney is the co-founder and CEO of Props. Props helps companies celebrate their team members from Slack and broadcast to their office TVs. Adam served on the PSL Leadership Board where he co-founded the PSL Accelerator and Startup Bootcamp with Kert Heinecke. In November 2015, Adam sold his last company, The Connectome. @K3ARN3Y
Philly Start-up Leaders Accelerator provides Philly’s promising founders & startups with an opportunity to connect and build lasting relationships through one-on-one mentorship. We do so by leveraging the knowledge and resources of the community to create more successful, strong, and scalable startups in Philly. We do not take equity; we only provide value. @StartupLeaders