Startups: Metrics vs. Gut?
Metrics by definition is a method by which something is measured. There are so many different types of metrics from “customer metrics” (customer traction building) to “sales metrics” (revenue building) to “financial management” (cash flow). For a startup, which ones do you focus on? Which one is more important? Well…good question. They are all important in their own right and just as equally necessary for a startup to get off the ground. Terms such as Customer Acquisition, Customer Engagement, Revenue Run Rate, Churn Rate, Gross Margins, Life Time Value, Burn Rate, and the list can go on and on. Yet, are all of these metrics essential? In many ways they are, but there is another metric which is not a quantitative metric but a qualitative metric: It is called “instincts” or “gut instincts” or some may say “intuition”.
You ever hear of a great athlete who has all of the physical tools or is the so-called “5 tool player” as they say in Baseball. The player can run for miles or run like a gazelle or throw the ball a mile and hit the heck out of the ball; yet, that same ballplayer has absolutely no feel for the game or “instincts”. That ballplayer makes all of the wrong decisions at the worst possible time but even worse, is the ballplayer compounding those mistakes because he or she never learns from the mistakes that are made. Yet, that player is given multiple chances but make those same mistakes over and over again. Why? Mostly because of the “metrics” they display, the investment that is already put it in and the potential that one day that ballplayer will reach that peak. However, the ballplayer never seems to recognize that same talent within. Again why? Metrics can only provide some of the picture, but what lies inside the mind and heart of that ballplayer is almost impossible to measure.
As CEO of a startup, instincts are many times your worst enemy. They tell you to push forward when maybe you should hold back and vice versa. Sometimes, your instincts can fail you from taking a look at the overall big picture. This is where metrics can come in and give you a “black-n-white” picture of the health of your company. Understanding your metrics and what they represent to your company on daily basis will help paint a picture for not only yourself and your employees, but also, to the stakeholders who have invested into your idea at such an early stage. Stakeholders rely on these metrics to be able to project out from your current status to that of 6mos, 1 yr, 5 yrs and so on.
Yet, with metrics painting a “black-n-white” picture and stakeholders relying on performance metrics, is there any room for a CEO that makes decision with his or her “gut instincts” even though the metrics might say otherwise? I believe, just like in life, there is no such thing as an absolute. When I was younger, I was very “black-n-white” in my thinking, but as you gain more experience in life, there is a lot of gray. There is even gray in the metrics that you might be looking at. Many CEOs have been told to fold up their tents and close down their businesses, but it is those entrepreneurs who know in their “gut” that no matter what metrics are showing, I am going to “will” this company to its success.
A great article on the Financial Times website talks with Giles Turrell, who is chief executive at Weetabix Food Company, who states that he would”rather than analyse company data or academic knowledge of what works in the quest for the best people, he used his own “career stretch moments” to define the way ahead”.
Does being a CEO of a startup come with great anxiety and risk knowing that the chance of losing everything before you even get out of the gates is imminently plausible? Absolutely. Should you manage your cash flow, know your burn rate, and understand customer traction at every step of the way? Yes! However, if the metrics are not in your favor, does that mean you should not go with your “gut” to continue on? Not sure but as an entrepreneur, inside of me, I know that as CEO of My Sensory Locations, I will allow metrics to guide my decision but I will not let those metrics choose the decision for the life of the company. I will not allow to deter my “gut instinct”. I confirm my “gut instinct” by knowing that MSL is needed and wanted for those looking to relieve their anxiety and stress before visiting those locations. How do I know this, because I live it everyday not only with my family but have those individuals and their families share their stories with us on a daily basis. Metrics can’t measure my experience it can only help in guiding my decisions moving forward.
If you have any comments or questions, feel free to contact me at adam@getmsl.net
Adam Klein — CEO/Founder | www.getmsl.net | @GetMSL_net
