Why We’re Making Our Investor Updates Public
When I was in 7th grade, I hid my interim report from my parents for 4 weeks because it was filled with C’s and D’s.
After my sophomore basketball season in college, I participated in post-season meetings where we planned for next season, though I knew my basketball career was over.
As a rising Senior, I interned at an investment bank and I acted like I wanted to be there when I couldn’t stand it.
Projecting something different from what you’re experiencing is difficult and emotionally draining.
When we were raising an angel round, I really struggled with the stress of pitching a bright and shiny future, while simultaneously being in the ugly, rewarding-yet-painful grind of building a startup. So much so that on the bus to Philly from an investment pitch, holding back tears, I texted this to a founder friend.
It’s hard to fight the startup instinct of pretending that everything is butterflies and rainbows. Countless cautionary tales about the startup grind warn us of the harsh realities, though it’s hard to really understand until you’re in it.
At Compass, one of our core values is transparency.
Startups like Buffer and Groove do a fantastic job pulling back the curtain and acting on their values of transparency. Buffer shows everything including equity and salaries, and Groove tells some gut-wrenching stories about mistakes they’ve survived. While, yes, we may occasionally reflect on our learnings like we did with this post about how we started a tech startup without tech, we’re going to give some real-time, unedited transparency.
Starting today, our supporter updates — the ones that were previously only sent to investors, advisors, close friends, and family members — will be posted on Medium. If you want to get these updates going forward, you can follow us or sign up to receive updates via email here.
You can see the high level wins we’re celebrating and losses we’re trying to rebound from. You can see the opportunities we want to go after and the challenges that we’re trying to overcome. You can even see the more granular details like our marketing funnel, where we’re getting our customers, and how our product metrics are doing.
While this is easy to do after having two good months, there will be months where these updates are not so good, but we’re committed to telling the real truth about how we’re building Compass and what it’s like building a startup.
We hope that this will give others insight into what the early days of a startup actually look like. But more importantly, we want to act on our value of transparency. Everything is easier when the story inside the walls of Compass is aligned with the story we’re projecting out into the world.
So here’s the first of many Compass updates — for better or worse.
March 1st Update
Dear Compass Supporters,
As many of you know, our core values are transparency, alignment, and sustainability. As such, we’ll be posting the below update on medium this week, and open up this close-knit supporter email to be received by anyone who wants to see it.
In months like this where things are going well (spoiler), this will be easy. In the months where things are not going as well, it will be hard. But values like transparency are not meaningful if they are easy. Showing people the good, bad, and ugly of what we’re building will not only bring alignment between what we’re doing inside the walls of Compass and how we present things outside the walls of Compass, but will also make it easy for our amazing supporters to help us.
Ok, on with the update.
- Healthy growth at every stage of the funnel. We acquired 26 customers this month (beating our monthly record of 20 set last month). More importantly, every part of the sales funnel grew. For example, we had 2x more sales calls in January than in December, and 3.4x more sales calls in January than November.
- Blog post went (kind of) viral, landing Mike on the Growth Show. Having a plan going 100% according to plan is a strange, uncomfortable feeling, but that’s what happened with the blog post we published at the beginning of the month. It was a “top story” on medium for a few days, was at the top of reddit.com/r/entrepreneur for two full days, and got over 20,000 views. This has been a great credibility booster when talking to press and others outside of the company, and even landed Mike on Hubspot’s Growth Show podcast (another credibility booster).
- Identified a niche: Nutrition Entrepreneurs. We randomly got two customers that are launching businesses — one as a nutritionists and one as a dietitian — and both of them raved about how valuable our services are. After doing more research into the world of nutrition, we discovered that there are way more of them than we thought, we have great product-market fit, and they are eager to share with others. We are going after this market with a full head of steam. Once we develop a playbook for winning with Nutrition Entrepreneurs, we can take that playbook to other similar niche markets.
- Thumbtack is still paying off, but shouldn’t be relied on. Thumbtack has gotten more competitive, and has raised the price of a project bid. We remain confident that we can keep cost of acquisition through thumbtack below $200, but this shows the importance of nailing down other sustainable sales channels.
- Problem projects caused capacity issues. Back-to-back strong sales months led to a spike in concurrent projects being managed. A few “problem projects” demanded a disproportionate amount of time to manage. The solution is to do a better job setting expectations for both designers and customers and matching the right designers to the right projects.
- Non-targeted blog posts don’t lead to many sales. The Medium post was awesome, but it didn’t directly lead to many sales. For content marketing to be a repeatable customer acquisition channel for us, our content needs to be getting in front of very specific people at very specific times. An example would writing a blog post about starting a nutrition business’ online presence that gets distributed to aspiring nutrition entrepreneurs getting certifications. This would allow us to build relationships with organizations that could end up referring us nutritionist customers.
How you can help
- Do you know any nutritionists or dietitians? Any food bloggers? Anyone at all that could help us get traction with nutrition entrepreneurs? We’d love an intro!
New customers: 26. Last month: 20 (30% MoM growth)
Breakdown of where they came from:
Sales calls: 71. Last month: 50 (42% MoM growth)
Note: we added a new stage to our funnel: Subscribers
Definitions of each stage of our funnel:
- Subscribers: someone who gave us their email address for something that doesn’t demonstrate intent to purchase a website.
- Marketing Qualified Lead: someone who’s provided their email address in a way that demonstrates interest, but isn’t yet ready to purchase
- Sales Accepted Lead: someone who’s inquired about getting a website, but we’ve yet to get on the phone
- Sales Qualified Lead: someone we’ve had a sales call with and have identified as a good fit.
- Customer: someone who’s made their deposit and is officially a Compass customer.
- Growth at every stage of the funnel in both ‘net change’ and ‘entered’ for the first time. We were focused on driving every stage of the sales funnel this month. We’re keeping an eye on how the different stages convert to sales, because that will determine where we spend most of our resources.
- Still getting a vast majority of our customers through referrals and thumbtack, which is disproportionate to the amount of time spent on these channels. Publishing relevant content in the right channels, at the right time, to the right audiences will help us diversify and de-risk our current customer acquisition channels.
Our key metrics:
- Efficiency vs Customer Happiness vs. Designer happiness. This graph shows how our efficiency is changing compared to the happiness of our customers and the happiness of our Designers. Note: “happiness” is measured by Net Promotor Score.
- Median Duration of Compass Projects (days). Our goal is to get the median down to 30 days from “I want a website” to “I have a website”. We’re measuring both the time from “I want a website” to “I have a website” and from “I’ve met my designer” to “I have a website”
Takeaway: The numbers are nearly identical to last month. Given that we have more projects than ever, this means we need to add some efficiency in the next month.
Takeaway: We’ve spent the past few months working on sales, so there hasn’t been significant improvement over the past 30 days.
The best basketball teams I ever played against played the same way when they were down 20 as when they were up 20. In December, we were down 20. In February, we’re up 20. Time to attack March like our backs are against the wall.
Onward and upward!
-Mike, Taylor, Matt, and Colleen