A crash course in startup metrics | Hacker News Reader

A crash course in startup metrics

tomblomfield.com

72 pointstomblomfield11 comments

If you care at all about this stuff, do yourself a favor and read "The Lean Startup: How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses". [1] Eric Ries shines a light on vanity metrics, tells you what you should be tracking, and ways to track it. [2] He goes into detail about how companies, big and small (himself included), often track the wrong metrics, which in turn give wrong indicators, he helps you turn that around.

[1] http://www.amazon.ca/The-Lean-Startup-Entrepreneurs-Continuo...

[2] http://en.wikipedia.org/wiki/Lean_Startup#Actionable_metrics

This book should be your bible. A lot of it is very similar to 4 Steps to the Epiphany, but Lean Startup is more approachable.

I'll edit the article to mention this book.

Good article. I know of a startup who had revenue as a KPI but did not include ad-spend or margin.

As a result they hit their quarterly revenue target (and got their quarterly bonuses) by amplifying their ad-spend to hundreds of thousands a month and buying customers for 110% of what they made from them.

This might seem like madness but when people's salaries and jobs depend on it, the line "what gets measured, gets done" is as true as true can be.

This sort of thing happens with alarming frequency. Growth at any cost by people that are just concentrating on revenues without realizing what running a business is eventually about. If you are funnelling cash into your marketing losing more on every deal you will die while you grow. Growth isn't everything.

This doesn't really give you any help with what metrics you should actually be choosing. When I mentor startups we spend a lot of time on this, but for most web companies a good starting point is Dave McClure's Pirate Metrics: http://youtu.be/irjgfW0BIrw

Dave's Pirate Metrics is great. If you like it, you might also enjoy this matrix that maps the most common SaaS key metrics to pirate metrics phases: http://www.happybootstrapper.com/2013/pirate-metrics-matrix/

If anyone needs a free dashboard tool for displaying their metrics in realtime, I made this one, which is available on Github: https://github.com/Anephenix/dashku

Dashing by Shopify is also pretty good https://github.com/Shopify/dashing

I think when you mentioned about PR and how hard it is to measure. I think some kind of customer/potential customer survey is probably the best metric. Have you heard about us? what do you think of us, etc. I remeber reading about a process where you ask your customer's would you refer us to someone you know if so why if not why not? Then focus your engergy on the why nots until it falls of the list. Also, will you have a post of hiring good sales people?

"Have you heard of us?" is sometimes called "brand awareness", and it's normally used by larger companies. Airbnb is probably at the size where it's a useful measure of PR success. Much smaller, and you'll get so many people replying "no" that it doesn't tell you much.

"Would you refer us to someone you know?" is often called "Net promoter score". You ask 100 of you customers if they'd recommend you to a friend [yes/no]. Subtract the latter from the former, and you get your score, from +100 to -100. Apple does consistently very well in these tests - around +70. The utilities firm I worked for hovered around -10.

You can use a more nuanced version with a score from 1-10. <=6 counts as -1, 7 or 8 is a zero, and 9 or 10 counts as +1.

This isn't really a measure of PR, though, because it surveys your existing customers.

I've actually got a series of about 6 or 7 articles I'd to write on B2B sales. Hiring is top of the list.

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