Metrics That Matter

Sujayath AliFounder – Voonik.com

About me

Sujayath Ali

Founder @ Voonik.comProduct Manager @ Amazon for 7

Years.VP, Product Management @ Visa.

MBA from ISB, Hyderabad.

Disclaimer

• This presentation is intended for startup founders seeking VC investment.

• This presentation is not based on researching multiple companies or surveying multiple founders; this is based on what personally worked for me at Voonik and Amazon.– So take it with a pinch of salt.

In 1987, Aluminum Company of America (Alcoa), was at historic low. A new CEO was appointed and the CEO said something in the first investor meeting. All the analysts panicked, started calling their clients and asked them to immediately sell the company.

What did the new CEO Say?

METRICS, WHY SHOULD I CARE?

Which company would you invest in?

“We are building innovative, reliable products and services; we are taking the world in imaginative new directions.”

Or

“We created a new category of devices and have already sold more than 200 Million devices. Every quarter has been better than the previous quarter, since the launch.”

Metrics, why should I care?

• As a founder, you are a story-teller. You are constantly selling your story to investors, partners, employees, press, and who not.

• Metrics is nothing but a story, told in numbers. This story is much more interesting and credible to investors and business stakeholders.

Metrics, why should I care?

• Understand the story that metrics are telling you – every day, every week, every month.– This is the best way to keep a close tab on your

business.• Practice how you will convey that story to

outside world - every day, every week, every month.

• Pick the interesting stories.• Plant seeds for better stories.

Btw, those quotes are from …

“We are building innovative, reliable products and services; we are taking the world in imaginative new directions.”

“We created a new category of devices and have already sold more than 200 Million devices. Every quarter has been better than the previous quarter, since the launch.”

METRICS THAT MATTER

What did that CEO say?

“Workplace safety is the only metric that I will focus on. I intend to go for zero injuries. The company updates will only talk about this metric and not about financial numbers or capital ratios”

The Keystone Metric

One metric that the entire organization rallies around.

Which Metric will you focus on?

Lets say, metrics A, B and C are on par with industry. D and E are below par. F is above par.

What is your keystone metric?

• What’s the use in putting all the hard work, just to become on par with industry?

• The keystone metric should make you stand out from the crowd.

• Keystone metric might not be in the metrics that you are currently tracking. Look deeper. Look everywhere.

Keystone Metrics change over time

• Voonik had different keystone metrics across stages: MVP stage, Building Block stage, and Scaling Stage.

• Keystone Metric could also change in the same stage, based on new information and changing priorities.

Keystone Metric should Grow

“Pick a growth rate and then just try to hit it every week. The key word here is "just." If you hit that number, you're successful for that week. But if you don't hit it, you've failed in the only thing that mattered.”

Startup = Growth- Paul Graham

And what happened to Alcoa?

• Within a year of the CEO’s speech, Alcoa’s profits hit a record high.

• In the tenure of the CEO, the market cap went up by $27 Billion.

• Anyone who invested on the day of the speech would have got 6X returns.

WHAT SHOULD I TRACK?

Metrics to Track

• In addition to keystone metric, you should be tracking a lot more metrics.

• A sub-par metric is not bad, as long as you planned it that way.

• A phenomenal metric is not good, if you don’t understand why is it that way.

Metrics to Track

• You might not know all the metrics you would need in future. So better enable tracking for all possible metrics you could think of.

• Send events for every action.• If possible, try creating a single repository. – At voonik, we dumped all the data from Google

Analytics (GA) and FreshDesk into our database so that we can combine them with Voonik data to create meaningful reports that are not possible in GA.

Metrics to track

• Sometimes, you need to invent a metric.– At Voonik, we have a custom metric to measure

the effectiveness of our algorithms.– At Amazon, we had a number of invented metrics.

• Don’t miss human metrics.– Example: Productivity metrics, Effort Burn rate

• Don’t miss metrics outside your product.– Metrics for the platforms and services you use

DELEGATION OF METRICS

Metric Owners

• Before creating a project roadmap, create a metrics roadmap.

• Assign a owner for every important metric. Have them report the story every day.

• Assign projects / tasks to the person whose metrics will be affected by the project.

• Make sure every metric owner understands their part of story and the goals.

• Don’t go by benchmarks. Go by what is needed for your business model.

Input Metric / Output Metric

• Metrics that are under your circle of influence are input metrics. – Example: Number of products added, Number of steps in

checkout, design of the website• Metrics that are outside your circle of influence are output

metrics. They are influenced by input metrics.– Number of orders, Sales Volume, Contracts.

• Assign only Input metrics to subordinates. – They will be frustrated if their efforts don’t impact the output

metrics.– By assigning input metrics, you avoid hearing excuses for not

meeting goals.

PITFALLS TO AVOID …

Pick the story that suits your stage

• You might have best-in-class conversion rate, multiple-x growth rate but …– It is meaningless, without scale.– You can grow from 1 to 2 orders and claim 100% growth

rate.• Pick stories / metrics that makes sense for your stage

– Percentage of positive reviews or repeat usage is better story than growth rate for a startup without scale.

• Pick stories / metrics that will lead you to next stage– Example: I will be ready to scale when I am handling X

orders with Y repeat rate.

Don’t get into Micro Optimizations …

• At the early stage, you should be looking at macro changes and not micro optimizations such as button color and font type.– Don’t avoid them altogether either. Use your

judgment• Don’t care about industry benchmarks.

Different companies measure the same metric differently– Example: How do you measure conversion rate?

Don’t go Top-down

• Always build your projections bottoms up.• Your valuation depends on your projection.

Bottoms-up gives credibility to your projections.

• Keep the projections ambitious but achievable.

• Don’t believe the analyst reports.

Do Everything

• Investors and stakeholders are not going to be happy when you just focus on 1 or two stories in a month. They want you to do everything, like a big company. How do you do it?– At Voonik, we had a building block stage between MVP stage

and Scaling stage. – We got an agreement with investors that in the building block

stage, every month we will focus on one new story and also maintain the stories from previous months.

– So by the time scaling stage started, we had all the stories in good place. We scaled the inputs and outputs maintaining all the stories, in other words, doing everything.

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Write to me: sujayath@voonik.comTwitter: @sujayath