One founder I know asks the same question twice a day, in the morning and the evening: what is my revenue today? One fatal mistake early-stage founders make is not making a strict decision regarding what they should measure.
In the early days, some may not realize that it is critical to have a key metric and measure it rigorously to make progress.
To others, it is a difficult commitment psychologically and execution-wise because once you have committed to a metric you have to achieve it daily. It limits your options to maneuver when you fail to achieve it, which is not a good feeling. Failure to achieve your key metric can mean many things: you are not working hard, you lack capacity, or your product is not working and there is a bigger problem in your business. For a founder, none of these feelings are enjoyable.
So we choose to pursue and measure many things instead of one key metric. Some of these additional metrics can be: PR, expanding to new verticals, Facebook likes and followers, hiring new people, new partnerships, launching new features, and so on. When you are glossing over multiple metrics and are tracking many metrics, you are not tracking any one metric seriously. This can be fatal for most companies. If not fatal, it can meaningfully slow you down and make you bleed money in areas where you actually should not.
Say for example, if you are an early-stage company seeking product-market fit, one of your key metrics may be talking to customers and getting feedback to understand the fit. Now talking to customers can be a real discomfort. Moreover, you are an introvert and don’t like talking to people. As an early-stage company, you are not a big team either.
To compensate, you overlook that metric and instead, focus on building more features, which you enjoy doing. This could lead to serious problems such as you could end up building features that people don’t want and in the process, wasting your valuable time and resources. In startups, you don't have the luxury of either.
As a founder, one of your critical jobs in the early stage and every other stage is deciding on an important metric and then setting up systems to track that metric relentlessly. If it is growing your users, that should be the priority you pay attention to. If it is growing your revenue, that is the priority you pay attention to. If it is building the product, that’s what you should think about 24/7.
In an interview with Future Startup, we asked Frontier Nutrition founder and CEO Eddie Bearnot what some of the most important lessons he has learned in growing a business that other founders can apply.
Eddie’s reply was straightforward: “Pick the most important metrics for your success, measure them rigorously and religiously, spend time thinking about them carefully, and trust your conclusions,” says Eddie. “It is easy to let personal preference dictate strategy or to allow emotional attachment to make convenient excuses for poor performance.”
Most founders initially fail to decide on this metric. Even when they do have a metric, they often stray away from the path and give into more easy and lucrative distractions, such as seeking fame, building an audience, expanding or chasing vanity metrics, and so on.
“We are not pursuing growth at this point in time. We are building awareness.” That is not a good sign.
Setting a key metric is psychologically tricky and distressing. You are setting a key metric that means you are closing all the doors for you to avoid accountability.
It means you are opening the door for you to fail and then called out for your failure.
More importantly, progress often takes time. That road is a jigsaw, not a straight line. As a result, if you choose a metric, it will take some time to get started on it and see results. There will be times when you will fail to achieve your goal.
In our minds, these are big problems. And this is why we are always in a dichotomy about setting a key metric.
We know it is critical. We understand it makes progress easy. We know unless we set a key metric, things could potentially go south. But still, the mental block sometimes makes it hard to make the decision.
There is no straightforward remedy to this challenge of mental block. One reason we avoid setting a specific target is that it is so specific and once it is there, we can’t avoid facing it. We know in our subconscious that we would sometimes fail to achieve our goal and when we have a metric, we know we failed it and it is a huge discomfort.
Accepting this feeling of discomfort is key to establishing a more positive relationship with the idea of setting up a key metric. Accept that you will fail sometimes. Accept that it will not be comfortable. But also realize the fact that once you set up and commit to your key metric, it will keep you focused and motivated to push forward.
Not committing to a single metric is comfortable but it causes distractions. You can cheat yourself and pursue things that feel like progress but don’t take your business forward.
Committing to a metric means you know what your job is today, tomorrow, and the next week. It brings focus and speed. It clears off your to-do list. You know exactly what to do and what to avoid.
It saves you both time and resources and hopefully your company from failure.
Originally published on 24 October 2020. Updated on 31 October 2024.
