

A crash course in startup metrics - tomblomfield
http://tomblomfield.com/post/62342949294/startup-series-part-3-you-make-what-you-measure

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WestCoastJustin
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...](http://www.amazon.ca/The-Lean-Startup-Entrepreneurs-
Continuous/dp/0307887898)

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

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tomblomfield
+1

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.

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petenixey
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.

~~~
jacquesm
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.

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ghc
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](http://youtu.be/irjgfW0BIrw)

~~~
jkulmala
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/](http://www.happybootstrapper.com/2013/pirate-metrics-matrix/)

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paulbjensen
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](https://github.com/Anephenix/dashku)

~~~
tomblomfield
Dashing by Shopify is also pretty good
[https://github.com/Shopify/dashing](https://github.com/Shopify/dashing)

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sharemywin
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?

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tomblomfield
"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.

