I Second That Emotion

Image representing Mixpanel as depicted in Cru...

There’s a management aphorism attributed to Peter Drucker that goes something like this “If you can’t measure it, you can’t manage it.”   This was on my mind, as I read Liz Gannes’ great article on AllThingsD today covering Mixpanel founder Suhail Doshi‘s call for an end to Bullsh*t Metrics.  His basic point is that technology companies have not innovated enough on how they think about measuring their businesses.  He’s calling BS.

Pageviews, installs and total installed base are out.  Engagement and retention are in.  This makes a lot of sense.

When I meet with very early stage startups, as I did last week at AppNation for VC Office Hours, I find myself repeating a few of the same points again and again.  Very early stage companies (i.e., pre-product or pre-product-market fit) tend to want a sense for how many installs or pageviews they need to attract an investor.

My answer heads a different direction.  To me, the first thing I want to see is evidence of what I think of as early product market fit.  Rather than showing me installs, show me that any small number of users that truly, with concrete evidence, really want your product.   This is actually more difficult to do than you might think.  It requires that the startup can show engagement and retention over a period of time.  And it requires that the startup is thinking about what how it measures user engagement in a manner that’s specific to that specific company.

This perspective seems aligned with Doshi’s feedback.  One thing that I liked a great deal in his post was his recommendation that startups focus on One Key Metric (OKM).  The idea is that tracking 1 actionable metric that “they can literally bet their business on.” Companies picking OKM have to deeply understand their business and what is driving growth and success in order to do so.  This reminds me of discussions that I’ve read of Facebook and Twitter‘s early growth, where FB started to realize that if a user added 7+ friends, that the likelihood that that user would become a retained user went up dramatically.  Similarly Twitter found some number (I don’t recall what the number was) of followers where, when attained, a user would be much more likely to be retained.

This mode of thinking and focus on OKL is smart–it focuses the leaders of a company on understanding, deeply, what users are doing on their service and what drives value to the user.  Hard to argue with this.

BRV portfolio company, Thumb, where I serve on the board, has been drilling in on it’s on OKM.  (I can’t disclose what the metric is.)  It’s been exciting to watch how the focus is leading to increasing retention and engagement, which as publicly reported is already quite high.

In any case, if you’re a startup in the tech space, I recommend reading Doshi’s post and contemplating what your OKM is.

 

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  • http://www.facebook.com/mystarme Michael Johnson

    Good post,OKM is indeed helpful.
    Thank you. *strme