During our program, we expect and help startups to grow 5% to 7% every week. Growing 5% a week for a year results in 12.6x annual growth. Growing 7% a week for a year results in 33.7% growth. That’s our benchmark for fast growth.
To achieve this level of growth, the first thing we do is have every company create a metrics scorecard based on a template we used at our companies. It’s surprisingly simple but effective.
We think more startups, not just the ones that go through our program, can benefit from it so we’re making it publicly available. Get access to the template by filling out this form.
Below are instructions for how to use it. As an example, in the screenshots and in the template, I put together a metrics scorecard based on what it might look like for Grab in the early days.
Step 1: Choose Metrics
Choose a single primary metric that encapsulates the purpose of your product. Your primary metric should be what you’re ultimately focused on. Focus is important so only choose one. If you’re having a difficult time choosing one, it’s likely you don’t have a strong enough understand on what your product is really about.
After you've selected a primary metric, pick 3 to 5 secondary metrics that directly impact the primary metric. We think of the primary metric as an output metric and the secondary metrics as input metrics. Growing your input metrics (secondary metrics) will grow your output metric (primary metric). If it doesn't, you picked the wrong input metrics.
Decide on what your metrics should be and change them at the top of the spreadsheet.
Often we find that the discussion around what the metrics should as valuable. You’ll be surprised how many co-founders have very different ideas on how the business works without knowing it.
Here are a few examples of popular products and what their metrics might have been in the early days.
- Grab – Primary metric is number of rides. Secondary metrics are number of drivers, number of riders, frequency of rides per rider, ride ratings.
- Lazada – Primary metric is gross merchandise value (GMV). Secondary metrics are number of products, number of sellers, number of buyers, average order value (AOV).
- Spotify – Primary metric is number of listens. Secondary metrics are number of songs in the catalog, number of artists, number of users, number of sessions, average length of session.
Step 2: Set Targets
Once you’ve decided on metrics, set targets.
- Enter Baselines – Enter the current weekly value for your metrics in the the corresponding green boxes. You’ll notice that once you do, the target column for each metric will automatically update. The spreadsheet is automatically calculating 7% weekly growth targets based on your current baseline.
- Adjust Growth Rates – If you’re a very early stage startup, you should grow much faster than 7%. If you’re a later stage startup, more slowly. You can adjust the growth rates under Assumptions > Weekly Growth.
- See Graphs – Now that the weekly targets are set, click on “Template: Charts” to see a graphical representation. The blue bar is what your value was and the red line is the target. Your job every week is to make the blue bar higher than the red line.
These numbers are obviously made up by me but it gives you a sense of what it looks like in a more real world setting.
Step 3: Update Weekly
Now that you have everything setup, update the scorecard at the beginning of every week.
- Update Weekly – Every Monday, update the scorecard with last week’s values.
- See Graphs – For the metrics where the blue bar is above the red line (Actual > Target) you’re doing well. For the metrics where the blue bar is below the red line (Actual < Target) you need to figure out what’s wrong and what to do about it.
- Decide on Projects – We liked starting the week off, typically with the entire team, by looking at the scorecard. It gives us a quick uncomplicated view of how we’re doing and then we discuss what we’re going to do this week in response.
I hope that’s helpful. I know it doesn’t sound very complicated but the act of having goals, a weekly feedback loop of whether you’re above or below targets and working on projects to hit the goals makes a world of difference.
Give it a try and let us know what you think.