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Planting (metric) trees, creative outbound, and the Luddite Fallacy
How well do you understand your business model?
The most impactful people I worked with at Lyft spent at least an hour each week staring at BI dashboards. It was usually part of a morning ritual that was similar to reading the daily news.
What made these people more impactful than the average was not that they had the latest growth, product, or experimentation numbers at their fingertips. Looking at day-over-day changes in a dashboard is usually not that interesting. However, by looking at dashboards over and over and over again, they started to build an implicit intuition of why metrics were moving. They started to understand (and respect) the relationship between metrics, the various business levers that made KPIs move, and the extent to which a business lever could affect a metric. Put differently, they understood the interworkings of the business better than most, and therefore, they knew where to focus and why.
This week, I watched Abhi Sivasailam’s talk at Data Council 2023 on Designing & Building Metrics Trees. Metrics trees are an incredibly simple, yet powerful concept that can be applied to any and every business model. What are your top-line KPIs? How do you solve for it? (e.g., ARR = leads * win rate * ACV). The leaders that spent time in dashboards were strengthening their understanding of the business by building a mental metric model. They understood how their OKR fit into the larger business and the importance of it.
Most founders at the seed stage that I chat/consult with think that it’s far too early to spin up dashboards and start consuming metrics. Sure, at the pre-PMF stage your growth metrics may not move much. Early-stage growth is definitely more of an art than a science. However, as Abhi argues, your business is not a snowflake and you should have a clear understanding of how your business can/could grow. At the very least, you will see your business as less of a complex system and more of a simple math problem.
Raman at Rhetoric