One Growth Metric to Rule Them All is fine until you’re building a company

Finding and increasing growth is critical to an early stage business.

But it’s also hard to explain, and on the surface it can look very tactical: you isolate something that works, then test to see how much you are able to increase it. 

If you’re good you’ll work on a bunch of these tests at once, and funnel them into one metric that drives all of your efforts, and revenue. That one metric is often something like average daily use (DAU) or how likely they are to refer a friend (using net promoter score or similar). The key is to focus on a metric that drives your core business, and rises all of the other metrics, including revenue. 

I often direct people to these GrowthHackers slides about finding the one growth metric that matters. It’s a good resource and smart as hell, but I’ve noticed it’s also necessary to regularly reinforce with founders that their job is to build something much larger. 

Kenneth Berger, who was the first product manager at Slack, pointed this out in a recent piece on Medium where he explained why one metric doesn’t necessarily help you balance multiple priorities… 

“One key reason is tradeoffs: few improvements in metrics come for free. With every email you send, some will click, but some will unsubscribe. With every feature you add, others become harder to find. With every dollar your customers spend, alongside come higher expectations for your product or service. And worse, a single data source often reflects only one side of this tradeoff. User growth shows up in analytics dashboards, but customer satisfaction doesn’t. It’s dangerously easy to neglect user research when it’s so easy to hear feedback on Twitter.

Ev Williams took a different tack earlier this year when he talked about engaging with content and what it means to appreciate great design. In particular, he encouraged that founders to be willing to trust their gut. 

Measuring an ecosystem, which is what you’re really building when you build a company, isn’t a precise science and anyone that claims you can port numbers into a computer or look at a chart and easily make a decision has probably never built something from scratch, or just gotten very, very lucky. 

Here are a couple of examples of One Metric To Rule Them All that actually have a lot of other metrics relying on them… 

Productivity app — Wunderlist. In this scenario you’d probably need to measure installs, daily average use (DAU), net promoter scores or referrals, and churn. Daily average use would likely be your key metric, since the more people rely on the app the more likely you’ll be able to charge them for a premium version and keep the user experience sticky. 

Marketplace — Airbnb, Visually. Two sided marketplaces are a complex beast. You really have two customers, and they depend on each other in some very interesting ways. At Visually we measured supply on hand at a given moment, project demand, time to complete projects, project satisfaction (via NPS), and inbound “start a project” requests from growth hacking. Our key metric / secret weapon was time to completion, and we found that speed tended to ensure that the other metrics were fulfilled. 

In an ecosystem you don’t choose one metric and forget all others. Instead, you work that variable in concert with others. You look at what UX / design / engineering / marketing tweaks can be made while still maintaining the core value or problem solved for your customers or users. 

I actually really like the growth hackers slide, and if you look at it closely this approach is suggested there. When you build a company you have to be focused, but you also have to be able to reinforce it with an understanding of the ecosystem you’re building. 

“Data driven” is the mantra people use frequently, but a better approach is to be “data informed” and know why your gut is telling you what to do next.