A metric for investing in your team

Here is a thing not many people will say out loud: investing in your team is hard.

Often, it is an expected part of a founder, executive, or leader's job but not valued in the same way that revenue, customers, product use etc. are even though investing in your team is what helps you hit those goals.

Coaching / leading a team is also the defining factor in whether or not you are creating sustainable and responsible growth with purpose, with equity...or just floating some line about diversity or meritocracy.

How you design your internal choices (or not) and enable your team to keep iterating, changing, updating, seeing opportunity individually + together, that's the whole battle.

You'll never hear this at a board meeting or on a quarterly earnings call, but it matters.

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How to tell if a startup actually has traction

Entrepreneurs have a lot of ideas. It’s easy to tell when you’re talking to one because they’ll come up with at least 2–3 business ideas in a half hour conversation on nearly anything. 

But an idea is not the same thing as a business. In a startup the most important people are those who execute, who get shit done when others simply talk about it. 

Something I’ve learned from both investors and experienced entrepreneurs is not to worry about keeping secrets in the early stages of a business. 

There are exceptions — like security software or the first idea in a niche market— but for the most part ideas are worthless because everyone has them, and reaching 400,000 customers has a whole different set of concerns than reaching 40 (or 40,000, for that matter). It’s mostly the execution, and team, that matters. 

So how do you know if the walk matches the talk? It’s a critical question if you’re investing, partnering, or considering working in a startup. 

Here are a few things I’ve noticed about companies that are experiencing significant traction… 

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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. 

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