Startup folks (myself included) love talking about being data-driven. Here’s why that’s dangerous…
“That number is the ONLY thing your team should be thinking about.”
The speaker, a “growth hacker” giving a talk at a startup event I went to a couple of months ago, was referring to monthly growth rate, a core metric used by many startups (including Groove) to measure the health of the company.
I agreed that focusing on metrics was important, but something about the delivery didn’t sit right with me.
Since then, I’ve been paying more attention to what people have been saying when they talk about metrics, and to be honest, it concerns me.
I keep seeing things like:
“Metrics are all that matters.”
“The one thing you need to do is be data-driven.”
“Keep a laser focus on your numbers.”
Even Paul Graham — a brilliant guy who I have nothing but admiration and respect for — suggests the same:
It’s beautifully put and a great way to simplify growth, but in my experience, that’s exactly the problem: things are never that simple.
First, an Admission
I completely appreciate the irony of writing a blog post criticizing metrics, when we work so hard to be data-driven at Groove.
We track numbers obsessively, run A/B tests constantly and set aggressive goals for growth.
Hell, this entire blog is built around our journey toward a very specific metric.
But that only tells half of the story.
Where Performance Metrics and
KPIs Fall Short
Several months ago, we were growing at a steady clip, and then we had a single week where things seemed to screech to a halt.
We hit a wall, and signed up only five customers over the entire week.
We had no idea what caused it, and digging into our metrics didn’t help. But I definitely lost sleep trying.
The following week, things were more or less back to normal.
Growth charts are rarely as smooth as the ones you see from runaway success stories.
Groove’s looks more like this:
While we’ve grown consistently since reaching product/market fit, there have been peaks and valleys.
And those valleys — crippling troughs so deep they left us wondering if the company was even worth pursuing — would’ve killed us if we let them.
It’s important to track your metrics, but there’s an important point that I think most data-obsessives miss:
Never tie your value as a team — and an entrepreneur — to those numbers. You are not your metrics.
Thinking that metrics are the only thing that matters in a startup will absolutely crush you. That sort of approach works for robots, but we’re humans. We think and feel, and when the metrics don’t look good, we think we’re failing and we feel terrible about it.
Takeaway: Metrics are important, but they aren’t everything. Don’t tie your value as an entrepreneur to your numbers, because it’ll destroy you emotionally.
The Dangers of a Laser Focus on
Key Performance Indicators
When you’re at a peak, everything is great. You’ll never be more confident in your chances of becoming a massive success story.
But when you drop into a valley, your perspective can get pretty bleak.
There have been weeks, especially in the early days of Groove, when things felt pretty miserable.
Our obsession with the numbers caused us to do some desperate things.
We discounted our product, and hurt the company in the process. We built way too many features, trying to be everything to everyone. Instead of digging in and talking to our customers and getting qualitative feedback, we — I — simply made bad decisions because I was stressed that the numbers weren’t looking so good.
We learned a lot from those early fails.
After that, when we hit valleys, we would step back, ignore the numbers a bit, and look at how the team was doing.
Were we unhappy?
Were there productivity issues?
Were we all burning out, and needed to take a break?
If human factors were responsible for the dip, then numbers don’t really matter.
You can’t A/B test your way out of an unhappy team.
Fluctuations are normal, and it’s important to understand and internalize that fact so that instead of letting the valleys kill you, you know that you can fight through that and live to fight another day.
Coming to terms with the fact that metrics aren’t the only thing that matters has made a big impact on the way we run Groove.
Takeaway: Human factors are just as important as data. Don’t ignore one at the expense of the other.
Finding the Right Balance
Don’t take this to say that being data-driven isn’t important.
It absolutely is, and if you don’t end up hitting your goals, you may very well fail.
But being too focused on core metrics can also lead to failure, because you end up ignoring the human factors that are so important to your health as an effective team.
Beyond our core metrics, I’ve found that a focus on more vague measures like the mood and happiness of your team has made a big difference in keeping us growing, and the time we started to focus on that correlates closely to when our growth curve startup looking up.
One thing that helps?
You know, those “pointless” numbers that die-hard data heads love to scoff at. Stats like social media mentions, pageviews and shares.
Here’s the thing: while those metrics might not correlate to your bottom line, they sure feel good to get excited about. And in a startup where morale can be the difference between calling it quits and keeping up the fight, that’s really important.
Takeaway: There’s still value in “pointless” metrics. The morale boost that they create can be very valuable to your team.
How to Apply This to Your Business
Don’t take this post to be a departure from our focus on data-driven growth.
We’re still working hard to drive up our core metrics; those core metrics, which you’ll be reading a lot more about on this blog, are one of the most important ways we gauge the health and growth of our business.
But they’re not the only way.
With so much “metrics worship” being plastered around the internet, I think it’s an important reminder to all of us that there’s more to business than the numbers.
And growth isn’t always a hockey stick.
Growth can be messy, especially in the early years. And it can take you into deep plunges along the way. You don’t always get out of those plunges by simply focusing on numbers.
Recognize that, and use it to your advantage to build a healthy, happy and effective team.
I know I find it useful to remember from time to time, and I hope you do too.