During one brainstorming session at TCC, we stumbled upon questions like; how metrics affect the functioning of a startup, what is the right way to measure startup growth, what are vanity metrics, and should startups focus on vanity metrics?
We are no experts, and what’s better than talking to founders and taking their first-hand insights into account?
So here’s the blog covering all the conversations I had with the following founders and founding members:
- Ayush Pandey, Skillvalley
- Afsa Chorwadwala, SuperPay
- Riten Debnath, Fueler
- Akshay Shah, iWeb
- Parul Dhand, wowscripts
- Aditya Sarao, Phanes Clinic
These entrepreneurs hail from different backgrounds and have varying business models (B2B, B2C, B2B2C, B2C2B), which range from being bootstrapped to funded startups.
Now moving forward, let’s learn some definitions of startup growth metrics to get our basics clear.
Table of Contents
- What are metrics?
- What are vanity metrics?
- How should one go about setting realistic targets for their startup?
- Is there any difference in the approach to setting targets for B2C, B2B, or other models?
- Are there any specific tools that you use to track metrics?
- When is it best to set targets before or after the launch?
- Do you think focus metrics change as a startup grows?
- What are the correct criteria to measure the growth of a startup?
- How often should one check these metrics?
What are metrics?
Metrics can be defined as quantities that assist in measuring progress made by following a set of processes.
Do I need to define startup growth metrics as well?
What are vanity metrics?
As per the definition of vanity metrics, they look good to others but do not help you understand the performance in a way that informs future strategies.1
Now, it’s time to head towards the questions and answers.
Founders; what are vanity metrics according to you?
For Ayush Pandey, the Co-founder of Skillvalley, customer feedback is the most important metric.
He says, Happy Customers = Good Business.
“Vanity metrics are anything that is not related to the core usage of your product.”Afsa Chorwadwala, founding member of SuperPay
She supported her opinion with the following example-
For a music streaming platform, if there are high downloads but low usage, then downloads are a vanity metric, while conversion from downloads to actual users is the real deal.
Riten shares the similar view with Afsa.
He says whether a metric is a vanity depends on the startup idea.
This is true, because for wowscripts, likes and comments are important metrics as they show the engagement on YouTube while for a fintech startup, they can be treated as vanity metrics.
At times, it was also said that numbers on social media matter owing to their help in developing distribution channels.
“We are only focusing on the growth part, as in getting power users because they are the ones who will bring revenue in the future.”Riten Debnath, the Founder of Fueler
As per Akshay, valuation games are unnecessary, and GMV (Gross Market Value) is the biggest vanity.
Quoting Snapdeal guys, he said, “Valuation is vanity – Revenue is the only sanity”
Hits, eyeballs, traffic, and downloads are all vanity, he added further.
Parul said that social media helps get leads, though there are unqualified leads as well.
“Unqualified leads – When the lead is not ready/qualified to invest the amount or the time you asked“Parul Dhand
Aditya said something in similar lines that a very less number of people among your followers are your potential customers.
Founders; How should one go about setting realistic targets for their startup?
Building a startup is like raising a child; it takes time.Aditya Sarao, the Founder of Phanes Clinic
Setting up goals or targets is a tricky task and depends on multiple factors like:
- The phase of your startup
- The team you have (whether they are full-time employees or interns)
- Your financial, social, and mental condition
- Your mindset.
Yes, mindset matters.
How do we know?
We know because the founders had different views on setting up realistic targets.
While some said it’s better to set achievable goals and break big goals into smaller targets, some advocated setting unrealistic targets, as that is when you will think of creative strategies to accomplish them.
Parul Dhand, the Co-founder of wowscripts, said that she aims to do more than what she did yesterday, or the last week or the last month.
Take care of the demand and supply chain, and never overpromise and underdeliver.
As the saying goes, take what you can eat, and don’t fill up the plate unnecessarily.
Founders; is there any difference in the approach to setting targets for B2C, B2B, or other models?
Akshay cleared the fog saying, these are two different animals and need not be compared.
In B2B, conversion is difficult, while retention is easy.
In B2C, while you have the advantage of getting faster feedback, it is highly dependent on numbers, unlike B2B, where one shot can give you hundreds of thousands of customers, allowing you to set higher targets.
Businesses know what they need while customers might not even know.
When it comes to B2C, you have to be vocal about the impact your product/service will have, said Parul.
“B2B takes its own time. We have to be very mature to sell to a business.“Akshay Shah, the Founder of iWeb
Founders; are there any specific tools that you use to track metrics?
While talking about metrics, I thought of asking if they use any specific tools to track them.
It turns out that they use simple tools such as Google Search Console, Google Play Store, or Apple App Store dashboards to track these metrics.
In the case of wowscripts, they use some additional tools to track YouTube performance, as YT studio gives limited information which is not enough for them.
Software-based startups use their app database to check how users navigate the app.
There are a lot of paid tools and agencies, but you don’t need them, at least initially, Akshay mentioned.
Founders; when is it best to set targets before or after the launch?
Afsa, suggested that before thinking about targets, ask yourself the following questions:
- Whether you want to have a product-based or a service-based startup?
- Do you wish to keep it bootstrapped or not?
- Will it be monetized from day one?
Once you have all the answers, then build the MVP.
Setting targets depends on the industry, business model, stage, and the team you have.
If you are alone, then first focus on building a great team and learn delegation, said Ayush.
If you have a team, then you need to set targets, he added further.
Parul suggests to go all in and then iterate on the go.
We got answers from all extremes. Aditya said that it’s good to have targets beforehand.
If you are traveling, you should know where to stop, how much you can travel in one go, what’s the budget and other factors.
According to him, it’s good to prepare beforehand.
Founders; do you think focus metrics change as a startup grows?
If your metrics are not changing, then you’re not growing. You have to keep experimenting and learning, says Parul.
While all the founders believed that focus metrics change as you scale, Akshay said, metrics more or less remain the same, with a focus on revenue and profitability at all times.
Ayush mentioned that funded startups have different metrics as investors want a return on investment.
Afsa said, metrics change at monetization as Lifetime Value (LTV), Average Revenue Per User (ARPU), and CAC to LTV ratio comes into the picture.
“Monetization and optimization introduce new metrics.“Afsa Chorwadwala, founding member of SuperPay
Riten said that metrics shift from outside to inside the product.
You start checking how people maneuver around in the product and how conversions are happening.
Aditya added a new perspective saying, metrics change qualitatively, as sometimes it’s not about the numbers.
Founders; what are the correct criteria to measure the growth of a startup?
Initially, the metrics you track are focused on Product-Market Fit.
So every metric relevant to the same is critical, said Afsa.
Riten believes the traffic-to-conversion ratio is an important factor.
“Less traffic and more conversion is better than more traffic and very less conversion.”Riten Debnath
Founders; how often should one check these metrics?
All of them suggested doing that every 15-20 days.
Aditya suggested having a self-created vision board where you are writing your goals.
Just check whenever you feel something is happening and remember why you started in the first place, he said.
So many questions and nuanced answers gave us an idea of how metrics work and how they help a startup function.
Talking to founders was like having someone mentor you closely in the process.
We also have in-house mentors who can help you take your startup to the next level.
It’s time to build that startup.