How do startups select relevant performance indicators?


1

Performance Indicators in existing businesses that have a defined business model and market are much easier to identify performance indicators for.

  • Within startup businesses, are there any fundamental performance indicators that every startup should measure?
  • Are there any fundamental performance indicators that apply to existing businesses, that are not of use for startups?
  • If the performance indicators are defined by the nature of the startup, what is the best way to discover them?

Answers to the above questions are not required, but the questions are intended to give a feel for the scope of the overall question, that being: How do startups select relevant performance indicators?

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asked Aug 8 '12 at 01:47
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Blunders .
899 points
  • I've only ever seen this type of thing used in mature companies. It would shock me if this kind of measurement was done at startups - as there are so many other important activities to do and typically so few resources and time to complete those other important activities. Once an organization is mature it has the bandwidth to do formal assessments, etc. – Tim J 10 years ago
  • @TimJ: Thanks for the feedback. So, [Startup Compass](https://www.startupcompass.co/) has "17,000 internet startups" that use "a simple benchmarking tool for entrepreneurs to evaluate their progress against other startups and make more informed product and business decisions by utilizing a data driven feedback loop."; so it appears it's KPIs are not just for mature companies. Any thought? Again, thanks! – Blunders . 10 years ago
  • Read the book called The Lean Startup; it talks about indicators to measure your startup's learning curve. – Frenchie 10 years ago
  • @frenchie: I agree Eric Ries' learning curve might be one indicator to measure. – Blunders . 10 years ago
  • @TimJ: Thanks. Would it be possible for you to point to your source that shows the data is based on 17000 surveys over a single slice of time, and not 17000 over a duration of time? – Blunders . 10 years ago
  • This: https://www.startupcompass.co/methodologyTim J 10 years ago
  • I think Tim makes a good point as far as resources go, your main goal as a startup is time to market. Develop a product and get it out, you can however build in KPIs to measure the product as it matures, so it doesn't become a hassle later. Those KPIs will need to be product specific, there is no 1 answer. A software company may set KPIs to measure bug fix timing, and a store may need to measure shelf to door. – User60812 10 years ago

1 Answer


1

Start-ups fall broadly into three types: creators, copyists and joiners.

Creators are looking to create new value for users that they can harvest as revenue. The job is all about validation (have I created value?) and iteration (if not, how can I use the learning to pivot?). They need to focus on the metrics around cost of traffic, effectiveness of conversion, depth of user engagement and retention. Why? To spot the need to pivot, and to identify the moment to scale.

Copyists take an existing model, then adapt and replicate to extend the market or/and steal market share. Their attention needs to be on brand awareness, and on qualitative and quantitative measures comparing them with the reference market maker. Why? To optimize the competitive position so that when they accelerate, the established players can't respond effectively.

Joiners take an existing supply/value chain, and create additional options. They can use large business-style KPI sets from the get-go. Why? Because they are looking to fit into a stable market and carve out a position. How do you determine the KPIs? Interview product managers in your target space.

answered Aug 8 '12 at 16:37
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Jeremy Parsons
5,197 points
  • Thanks, nice answer! – Blunders . 10 years ago
  • @blunders yw: nice question :) – Jeremy Parsons 10 years ago

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