Reverse Engineer Success exercise to identify your best KPIs

Working backwards produces better results (and provides more clarity) than working forwards. Bonus: hiring, product decisions, other key decisions, etc. become easier once this framework is complete.

The steps of this exercise:

Define what statements you want to be able to make (in a year, end of 2021,???)
Select the metrics/data you will need to prove those statements
Map the monthly plan from here to there by metric

Step 1: What statements do you want to be able to make in [INSERT TIME PERIOD]

It is TIME PERIOD and you are pitching a VC, what 3-5 high-level claims do you want to make about your business (NOTE: keep the focus on things you can impact & have sure it is the result–NOT the initiative)

Something about perception / your position in the market (for Daily, this may include proof of use cases horizontally + ability to “tip” a vertical) – growth
Something about product love, addiction, usage and growth of an account
Something about financial metrics and proof that this is a market worth winning (revenue, margins, ???)

An example of a companies …

X’s members are obsessed with the brand and the service.
X residential markets are large and lucrative at scale
X has the playbook to enter and penetrate new markets quickly and cost-effectively.
After showing #3, a more diverse market (or two) shows this in 2021
The problem X is solving is a national phenomenon, not limited to cities usually compared to Seattle.

Step 2: What would you see if the statements were true?

List all the metrics and behaviors you would see if the statement were true. Don’t worry yet about what you can/cannot measure.

Playing off the example above…

If members are obsessed, you would see high retention/low churn, high engagement, high referral rates, high NPS.
If markets are lucrative at scale, you would see a high revenue run rate (in city 1, Seattle), short CAC payback period, good and improving gross margins
They are currently moving into city #2 and will track how quickly and effectively they move up the curves on the key metrics discussed above
Once city #2 is solid, they will enter into a city that behaves differently than Seattle and city #2 to prove it is a national phenomenon (likely Texas). They know to do this well before they need their next round

Step 3: Select the best 2-4 metrics for each

Step 4: State what you want/need each metric to be by the time you selected (in a year) to prove the statements

Step 5: Create a monthly plan for each metric from this month (where you currently are) to next year’s goal.

Note: do not just gradually improve each metric. Be thoughtful about when and how you plan to move the needle on each (think about product roadmap, hiring plan, the reality of time, etc). Also, not every metric needs to improve. You may decide that some are fine as is and don’t need to put your efforts toward improvement.

Step 6: Give each dept (employee) the 2-3 metrics that they can really impact and will be managed against.

Don’t get too attached to your metrics too early (no one should lose their job if they didn’t hit your new fav, arbitrary number). It is more a guide in the beginning to keep all aligned on what matters and what does not.