How to Grow, Part 1: Pick a Goal

This is the first post in a series about how to grow your startup. Click here to subscribe to new posts.

The very first step in growing your startup is to pick a goal.

It is surprising how often this isn’t mentioned as part of the process. When you hear people from Facebook’s growth team describe their process, they keep it simple: measure, test, deploy. This shows how deeply ingrained the growth ethic was at Facebook. Every employee knows they want the whole world on Facebook to the point that their advice skips goal setting.

To understand the importance of goal setting, just look at applications where the goal isn’t obvious for external observers. Before Twitter focused on monetization as a media company, they floundered with platform decisions along with the tension of getting regular users to publish vs consume. Is Foursquare a location API, a consumer local search utility, or a social network? This ambiguity is part of their current growing pains.

Deciding what the goal should be is hard. Startups are flooded with numbers: web traffic analytics, product event data, site speed & perf metrics, app store metrics, cohort data, and on and on. People see dashboards full of dozens of numbers, with additional complexity because you never just care about a number but also how it changes too.

Which numbers matter? Let’s explore the different aspects of a good goal.

Stage Appropriate

Goals change depending on your stage. In this post by Brian Balfour about different stages for a company, he explains how retention is the most important metrics at the start, as a measure of approaching product-market fit.

Easy To Understand

People tend to have a hard time understanding graphs and complex statistics. Your goals should become diffused throughout your team, which means ease of communication is essential. The goal should be a single number, and it should be something people understand. Active users and revenue are two that come to mind that would fit most companies, and everyone understands them. This also helps in PR if you’re going to announce milestones with your goals, like Facebook announcing one billion active users.

Singular

It is really tempting to have multiple goals. Signups and retention both matter, right? The problem is that you need a guide to help prioritize your product pipeline. Ambiguity here can cause you to work on the wrong things. It also makes communicating goals harder.

No Bullshit

It is surprising how often you continue to hear statistics that don’t matter, like pageviews. Some call these vanity metrics, because they don’t map to what matters for your business. Companies often publish the number of signups instead of the number of active users, when obviously the latter is what really matters for most businesses.

Teams within a company can certainly have their own goals. I’d recommend that they all have the same characteristics as a company goal. Ideally, the relationship between the company goal and the team goals are well understood. A good example breakdown can be found in this post by Tomasz Tunguz about structuring a sales team and the associated metrics of each component.

For my new startup, YesGraph, we went through this process. At first I thought that active users was the best measure. That is certainly easy to understand and maps to something that matters. But we needed to focus on the friction points of getting to the the core value of the product, that “a-ha moment”.

YesGraph is a referral recruiting product that makes it easy to explore your Facebook and LinkedIn contacts to find great candidates. Get your whole team on board to make referrals. The core value is in collecting referrals, so we changed the core metric to be activation rate, defined as a signup getting referrals from their network.

To illustrate the difference: we’re focusing on reducing friction for first time users. If we only focused on active user count, that onboarding would be just a part. We’d also focus on viral channels, re-engagement emails, and messaging within the product. All these things matter, but if users aren’t getting to the initial core value of the product, they don’t matter as much right now.

I’d love to hear how others have set goals and communicated them with their teams. Please comment on Hacker News here.

In future posts, I’ll be exploring related ideas about how to grow. For example, you need to understand how different parts of your product affect your core goal. Then, you need to triage your product development pipeline to drive your core goal. Get the next post in this series right to your inbox..