One of the hardest experiences you’ll face as a founder or early growth exec is finding your focus.
Without it, you’ll feel and be at the mercy of what comes at you. With focus, you’ll immediately start to spot patterns and prioritize what to do next.
After you’ve launched a product, you have very little time to find your focus. Even worse, is you’re probably doing it on your own or with a small team.
Why a single focus is the highest leverage thing you can do (and how to to find it)
With limited time and attention, the most powerful you can do is NOT to read or follow the latest blogs and tactics. Little matters until you start with a single clear focus.
While growth blogs are great for inspiration, what worked for that other company will probably not work for your stage, product and audience.
Let me tell you a story about a company I recently helped start called Teachable. In the early days, investors said a few things about us including:
“Too much competition.”
“The market seems to be growing, but it’s too small.”
“Your product isn’t strong enough.”
Is it possible to grow quickly in a smallish, but growing market with 20+ competitors?
With the right focus, yep…
Here’s how our growth looked AFTER choosing our single metric of net new MRR.
We weren’t industry experts, but after finding focus on this one metric we learned and executed our way to near $3M in ARR, without paid or sales.
In the two months where this chart ends, we actually had to completely shut down all growth activities to catch up on support.
How many times in the past week have you said “that’s high leverage” or “over optimization?”
At Teachable, we used these phrases constantly.
Many growth ideas and tactics you find will be an over optimization to reaching your core metric.
Want to create an elaborate process of recording all of your growth experiments? For a team of 2-3 people, that’s an over optimization. Testing a new growth tool? What you have is probably good enough.
This applies beyond just your growth process. Want to launch a new feature? How does that move your core metric? Go to that startup event? Take a meeting with that investor who doesn’t appear bought in? Did you spend more than a few minutes finding office space? Are you creating business cards!?
Now, I’m not saying the above activities shouldn’t be done, but what I do know is: you or others on your team are probably over optimizing something.
The right metric helps you focus on impact relative your stage
When you’re looking at a mature business, you’ll have the resources to focus on multiple metrics, but as a growing tech company I haven’t seen it done successfully. In the early stages before 1M users and $5M ARR it’s simply too much to focus on. And as long as you chose the right metric, your other metrics will follow.
How choosing one main metric made an impact
After you prioritize one growth metric, each decision becomes faster and more effective.
Let me share how creating focus around a single metric helped us at Teachable. For context, Teachable is a freemium SaaS product that helps anyone create and sell online courses.
We started by focusing on Weekly Active Users (WAU)
There were a lot of metrics we could stare at each week:
Out of each, we chose to stare at Weekly Active Users (WAU) grew every week.
Focusing on WAU and mostly ignoring everything else helped us optimize for:
– Core product value of helping users manage their online content. We expected content entrepreneurs would login at least once per week to get value, so a weekly metric made sense.
– Testing less scalable user acquisition approaches and sources to see which types of users were the most sticky and improved our WAU, versus just signed up.
Although we could go out and pursue a lot of user growth for a particular week, it didn’t matter if they didn’t stick around until the next week where our WAU would certainly drop.
This admittedly wasn’t perfect, given we could just be consistently acquiring more users who could subsequently churn, but given we weren’t focused on user acquisition it was a good proxy.
The transition to Monthly Recurring Revenue (MRR)
What happened next came out of significant internal debate.
After deciding on a SaaS business model, we wanted to shift our focus to revenue, rather than just retention. Moving to MRR was controversial, and I actually pushed back against it thinking the product was too buggy to justify completely focusing on a revenue metric. However, I was proven wrong.
To settle the debate, we took Sean Ellis’s approach and surveyed our users and showed us strongly in the zone of initial product-market fit. The majority of our responses told us they’d be very disappointed without the product. Here’s how it looked:
It turns out this shift was the right move.
After transitioning to an MRR focus, for the next year we hit an aggressive 20%+ growth rate, net of churn.
Most months, MRR growth was more like 30-40%, but we had to shut down all growth activities in this past December and January to focus completely on support.
Shifting our focus to MRR worked because:
– MRR took into account use cases where someone would use our product one month, but not actively use it the next.
– It was deeper in the funnel, and could help us predict revenue going forward by taking into account retention. This deep focus meant, it took into account retention metrics such as churn, allowing us to build on a base of customers who were getting value.
One metric allowed us to focus on ONLY the ideas that had leverage.
Here are a few “good” ideas that we did NOT do until we were beyond $1M ARR. While all tempting to focus on, we determined they were over optimizations during initial traction for us:
– User onboarding – A strong and thought through user onboarding flow.
– Product – A completely thought through product in terms of copy and features.
– A/B testing – Our initial page was already averaging a 18% conversion rate to email.
Believe me, as a product and growth driven company we were aching to do these. However, we held off knowing we could get them done when we could hit our goals. There were lower hanging fruit.
Here are just on the many ideas we implemented that were particularly high leverage. Both came from a singular focus on MRR:
– Survey & email nurturing – Any user who signs up for Teachable gets dropped immediately into a simple survey. Although there was discussion that users would drop out at this stage due to a survey, we could message those who did drop out. By creating an intro survey, we could significantly improve our email messaging to the variety of use cases and better target offers to these segments.
– Feature launches – Launching high-value features to our paid plans helped us pick up quick wins in MRR with each new product update. Another example of this type of decision was enabling Stripe connect with our mid-tier $99 plan. While this encouraged certain users to downgrade from a higher tier $299 plan, it encouraged more to upgrade, that more than made up for the shift. These type of simple pricing changes led to a significant increase in monthly MRR with little effort, that came through a focus on MRR.
One caveat to a focus on MRR is we we did treat content as a longer term investment and didn’t evaluate it completely like other actions. Content was a way to better understand our customers and offer a full service to users to show how they could make money online.
How to actually get clarity on YOUR north star
Your one metric is likely going to be very different and there’s no special formula or algorithm. That said, here are some ideas to help you choose a single core metric today.
1. Look deep into your funnel
What metric can you easily measure that’s a proxy for product value? This will likely be a metric deep in your funnel:
Here’s a little metric inspiration from a variety of other companies:
– In the early days of What’s App used the “Send” metric.
– Airbnb’s core value is connecting people need a place for their marketplace and they stayed focuses on # of Nights Booked.
– Medium, a reader and writer marketplace focused on Total Reading Time.
– ProductHunt measured Product Page Click Throughs.
– eBay focused on Gross Merchandise Volume.
– Square would look at number of # of Merchant Transactions.
– SideKick (now HubSpot Sales) focused on Weekly Active Users when it was live.
2. Expect your metric to change based on stage
It can be helpful to look at the variety of models about how your metric might change over time to see which matches you.
The left side of the chart below is from the book Lean Analytics which goes into each of the other frameworks:
To keep things simple I personally think of the stages as hustle, traction and scale. This helps keep the focus on the type of activities you’ll be doing if you’re focused on growth.
For example, when you’re in building your initial product, you’re hustling. In this mode if you chose a metric something like # of quality user interactions to help avoid too much analysis and take action.
Then as you transition to traction, you can start to get more analytical and choosy about what you do to get more users. Your approach to growth changes based on stage.
3. Your core metric doesn’t have to be perfect
Some conversations I’ve had with founders stressed the need for a statistical model to inform your key metric. While I think that’s great, for most companies, don’t let that stop you from choosing one. If you don’t like the results of a particular metric, you can change it the following month.
Was our Weekly Active User metric the perfect measure of success? No, it could certainly be gamed. But we were mindful of this, and used qualitative feedback and common sense to make sure were were headed in the right direction.
4. There’s a difference between your “aha moment” and core metric
This is a point of confusion I’ve seen a few times. Your “aha moment” metric is not your core metric, it’s a metric you believe can help lead to an improvement in your core metric.
5. Chose an aggressive growth rate
One you have a single metric you can easily track and watch you should ideally chose an aggressive growth target.
This helps you expand your thinking and really get focused. And yes, every new month there is a bit of an “oh shit” moment where you have to get your previous months growth plus some.
Some ranges you can consider are to chose between 10 and 30%. At Teachable we stuck with a focus on 20% monthly growth.
When coming up with this number it’s worth considering the downsides of slower growth, although this is certainly a personal decision and largely dependent on resources and stage. The more resources you have and earlier the stage the higher growth rate to target.
In the hustle and early traction stage it can be helpful to chose a weekly metric, and eventually transition to monthly. Here’s a quick and dirty visual if you’re shifting between the two:
Other resources to find a metric
Hopefully this post communicated the importance of getting a north star, immediately.
One of the most high leverage things you can do is make sure you’re focused on one solid metric. Don’t split your focus.
Here are a few great resources to also check out for more depth:
– Paul Graham has an excellent essay on Growth that if you haven’t read, you should save for later.
– In the book Lean Analytics, they helpfully break out metrics by business model. For a high level view, check our their post on The One Metric that Matters which groups metrics by business model such as SaaS, Marketplace, Media, etc. which I think is particularly useful.
– Brian Balfour writes about how more focus could have helped him looking back at his own career in growth.
– If you’re googling this topic, some words to search for “north star metric” “core metric” and “one metric that matters.”
What’s YOUR one metric?
What is your #1 metric your focused on right now? Why did you chose it? Post it in the comments below!