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12 KPIs you must know before pitching your startup | TechCrunch

It is critically important for the founders of a company to intimately understand the company’s key performance indicators (KPIs). Founders cannot hope to grow a company in any meaningful way without an almost obsessive focus on its KPIs.

Why? Because KPIs, if constructed correctly, give management and potential investors a cold, analytical snapshot of the state of the company, untainted by emotion or rhetoric. This focus must not be limited to the KPIs themselves, for they are merely measurements of outcomes. We look for founders to have an understanding of what levers can be pulled and what tweaks can be made to improve the business, which will then be reflected in its KPIs.

The focus should not be on the KPIs themselves, but the meaning behind them and knowing what impacts each one.

Let’s review some of the KPIs that are important for founders to thoroughly understand and for which they should have a strategy, or set of strategies, for optimizing. Please note that some KPIs are not relevant to some types of businesses. Finally, I am not going to go into very much detail on each metric and how to calculate it as (a) that is beyond the scope of this article, and (b) that information is readily available from other sources.

Customer acquisition cost (CAC). CAC is the amount of money you need to spend on sales, marketing and related expenses, on average, to acquire a new customer. This tells us about the efficiency of your marketing efforts, although it’s much more meaningful when combined with some of the other metrics below, and when compared to competitors’ CAC.

Acquiring new customers is one thing, but retaining them is even more important. Your customer retention rate indicates the percentage of paying customers who remain paying customers during a given period of time. The converse to retention rate is churn (or attrition), the percentage of customers you lose in a given period of time. When we see high retention rates over an indicative time period, we know the company has a sticky product and that it is keeping its customers happy. This is also an indicator of capital efficiency.

Lifetime value (LTV) is the measurement of the net value of an average customer to your business over the estimated life of the relationship with your company. Understanding this number, especially in its relation to CAC, is critical to building a sustainable company.

We consider the ratio of CAC to LTV to be the golden metric. This is a true indicator of the sustainability of a company. If a company can predictably and repeatedly turn x into 10x (note: 10x is just an illustration and not meant to imply any sort of minimum or standard), then it’s sustainable.

The most successful founders tend to be those who have an obsessive focus on their KPIs and the drive to constantly experiment and optimize them.

CAC recovery time (or months to recover CAC). This KPI measures how long it takes for a customer to generate enough net revenue to cover the CAC. CAC recovery time has a direct impact on cash flow and, consequentially, runway.

Whereas CAC measures the variable expenses attributable to acquiring customers, overhead measures the company’s fixed expenses incurred irrespective of the number of customers acquired. Overhead relative to revenue is a reflection of the capital efficiency of a company (i.e. all things being equal, a company that generates $1 million in revenue on $200,000 in overhead is twice as efficient as one that generates $1 million in revenue on $400,000 in overhead).

Understanding your revenue and monthly expenses (fixed and variable) enables you to calculate the company’s monthly burn. This is simply the net amount of cash flow for a month when net cash flow is negative. If the company starts the month with $100,000 in cash and ends the month with $90,000 in cash, its burn rate is $10,000. If a company’s monthly net cash flow is positive, it is not burning cash.

A keen focus on runway is critical to the survival of any startup. Runway is the measure of the amount of time until the company runs out of cash, expressed in terms of months. Runway is computed by dividing remaining cash by monthly burn. We prefer to view a conservative estimate of runway that calculates the monthly burn utilizing current revenue and projected expenses (after accounting for the increased expenses to be incurred post-investment). We require an absolute minimum of 12 months of runway, but have a strong preference for 18 months or more. Short runways cause entrepreneurs to by myopic and not to have the liberty to tweak and iterate when necessary. It also forces them to almost immediately focus on the next fundraising round instead of growing the company.

Expressed as a percentage, profit margin tells us how much your product sells for above the actual cost of the product itself. Put another way, it reveals how much of the selling price is “mark-up.” This invaluable metric allows us to consider the return on investment on the cost of the product and is significant in understanding the scalability and sustainability of the company.

We consider conversion rate to be a very telling KPI in that it reveals a combination of the company’s ability to sell its products to its customers and customers’ desire for the product. It is particularly instructive to track and review conversion rate over time and regularly run experiments to improve it.

Certain businesses find that revenue may not be the most informative indicator of their financial performance. This is especially true for marketplaces for which revenue (i.e. their take rate) represents a small portion of overall transactions. Gross merchandise volume(GMV) can be a useful KPI in these cases. GMV is the overall dollar value of sales of goods or services purchased through a marketplace.

For companies that have apps, online games or social networking sites, monthly active users (MAU) is an important KPI. MAU is the number of unique users who engage with the site or app in a 30-day period. Understanding MAU is helpful in determining the revenue potential of a company or how well it is currently monetizing.

When we speak to founders to learn more about their companies, we ask them for these KPIs, along with their narrative and other information. It is a quick way for us to understand the current state of the business and we have serious concerns about founders who do not know their KPIs.  We find that the most successful founders tend to be those who have an obsessive focus on their KPIs and the drive to constantly experiment and optimize them.

Source: 12 KPIs you must know before pitching your startup | TechCrunch

The violent Russian spring that seemed to begin in an hour and was like the whole earth cracking. That was the most wonderful event of every year of my childhood.

Igor Stravinsky

If you were an elephant … | Environment | The Guardian

If you were an elephant …

… the world would be a brighter, smellier, noisier place – and you would be a better, wiser, kinder person. The author of Being a Beast explains all

by

Thursday 19 January 2017

If you were an elephant living wild in a western city, you’d be confused and disgusted.

You’d have one two-fingered hand swinging from your face – a hand as sensitive as tumescent genitals, but which could smash a wall or pick a cherry. With that hand you’d explore your best friends’ mouths, just for the sake of friendship. With that hand you’d smell water miles away and the flowers at your feet. You’d sift it all, triaging. Category 1: immediate danger. Category 2: potential threat. Category 3: food and water. Category 4: weather forecasts – short and long range. Category 5: pleasure.

Grumbles from trucks and cabs would shudder through the toxic ground, tickle the lamellar corpuscles in your feet and ricochet up your bones. You’d hear with your feet, and your femurs would be microphones. As you walked 10 miles for your breakfast you’d chatter with your friends in 10 octaves. A nearby human would throb like a bodhran as subsonic waves bounced around her chest.

Even if it swayed with grass instead of being covered in concrete and dog shit, the city would be far, far too small for you. You’d feel the ring roads like a corset. You’d smell succulent fields outside, and be wistful. But you’d make the most of what you had. You’d follow a labyrinth of old roads, relying on the wisdom of long-dead elephants, now passed down to your matriarch. You’d have the happiest kind of political system, run by wise old women, appointed for their knowledge of the world and their judgment, uninterested in hierarchy for hierarchy’s sake, and seeking the greatest good for the greatest number.

No room here for the infantile phallocentric Nietzscheanism that is destroying modern human culture. If you were a boy you’d be on the margins, drifting between family groups (but never allowed to disrupt them) or shacked up with your bachelor pals in the elephant equivalent of an unswept bedsit (though usually your behaviour would be gentler, more convivial and more urbane than cohabiting human males). Your function would be to inseminate, and that’s all. Government would be the business of the females.

Elephant foot
‘You’d hear with your feet, and your femurs would be microphones.’ Photograph: Bruno Guerreiro/Getty Images/EyeEm

You’d be a communitarian. Relationality would be everything. It’s not that you couldn’t survive alone, although there would certainly be a survival benefit from being a member of a community, just as humans live longer if they are plugged into a church, a mosque or a bowling club. Yes, at some level your altruism might be reciprocal altruism, where you scratch my back if I scratch yours, or kin selection, where you are somehow persuaded to sacrifice yourself if your death or disadvantage will preserve a gene in a sufficiently closely related gene-bearer. But at a much more obvious and important level you’d be relational – joyously shouldering the duties that come with community – because it made you happy. Why do elephants seek out other elephants? Not primarily for sex, or for an extra arsenal of receptors to pick up the scent of poachers, or because they assume that the others will have found particularly nutritious food, but because they like other elephants.

This should be terribly unsurprising. Yet many humans will be surprised. That shows how fully we’ve fallen for the anthropocentric lie that only humans have minds and real emotions. The lie is the high-water mark of scientific fundamentalism. Fortunately it’s going out of fashion now, but for years it paralysed the study of animal behaviour.

As an elephant, you’d have a mind. You would, no doubt at all, be conscious. All the evidence agrees. None – absolutely none – disagrees. You’d have a sense of yourself as distinct from other things. When you looked out contemptuously at humans, wondering why they ate obviously contaminated food, opted to be miserable and alone, or wasted energy on pointless aggression and anxiety, it would be your contempt, as opposed to generic elephantine contempt, or reflexive contempt that bypassed your cerebral cortex, or the contempt of your sister. It would be you looking out, and you’d know it was you.

Elephant eye
‘You’d have a mind. You would, no doubt at all, be conscious.’ Photograph: Palani Mohan/Getty Images

The American ecologist Carl Safina argues that elephant X can understand the relationship that elephant Y has with elephant Z – whether it is a kin relationship or simple friendship. Just think about that. Think about what it entails for X’s knowledge of itself; for X’s ability to think itself into the head of another, and for the way that X must articulate to itself the concept of a third-party relationship. Perhaps elephants are explaining the world to themselves by formulating, evaluating and selecting propositions – a faculty we tend to think of as uniquely ours.

That will be too much for most. Indeed, it’s a mistake to assume that in order to have a mind one has to have a mind that is like human minds. So let’s just say that, according to the evidence, it’s not obviously ridiculous to invite you, the human, to imagine yourself as an elephant. There’s some biological justification for what sounds like a whimsical, sentimental literary device. You and the elephant both have minds, wrought from the same stuff. And your minds engage with the world using the same devices. Your neurological hardware differs only in sensitivity: sodium and potassium surge in the same way through the same molecular gates when you and the elephant step on a nail; the same ancient hormones mediate pleasure, anger and stress. “If you prick us,” ask the elephants (using a chromatic orchestra of sounds, and well over 100 distinct body movements), “do we not bleed?” Indeed they do.

We can be cautiously Beatrix-Pottery with elephants. When the temporal glands near their eyes stream in circumstances that, for us, would be emotional, they’re crying. When a bereaved elephant mother carries her dead baby round on her tusks, or trails miserably behind the herd for weeks, her head hanging down, she’s grieving. When other elephants sit for hours around the body of a dead elephant, they’re mourning. When they cover an elephant corpse with soil or vegetation, or move elephant bones, they’re being reverential. When they cover a dead human, or build a protective wall of sticks around a wounded human, they’re showing an empathic acknowledgment of our shared destiny that we’d do well to learn. These, dear reductionists, are, as you would put it, the most parsimonious hypotheses.

Elephant trunk
‘You’d smell water miles away and the flowers at your feet.’ Photograph: Simon Eeman/Alamy Stock Photo

If elephants have minds, and minds (as seems likely) can extend beyond the brains in which we conventionally assume they’re situated, we’d expect them to tune into distant elephants, and perhaps into the minds of other species too. There are some tantalising hints that they can. Safina was told by a keeper at a Kenyan elephant sanctuary that the resident elephants knew, from distances well beyond the reach of ordinary senses, that other elephants were on the way – just as Kalahari bushmen know, from 50 miles away, just what a hunting party has killed, and when it will return. When the elephant whisperer Lawrence Anthony died, two groups of elephants that he’d rescued came to his house on two consecutive days. They hadn’t visited for a year.

Perhaps one of the reasons we’re so keen to deny non-human creatures minds, consciousness and personhood is that, if they’re people, they’re embarrassingly better people than we are. They build better communities; they live at peace with themselves and aren’t, unlike us, actively psychopathic towards other species. They know, and take account of, a great deal more information about the natural world than we do.

Back to the shamanic fantasy: you’re a city elephant. You’ll inhabit the city much more intensely and satisfactorily than most of its human denizens. All your senses will be turned fully on. You won’t, like most woefully unsensual humans, use only your eyes, and then translate the visual images into self-referential abstractions with only a slight and dysfunctional relationship to the real world. You’ll be much more properly local than any cockney, New Yorker or Madrileño, though you call Africa your home. You’ll know far more of the city than any geographer, historian, zoologist, botanist, policeman or lover. By trying to become an elephant, you might become a much more thriving human.

Be careful, though. You’re likely to end up dead because someone wants a couple of your teeth.

Source: If you were an elephant … | Environment | The Guardian

Artist Windy Chien Unearths Obscure Knots Everyday for an Entire Year | Colossal

In January of 2016, artist Windy Chien devoted herself to learning a new knot every day for a year, tying a total of 366 by December 31st (2016 was a leap year). Although 366 knots might seem like a staggering number, it is nothing compared to the 3,900 included in Chien’s go-to knot manual—The Ashley Book of Knots, which took its author nearly 11 years to compile.

The daily ritual was both meditative and informative for the Apple project manager turned artist, allowing Chien to access an energetic flow, while also giving her a chance for constant experimentation with line and form. You can see a selection of Chien’s knots on her website, and view the entirety of the project on Instagram. (via Wired)

Source: Artist Windy Chien Unearths Obscure Knots Everyday for an Entire Year | Colossal

I cannot remember the books I’ve read any more than the meals I have eaten; even so, they have made me.

Ralph Waldo Emerson

The Zipf Mystery – YouTube