Key metrics for Startups

Key metrics for Startups

I recently did a mentor session for the Founder Institute San Diego (thanks to Jeanine Jacobson for asking me to participate).

The session was on Revenue, Costs and Profits is here on Scribd.com.

First, as always, I want to give a shout out here to Steven Carpenter and his Blog, The World According to Carp for his TechCrunch Teardown of 13 Consumer Internet Business Models.This two part series will give Entrepreneurs some benchmark comparison data for doing your initial pro-forma for B2C products and services. Specifically, what type of numbers will it take to get to a $10M revenue based on the different models.

I discussed with the group the importance of having your hypothesis as ONE revenue model. This is in contrast to the early entrepreneur mistake that multiple business models must be better. Remember, more isn’t better, more is just more.

From that hypothesis, select your key metrics for the business and the financial model, as an example:

  • Traffic sources and cost
  • Registrations
  • Uniques
  • Conversion to Paid
  • Pricing assumptions – average spend, subscription, etc
  • Gross margin

Remember, you goal is to choose a business model that scales. You have to pick some pricing, you have to pick conversions… This effort will force you to get the numbers out of your head and get them down onto a spreadsheet. Use Excel to bring your feet back to earth…

As I reminded the group – and nearly every group I talk with on the topic. Steven Carpenter outlines 13 models. YOURS is not the 14th – so pick one!.

12 Replies to “Key metrics for Startups”

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