It seems like every successful venture has a snappy founding story. eBay has the Pez dispensers. Trade Me has the cold flat in need of a heater. YouTube has the infamous dinner party videos.
None of those was the real origin of those businesses, but why let the facts get in the way of a good story?
Here, by comparison, is the meandering but true origin story of One Metric…
Let’s start in early 2000 (around the time of the primordial soup).
In the early days of Trade Me we were fortunate to discover that nearly all of the things we cared about were dependent on the number of unique sellers per day. So we focussed obsessively on increasing that number.
Later as Xero was getting started, one of the jobs I gave myself was to get the team to pay more attention to the number of customers who had bank feeds enabled. The theory (which time has proven to be correct, I think) was twofold: because the user experience is so much better if you have a feed setup, it would make the product much more sticky, but also (and more importantly) because it was painful to get them setup it was something that we’d have to nudge.
In the Lean Startup book Eric Ries gave this idea a name: One Metric That Matters.
Fast forward to 2012.
In an effort to better understand the Vend business model, and make some sensible forecasts as part of the investment rounds we were doing, I did a lot of work to try and learn SaaS metrics: ACV, ARPU, CAC, CTS, LTV, Churn etc. There are a lot of TLAs!
We ended up with a very large and complicated spreadsheet to keep track of it all. (HT to Angus who was my partner in crime on this)
Then, with the team at Southgate Labs, we took that spreadsheet and turned it into an online tool that anybody with an early-stage SaaS venture could use to quickly calculate their metrics. We called it Dr SaaS. It’s still available (for the moment, at least) at: http://drsaas.southgatelabs.com.
Dr SaaS was an opinionated and cynical piece of software. You would enter your numbers and it would give you a diagnosis, presented as a medical check up. Mostly it would tell you how badly you were bleeding and predict a date of death! But, it was fun, and a number of people used it. However it missed the mark on the most important thing: which is creating the habit of regularly updating and sharing your numbers with people who can help.
Fast forward to 2016.
One of the first things Sacha did after she started working with us was try to build a simple dashboard for each of the ventures we’ve invested in, so we could do a better job of tracking their progress and helping with advice where we could. The results, frankly, were pretty depressing. Given what we’ve learned about the important signal that regular updates sends, it was depressing to discover how difficult this was for the founders we cared about.
With hindsight, I hope we’ll look back on that as a positive exercise, because it led us to think in a bit more detail about the specific things that make it hard for founders who want to know their numbers and to share them with their investors and advisors, and to imagine what a tool to help with this specifically could look like.
So, tl;dr I’ve been thinking about this for way too long.
There is a good reason why companies fabricate origin myths. If you are successful journalists ask “how did you get started?” and you need a simple answer that fits in a sound bite. So hearing all of those stories about others ventures it seems as if everybody has one.
If I’m lucky enough to have that happen for this project I think I’ll just quietly smile and say: I’ve been waiting nearly twenty years for somebody to build this, and I finally got impatient. :-p