10X: Metrics for Early Stage Startups
[TL;DR: I have an idea; not sure what to do next; guide on metrics to set in order to achieve a seed round or Series A.]
0: Getting Started
Say you're working on a project somewhere. It might not even be a company. Nobody cares about what you're doing. How the heck will this turn into Stripe, for chrissake? "Get more users", they say. "Get revenue", they say.
But what does that even mean? That sounds vague, big, ominous, and unquantifiable. And the other games, like improving just a little bit at getting your boss to like you or answering email feel very achievable. Very clear what to do next.
The reason there aren't more startups is because it's a weird game to play. The differential in scores is giant, and the next action to take unclear. And especially when starting, it's all headwind. There is no inertia of success. It's really not clear what to do if you want to start SpaceX. Elon's score on the leaderboard is so large it feels useless to play the game.
I’ve found it most useful to turn this challenge into something that feels achievable. To work as expediently as possible to get to a point where you're performing for real, paying users instead of your local friends, Boss, or whatever.
This is a playbook for how to get started with very bite-sized, achievable steps. (BTW, this blog post has been implemented into software! Try out Pioneer Launcher.)
Week #1: 10 Friends
Building SpaceX feels infinitely far away. But everything big starts small. Just focus on showing your product to 10 people this week. Just ten. This can be in the real world, over Zoom, whatever. Distant cousins or friends. Ten people, that is all. In the ever-connected era of the Internet, this should be very doable. Focus on the amount of interaction you have with them, not just hitting the number.
You want these 10 people to be your base. Your core. You'll be using them as motivational fuel over the next few weeks. So make sure they really care about what you're building.
Open iMessage. Start scrolling down. Send invites to whoever is recent. Think of yourself as planning a small party, but on the Internet instead of a bar.
Week #2: 100 Chats
This is the most important step. Let's imagine the above took a week. I would then try to get to 100 users by the end of this month.
You don't have to meet these people. You just need to get 100 people chatting with you. A WhatsApp group that's filled with excitable users who adore your product. If you did 10 users last week, just step it up to 20, 30, then 40 over the next 3 weeks.
It'll get easier as you go along, both due to viral referrals and because you'll have an audience to perform for. Something to show people. That alone will give you motivational fuel.
This, in my opinion, is the key step. Once you build your own club of 100 truly delighted customers, the feedback loop will kick in. You'll want to perform for them.
Week #5: $1,000 Revenue
Now that you've gotten to 100 users, you might want to think about getting to $1,000 dollars in revenue. This shouldn't be too hard.
All you need to do is 20% of your users (let's imagine 80% refuse) to pay you $50. Twenty people, fifty dollars. Talk to them. Figure out what they'll pay for. Build that. (It helps that you first focused on getting them to love you, they'll be more responsive.)
You have a 100 users. Assuredly you can ask all of them this week?
Week #6: $10,000 ARR
Now that you've gotten to $1,000 in revenue, it's time to get to $10,000 in ARR. This may sound large, but it's a forgiving metric. ARR stands for annual recurring revenue, and it really only means that you need to get those same 20 people paying you $50, but each month. (These numbers are just defaults. You should be adjusting. It might be only 5 users paying you $200 a month, or 1,000 paying you $1 a month.)
Do what makes sense to you, but make the goal achievable for yourself. Play a game you can win.
If you make it this far quickly, we'll gladly fund you. We'll incorporate your company, fly you out to Silicon Valley, the whole shebang. (I can't blindly commit to this, obviously! But the odds are very, very high.)
Concluding: just try and build a club of 100 people in WhatsApp in the next 30 days. Forget SpaceX, forget Stripe, or Airbnb. Get 100 loving users in a chatroom, and everything else will follow. If you need an extra jolt, check out Pioneer. Link below.