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Mission, Strategy, and Metrics

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Company-building is a founder-CEO’s primary job after a startup has attained product-market fit. In order to do this job effectively, founder-CEOs must learn to excel at three primary tasks:

  • Hire a great leadership team and make sure they work well together
  • Create purpose, direction, and alignment in the organization
  • Nurture a culture that attracts, motivates, and retains great employees

This document is about the second task on this list: creating purpose and alignment across a company. We describe a simple Mission-Strategy-Metrics framework (or “Mission-to-Metrics”) that you can use as a tool to create better alignment at your company. Itʼs the founder-CEOʼs job to ensure that the mission, strategy, and key metrics of a company are well-defined. Metrics are the most important of the three to have in place, so if youʼrestruggling with writing your mission or strategy, make sure to have the key metrics that define success in place and well understood by your company.

An effectively articulated "mission-to-metrics'' framework fosters alignment within an expanding organization. It aids members in understanding priorities without the CEO needing to be involved. We strongly advise penning your mission-to-metrics document in writing, reviewing it every quarter, and revising it annually.


1. Mission

We recommend taking a practical view on the importance of mission statements. Founders sometimes obsess over the wording of a mission statement, but you shouldnʼt. Great companies are formed around solving a customer problem, not around a grand mission statement. Some founders are lucky enough to define mission statements fairly early in their lives that inspire and endure for a long time. 

Some examples are:

  • Stripe: Increase the GDP of the internet
  • Rippling: We free smart people to work on hard problems
  • OpenAI: Ensure that artificial general intelligence benefits all of humanity
  • Amazon: Be earth's most customer-centric company where people can find and discover anything they want to buy online
  • Google: Organize the world's information and make it universally accessible and useful

But most startups, even the very successful ones, iterate on their mission statement periodically. As Jeff Lawson from Twilio described, "We've gone through multiple iterations of our mission statement over the years. Somewhere between 20 and 50 employees we realized, 'Oh, we need a mission.' So we'd spend time writing one and say, 'OK, good enough. Let's just use that.' Some of them were really bad. It took a while for us to have conviction around the words to describe why we exist. I always had a sense for why we existed: the future of the communications industry is clearly going to be built by the many software developers of the world and will not remain in the hands of a few companies. Today, our mission is to fuel the future of communications, which we settled on after many other versions.”

Grant from Whatnot on using Mission, Vision, and Strategy to drive alignment

“Mission, vision strategy. I wrote the first whole draft of the mission, vision, and strategy at around 40 or 50 people. I tend to view these things mostly as an alignment tool. In the early days, you don't need it that much because everyone in the room is very clear with what they're doing and why they're doing it. But as we started to scale and get bigger, you need to write down those things, so it's very clear what you're trying to do, what direction you're moving in, and what you're going to do, and the things you're not going to do to get there."

It's useful and strongly recommended to have a mission statement written down on paper and communicated to employees because it helps you define your “field of play” as a company and reminds employees (new and old) about the big picture of what you're trying to accomplish. But donʼt obsess over getting the wording perfect or making it sound timeless. Be open to revisiting it and rewriting it from time to time. As one founder put it, "I know I need a mission statement because people want something to inspire them and to frame our long-term strategy, but it can become problematic if the mission statement starts to define what we do too closely and keep us from seeing our customers' biggest problems. It's important to have a mission that's broad enough to be enduring but not distract from focusing narrowly on the customer."

2. Strategy

As you scale to 50 people and beyond, a strategy document can become an important way to keep a growing team aligned. It's also helpful as a way to capture your thinking at a point in time about the company and track how your thinking evolves.

In our experience, the best companies have written documents that describe both their product and go-to-market strategies. The first versions of these are almost always written by the founder-CEO or another co-founder. Over time, other executives contribute or sometimes write these documents, with heavy involvement from the founders. The best strategy documents are deeply connected to your customer. They reflect a nuanced understanding of the customer problem you intend to solve and how you intend to solve it. They are grounded in customer observation and research.

How do you come up with a strategy document for the first time?

Here's a simple approach:

  • Start with the most important top-level goals for your company.
    • Depending on your business, these might include things like revenue, number of customers, GMV, payment volume, API calls, etc.
  • Envision your company in 12 months. What does success look like for these goals?
  • For your product strategy, ask:
    • Who is the customer you are building for? 
    • What are the key problems you are trying to solve for them in the next 12 to 18 months?
    • It helps to be narrow rather than broad. Start with a small group of customers who have a clear problem that you can solve. If your early customer growth has been organic, this can feel unnatural. It requires you to shift your mindset to pinpointing customer profiles in a more precise way and defining what you need to build for them.
    • Do you have an understanding of which product levers will drive your top-level metrics? Which new product features can you build to pull these levers?
    • What supporting infrastructure do you need to build to ensure that your products will scale and that your product and engineering teams will be effective?
  • Developing a go-to-market strategy is generally harder in the early days. Most founders are not go-to-market experts, and most products require a fair amount of experimentation before a repeatable, effective GTM strategy can be defined. But this shouldnʼt deter you from writing something down. View it as an iterative process, driven by a set of initial hypotheses about how you can effectively distribute your product. Adapt from there as you learn more.
    • In this phase, a good practice is to meet with other startup founders and compare your GTM approach with theirs. You'll get smarter about GTM and develop a better understanding of what makes your approach unique.
  • To start writing V1 of your go-to-market strategy, ask:
    • Who is the buyer of your product? How do you reach that buyer effectively?
    • What is the value proposition that will convince this person to buy or use your product?
    • What channels should you use, and how can you make these channels effective?
    • How should you price and sell your product in order to reach your 12-month goals? What is the selling motion and how does it need to be staffed?

Every six months, you should do an in-depth review of your strategy, budget, and progress towards your goals with your team. As part of that review, measure your progress, set new 12-month goals, and revise your strategy documents accordingly.

Finally, a word about format. 

  • The best strategy documents we have seen are written in long form, not as slide decks or scribbles on a piece of paper. 
  • They tend to be three to five pages long. 
  • Writing it out forces you to be thorough and helps catch flaws in your thinking. This is the reason why Amazon has long favored the memo for new initiatives and has outlawed PowerPoint. 
  • For your strategy documents, you should do the same.

3. Metrics

One of the most crucial tasks to ensure alignment across your organization is to determine the key metrics that define your startup’s success.

You can think of metrics as either “input” or “output” metrics.  As the CEO, it’s imperative for you to discern and convey the internal factors (“input metrics”) that influence the desired results (“output metrics”) for your business.

  • Output metrics are results that external stakeholders, such as your investors, use to assess your business. Identifying these is typically straightforward. 
  • On the other hand, input metrics are the detailed metrics that are instrumental in your day-to-day business management. These are the levers that your employees can directly influence and that subsequently impact your output metrics.  It's vital to comprehend how different input metrics influence output metrics, for instance, understanding which input metrics affect revenue or customer interaction. Unraveling these influential factors can be challenging and might necessitate extensive experimentation and investigation.


Example: Output and Input Metrics

  • Meta has consistently chosen Monthly Active Users (MAUs) as their output metric.
  • Early on, they identified that users who established connections with 7 friends in 10 days post-signup were more likely to become MAUs
  • Subsequently, they defined an input metric of “number of new users who add 7 friends in 10 days” - they focused on developing features to promote this
  • Features included restricting content visibility until a user had connected with 7 friends
  • As Product Managers and engineers prioritized enhancing this metric, they concurrently grew the number of MAUs

Identifying the Magic Moment metric:

  1. Look at groups of users who became engaged, and groups of users who did not become engaged with your product over a historical period of time, ex. Last six months.
  2. Analyze historical event logs with basic data science (correlations, segmentation, even eyeballing) to see if any patterns exist between key groups of users, ex. engaged, not engaged, paying, not paying.
  3. For Facebook, the pattern that emerged was that the engaged users had reached at least 7 friends within 10 days of signing up.

  • In Amazon's retail sector, the key metric is revenue
  • Amazon has found that customers are significantly more likely to place subsequent orders when they receive their initial orders within a day of making them. 
  • Consequently, the product and operations teams were assigned the "fast-track in-stock" as the key input metric. This refers to the percentage of inventory, adjusted for demand, that Amazon is capable of shipping within a 24–48 hour timeframe. This was something that employees could directly impact to enhance customer satisfaction and the frequency of reorders, eventually leading to increased revenue.
  • One of Segment’s key input metrics is the number of integrations that are receiving data, serving as a gauge of the volume of data each customer is monitoring
    • When a customer surpasses a specific threshold in this metric, their likelihood of churn significantly diminishes. Thus, the number of integrations acts as a primary predictor of customer attrition. Consequently, the team strives to ensure that customers integrate the maximum number of tools available to maximize retention
  • Another metric closely tracked was “Pipeline Coverage” as a key leading metric for success
    • Pipeline Coverage is the total $ amount of pipeline you have relative to your target net new ARR
    • Segment would look at the total amount of pipeline that they had each week. Pipeline grows at the beginning of the quarter and then the pipeline either by stuff getting punted out to future quarters, getting closed won, or losing kind of shrinks down to 1x…
    • By the time Peter sold the company, like he could tell in like week two of the quarter almost exactly what they were going to close”
    • If you have a very predictable way of generating these things, then you know when to hire the next account executive, how you expand the sales team, and that you're not hiring people into dead zones. Predictability wasn’t just like a thing that happened. It was a goal.‍
  • Total hours watched is Twitch’s output metric
  • To drive this internally, their goal is to encourage as many unique daily users to watch at least 5 minutes of video daily
  • Thus, their input metric is “five minute unique viewers”

  • For their ChatGPT consumer product, OpenAI’s output metric is weekly active users (WAU)
  • Over time, they’ve learned that the more chat messages sent, the more likely a user would be to become a WAU
  • Thus, they’ve been experimenting with various prompting techniques (ex. "Plan a trip" or "Make a content strategy") to encourage users to send more messages

  • Early on, Brex’s key metric was Gross Merchandise Volume (GMV) which is the total volume of payments processed through Brex cards - of which ~3% (interchange fee) was considered “revenue” and roughly ~1.5% (interchange - rewards) was considered “net-revenue”. This evolved to the key metric being “total net-revenue” as the business has expanded into multiple revenue streams (card interchange, banking deposit yields, and SaaS fees for their seat-based enterprise expense management solution) which is a sum of (1) corporate card interchange revenue, (2) net-yield on deposits, (3) SaaS fees.
  • Input metrics are tracked at the product-level - for corporate card, the input metrics are: # of monthly users and # of card customers that spend above $10k; for banking, the input metrics are: % attach-rate of customers with banking and # of customers with >$250k deposited; for expense management, the input metrics is # of paid monthly-active customers.

  • Zepto's key output metrics are orders per day and gross profit per order
  • To drive orders per day, Zepto's key L0 inputs are monthly order frequency and retention
  • To drive gross profit per day, Zepto's key L0 inputs are average order value, fees/advertising per order, product margin, and total costs per order
  • These inputs are all further broken down into L1 and L2 inputs at a team level
  • Zepto's approach to metrics has been refined consistently as the team's internal understanding of their business equation has evolved
  • As an example, gross profit per order was only introduced as a key metric about 6-12 months after public launch and drivers of growth were better understood


To establish your metrics, it is crucial to implement a procedure for reviewing and modifying them as needed. This involves documenting your metrics along with the reasoning behind them; scheduling regular meetings (monthly, etc.) to scrutinize this document; and based on the insights from these meetings, implementing alterations to the business practices and updating the metrics document for the next review cycle.

Here is an example of a monthly review document: Twitch: Monthly Business Review

Metrics can develop and adapt over time, but it’s imperative for everyone in the organization to have confidence in their accuracy to inform actions.  Constantly questioning whether the metrics genuinely reflect reality can be disruptive.  Achieving accurate metrics often requires engineering investment in the underlying infrastructure to ensure metric quality.

We recommend starting with a smaller number of clear and concise metrics—ideally around three or four—that are communicated regularly, instead of overwhelming the team with details that are hard to remember. It is crucial for every member of the organization to understand the significance and the rationale behind each metric. As the company scales, individual teams can then establish their own sub-metrics.

4. Communicating your mission, strategy, and key metrics

The world’s best mission, strategy, and metrics are useless unless your team understands and internalizes the message.

Learning to communicate clearly to an ever growing employee base can feel unnatural at first. You should simplify the message and repeat it to a degree that may feel strange. You will be surprised at how often you will have to repeat yourself for everyone at the company to understand.

Writing is a scalable way to communicate. Written documents can be shared with many people and serve as archived reminders of how your thinking changes over time. As noted in the prior section, we strongly recommend that you take the time to write your company’s mission, strategy, and key metrics in long form so that everyone at the company can read it. Some founders also send company-wide emails to communicate what’s important and reinforce key themes, sometimes as frequently as once per week.

Whatever methods of communication you choose, we recommend keeping three principles in mind:

  1. Communicate to the entire company at least once a week.
  2. Repeat the key strategic priorities in every communication.
  3. Take the time to write your strategy, customer insights, and other learnings in long form and make these documents available to the company.

Finally, a key aspect of effective communication is the consistency of your message. As the CEO, your words carry tremendous weight. Everyone is trying to get your attention and please you. Many first-time CEOs have found that a stray comment they make in a team meeting inadvertently scrambles their team’s priorities as everyone suddenly begins to chase the CEO’s latest whim. Even worse is the CEO who can’t commit to a strategy or product direction. CEOs must be decisive. You need to set a direction and stick with it. One of the reasons we strongly advocate for writing things down in long form is that writing forces you to think things through and archives your thinking in a healthy way. It deepens your thinking and commits you to something. Try to set a cadence to review strategy and product direction rather than doing so continually. If you are considering a change of direction, you should always preview it with a small group of trusted people before announcing it to the whole company.

At Affirm, Max Levchin revisits their strategy document annually, viewing it as if it were his first year at formulating a strategy with fresh eyes.  Reflecting on a decade’s worth of such documents, he observes that approximately 80% of Affirm’s strategy has persisted since the company’s inception.

Below is an exemplary mission-to-metrics document penned by Grant LaFontaine, the co-founder and CEO of Whatnot written for 2022.  Whatnot operates as a peer-to-peer live commerce platform, facilitating transactions between buyers and sellers via live video streaming. The document, edited to protect strategic details, serves as a prime example of what every CEO should compose once their team reaches 50 members.

5. Example I: Whatnot's Mission-to-Metrics

From Grant La Fontaine (CEO of Whatnot): If you want to deliver a lot in a small period of time, you just need to move fast. You can't be spending shitloads of time debating the merits of going into shops, whether it's possible. And so [defining what we wouldn’t do] was truly for focus. Because we felt we had enough conviction in what we were doing that we were going to go all in on it. And then we, you know, we never thought we were always going to be right, but we always set up mechanisms to be nimble enough that if we learned something new, we would adjust more.

I tend to view strategy as always developing. You take all known information, put it at the best guess as to what the things you should invest in are. We try to carve out about 20 percent of resources to work on things that are off strategy, which are like adjacencies, where we may be able to learn something new that can transform the business. We had less screening guideposts in the early days, just because, honestly, I ran a ton of the roadmap, and I could just do what I felt was right. These days, at a bigger scale,  the general guidepost that we give the teams is like 80 percent on core strategy and 20 percent on newer emerging things just to make sure we're always learning something new so that we can expand the market. The impact of being overly focused on the near-term strategy (6-12 months) is you can miss opportunities to lay the groundwork for future growth. This sometimes results in a sudden slow down once your core engine starts to break as you haven’t built the foundations for your next act.

  • Always start with your Mission/Values and Vision before outlining your strategy. This drives better alignment as it reinforces 1) why the company exists, 2) how you make decisions, and 3) where you are going.
  • Tie the strategy back to the key metrics you need to achieve within the time frame. This makes clear what it takes to “win” in the strategic planning period. 

Mission

Enable anyone to turn their passion into a business and bring people together through commerce.

Customer and Market Insight

Buyers

Here’s what we know/hypothesize about buyers

  • Users most value product categories that have [these] characteristics.

[Explanation based on user research]

  • ‍The core reason that people come back to Whatnot is [this]

[Explanation]

  • ‍People need to trust Whatnot to come back and purchase‍

All marketplaces are built on the trust that you will get exactly what you purchase. To date buyers have loved Whatnot because they trust it. But if this erodes, the marketplace could fall apart.

  • ‍People come to Whatnot looking for specific products or product types

[Explanation based on user research]

Sellers

Here’s what we know/hypothesize about sellers

  • Sellers are motivated by money

Sellers typically care most about generating money, so if we want to keep and retain them we should help them make more money by using Whatnot.

  • Sellers are trying to build and optimize their business

As a function of trying to make money, their presence on Whatnot is largely about business building: They really want to know how to optimize it. How do they best market, when is the best for a show, what supply sells best. 

  • Buyers really want to sell on Whatnot

The single most asked for thing on Whatnot is the ability to sell. [Explanation for how we know this]

Our wedge

  • Our research and experience to date suggests that [this category] appears to be the gate to live and social commerce.
  • Once we get this category to scale, the opportunities to tack on other categories and products increase drastically.

Product Strategy

We’re building a P2P social marketplace by investing in:

  • Live: [Explanation of specific features]
  • Trust and safety: We’ll invest further in reviews, moderation, authentication and more to ensure when someone buys on Whatnot, they have a great experience. We aim to create the safest P2P horizontal marketplace on the internet.
  • Key feature X: [Explanation]  
  • New product area Y: [Explanation]

Distribution or Go-To-Market Strategy

We’re going after enthusiasts and power sellers by: 

Getting the community talking:

  • Scaling sellers: Sellers drive demand and increase supply on Whatnot. We’ll need to be best in class at onboarding them. [More explanation on how to do this]
  • Content strategy: [explanation on methods]
  • Owning influencers: [Explanation]
  • Paid ads: [Explanation]

Fix the funnel:

  • As we get people talking and into Whatnot there will be some significant areas in the funnel we’ll need to fix. We’ll avoid small incremental things, but will unlock things like scaling the seller waitlist to make sure people sell and go live on Whatnot, as well as doing a better job converting our initial buyers.
  • As we scale growth, we must ensure we’re doing this on positive unit economics—that is, we’re actually making money on each transaction. We should not subsidize our way to negative unit economics. As we launch early categories, we can do it for a small period of time, but we must quickly get them to positive unit economics in every category.
  • Further, we are not going to invest heavily into discounting subsidies, and instead focus our limited resources on creating value for our highest-value buyers and sellers.

Things we are not doing

  • X
  • Y
  • Z
  • A
  • B
  • C

Metrics

North-Star Metric

  • GMV = gross merchandise value = the value of all items sold on the marketplace not including taxes, shipping, or other fees

While this is our North Star metric, this is not the end-all-be-all for prioritizing. We still need to make sure we’re prioritizing a quality and reliable user experience; otherwise, long-term GMV will not materialize.

Key Metrics to Define 2022 Success

Build a “machine” that turns our major categories into market leaders

  • P0: Grow the GMV of W, X, Y, and Z categories to be x%+ of eBay’s monthly sales and increase GMV to y% in December 2022 amongst other existing categories.
  • P0: Enable [new format] that drives x% of monthly sales in W, X, Y, and Z categories.
  • P1: Build [new business segment] that generates x% of GMV in W, X, Y, and Z categories.

Generate significant sales in W+ categories with X, Y, and Z and enable rapid scaling of new categories

  • P0: Organically grow x+ new categories generating $xm/mo in additional GMV.
  • PO: Actively launch into y+ new categories generating $ym/mo in additional GMV.
  • P0: Build infrastructure to support launching into z+ categories by end of year.

Build a reliable and high-quality core live and marketplace experience

  • P0: Maintain buyer NPS at x%.
  • P0: Maintain seller NPS at y%.
  • P0: Get monthly gross profit/GMV to z%.

Grant on Planning: Our belief, and I still think it's generally correct. Whatever time you allot, the shorter the time period for planning, the faster people will move. Because they'll see a goal with a tight time window and they'll run to achieve it. And so philosophically We've always felt that we wanted to make planning as short as is reasonably possible, while making good decisions. This began with weekly sprints, then monthly plans until we reached about 150 people when it broke and we’ve moved to quarterly cycles.

Who wrote the mission to metrics doc at Whatnot at every stage?

Developing an understanding of the inputs that drive the outputs is critical to operationalizing your success. This is an iterative process and you’ll add and remove metrics over time. One strategy is to work backwards from key output metrics to understand what drives the business. These metrics will be turned into OKRs that your teams can actively make progress against.

5. Example II: Segment’s 100 Week Plan

Below is a case study on how Peter Reinhardt set and operationalized Segment’s strategy at $50M to $100M ARR. Peter believes narrative construction is key to communicating strategy. The right narrative drives urgency and alignment at scale

From Peter: Strategy is the layer of the stack of mission value strategy where you have the most flexibility as CEO. If you try to constrain the strategy to any of the strategy frameworks that are out there it's transparently bullshit and not really the right way of approaching it. This is where your skill at synthesis as a CEO is tested the most. Can you create a narrative from scratch of what needs to happen and why that needs to happen? At the highest level that distills things down.

‍When Segment reached $70M ARR, Peter developed a "100 week" narrative to transition the company to the enterprise. Salesforce and Adobe wanted to launch competing products and were telling customers that everyone needed a CDP (Segment's product). They had distribution, but no product. Segment had a product, but needed to build enterprise distribution. Peter picked 100 weeks as an arbitrary timeline to build distribution before Adobe and Salesforce could build a new and competing product. He communicated this to the company.

Peter on the 100 week narrative: The articulation was that we have a hundred weeks until Salesforce and Adobe have a product in the market. They already have the GTM team, and so we have a hundred weeks until they get a product on the market. And if we don't have a footprint in all the enterprise companies before they have a product in market, we're going to get locked out of all their accounts. So we have a hundred weeks to get a footprint in all the enterprises. This narrative aligned the company and created urgency as it clarified that Segment had 100 weeks to win the most attractive segment of the market.

They broke down this high-level narrative into 1) building a fast growing commercial business (e.g., tier just below enterprise) and 2) an enterprise business

It was a rallying call, it had FOMO and all the things that you would hope for in a strategy. We broke it down into needing a highly efficient and fast growing commercial business and then secondarily an enterprise growth story.

The 100-week plan was then broken into a financial plan with quarterly targets and input metrics that were owned by leaders and teams. They would track progress against the plan through: 1) weekly executive team KPI reviews and 2) all hands (that happened every couple of weeks). All hands are an important communication forum as its your opportunity to highlight progress against the strategy and reiterate the initial narrative you outlined

We broke down the strategy further into metrics. You can write these however you want, but for us this was OKRs. The important part of OKR is just that it keeps breaking things down into smaller and smaller and smaller pieces until you have things that people can actually go do this week.  From an operating perspective, we had these weekly E-team KPI reviews, and all hands every couple of weeks. We [outlined] the structure for what was going to happen at each all-hands at the company. Like when we were going to review the last quarter, when we were going to do the board recap, when we were going to talk about the next quarter. And we would show people this is how all these pieces of company infrastructure fit together into an execution model.

Example Q1 KPIs that came out of the financial plan

  1. ARR and Gross Retention
  2. Productive Capacity [capacity of sales team]
  3. Pipeline Coverage [pipeline over target ARR]
  4. % Healthy Accounts [based on customer indicators]
  5. Enterprise customers “promoters” [enterprise customers ready to advocate for Segment]
  6. A Segment specific metric that captured Gross Margin
  7. Rule of 40

Keeping External Stakeholders Aligned

  • External stakeholder alignment is just as important as internal alignment. You want your board and any other important stakeholders to be bought into the strategy of the company. They also can be helpful accountability partners for you as you execute quarter over quarter
  • Use the process of writing your board memo as a mechanism for driving clarity. Distill your key metrics, how they are progressing, how you are addressing issues, and where you need further focus. Try to use no more than a few pages. Peter, from Segment, wrote board memos each quarter for exactly this reason
  • Hold yourself accountable. You have accountability meetings internally. This accountability meeting is for you. Create a scorecard and present it to the board each meeting. This simply highlights performance against key metrics, learnings from the plan, and how you are tracking against them

Once you’ve written “Mission-to-Metrics” for your startup, and gotten feedback from your leadership and other key employees, you have to start communicating it to everyone regularly. You have to reiterate the Mission-to-Metrics much more than what feels reasonable, which may run counter to your instinct to be efficient. Your employees will not internalize the message unless you communicate it constantly. The real test is not simply whether employees can repeat it, but whether they can make good decisions in your absence based on the context you have provided.

One of the best examples of “Mission-to-Metrics” alignment comes from a friend who visited the manufacturing floor at SpaceX. Seeing a SpaceX employee assembling a large part, he stopped to ask him, “What is your job at SpaceX?” He answered, “The mission of SpaceX is to colonize Mars. In order to colonize Mars, we need to build reusable rockets because it will otherwise be unaffordable for humans to travel to Mars and back. My job is to help design the steering system that enables our rockets to land back on earth. You’ll know if I’ve succeeded if our rockets land on our platform in the Atlantic after launch.” The employee could have simply said he was building a steering system for landing rockets. Instead, he recited the company’s entire “Mission-to-Metrics” framework. That is alignment.

Additional recommended reading: The second job of a startup CEO

6. Case Studies

Gusto: Driving Alignment

A case study on how Josh thinks about planning and driving alignment

The key to alignment at scale is good planning and consistent communication.

As your startup grows, driving alignment becomes a coordination and planning problem. Good planning enables teams to spend more time building and driving progress. Bad planning leads to slow execution and lack of business progress. Josh Reeves, CEO at Gusto, felt the pain of this shift at about 70-100 people. To help address this, he invested in better planning and consistent communication via all hands and other mediums. His goal was to create systems that drove alignment so people can spend most of their building (e.g., actually doing stuff). He describes the shift below and also highlights some rituals of communication he used.

"Why do we need to spend time on this topic that many people call a planning? Why is this useful? And is this just a bunch of BS and things that distract us from building? Because building is writing code. Building is writing marketing copy. Building is answering a customer email. Building is calling a customer for a sales call. What's this whole like planning strategy thing? And the metaphor I used was [following]. Maybe some of you can imagine a similar place near where you live, but like Lake Tahoe is a place that's about four hours away [from San Francisco]. And many folks like to go there in the winter for a ski trip. And I was like, imagine it's a Friday and you and one really good friend are like let's go to Tahoe. Let's just do it. No planning. Spur of the moment. Probably can just do it right? Like two people is talking to each other. Are you driving? Am I driving? Did you bring your wallet? I brought my wallet...You just kind of started driving, right? And it actually works. Now imagine that [same trip] with five people, and you're like, I probably can still fit in car. That's not a big deal. Maybe we need to get two hotel rooms now. Now imagine doing it with 100 people. It will definitely not work. It would just be chaos, right? Like you might all ended up at different resorts. You'll end up in different lodging. You might forget someone. And so that's what planning is trying to solve...coordination and alignment."
"We also did all hands every week where it ultimately ended up being a lot of those common topics. It was like who's joined. It was like open roles, because we want everyone to help with recruiting. It was like, here's how much money we have in the bank. Here was our revenue. Here was our expenses. That was kind of a very basic financial breakdown. It was here's what we've made different and improved in the product. And it was here's feedback from customers, whether it was like the numbers in terms of number of tickets, categorization, and some qualitative quotes. But that was kind of our early I'd say template to all hands and I, you know, I didn't have anyone to help me with it. I just did it all myself because it's not that hard. Right? Just looking at a couple of dashboards, copy pasting a couple of screenshots. I remember putting it together like half hour before each all hands. And we also did a selfie at every all hands that was fun."
"Comms is not just all hands right? Like it's anything you send. It could be a video message that you post in Slack. It could be a memo or that sounds like too fancy just thing you write down half pager of whatever to share some thoughts."

Successful planning atomizes your mission and strategy into something near-term, tangible, and executable (e.g., metrics)

Good planning drives parallel execution so teams can operate simultaneously on multiple products. It also helps connect your "big" vision with the actual execution by making it more tangible and near-term focused. Gusto's Mission was (and is):

  1. Be the easiest way to pay employees = [Payroll]
  2. Strengthen the employee-employer relationship = [Health insurance and Benefits]
  3. Empower employees to better allocate their pay = [Gusto Wallet (consumer fintech)]

Planning broke these big statements down into 3 year, 12 month, and quarterly increments. Gusto first scaled payroll, then launched benefits, and in the last couple of years launched its consumer fintech offering. Good planning helped connect the Mission and Strategy to the actual execution and helped drive alignment. The ideal planning process, per Josh, is one that maximizes time spent building by the team while limiting the time spent planning.

"You end up having artifacts -- that's kind of the term we use...We always had a vision artifact with what's our vision? Where are we going? What do we stand for? What do we hope to go change in the world? And it was very big and ambitious. And we needed to start creating something that was more tangible and near term focus. And it also was a way to think about just going from sequential execution to parallel execution. Again, you know, early on, we just all did one project at a time. We all worked on it, and then you went to the next project. [At around 100 people] We started having what we would call a three year plan, which was a very strong stake in the ground for what we will do in the next three years. And we had our fiscal year plan, which is the next 12 months, which is more of a budgeting exercise. And then we started having, you know, pretty regular check-ins on a quarterly, monthly, and weekly basis that builds up into those goals. So that's something I put in the planning bucket. But a lot of it also is organizational design and it will change and be in flux, but how do you decentralize into different swim lanes so that smaller teams can have autonomy to go execute, and not be waiting for approval or permission to do which can also become a big bottleneck."

All metrics are not created equal. Defining activity metrics that drive the outputs drives planning and execution

A common mistake we see founders make is using output metrics to drive alignment. The reality is output metrics are both disconnected from the actual work and the inputs that drive change in your business. All north star metrics can be broken down into an equation and great CEOs constantly evaluate this equation to understand the drivers of their growth. These drivers are then used to drive alignment and purpose as well as plan your hiring and investments more effectively. Josh, Gusto's CEO, advocates for investing in this process as soon as you have sufficient scale whereby ratios start to show consistent patterns. In the case of Gusto, he hired Andy Toung at 25 people at ~$1M ARR to lead finance. Andy helped Josh (CEO) define the activity metrics of the business and to up-level the planning process.

"I'm just thinking back to early on, it was like we grew 10x last year, we'll grow 10x this year. That's the very simplistic form of FP&A when you're super, super small. But it just becomes a lot more science than art. Frankly, there's a lot more data, there's a lot more cohorts to leverage. And then the numbers just get bigger and so it's just a muscle. It's worth building. I would argue earlier than later and the pitfall there is to think you can actually predict the future. A forecast is a forecast. It's not reality, you know, it's never going to be on target. But it's just again, a muscle you want to own and you only build it if you start the process....Gusto is a high volume, lower touch, inbound, organic fueled, GTM motion is our main direct motion. And then we have a channel relationship with a bunch of accountants. But what that means is, you know, there's still some touch with a salesperson, it's just more reactive."
"You need sufficient numbers to start having ratios, right. So like, how many customers can a salesperson close per week? per month? And what kind of dollar ARR comes per salesperson? In the most basic form, you just take your revenue from that month, and you divide by the number of salespeople to get a number. We all know that if the number is too small, that denominator is too small, then it's just going to be wildly volatile. So think of that [sufficient scale] as like one metric that will be helpful [to indicate when it makes sense to plan with metrics]."

Sales & Marketing Metrics

Output: New ARR

  • Number of AEs
  • Ramp times
  • ARR quota for AEs
  • Average deal size
  • Number of organic leads
  • Number of AE sourced leads
  • Number of paid leads
  • Close rate
"The problem to solve is how many people should you hire in sales right? And if leads goes up by 5x, you have to also have some type of historical on lead volume, your lead sources, what's organic, make some assumptions on how that persists....So these are all just systems it's all math right? The outcome is budgeting like you have finite dollars where do you allocate towards. Is it content programs to drive more top of funnel? Do you allocate towards a salesperson to help with conversion and closing? Do you allocate towards paid acquisition to drive more MQLs or leads into the funnel?"

Customer Support Metrics

Output: Customer Support Reps

  • Calls received per person
  • Calls handled per rep (time per ticket, tickets closed, etc)
  • Rep ramp time
  • Rep specialization (e.g., a benefits question might take longer per ticket vs. a general question)
"How many calls are we getting? how many calls per person are viable to be handled by a human? and you have to make a bunch of assumptions. If you're launching two new products this year, probably it's not going to stay the same. Are you going to have a generalized support team? Are they going to be specialized? And then the action that comes from this is like I said, it's just who should you hire, how many should you hire. If you have a ramp time and it takes you know, 90 days for someone to be effective on the phones, or it used to take you know, 60 days now it's becoming 90 days cool, but now you're going to be offset by 30 days. They're also tracking onboarding, time route tracking, close rate, and all these different things that drive a model [to ensure you can] still deliver the experiences needed, right?"

Engineering Headcount

Output: # of Engineers

Input: No ratio. Driven by 1) how much do you need to accomplish to achieve your goals and 2) target burn profile.

"You have leverage headcount in the company too, which is things like engineering where there is no ratio, but it's like cool, so how much is left to hire? Based on your roadmap? [Do you need] two engineers or five engineers?"

Planning clarifies tradeoffs and forces prioritization. As you get bigger, with focus, you can do more in parallel

Building a company is a constant question of resource prioritization. In Gusto's case, they squarely focused on scaling with customers with 1 to 100 employees in the first few years of the company. In service of serving their core customer more deeply, Gusto deliberately shied away from serving middle market customers. This let the team build health benefits and financial services products for employees. More recently, they've began to serve companies with up to 500 employees. This focus helped Josh and the team make difficult tradeoff decisions because they had a clear understanding of the customer and business model required to serve them well.

"[Our] opportunity is to serve every business everywhere in the world. So there'll be a future moment when Gusto serves 100,000 person businesses and has you know, customers in Poland and Brazil. We're excited to go serve folks, wherever there's an opportunity. But to the theme of this discussion, the question is not if, but when. When is a very important topic, right? And there's ultimately a lot of trade offs in that process. So I mean, it might be more unique to our business, but I think some of the principles might be generalizable. You know, again, we think of these kind of like his act one, act two, act three. You don't move off of Act One, but it gives you the chance to write the opportunity to go do more than just your act one. And so, maybe the difference for us is, you know, we have hundreds of thousands of SMBs where we have really, really great NDR, we have great cohort performance, we have strong unit economics, we have cost effective CAC payback and gross margin. That's very, very healthy. And so it's kind of like just a way of saying if you can build a business in a large market that's doing well and growing quickly, why wouldn't you want to keep doing it? Now? The reality is for most SaaS companies, SMB becomes not a great market because they can't and it's not usually their fault. It's just depending on the product, depending on the product mix. It becomes a segment that can be hard to scale. And so more of the playbook I would say is to move upmarket and do larger deals. But fortunately, there are examples like Shopify, Square, and Intuit that demonstrate if you are focused on SMB and have the right product mix, it becomes all numbers right? As bigger bigger numbers come in, can you maintain those unit economics? can you maintain that type of funnel? Does your net dollar retention stay healthy? And if so, it's not that controversial of a decision. I would say it's a hey, you have a business that's working. Why would you not want to keep doing it? And then it becomes a choice of when do you layer more on top? And so that's been more of the discussion at Gusto. Today, we talk about one to 500 employee businesses being our sweet spot but there are product differences for some of these different segments. Much like for many of you, I imagine if someone came in from a totally different customer profile, they might have different needs. And then you have a choice, you know, who do you build for? And again, hopefully the question is not if, but when. But you can't build for too many people all at once with finite resource. That's been more of our journey when it comes to company size. When we had 100 to 150 people, we were more [focused on] one to 100 employees and we had a customer that had 850 employees. It was just wildly out of our sweet spot at the time. And they wanted to stay on Gusto. But the reality was the work to serve them would indirectly come away from us doling out health insurance at that point for small businesses. And it's never really a zero sum. But it is all trade offs and prioritization. So I would say, hopefully, that gives folks some context at times you have to just choose one of two things. But as you gain scale, you can start using two or four things or three of six things. That's been more our journey today."

Twitch: How to Write a Monthly Report

A case study on how Emmett uses monthly reports to drive decision making and continuous improvement

How to write a monthly report and why

Monthly reports are a mechanism we use at Twitch to drive decision-making and continuous improvement. When done correctly, they are not busy-work: writing one should involve real thought and effort. And they’re not created for other people: you should be writing for clarity within your team, though they can serve the dual purpose of keeping people outside your team informed.

Monthly reports are for your team. While they can be used for the purpose of keeping people outside your team informed, they should be primarily written to help everyone on your team understand your progress and results together.

Monthly reports are not busy work. They require real thought and effort and time, and should generate learning and business decision.

Monthly reports are backwards looking. They summarize things that happened in the past month (examples revenue generated, roadmaps changed, projects launched, conversion rates that changed, etc) and specifically progress towards goals. They aren’t about your future expectations or theories (unless they changed during the month, in which case that’s a result itself…)

Monthly reports are about your customers, not your team. They’re about things a customer would care about, not how the sausage gets made. Use post-mortems or cause-of-error processes to figure out how to fix faults in process. Use performance reviews to drive improvement in people. Use architecture reviews to figure out how you’re going to create API boundaries. Use the product development process to make sure stakeholders are informed of upcoming releases. Everything happens because “we” did it in a monthly report, because our customers don’t care which team internally was responsible.

Monthly reports are a mechanism. Mechanisms are processes which have three attributes: they produce an artifact (in this case, the monthly report itself), they include an audit mechanism (we all sit down and look at the monthly report), and they are under constant change (one of the results from the review is to decide how to change the artifact production in the future, in addition to changes to the business). As a result, one key thing you should do at every monthly review is spend a small amount of discussion about how to change the monthly report next month. If you don't sit down together with your key stakeholders and key team members and review the report, then use the results of that review to make business changes and update what you put in the report in the future, you're missing out. Monthly report reviews are a GREAT way to keep other teams in the company aware and involved in what your team is doing without creating a large burden on them or additional burden on your team beyond the report. Try to avoid doing multiple reviews! One review of the data internally to decide what to write, write the report, a second review of the report with stakeholders and team members. Don't worry about it being perfect.

Monthly reports center around goals and metrics. Choosing good goals and good metrics is hard, and a full explanation is beyond the scope of this document. However, some notes on how to pick and think about them:

  • Not all goals need to be metrics, and not all metrics need to be goals. But usually, the more we align them the better.
  • For goals which aren’t metrics, use green/yellow/red reporting. Green means that you’re on track. Yellow means that the current trend is off-track, but you have a plan to return to green. Red means the current trend is off-track, and you don’t know how to get back on-track. Watch out for “watermelon” goals which are green on the outside but red on the inside…the real failure isn’t missing a goal (we aim high, so we’re ok missing sometimes. Specifically, we aim to miss about 30% of the time on average). The real failure is having a goal be green all year and switch to red at the last minute. If you’re off track, better to know up front.
  • Try to choose only one or two “main” goals. At Twitch, these are usually things like “hours watched” or “revenue” or “gross profit”, although sometimes they are things like “daily active viewers” or “retention”. Generally, you’ll keep the same main goal for many years in a row. You’ll sometimes hear the main goal called an “output” goal.
  • Considering the main goal, choose 3-5 “support” goals. A support goal represents a specific thing we intend to change in order to drive the main goal. For example, let’s say the main goal is revenue from advertising. Good support goals might include increasing the number of streamers regularly running mid roll breaks (if we think our problem is lack of reach), or increasing the number of mid roll breaks run by streamers already participating in the program (if we think our problem is insufficient density), or implementing and launching a 3rd party verification of our ad delivery (if we think our problem is lack of advertiser trust), or selling at least $10MM of advertising to consumer packaged goods companies (if we think our problem is that we need to break into that category). We could even set all of them, if we thought they were all problems. While you keep the same main goal for many years in a row, the support goals you pick may change from year to year as your strategy evolves. Advertising businesses almost always care about increasing revenue, but only sometimes care about increasing ad density.

The key writing pattern for a monthly report is what, why, so what


Example: Monthly Report Methodology

What happened, concretely?

  1. “Our new event Rivals generated 5MM HW (+10% YoY, +28% vs goal)”, 
  2. “We launched a new feature, adoption is at 10% in the first 2 weeks as expected”, 
  3. “We signed a critical deal with Activision/Blizzard”, 
  4. “We learned that the viewer action that most predicts retention is watching a video for at least five minutes”, 
  5. “We cancelled the launch of Project Marrow and moved resources over to Project Starfruit.”

Why did that happen? (Examples corresponding to the ones above)

  1. “We had 19% large streamers vs. our usual rate of 10% large streamers. Large streamers bring their audiences with them, driving more HW.”
  2. (launches don’t need a why unless they’re delayed)
  3. “We found a compromise where they get to keep 100% of the up-front revenue, but our streamers get the downstream value.”
  4. “Our quantitative research into viewer habits has started producing results.”
  5. “When we revisited our assumptions about Starfruit, we realized we had underestimated engineering cost on this critical project. While Marrow is very promising, ultimately Starfruit takes precedence.”

So what are we doing: (Examples corresponding to the ones above)

  1. “We are have created a pipeline tracking metric for large streamer participation to make sure future events track towards having at least 15% large streamers. Currently we are tracking at 8 out of 10 future events above 15% and we have begun recruiting to fill the gap in the remaining two.”
  2. “We’re on track and are continuing to work on our roadmap. The next iterative launch is in 8 weeks.”
  3. “We will be looking to generalize this into a new model for future deals.”
  4. “We are reconsidering our roadmap and running experiments to look at five-minute plays as the key metric going forward. The primary change is that we have de-prioritized projects which will drive people to watch longer (Project Grapefruit and Strawberry) and invented a new project which is aimed specifically at conversion to five-minute play (Project Mayhem)”
  5. “We are revisiting our engineering time estimation process in order to prevent future last-minute changes like this.”

Some important style-guide notes on writing in general at Twitch that often apply here:

  • Whenever you give a result, give the YoY change, and the vs. goal change if you have a goal. The format is “XMM hours watched (+X% YoY, +X% vs goal)”. Those two data points help contextualize almost any number. Any number that you care enough to report on multiple months in a row probably should have a goal. If you don’t know what you WANT the number to be, how can you know if your results were good or not?
  • Whenever you give a comparative statement, be concrete quantify if at all possible. Don’t say your metric “grew quickly”, say it “grew 75% vs. prior month”. Don’t say your metric was “much higher than the competition”, say it’s “13% higher than our competitive benchmark”. Adverbs and adjectives create ambiguity which is not your friend in a monthly report.

Brex: Monthly Email to the Board

A case study on how Pedro uses monthly email to align external stakeholders

Dear BoD -

Please find a brief update below on our progress in March, which wrapped up a solid Q1.

Company Growth & Performance

  • Explain your growth for that month and # of customers
  • How did it compare to what you had predicted––did you under-deliver or over-deliver? Explain why in both cases.
  • If you launched a new product, explain how it is doing

Company Challenges

  • List your top 2 to 3 challenges
  • What are you doing to address those challenges?
  • What is your confidence level on resolving these soon vs. where you see significant gaps?

Hiring

  • Explain your current headcount
  • How many new hires next month you expect and close rates
  • Highlight key new hires
  • If you have done any acquisitions, explain that here

Open Positions

  • List your open positions here (especially senior execs)
  • You can also ask questions around the positions you are trying to fill
  • Ask for help on specific ones

Target Partnership Opportunities

  • If you are looking for introductions to specific partners, list those here

Monthly KPI deck

  • If you have a monthly KPI deck attach that here

Best,

Cofounders


Whatnot: Mission, Outcomes, Competencies

Model Companies

  • Stripe, Airbnb, Doordash 
  • Could be interesting (but no knowledge of product talent/culture): Coupang, Shopify, Bytedance (non-US)

Mission:

  • Consistently deliver a product users love fast that moves the business forward

Outcomes (18 months):

  • Build a world-class product team
    • Grow product team from ~5 to over 20+ world-class product managers with strong product sense, amazing executional ability, and strong XFN skills
    • Build a user-first product culture aligned to Whatnot’s principles
    • Ensure everyone on the team is an avid user of the product and deeply understands all core components of the business
  • Deliver a product that user’s love and achieves our business goals fast
    • Ensure the product supports and helps unlocks $700M/mo in GMV sales
    • Ensure Whatnot is a trusted brand amongst buyers and sellers
    • Deliver a world-class discovery product that ensures buyers find and discover things they’ll love
    • Generate over $100M+/mo in async sales on Whatnot
  • Build the best XFN product team
    • Ensure the entire XFN product team is the top-executing team amongst growth-stage companies
    • Develop strong roadmaps and team visions & strategies for product pods that enable us to hit upon our business goals faster & build better products for our users
  • Ensure Whatnot is capable of quickly and effectively launch into all core verticals and countries
    • Ensure the Whatnot product and team is capable of launching a compelling product in all core verticals we want to enter (Collectibles, Cars, Food & Beverage, Home & Garden, Fashion, Electronics, Healthy, Art, Crafts, and Beauty & Digital)
    • Enable $10M+/mo in sales in 5+ product verticals
    • Drive $100M/mo in sales from outside the US
  • Drive sustainable growth through Whatnot’s product
    • Help develop sustainable growth channels that consistently drive 60%+ of Whatnot’s growth (sharing, SEO, referral and more)
    • Ensure Whatnot’s channels and funnel are optimized to drive strong growth

Competencies

Top 5

  • Team-builder: Is adept at judging talent both for skill and cultural fit. Has built exceptionally strong product teams in the past that have executed and delivered strong product roadmaps quickly
  • Strong product instincts: Can step outside of the numbers to understand what makes a great product for users, and think the product pieces need to bring this to live
  • Great executer: Can cut through the noise, make swift decisions, and ensure the team is set to deliver on their roadmap with few missteps. Can do this in the product team and amongst XFN stakeholders
  • Has seen a best-in-class company scale from a ~200 people to 1k+ in a product role with significant scope
  • Has worked in multiple different roles and environments, so doesn’t just default to previous way of solving a problem 

Qualities (In order of importance)

  • Exhibits characteristics of Whatnot’s culture
  • Team-builder: Is adept at judging talent both for skill and cultural fit. Has built exceptionally strong product teams in the past that have executed and delivered strong product roadmaps quickly
  • Strong product instincts: Can step outside of the numbers to understand what makes a great product for users, and think the product pieces need to bring this to live
  • Great executer: Can cut through the noise, make swift decisions, and ensure the team is set to deliver on their roadmap with few missteps. Can do this in the product team and amongst XFN stakeholders
  • Oriented towards speed vs. perfection: Knows that great software is made iteratively, and not through perfection. Comfortable shipping MVPs, and moving quickly to make them better
  • Exceptional communicator: Can easily communicate complex ideas, and align XFN teams on the roadmap and work we must achieve to bring the company forward
  • Highly analytical: Incredibly analytical. Easily able to gain mastery of the core elements that drive a business, and has a command of business metrics than rivals anyone within any organization
  • Great partner: Can easily with with a large number of XFN stakeholders and bring teams together to produce incredible outputs
  • Strategic: Understands how to invest in the product and roadmap give a business increased advantage over time
  • Risk taker: Willing to comfortably make bets that could change the trajectory of our business

Previous Experience (In order of importance):

  • Has worked in multiple different roles and environments, so doesn’t just default to previous way of solving a problem 
  • Has seen a best-in-class company scale from a ~200 people to 1k+ in a product role with significant scope
  • Has managed a PM team of 20+
  • Has worked in an eng-first organization
  • Has built successful 0-1 products in the past (ideally, as a founder)
  • Has experience in a marketplace business 

Benchmarks

Coming Soon

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