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:
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.
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:
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."
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.
Here's a simple approach:
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.
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.
Identifying the Magic Moment metric:
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.
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:
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.
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.
Enable anyone to turn their passion into a business and bring people together through commerce.
Buyers
Here’s what we know/hypothesize about buyers
[Explanation based on user research]
[Explanation]
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.
[Explanation based on user research]
Sellers
Here’s what we know/hypothesize about sellers
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.
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.
The single most asked for thing on Whatnot is the ability to sell. [Explanation for how we know this]
Our wedge
We’re building a P2P social marketplace by investing in:
We’re going after enthusiasts and power sellers by:
Getting the community talking:
Fix the funnel:
Metrics
North-Star Metric
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.
Build a “machine” that turns our major categories into market leaders
Generate significant sales in W+ categories with X, Y, and Z and enable rapid scaling of new categories
Build a reliable and high-quality core live and marketplace experience
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.
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
Keeping External Stakeholders Aligned
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
A case study on how Josh thinks about planning and driving alignment
A case study on how Emmett uses monthly reports to drive decision making and continuous improvement
A case study on how Pedro uses monthly email to align external stakeholders
0 Comments