When you are flying a plane in a storm, you have to go by instruments, not your eyes. Same with startups – First Round Review

Analytics is easy to put off for startups and freelancers. Actively building your company requires a focus on value proposition and any slice-and-dice of data may seem premature. But when things get a little complex, and there is a need to understand users, you might realize there is incorrect or no data at all.

As a creator, you would want to know which topics, features, or themes resonated most with your customers, right?

Presenting a simple framework of Analytics for startups

Growth is important…

To grow your company as a startup, you need to focus on

• Number of users / sign-ups
• Meaningful usage of your value proposition (re-engagement)

• Monetization – Engagement getting converted to revenue

Now, you can add an analytics tool to collect, QA, and present the data but essentially these are the three metrics that serve as a building block for deeper analytics (conversion %, growth %, Virality, retention, etc.).

…but not the most important metric

Remember the story of the survivorship bias of WWII planes.

The bullet holes represent areas where the plane could take damage and still return to the base. Hence, it is the areas that are unscathed that need to be reinforced.

We need to look at failed startups to see what is even more important than Growth.

According to Paul Graham, the startup should be scrappy enough to operate in ‘cockroach mode’.

“Apparently the most likely animals to be left alive after a nuclear war are cockroaches because they’re so hard to kill. That’s what you want to be as a startup, initially.”

So, if you are able to manage your working capital and keep your spending lower than your income, you still have time to tinker with your business model, talk to users, pivot, and build your startup.

Hence, the metric important than growth is

Expenses (should mostly be less than revenue)

YouTube started as a dating video site and Sony Corp. started as a rice cooker company but they could pivot as they had the means to do so.