Introspection is a good thing. Running a good business - and living a fulfilling life - demands that we analyse ourselves and try to improve what we are doing.
Recently I’ve been reflecting on our performance as a company, and my performance as a co-founder and MD. In some ways, I’m delighted with the progress we’ve made since launching Capitalise.com at Finovate in February 2016. In others, I’m frustrated and eager to improve.
When you’re running a startup, there are just so many metrics to monitor, so many ways to assess your performance. It’s tempting to select those which present your business and your leadership in the most flattering light. This selective approach to self-assessment is rife throughout the startup world, with app developers prioritising downloads over monthly active users, and ecommerce sites focusing on monthly traffic rather than conversions.
So, what metrics matter? Awards are a good measure of how your company is performing relative to your peers. They’re not the ‘be all and end all’, but they’re great for raising awareness about what you’re doing with partners, investors and the media. They also boost morale amongst staff and of course, grants are a helpful source of capital for the business that can help to fuel growth.
On the awards front, we’re making strides. We progressed from a Microsoft Accelerator alumni to being supported as a Microsoft Growth company. We were shortlisted for Wired Startup of the year and also were nominated for Software Excellences innovation of the year. And we are one of the first 20 companies in the UK to have access to OpenBanking data and a grant from Nesta. At this stage we are still too small for the Tech Track 100, but we aspire to reach that milestone. The criteria is quite steep, but we are getting there. Average annual growth across the 100 companies on the list is 99%, whilst we grew at 429% YoY and our burn was lower than expected.
Since I believe that building strong teams with the right people doing the right things is key to success in business, I’m particularly proud of the fact we’ve grown headcount, with not one departure from the team. I can say with confidence that we have an amazing team. We’ve delivered according to other metrics, too, hitting our target for active partnerships and platform adoption amongst partners.
So, with all this progress, why do I feel I’m unable to celebrate?
Because there’s more to business than awards and growth. Ultimately, I feel the need to judge my performance and that of the broader business by more traditional measures. I’m talking about revenue growth. And according to this one, all powerful metric, we still have much wood to chop. We just closed our second financial year with revenue having reached 80% of target. We have two less members of staff than we had planned to hire. And we raised a seed round six months later than planned, which has had adverse knock-on-effects in hiring, marketing and technology spend, slowing our rate of innovation and ultimately, growth.
In a now famous blog post, entitled ‘Startup = Growth’ legendary investor Paul Graham said that, “A startup is a company designed to grow fast [...] The only essential thing is growth. Everything else we associate with startups follows from growth.” This view is now accepted as gospel by entrepreneurs, VCs and media commentators. Nobody questions whether the obsessional focus on growth is correct, nor do they query whether startup growth targets are too high. Perhaps it’s time we started concentrating more about the bottom line in order to build sustainable businesses, built to last rather than burn out?
As a co-founder I’m always asking myself difficult questions. Sometimes I have answers to them, sometimes I don’t. Is my background on the trading floor with an obsessional daily focus on revenue making me look at the wrong metrics? Should I be placing a higher emphasis on partnerships, adoption, customer funding volumes? Perhaps. But even if we did hit our revenue target, would I really be high fiving colleagues in the office? Or would I already be thinking about the next hires, the next office move to accommodate a growing team, the next ambitious revenue target?
With so many metrics to focus on, sometimes it helps to go back to basics and think about the customer. Other metrics are useful and often important, but customer feedback is the most accurate measure of success in business. This feedback comes in different forms. Qualitative feedback is super helpful in guiding product delivery and development, but can be tricky to source. Quantitative feedback - in the form of sales - is the ultimate gauge, and it’s dead easy to source.
With so many KPIs to monitor, it’s easy to get distracted by vanity metrics and things that don’t really matter. So it’s good to remind ourselves, from time to time, why we’re doing this, and who we’re trying to help. Ultimately all I can do is keep working on growing the business whilst staying true to our mission to help clients obtain the funding they need, whilst creating a great place to work. After all, that’s why we created Capitalise.com in the first place.