009 How to Keep Your Team Focused on the Right Things
I'll be the first to admit that I'm terrible with goals. I've read all the reasons why you should set written goals. I've been taught all the techniques. I get it, goals are great. Unfortunately, I can't tell you how many times I've set a New Years Resolution, only to lack the discipline to check up on my progress mid-year (...or if I'm being honest, February).
But there is one kind of goal I'm a huge fan of.
When you're working on an early stage startup, it can feel like a grind. Some days, you can fill up a whole day with work and end up unsure if you actually accomplished anything important. Other days, you and your team might hit a couple of rough bumps and feel the urge to panic and pivot.
Here's the antidote for whatever stage you're at: to move forward, plan backwards.
1. Pick a short-term milestone
Oftentimes, people (especially investors) will ask you what your startup's 3-5 year plan is. For this exercise, let's focus on picking a milestone you can reasonably achieve in the next 6-12 months. In the early stages, examples of milestones include:
- Validating an initial hypothesis around your problem or solution
- Getting into an accelerator
- Raising an angel or seed round
- Getting your first sale
- Being ready for your first hire
Which milestone you pick depends on what kind of company you envision yourself building. If you're hoping to build a venture-backed company, then raising an angel round or entering an accelerator might be appropriate. If you're hoping to bootstrap, then getting your first sale from an unaffiliated (non-friend or family) customer could be worth shooting for. The idea is to pick something that gets you to the next step up on your ladder, where you can set the next short-term milestone. It needs to be attainable, not something that makes you feel discouraged when you think about it.
2. Choose the metric that matters (OMTM)
When you're a small startup, there are a ton of things you can potentially track: revenue, number of active users, number of demos booked, website traffic, downloads, email list signups, number of outbound calls, net promoter score, churn, multiple conversion rates, referrals...you name it. It can get pretty overwhelming, pretty fast.
One of the secret sauces of the 500 Startups accelerator is their ability to help founders (who are generally pretty ADD) focus intensely on the one metric that matters, or OMTM. The idea is even though all of the metrics above can be important, picking one early on to optimize for can do wonders for your decision-making (and perhaps even more importantly, your sanity).
Which OMTM should you choose? Choose the one best suited to the core purpose of your business. If you're a B2B company that aims to have paying customers, then choose something related to revenue -- for example, monthly recurring revenue (MRR) or demos booked. If you're creating a free consumer app, choose something related to usage -- like daily active users or downloads. Whatever you choose, make sure it's aligned with the definition of success for your company and that it reflects a certain level of product-market fit.
3. Set your OMTM goal to match the milestone
So now you've got your milestone and your OMTM. Time to answer the big question: how much of your metric do you need to accomplish in order to successfully achieve your milestone?
For example, if you're just starting out, you might say that in order to have a better problem hypothesis (your milestone) by June, you want to finish 30 customer development interviews (your OMTM). If you're a SaaS company trying to achieve the milestone of raising a larger seed round and you've chosen monthly recurring revenue as your OMTM, you might need $30k-$60k of MRR to do it successfully (check out this spreadsheet from the inimitable SaaS VC Christoph Janz for a general idea). It can be helpful to get a second opinion from a number of different experienced mentors in your industry to give you an accurate benchmark.
4. Create a plan (backwards) to achieve that goal.
This is where the rubber meets the road. As founders, this is often what we know best -- breaking something down into a more concrete action plan. These questions might help:
- When do I want to accomplish my milestone? (month and day)
- What number (of my OMTM) do I need to hit each month leading up to my milestone date? Each week?
- Leveling up from there, what does my funnel need to look like in order to achieve each month/week's number?
- What steps do my team and I need to take to make that funnel happen?
- How little sleep will I be getting to make those steps actually happen? (Kidding... but not really.)
Whether you've just come up with your idea or you're already making revenue, sitting down to do the exercise above with your team could be one of the highest-leverage ways to spend your time this instant. It's the same exercise big corporations do to figure out their yearly financial projections, and it's the same exercise you'll do later on when figuring out how much money you need to raise in a round. It's just that as small companies just starting out, it's easy to forget the power of setting short-term milestones that the whole team can work backwards from and really rally around.