Something like “Flat is the new up”
TLDR — Exponential increase in impact metrics are unrealistic and consistent increases are more meaningful to facilitate a long term sustainable business model.
In 2018, I read an article outlining the trend of flat or down rounds seen in venture capital starting in the 2015 bubble. The abridged version of that article highlighted that valuations at later growth financing rounds were decreasing to the valuation to the previous round, or were decreasing past that of the previous round — this is starkly contrasted against the previous valuations prior to 2015 that created the occurrence of unicorn herds…hence “flat” being the “new up”.
One year later, I ran into a situation within the workplace where I was told we need to increase one of the metrics we use to gauge quality of our recruitment pipeline by 20%. Although I did not understand the reasoning behind the decision, I did begin to think about benchmark metrics for success and how we design them, specifically for business models that are not reliant on showcasing ROI based on liquidity. I started to think, what can organizations reasonably plan for in terms of growth metrics — substantial increases or consistent increases. In this sense I started to think, growth rates can easily be consistent over time based on realistic expectations and not exponential based on surface level metrics.
Many of us have seen this photo of Slack’s growth in Daily Active Users (DAU). This is remarkable rate of growth and I am sure investors, startups, and competitors alike all agreed that is one beautiful curve. However, I am not sure that is a reality for most companies or ventures who would love to create a sticky solution to the challenges their customers face.
However, Slack’s metrics show focus on engagement, retention, and re-engagement not acquisition. IE Impact Metrics — KPI’s that have will have a meaningful impact on sustainability of a business model over set intervals of time. For myself and the organization that spawned this stream of thought, I had thought of a few options that all relate back to brand equity and how we could recruit early stage startups to enter our program. As a reference, my organization intakes applications from ventures to join our program on a 1 year cycle so we dedicate substantial efforts to recruitment of those ventures. For now, I’ll focus there.
Alumni Engagement — Time is finite, so I figure those that want to engage with us do so at the expense of that resource and thus find us valuable to engage with. Therefore, meaningful engagements — an exchange of perceived value based on products, services, resources, thoughts — would indicate future potential to engage in the same interaction.
Overall Conversion Rate + In Process Conversion Rates — How many customers convert from engagement to application to the program. Focusing on the In-Process Conversion rate — breaks down conversion rates into distinct components — can promote stronger relationship building, and ultimately purchasing of product/service. If you’re interested in learning about those components, here is a quick reference.
Long story short, “Flat is the new up” can be applied as a reminder that measurable increases in impact metrics based on consistent increases should reflect our current reality moreso than exponential increases.
