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How Do You Measure Non-Revenue Progress in a Startup?

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One of the things I enjoy doing outside of my work at 6fusion is contributing to the local MBA programs. Now and then I’m asked to deliver a presentation for areas of the curriculum like venture financing, entrepreneurship or bringing technology to market. During my last engagement an inquiring student asked me the best practices I use for measuring the non-revenue progress and success of a new company, particularly since one doesn’t have years of baseline data or well-established processes to draw from.

I chuckled at the question. “Forgive me,” I said to the student. “But if I asked you to predict something with no history built on a foundation of uncertainty you’d laugh too!”

“Well, surely you can’t just do nothing,” the student continued.

“Of course not,” I replied. “I employ the Oh Yea! Oh No! balance sheet technique,” I said as if she would have any clue to what I was talking about!

Before you can understand the Oh Yea! Oh No! balance sheet, you must first accept that building and operating a startup company is not for the faint of heart. It is a virtual roller coaster of emotion. Triumphs can be followed by heartbreak literally in the same day.  Logical questions sometimes don’t apply. For some, this is an impossible work environment.  For others, we couldn’t do it any other way and it’s the reason we love doing what we do. Running a startup is like bungee jumping or skydiving. Either you love it or you think you’d have be crazy to even try it!

You have to believe above all other beliefs that you and your team can change the world. But you have to be prepared for the fact that less than 10 percent of startups actually become mature businesses.  On paper, that concept doesn’t even reconcile, so you have to control the cognitive dissonance, maintain a rabid focus on your goals and remember what the famous American boxer Muhammad Ali said about “impossible.”

“Impossible is just a big word thrown around by small men who find it easier to live in the world they’ve been given than to explore the power they have to change it. Impossible is not a fact. It’s an opinion. Impossible is not a declaration. It’s a dare. Impossible is potential. Impossible is temporary. Impossible is nothing.” 

With that said, a startup can be a strange and sometimes dysfunctional place to be at times. Which is why, when it comes to measuring progress, seeing the forest through the trees is a very big and sometimes very difficult thing to do. For instance, there have been times in the past year that I know members of my team looked into the future and couldn’t see it. They couldn’t see the light at the end of the tunnel. They couldn’t see how we would overcome the hurdle of the day. They couldn’t see how we could make it through.

In a startup, doubt is like terminal cancer, which is where my Oh Yea! Oh No! ledger becomes important.

As I explained to the MBA student, you won’t find the Oh Yea! Oh No! ledger concept in any textbook. You won’t find it in any MBA curriculum (that I know of). The Oh Yea! Oh No! ledger is the startup’s annual balance sheet of ups and downs. A year in the life of a startup is full of critical moments. Moments that will make you gasp “Oh Yea!”  Like “Oh Yea! We just nailed a giant order from XYZ Co!” There are other not-so-fun moments too. Moments that make you gasp “Oh No!” — like, “Oh No! The product just completely fell apart in the middle of the biggest demo of our lives!”

Ah yes, in a startup stuff happens, as they say.

As an entrepreneur I don’t get worried when stuff happens. I get worried when I see the Oh Yea! Oh No! ratio leaning in the direction of the latter. Or I get worried when the magnitude of the individual “Oh No!” moments are greater than the “Oh Yea!” moments. The totality of moments in the year of a startup shows your most meaningful non-revenue trend line. And in a startup, this trend line matters. If you can’t show me a positive ratio of Oh Yea! Oh No! moments, there is absolutely no reason to be contemplating your next venture!

6fusion is now two full fiscal years post venture financing. I recently had the pleasure of presenting our company’s first-ever Oh Yea! Oh No! ledger at our annual company meeting. This was an exciting moment for me as a founder and entrepreneur. It was the first time I could graphically show over an established history that there is light at the end of the tunnel. That the 22-hour days, no vacations and laundry list of personal sacrifices will pay dividends. When stuff happens, this is no small task as a leader.

But there is another important reason for communicating the Oh Yea! Oh No! ledger.  As you look forward to the next year in the life of a startup, it is easy to get snowed under. It is easy to look at the totality of what you must accomplish and get thoroughly discouraged.

But as I said to my team, your job is simple. Create more Oh Yea! moments than Oh No! moments. Make the Oh Yea! moments bigger than the Oh No! moments. Do that and we will do great things together.

Do that and this time next year you’ll see the maturation of your business unfold before your eyes.

Coming soon: Real Time Oh Yea! Oh No! KPI Reports.

John Cowan is co-founder and CEO of 6fusion and co-inventor of 6fusion’s WAC algorithm. He is regarded as the company’s business model visionary. In addition to 6fusion’s day-to-day management responsibilities, John is responsible for the overall strategic vision and commercial direction of 6fusion. A 12-year veteran of business and product development within IT and Telecommunications, he successfully created new business during the period of telecommunications deregulation and developed and launched new technology products and services globally. You can follow John on Twitter @cownet or @6fusion. 

Comments

By Mike Sinsheimer

Pragmatic optimism comes to mind – always be gauging where you are and where you need to go – the key is getting to product/market fit where you can demonstrate at least on a micro scale that you have a business that target customers covet and will pay for. That’s what we’re trying to do at Flash Purchase.

By Nagaraj Kulkarni

Love this for two reasons! First, as the “Information Excellence” company, we often come across scenarios and situations where the management is looking for those reports and dashboards, whereas the only available facts are “simpler contextual outcomes”. This is similar to the Heatmap in a different context where the Greens are Oh Yas and Red are Oh Nos and the hues-and-shades of Green and Red indicate the gravity of the Ya and Na! It is both fun and exciting to see how the “contextual mindset dashboarding” will become more important and pervasive as the man-machine competition and synergy increases.

Second, wearing the startup hat that is unfunded and decided to grow organically, the “Oh Yea! Oh No!” are a routine affair (with unroutine mindset impact!). The realization that the “Oh No!”s ought to be there makes it more acceptable and keeps the business grounded. Thank you for sharing. Love to see the “contextual mindset KPI report” soon!

By John Cowan

Mike – I’ve often characterized the job of running/building a start up as creating a market relevant product before one of two things happens — either you run out of money or you miss the window of opportunity you were gifted enough to realize at the beginning of the startup journey. Neither scenario is a very good day at the office and is something entrepreneurs need to be perpetually mindful of as they balance out, as you put it, pragmatic optimism…. thanks for your comment!

By John Cowan

Nagaraj – thanks for sharing. Growing a startup organically is *definitely* not for the faint of heart! We started 6fusion in 2008 and did 2.5 years pre-funding/under the radar. I could characterize that part of the roller coaster as very similar to the past few years with the exception that the magnification of the ups and downs made the ride borderline nauseating for some — particularly spouses/significant others! ;)

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