The basics of tracking metrics for your startup

This article is from an episode of Matrix Moments by Matrix Partners India, a podcast featuring candid conversations on what it really takes to survive the startup world. This is heavily revised from the original show transcript. For the full interview, go here.

Tracking your company’s performance is crucial not just at the early stages, but also through the course of your company’s life cycle.

In this episode, Tarun Davda and Vikram Vaidyanathan, managing directors at Matrix Partners India, share lessons on why tracking the right metrics can help you see what’s working in your company and what isn’t.

Why is it important to track metrics?

Tarun Davda: A lot of what you do as an early-stage founder is based on your gut. And while things are going well, it’s great to use your intuitive understanding of your customer to improve the product.

However, things don’t always go well. So if you aren’t measuring, you essentially don’t know what is going wrong, why it’s going wrong, and where teams need to focus on more. So that’s no. 1.

The second point is that as a manager, you’re always looking to align the entire company on what is important. Unless you have a metric that you can use to do that, it’s very hard to drive toward a particular outcome.

Next, when companies scale – finding product-market fit, seeking profitability, or gunning for expansion – they need to have some indication on where they should be pressing the brakes or where they should be accelerating.

Lastly, as an early-stage company, you are going to start projecting what the company looks like a few quarters out as part of your business plan. If you haven’t been measuring the building blocks of the startup, you won’t know what assumptions to make.

What are the common pitfalls?

Vikram Vaidyanathan: Often, people scramble to put numbers into a spreadsheet when the management information system (MIS) or dashboard is due. What’s better is to build this into the tech.

For example, let’s say you want to measure the turnaround time (TAT) for a loan. It’s easier to actually put that in the instrumentation of the loan management process so that TAT becomes a metric that is measured as loans are being processed.

The second is not including the product team in the design of these dashboards. Usually, a dashboard is a key performance indicator (KPI) for a business team’s deliverables, and the product team just does their own thing.

If you include the product team when designing the dashboard, you will get the instrumentation right, and you will also align the product team on what the business KPIs are.

TD: I think the mistake I’ve seen a lot of young founders make is thinking that dashboards are meant to be built only when they are ready to fundraise.