One Ring to Bind Us All
The pros and perils of a company God Metric
The importance of KPIs for biz building is thuddingly obvious to anyone who’s run a company. More worthy of debate is deciding which KPIs matter most, and when. Not all measurements are created equal, and what matters today might not matter as much tomorrow.
Obvious on paper, continuously re-evaluating KPIs is real work, another task atop a mountain of tasks that grows faster than you can climb it. Just to pile on, there’s something else founders may need to consider: The God Metric. (Some people call this a North Star metric, but why resist a little melodrama?).
The God Metric is the one ring to bind us all. With it comes the idea that everyone in a company, regardless of role, knows that the God Metric is the metric that matters most.
Practically speaking, the God Metric guides action and reaction within the company, at the micro and macro level. Fluctuations, inaccuracies, and missed targets provoke real consequences, and swiftly.
The God Metric isn’t all fire and brimstone. It can also bring calm and clarity into turbulent times, which in an early stage company, is every day. The God Metric hovers above the maelstrom of data that a comprehensive suite of KPIs will likely produce. Done right, adherence to a God Metric can be unifying in a powerful and comforting way. Done wrong, and it can lead an entire company toward disaster.
The utility of a God Metric came up last week in a meeting with a RevUp founder. His senior marketing person was measuring success against KPIs that were by-and-large disconnected from what happens “after” marketing, i.e., sales and revenue.
This might work in large enterprises, where marketing and sales are vast and separate worlds, connected only by the senior managers who float between them. But in an earlier stage company, the connection between marketing and sales needs to be TIGHT.
For this CEO and marketing lead, the disconnect on KPIs created misalignment between what “it’s working” really means. The marketing activities were technically performing well but not tracking directly enough to the revenue goals.
That got us onto the topic of the God Metric. The founder felt strongly (and I agreed) that everyone in the company needs to know that ARR was the metric most closely correlated with company success in 2024. Every activity within the company had to be calibrated to that goal, whether it directly or indirectly contributed to it.
The point isn’t that ARR is the right God Metric for every company. But for this company, at this moment in time, ARR was the “one thing” they cared most about. For another company, maybe not so much.
I hit up some other founders in the RevUp portfolio to check in on their current God Metric. The diversity of answers underscores the point that what works for one company won’t for another. A few examples:
Type: SaaS company that sells to VERY Large enterprise
God Metric: Quarterly revenue growth.
This company has a long sales cycle. Quarterly is the right cadence to know if things are really moving in the right direction.
Type: SaaS company that sells to VERY Large enterprise
God Metric: Churn.
With slow to close and costly to win contracts, this company knows that renewals are very important to prove their model in 2024.
Type: Platform company that sells to educational institutions
God Metric: #Quarterly new deals added
This company has a mature lead qualification system and closes a high percentage of what comes into their funnel. The # of new deals in the pipe each quarter is a leading indicator of downstream revenue.
Type: Consumer company
God Metric: Profitability
The half life of a good customer acquisition model is short, and getting shorter. To survive consumer company adolescence, closely monitoring profitability is often top of mind.
Type: SaaS company that sells to mid-market enterprise
God Metric: Customer Lifetime Value
With a “land and expand” sales model, ensuring that the value from each customer increases over time is clutch.
Type: Consumer company
God Metric: Cost per Thousand
In 2024, this company is looking to get the most “bang for their buck” across a large portfolio of digital outreach
Finally, back to the SaaS founder who wanted to get his whole organization “to find God” in ARR.
ARR matters for this company today because it underpins the company’s market position and, in the broadest strokes, its ability to afford what it needs to grow.
Interestingly, throughout 2022, company leadership pinned "New Bookings'' as the God Metric. It wasn’t until early 2023 that ARR took the pole position. “I do not think it is any accident that the first year we put ARR first was the first year we doubled our ARR,” the CEO told me. Likely right. Hard to hit a target you aren’t aiming for.
Which brings us to one of the most important things to understand: the God metric is the metric most likely to change over time. What matters most on day one for a company is likely not what matters most in year three. And so on.
Adherence to a God Metric is a high stakes game. Pick the wrong one, no good! Keep the right one for too long, no good! (To close off on LoTR: There's a good reason why some folks just don’t want to wear THE ring.)
For earlier stage companies, it’s powerful to have everyone see themselves as being contributors to the “most important thing,” even if their role is upstream or downstream from where the performance metric is measured. It can be part of a shared identity that connects everyone in a clear and consistent way.
And let’s be real…if whatever the God Metric is measuring takes a turn for the worse, there could be real consequences that affect the whole organization. like layoffs or spending cuts. Or worse.
SaaS Academy COO and RevUp Capital alum Matt Verlaque describes this dynamic perfectly as keeping everyone tuned in to the “tension in the system.”
“You have to align incentives and create accountability that produces the right results individually AND collectively. Getting too far from the tension in the system makes people feel good, but can often mask problems for far too long.”
Amen to that.
RevUp Capital Managing Partner Melissa Withers is a bullish advocate for innovating the ways in which new companies are funded and supported. Beyond building new economic models for early stage investing, Melissa is also committed to directing more entrepreneurial funding to those underserved and overlooked by traditional VC.
More About RevUp Capital
RevUp Capital invests in B2B and B2C companies that are revenue-driven and ready to double down on growth. We deploy cash and capacity to help companies grow from $1-3M to $10-30M, quickly and efficiently, using a revenue-based model. Companies enter our portfolio with $500K-$3M in revenue, a strong growth rate, and a team that’s ready to scale. Our typical investment range is $300K-$500K.
We invest into a company's market-facing activity using a cash and capacity model. We pair our cash investment with dedicated support from the RevUp Growth Platform: a powerful resource to build a data-driven growth engine, delivered by people who get the work done. Rather than take equity, companies return investment through a small percentage of revenue over time. More at www.revupfund.com