I felt like quitting, but someone stopped me. Since then we did 10x growth.
I am closing my first 10 years of building online businesses.
I have spent seven of those years building up TrueStory, which is now a profitable business, crossing $10 million in revenue, +120.000 customers and with the privilege of gathering a great group of more than 20 people, working together every day on the project.
Seven years in, my days are still full of challenges I don’t have the faintest clue about how to solve. Just trying to learn more every day and find the hidden truths — in general and in our specific business.
However when asked what I actually HAVE learned during these years, I do know what I would highlight as a certain truth:
In order to succeed in business — and in life for that matter — you just have to figure out what to prioritise and then put in the effort. Simple.
It is simple, but it is also why so many fail. Building a business is a long-term sport. There are obvious exceptions to that rule, but try to forget about those. Chances are that you are not the “one in a thousand”-talent that does not have to train to win. Most likely you are, like me, pretty average and thus have to train and dedicate yourself more than your competitors in order to win. That is if you want to win of course — no one is forcing you, but the sport is amazing.
This post is about not quitting, controlling and nurturing your focus — and putting in the efforts. I will talk about lead measures, lag measures and finding your flywheel…
Back in late 2014 our company was 1/10 the size and strength of what it is today. I remember visiting my parents and talking to my dad about quitting. My rationale was that it would be good for me to try something new. That maybe the potential of selling experiences online wasn’t that great after all. Trying to build the business was hard and I probably just felt like getting away from the goals, expectations and frustrations for a while.
The following week I also spoke with my business partner and chairman about the same thing. He backed what my dad told me.
We made an agreement: focus on what works, don’t start any new ideas and projects and see how it all looks in 6 months. I did that. The following graph shows what happened.
I am fortunate that they saw what I didn’t: that I was about to quit because the marathon started to get hard. That we had something good going and that we needed to put in efforts constantly on what obviously worked. That’s it. No new ideas, no new big experiments. Just the good ol’ grind — day after day.
As the chart above shows, he was right. After those six months, we did the same. This time we agreed on 12 months. And we have actually done that ever since — however I am long-term committed at this point. Why? I want to show you in this post.
What is really valuable and important here is how to manage this focus and work in the everyday life. What I will share next is two approaches to do exactly that:
- The TrueStory Flywheel
- Objectives & Key Results (OKR)
Flywheel and lead measures
Do you know the difference between lead and lag measures (aka indicators)?
I did not, but now I do. This understanding has changed my view on how to run a business.
You are always told to measure and know your metrics/numbers. Which I agree is important. And we have always done that, but it has been suboptimal due to a big messy blend of lead and lag metrics.
Obsess about the future (lead), not the past (lag)
For many years we made the mistake of spending too muh time studying metrics that showed us what had happened (lag), instead of looking at metrics that could show us what would happen (lead). For e-commerce based companies is it very common to focus too much on metrics like conversion rate, average order value and revenue. Which makes sense, because they are some of the big, overall goals for the company.
The problem with those metrics is that when you get the numbers in, it is already too late to change anything. They tell a story about what happened in the past, not what is going to happen. Which also means it is too late for you to fix it. That is lag metrics.
What we need to focus more on are the metrics that actually help us predict the future and allow us to adjust and optimise in time. The metrics that lead us towards hitting the big goals!
For instance, in our case, instead of looking too much at our conversion rate (lag measure), we should look at how our selection is growing and how our prize-competitiveness is developing (lead measure).
In the book “The 4 disciplines to execution”, the authors use the visual image of a big rock that needs to be moved. Moving that big rock is the overall business goal and we can easily measure the distance the rock moves (lag measure). But what we should obsess about instead is the levers we have, that will actually make the rock move (lead measure).
So to sum it up:
Lag measure = The big, important metrics that reveals how your business did, not how it will do in the future. Metrics that won’t be available to you before it is too late to fix.
Lead measure = The quantification of effort and sub-metrics that determine the overall metrics and results.
Obsess more about your lead measures
When I got an understanding of our most important lead measures, I also realised how they all move in correlation with each other.
Back to the example with conversion rate as a lag measure and selection growth as a lead measure. The selection growth cannot stand alone. It needs backup from other levers (metrics), e.g. traffic to the site. Our selection can be very good, but if no-one sees it our revenue will tank.
For me the best way to think about this has been with the flywheel analogy.
I read about the flywheel analogy in Jim Collins book, Good to Great, 4 years ago, but it took me a few years to really make the penny drop. When it did, it changed everything and made me realise how impactful the flywheel analogy can be.
Wait a minute. Flywheel? What?
To quote Jim Collins, from the Good to Great book:
Picture a huge, heavy flywheel — a massive metal disk mounted horizontally on an axle, about 30 feet in diameter, 2 feet thick, and weighing about 5,000 pounds. Now imagine that your task is to get the flywheel rotating on the axle as fast and long as possible. Pushing with great effort, you get the flywheel to inch forward, moving almost imperceptibly at first. You keep pushing and, after two or three hours of persistent effort, you get the flywheel to complete one entire turn. You keep pushing, and the flywheel begins to move a bit faster, and with continued great effort, you move it around a second rotation. You keep pushing in a consistent direction. Three turns … four … five … six … the flywheel builds up speed … seven … eight … you keep pushing … nine … ten … it builds momentum … eleven … twelve … moving faster with each turn … twenty … thirty … fifty … a hundred.
Then, at some point — breakthrough!
So the flywheel analogy is all about putting in the effort — but doing it within the target of your flywheel. Otherwise it will be a waste of energi.
The last year I have tried to really dig deep into the understanding of what lead measures our flywheel contains.
The result, for now, is this:
The flywheel is something we use internally. So, for an external part not everything will make total sense as there are lots of knowledge and internal understanding that is not shown.
And now it suddenly becomes very simple:
What we need to do, every day, is to put in efforts that hit within that flywheel and that leads us towards our big overall goals. Each team knows exactly what measures they can impact to make the flywheel spin even faster.
I believe we can reach the $50million revenue mark within a few years — if we focus our time and energy on making our flywheel spin!
The revenue number is just another measure. More importantly it can help us achieve our goal of building a global business that creates memorable experiences for millions of customers. That takes great care of its employees. And that creates business and possibilities for our thousands of cooperating experience suppliers.
Planning those efforts with OKR
I have written about our use of the famous framework OKR (Objectives & Key Results) before. And many others have written about it as well, so I won’t go into detail with the actual framework. What is interesting and important about OKR, when talking about the flywheel, is that we can use it to plan our efforts and make sure that we target different areas of the flywheel at the right time.
So when we plan a new OKR period, which in our case runs for two months, we know that all our objectives needs to hit within the target of the flywheel.
Let’s say we want to develop a process that we believe can increase our conversion from experience booked to experience review submitted. That would be perfect because succeeding with that objective would make our flywheel spin faster.
Let’s say we want to start a side business selling some of our features and systems to other companies. That would be possible, but it would be way off the target in terms of making our flywheel spin faster.
Furthermore the OKR framework ensures accountability and aligned goals within and across teams.
And let me just stress the fact that we still make the mistakes of defocus and bad prioritising. We get better every day, but the road ahead to perfection is still long and bumpy. But hey, at the end of the day, that is what makes it fun and existing, right?
What I have tried with this post is to take you through the journey of wanting to quit due to lack of understanding of what makes a great business, to an absolutely game-changing realisation of how to track, work and plan in order to achieve market-winning results. A great quote goes something like this: “Don’t write to teach, write to learn”. So consider this an essay from me to me. And if you, coincidently, have gotten any value from it, then that makes me happy and thankful for you spending time reading this.