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August 26, 2013

Know Your Numbers

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Know Your NumbersAsk a startup founder about the revenue for the month. Or the number of users his/her business has. Or the amount of servers and the load on them on an average day. The answer should be immediate (there can be some hesitation, but only to take into account or not today’s numbers). Obviously, ask each founder the questions specific for him: I would hate to be asked about the servers, instead of Elvis. Obviously, I now a general number, and I know how much we spend on it, but that’s it. My job is not to know how many they are, but how they impact the cash flow.

Surprisingly, though, I have met so many startup founders, especially in early stages, that don’t have a clue about their numbers. And I have no idea how that happens. How can you think about your business every minute of every day and not know those numbers?

When I ask about this, they say there are so many numbers, how can they remember all of those? And I give them the example of Cristi, the other co-founder at MavenHut, who follows several hundred indicators permanently and he probably knows by heart about 50 of them (the most important ones). Or it takes him 2 minutes at the most to give details on the others (after looking through Excels and stats). It may sound huge, but gaming is a metrics driven business and that is his job. If he doesn’t know those, he can’t do what he’s supposed to do: create great games that are played by lots of users.

You may say that you don’t have the time to look at the numbers, because you are busy building a business. How do you know how to build it, what it needs, if you are not looking at the numbers?? It’s mind blowing for me how many times I hear this, though.

And, as a side information, every investor I’ve met asked me about numbers. User numbers, growth, revenues, if any, estimates, industry numbers. You NEED to know numbers!

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