Mission, Strategy, and Metrics

The CEO holds the primary responsibility for outlining and sharing the company’s mission, strategy, and key metrics. This role, akin to supervising and leading a senior team, is non-delegable. Only the CEO can effectively perform these duties.

An effectively articulated "mission-to-metrics'' framework fosters alignment within an expanding organization. It aids members in understanding priorities without the CEO needing to be involved. We strongly advise penning your mission-to-metrics document in writing, reviewing it every quarter, and revising it annually.

At Affirm, Max Levchin revisits their strategy document annually, viewing it as if it were his first year at formulating a strategy with fresh eyes. Reflecting on a decade’s worth of such documents, he observes that approximately 80% of Affirm’s strategy has persisted since the company’s inception.

Below is an exemplary mission-to-metrics document penned by Grant LaFontaine, the co-founder and CEO of Whatnot (W20), written for 2022. Whatnot operates as a peer-to-peer live commerce platform, facilitating transactions between buyers and sellers via live video streaming. The document, edited to protect strategic details, serves as a prime example of what every CEO should compose once their team reaches 50 members.

Template: Whatnot's Mission-to-Metrics

Mission

Enable anyone to turn their passion into a business and bring people together through commerce.

Customer and Market Insight

Buyers

Here’s what we know/hypothesize about buyers

Users most value product categories that have [these] characteristics.

[Explanation based on user research]

‍The core reason that people come back to Whatnot is [this]

[Explanation]

‍People need to trust Whatnot to come back and purchase‍

All marketplaces are built on the trust that you will get exactly what you purchase. To date buyers have loved Whatnot because they trust it. But if this erodes, the marketplace could fall apart.

‍People come to Whatnot looking for specific products or product types

[Explanation based on user research]

Sellers

Here’s what we know/hypothesize about sellers

Sellers are motivated by money

Sellers typically care most about generating money, so if we want to keep and retain them we should help them make more money by using Whatnot.

Sellers are trying to build and optimize their business

As a function of trying to make money, their presence on Whatnot is largely about business building: They really want to know how to optimize it. How do they best market, when is the best for a show, what supply sells best.

Buyers really want to sell on Whatnot

The single most asked for thing on Whatnot is the ability to sell. [Explanation for how we know this]

Our wedge

Our research and experience to date suggests that [this category] appears to be the gate to live and social commerce.
Once we get this category to scale, the opportunities to tack on other categories and products increase drastically.

Product Strategy

We’re building a P2P social marketplace by investing in:

Live: [Explanation of specific features]
Trust and safety: We’ll invest further in reviews, moderation, authentication and more to ensure when someone buys on Whatnot, they have a great experience. We aim to create the safest P2P horizontal marketplace on the internet.
Key feature X: [Explanation]
New product area Y: [Explanation]

Distribution or Go-To-Market Strategy

We’re going after enthusiasts and power sellers by:

Getting the community talking:‍

Scaling sellers: Sellers drive demand and increase supply on Whatnot. We’ll need to be best in class at onboarding them. [More explanation on how to do this]
Content strategy: [explanation on methods]
Owning influencers: [Explanation]
Paid ads: [Explanation]

Fix the funnel:

As we get people talking and into Whatnot there will be some significant areas in the funnel we’ll need to fix. We’ll avoid small incremental things, but will unlock things like scaling the seller waitlist to make sure people sell and go live on Whatnot, as well as doing a better job converting our initial buyers.
As we scale growth, we must ensure we’re doing this on positive unit economics—that is, we’re actually making money on each transaction. We should not subsidize our way to negative unit economics. As we launch early categories, we can do it for a small period of time, but we must quickly get them to positive unit economics in every category.
Further, we are not going to invest heavily into discounting subsidies, and instead focus our limited resources on creating value for our highest-value buyers and sellers.

Things we are not doing

Metrics

North-Star Metric

GMV = gross merchandise value = the value of all items sold on the marketplace not including taxes, shipping, or other fees

While this is our North Star metric, this is not the end-all-be-all for prioritizing. We still need to make sure we’re prioritizing a quality and reliable user experience; otherwise, long-term GMV will not materialize.

Key Metrics to Define 2022 Success‍

Build a “machine” that turns our major categories into market leaders

P0: Grow the GMV of W, X, Y, and Z categories to be x%+ of eBay’s monthly sales and increase GMV to y% in December 2022 amongst other existing categories.
P0: Enable [new format] that drives x% of monthly sales in W, X, Y, and Z categories.
P1: Build [new business segment] that generates x% of GMV in W, X, Y, and Z categories.

Generate significant sales in W+ categories with X, Y, and Z and enable rapid scaling of new categories

P0: Organically grow x+ new categories generating $xm/mo in additional GMV.
PO: Actively launch into y+ new categories generating $ym/mo in additional GMV.
P0: Build infrastructure to support launching into z+ categories by end of year.

Build a reliable and high-quality core live and marketplace experience

P0: Maintain buyer NPS at x%.
P0: Maintain seller NPS at y%.
P0: Get monthly gross profit/GMV to z%.

1. Mission

We advise thinking about mission statements practically.

Exceptional companies are built by addressing customer issues, not by focusing on a lofty mission statement. Therefore, don’t let perfectionism or writer’s block prevent you from presenting a mission statement. Some founders have the fortune of creating memorable and lasting mission statements early in their journey.

Examples:

Stripe: Increase the GDP of the internet
Rippling: We free smart people to work on hard problems
OpenAI: Ensure that artificial general intelligence benefits all of humanity
Amazon: Be earth's most customer-centric company where people can find and discover anything they want to buy online
Google: Organize the world's information and make it universally accessible and useful

However, the majority of startups, including those that achieve great success, refine their mission statements over time.

Example: Evolution of Mission Statements

Twilio

For instance, Jeff Lawson illustrated the evolution of Twilio’s mission statement as such:

"We've gone through multiple iterations of our mission statement. Between 20 and 50 employees we realized, 'Oh, we need a mission.' We’d write one and say, ‘Good enough. Let's use that.' Some were really bad. It took a while for us to have conviction around the words to describe why we exist. But I always had a sense for why we existed: The future of the communications industry is clearly going to be built by the software developers of the world and will not remain in the hands of a few companies. Today, our mission is to 'fuel the future of communications,’ which we settled on after many versions."

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Zapier

In contrast, Zapier did not establish an official mission statement until they had around 80–100 employees. This period coincided with the time they began to incorporate more executives and felt a need to be more formally aligned.

Takeaway

Mission statements serve to delineate a company’s “playing field”. They act as reminders of the overarching goals the company is striving to achieve. However, it’s crucial not to fixate on perfecting the wording or creating a timeless proclamation. Be willing to reassess and modify it periodically.

One founder shared: "I know I need a mission statement because people want something to inspire them and to frame our long-term strategy, but it can become problematic if the mission statement starts to define what we do too closely and keeps us from seeing our customers’ biggest problems. It's important to have a mission that's broad enough to be enduring but not distract from focusing on the customer."

2. Strategy

Based on our experience, top companies maintain written documents detailing both their product and go-to-market strategies, much like Whatnot's above.

The most effective strategy documents are inherently customer-centric, embodying a sophisticated understanding of the customer issues you plan to address and your intended solutions. These documents are rooted in customer studies and observations. Therefore, we recommend initiating your strategy section with unique market or customer insights. These are things that your team uniquely understands because of your interactions with customers and time spent in the market.

When formulating your product strategy, consider addressing the following:

Who is your target customer?
What principal issues are you planning to resolve for them in the next 12 to 18 months?
Begin with a compact customer base with distinct issues that you can address. If you have experienced organic growth in initial customers, narrowing focus might seem counterintuitive. This necessitates a shift in perspective to accurately identify customer demographics and decide the necessary developments.
Do you know which product levers impact your key metrics? What innovative features can you introduce that will positively impact these metrics?

Crafting a distribution or market-entry strategy is typically more challenging in the early stages. Most founders typically do not specialize in sales and marketing, and establishing a consistent, efficient growth or go-to-market strategy usually demands considerable experimentation. Nonetheless, this should not dissuade you from documenting your thoughts. This is a continuous endeavor, guided by initial assumptions about effective product distribution methods. Modify your approach as you gather more insights. This also serves as a written record of initial hypothesis that you can double down on or adjust as you gather more data points on their success.

During this stage, interacting with other founders that have similar product adoption characteristics (e.g., product-led growth, inside sales) to exchange insights on growth/go-to-market strategies can be helpful. You will gain more insight into go-to-market strategies and understand the differentiators of your approach.

A note on format: We’ve observed the best strategy documents are articulated in long form, not slideshows or listed points, often three to five pages long. Writing out your thoughts compels thoroughness and highlights any potential inconsistencies. This is the reason why companies like Amazon internally prefer memos - and bans slide presentations - for new projects. Your document should aim to be clear, simple, and focused.

3. Metrics

One of the most crucial tasks to ensure alignment across your organization is to determine the key metrics that define your startup’s success.

You can think of metrics as either “input” or “output” metrics. As the CEO, it’s imperative for you to discern and convey the internal factors (“input metrics”) that influence the desired results (“output metrics”) for your business.

Output metrics are results that external stakeholders, such as your investors, use to assess your business. Identifying these is typically straightforward.
On the other hand, input metrics are the detailed metrics that are instrumental in your day-to-day business management. These are the levers that your employees can directly influence and that subsequently impact your output metrics. It's vital to comprehend how different input metrics influence output metrics, for instance, understanding which input metrics affect revenue or customer interaction. Unraveling these influential factors can be challenging and might necessitate extensive experimentation and investigation.

Example: Output and Input Metrics

Meta has consistently chosen Monthly Active Users (MAUs) as their output metric.
Early on, they identified that users who established connections with 7 friends in 10 days post-signup were more likely to become MAUs
Subsequently, they defined an input metric of “number of new users who add 7 friends in 10 days” - they focused on developing features to promote this
Features included restricting content visibility until a user had connected with 7 friends
As Product Managers and engineers prioritized enhancing this metric, they concurrently grew the number of MAUs

Identifying the Magic Moment metric:

Look at groups of users who became engaged, and groups of users who did not become engaged with your product over a historical period of time, ex. Last six months.
Analyze historical event logs with basic data science (correlations, segmentation, even eyeballing) to see if any patterns exist between key groups of users, ex. engaged, not engaged, paying, not paying.
For Facebook, the pattern that emerged was that the engaged users had reached at least 7 friends within 10 days of signing up.

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In Amazon's retail sector, the key metric is revenue‍
Amazon has found that customers are significantly more likely to place subsequent orders when they receive their initial orders within a day of making them.
Consequently, the product and operations teams were assigned the "fast-track in-stock" as the key input metric. This refers to the percentage of inventory, adjusted for demand, that Amazon is capable of shipping within a 24–48 hour timeframe. This was something that employees could directly impact to enhance customer satisfaction and the frequency of reorders, eventually leading to increased revenue.

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One of Segment’s key input metrics is the number of integrations that are receiving data, serving as a gauge of the volume of data each customer is monitoring
When a customer surpasses a specific threshold in this metric, their likelihood of churn significantly diminishes. Thus, the number of integrations acts as a primary predictor of customer attrition. Consequently, the team strives to ensure that customers integrate the maximum number of tools available to maximize retention

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Total hours watched is Twitch’s output metric
To drive this internally, their goal is to encourage as many unique daily users to watch at least 5 minutes of video daily
Thus, their input metric is “five minute unique viewers”

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For their ChatGPT consumer product, OpenAI’s output metric is weekly active users (WAU)
Over time, they’ve learned that the more chat messages sent, the more likely a user would be to become a WAU
Thus, they’ve been experimenting with various prompting techniques (ex. "Plan a trip" or "Make a content strategy") to encourage users to send more messages

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Early on, Brex’s key metric was Gross Merchandise Volume (GMV) which is the total volume of payments processed through Brex cards - of which ~3% (interchange fee) was considered “revenue” and roughly ~1.5% (interchange - rewards) was considered “net-revenue”. This evolved to the key metric being “total net-revenue” as the business has expanded into multiple revenue streams (card interchange, banking deposit yields, and SaaS fees for their seat-based enterprise expense management solution) which is a sum of (1) corporate card interchange revenue, (2) net-yield on deposits, (3) SaaS fees.
Input metrics are tracked at the product-level - for corporate card, the input metrics are: # of monthly users and # of card customers that spend above $10k; for banking, the input metrics are: % attach-rate of customers with banking and # of customers with >$250k deposited; for expense management, the input metrics is # of paid monthly-active customers.

Zepto's key output metrics are orders per day and gross profit per order
To drive orders per day, Zepto's key L0 inputs are monthly order frequency and retention
To drive gross profit per day, Zepto's key L0 inputs are average order value, fees/advertising per order, product margin, and total costs per order
These inputs are all further broken down into L1 and L2 inputs at a team level
Zepto's approach to metrics has been refined consistently as the team's internal understanding of their business equation has evolved
As an example, gross profit per order was only introduced as a key metric about 6-12 months after public launch and drivers of growth were better understood

To establish your metrics, it is crucial to implement a procedure for reviewing and modifying them as needed. This involves documenting your metrics along with the reasoning behind them; scheduling regular meetings (monthly, etc.) to scrutinize this document; and based on the insights from these meetings, implementing alterations to the business practices and updating the metrics document for the next review cycle.

Here is an example of a monthly review document: Twitch: Monthly Business Review

Metrics can develop and adapt over time, but it’s imperative for everyone in the organization to have confidence in their accuracy to inform actions. Constantly questioning whether the metrics genuinely reflect reality can be disruptive. Achieving accurate metrics often requires engineering investment in the underlying infrastructure to ensure metric quality.

We recommend starting with a smaller number of clear and concise metrics—ideally around three or four—that are communicated regularly, instead of overwhelming the team with details that are hard to remember. It is crucial for every member of the organization to understand the significance and the rationale behind each metric. As the company scales, individual teams can then establish their own sub-metrics.

4. Articulating your mission, strategy, and key metrics

Mission, strategy, and metrics are all useless if your team cannot understand and internalize your message.

Mastering the art of clear communication to a continually expanding team may initially seem daunting. It's essential to distill your message and reiterate it more than you may believe is necessary. Repetition is often needed to ensure company-wide alignment.

Writing is one of the most scalable ways to communicate. Documents and posts can be distributed quickly, and act as enduring reflections of the evolution of your thought process. As highlighted earlier, it's encouraged to document your company’s mission, strategy, and pivotal metrics comprehensively, ensuring accessibility for all team members. Some leaders opt to circulate regular emails, Slacks, and posts across the company to emphasize key messages, sometimes even on a weekly basis.

Regardless of your communication channel, adhere to these guiding principles:

Communicate to your entire company at least weekly.
Emphasize key strategic priorities in every message.
Dedicate time to comprehensively documenting your strategy, customer insights, and additional insights, and make these writings available company-wide.
Consistency and repetition of messaging (e.g., Using the same language each week re: mission and strategy)

As a CEO, what you say yields significant influence. Everyone seeks to garner your satisfaction and recognition. Many first-time CEOs have unintentionally derailed team objectives with offhand remarks during meetings, causing teams to scramble based on the CEO’s latest sidetracking ideas. Even more detrimental is an indecisive CEO. Firm decision-making is crucial. You must set a direction and maintain it.

A key reason why we advocate for thorough documentation is its ability to crystallize your thoughts and serve as a reference point. It not only solidifies your thought process but also holds you accountable. It's prudent to have periodic strategy reviews rather than continuous, less intentional improvements. If a major shift is on the horizon, vet it with a select group of trusted individuals before rolling it out company-wide.

5. Creating Purpose and Alignment with Metrics

As a CEO, you cannot delegate the task of driving alignment. Below is an excerpt from Ali Rowghani, former CFO and COO of Twitter, on driving team alignment. The text below, in our opinion, best captures the importance of building systems and provides relevant examples for how to use metrics to drive alignment at scale.^[1]

Excerpt: Ali Rowghani (Ex-CFO / COO at Twitter) on Creating Alignment

When your startup has less than 10 people who all sit together, you don’t need to work very hard to keep people aligned. Everyone can easily hear what’s going on, understand how their work fits into the broader goals, and have a say in every decision. Communication is simple and creating alignment is easy.

But when you start hiring more people, soon in different offices and from broader backgrounds and functions (e.g., sales, finance, etc.), creating alignment becomes a lot harder. Your team no longer sits within earshot. You aren’t able to interview or even meet everyone who joins the company. And you may not even able to attend employee onboarding sessions. As an example, there was an 18-month period at Twitter where the company was hiring 50 people per month in offices all around the world. There was no way the CEO or any one executive could meet everyone who was joining the company.

As a Phase 1 CEO, you are the lead rower on the boat. But in a Phase 2 startup, your job is no longer to row. Instead, it’s to define the purpose of the voyage, set the direction of the boat, and measure the pace and performance of a much larger number of rowers. In business speak, the CEO’s job is to define the Mission (purpose), Strategy (direction), and Metrics (pace and performance). These three elements provide the essential context that a growing company needs to be able to perform.

One of the best examples of “Mission-to-Metrics” alignment comes from a friend who visited the manufacturing floor at SpaceX. Seeing a SpaceX employee assembling a large part, he stopped to ask him, “What is your job at SpaceX?” He answered, “The mission of SpaceX is to colonize Mars. In order to colonize Mars, we need to build reusable rockets because it will otherwise be unaffordable for humans to travel to Mars and back. My job is to help design the steering system that enables our rockets to land back on earth. You’ll know if I’ve succeeded if our rockets land on our platform in the Atlantic after launch.” The employee could have simply said he was building a steering system for landing rockets. Instead, he recited the company’s entire “Mission-to-Metrics” framework. That is alignment.

Can you define the Mission, Strategy, and Metrics for your startup in a way that’s clear, simple, and inspiring? Most Phase 2 CEOs can’t readily do this. And, when they sit down to define it, they find it harder than they thought.

Your mission should feel ambitious and permanent. It should find its roots in the reasons you started your company and should not be something that you change very often. Conversely, you should revisit your product strategy and go-to-market strategy at least twice per year to make sure they remain relevant and right. There is an enormous amount of literature about developing business and product strategy. Whatever approach you choose, a simple practice always seems to help: write it down. In our experience, the CEOs who are most effective in developing and communicating strategy take the time to write their strategy out, in long form. You don’t have to go as far as Jeff Bezos and his team at Amazon do, requiring 6 page memos for every strategic meeting. But writing your “Mission-to-Metrics” framework in long form will help you be more thorough and catch flaws in your thinking.

Effective metric-setting is also a critical part of a CEO’s job. A common mistake is to equate key internal metrics with the business’ most important top line results, like revenue or user growth. This is the wrong approach because top line results like “increase user growth” usually aren’t directly actionable. Instead, you’ve got to dig deeper to understand what drives top line results and set these drivers as the key internal metrics. Great companies work tirelessly to understand what drives their growth. Facebook famously discovered that connecting a new user to 10 friends within 14 days correlated with retained usage, so they set “number of new users with 10 friend connections” as the key product metric. You’ve got to be tenacious about learning what drives your top line business results and set those drivers are your internal metrics. If you don’t know what drives revenue, customer acquisition, or user growth, you aren’t likely to be successful anyway.

Once you’ve written “Mission-to-Metrics” for your startup, and gotten feedback from your leadership and other key employees, you have to start communicating it to everyone regularly. You have to reiterate the Mission-to-Metrics much more than what feels reasonable, which may run counter to your instinct to be efficient. Your employees will not internalize the message unless you communicate it constantly. The real test is not simply whether employees can repeat it, but whether they can make good decisions in your absence based on the context you have provided.

[1] Originally published by Ali on https://www.ycombinator.com/blog/the-second-job-of-a-startup-ceo