Whatnot & Segment on Mission, Strategy, and Metrics

I. Session Takeaways

Date: March 2024

A. Mission, Vision, Strategy

‘Mission’ is the process of defining why you exist, ‘vision’ is where you are going, and ‘strategy’ is the how you will get there. It acts as an alignment tool to help your team spend less time debating decisions and more time building.
Both Segment and Whatnot began to articulate mission, vision, and strategy at 40-60 people and iterated on the document regularly as the companies grew over time. They outlined strategies for 1-2 years and revisited these plans annually.
At less than 50 employees, vision and strategy can be loosely constructed as communication loops are so tight. As you scale and your understanding of the business increases and communication becomes more fragmented, more rigor and data needs to be put into the process to align your team.
Your mission doesn’t need to start with a compelling ‘one-liner’ and can often come out of the stories you tell yourself and your company about why and who you exist to serve.

Grant on using Mission, Vision, and Strategy to drive alignment

“Mission, vision strategy. I wrote the first whole draft of the mission, vision, and strategy at around 40 or 50 people. I tend to view these things mostly as an alignment tool. In the early days, you don't need it that much because everyone in the room is very clear with what they're doing and why they're doing it. But as we started to scale and get bigger, you need to write down those things, so it's very clear what you're trying to do, what direction you're moving in, and what you're going to do, and the things you're not going to do to get there."‍

Peter on a Mission statement coming for stories and mistakes

“[Our mission] started with just a clear articulation of the values since this kind of sits above everything. The way we set these was when we were around 20 people, myself and my co-founders went off-site and tried to articulate things that we had screwed up on at one point or another. And that we felt bad about, and so we wanted to do it differently going forward. It turns out that, at least for us, the stories of the times that we messed it up, and why we changed were really impactful. Those stories were actually the most impactful thing that actually stuck in people's heads. And so behind the one sentence articulations was a set of stories that illustrated the value. And that made it very powerful.”

A1. Best Practices

Do not write by committee. Take a position and write the initial version yourself or with your co-founders and seek feedback from trusted individuals in the company to incorporate feedback.
Communicating what you WILL NOT do is just as important as what you WILL do. It prevents you from wasting time debating the merits of a particular activity and allows you to move faster.

Grant on focus

“If you want to deliver a lot in a small period of time, you just need to move fast. You can't be spending shitloads of time debating the merits of going into shops, whether it's possible. And so [defining what we wouldn’t do] was truly for focus. Because we felt we had enough conviction in what we were doing that we were going to go all in on it. And then we, you know, we never thought we were always going to be right, but we always set up mechanisms to be nimble enough that if we learned something new, we would adjust more”

Carve out 10%-20% of capacity for new/emerging initiatives to make sure you’re always learning something new so that you can expand the market. In the early days, you can likely set these for the team, but as you scale you’ll need to explicitly ask the team to include emerging initiatives when going through your planning process.
- The impact of being overly focused on the near-term strategy (6-12 months) is you can miss opportunities to lay the groundwork for future growth. This sometimes results in a sudden slow down once your core engine starts to break as you haven’t built the foundations for your next act.

Grant on resourcing “big bets”

“I tend to view strategy as always developing. You take all known information, put it at the best guess as to what the things you should invest in are…we try to carve out about 20 percent of resource to work on things that are off strategy, which are like adjacencies, where we may be able to learn something new that can transform the business….We had less screening guideposts in the early days, just because, honestly, I ran a ton of the roadmap, and I could just do what I felt was right. These days, at a bigger scale, The general guidepost that we give the teams is like 80 percent on core strategy and 20 percent on newer emerging things just to make sure we're always learning something new so that we can expand the market.

Always start with your Mission/Values and Vision before outlining your strategy. This drives better alignment as it reinforces 1) why the company exists, 2) how you make decisions, and 3) where you are going.
Tie the strategy back to the key metrics you need to achieve within the time frame. This makes clear what it takes to “win” in the strategic planning period. The metrics you pick will evolve as your understanding of your business improves. They will also be broken down into smaller increments to enable execution. We include examples from Whatnot and Segment below.

Examples: Key Metrics

B. Operationalizing the Strategy

Tie the strategy back to a plan that you can operationalize with metrics and OKRs. At a company level, pick a few metrics that align to the value you are delivering to customers. These will be broken down into inputs that teams can execute against on a weekly basis.

Grant on picking the right company-level metrics

“So we wanted to link it back to something that was just very clearly aligned to user value on both sides of the marketplace and directly linked up to revenue. If you look at our strategy this year, there's actually two metrics that we track. We're tracking GMV and contribution margin. I think at this point in time, we decided to go to orders instead of GMV. [We did this] because average order value was fluctuating a lot, so there's a lot of variability and we wanted something a little bit more stable that we could orient towards. But I think it’s the clearest thing in the team's mind for delivering value across all three things to business.”

At 50 to 100 employees, most companies operate on monthly planning cycles. As you start to scale, this becomes burdensome and it shifts to quarterly or longer. While your planning cycles will get longer with scale, always break goals down to smaller units of execution for the team.
- Segment, at $70M, ARR created a 100-week plan but broke down inputs into quarterly goals
- Whatnot, at 500 people, created an annual strategy but broke down inputs into semesterly goals
- Both Segment and Whatnot created forums to track progress on quarterly and semesterly goals on a weekly/biweekly basis (covered below)

Grant on planning

“Our belief, and I still think it's generally correct. Whatever time you allot, the shorter the time period for planning, the faster people will move. Because they'll see a goal with a tight time window and they'll run to achieve it. And so philosophically We've always felt that we wanted to make planning as short as is reasonably possible, while making good decisions. This began with weekly sprints, then monthly plans until we reached about 150 people when it broke and we’ve moved to quarterly cycles.”

Developing an understanding of the inputs that drive the outputs is critical to operationalizing your success. This is an iterative process and you’ll add and remove metrics over time. One strategy is to work backwards from key output metrics to understand what drives the business. These metrics will be turned into OKRs that your teams can actively make progress against.

Example: Whatnot’s Iterative Process for Metrics

1. Whatnot defined initial metrics by working back from their initial understanding of the business

Early on, Whatnot cared about Sales, Orders, and Retention. They also understood categories were important.
They worked backwards from these hypotheses to tease out core drivers. They would ask questions like:
- How does X happen?
- What drives good experiences?
- What drives bad experiences?
- How do we measure the performance of each category?
This led them to outline category performance scorecards that measure performance. These included:
- Category Sales, Orders, AOV
- Category Buyers and Sellers
- Buyer and Seller Retention

2. As functions started to scale, Whatnot began to their track performance and define metrics

As Whatnot started to scale, the number of customer support queries and trust and safety issues increased
They also realized that they needed to optimize shipping as it was a large revenue and cost driver
Whatnot started to track issues by reason and shipping revenue and cost drivers
This let them create input metrics and plans to move metrics that the teams could execute against

3. Whatnot revisits the metrics regularly and continues to work backwards to improve predictability

Grant revisits metrics regularly. He works with the analytics and Biz Ops team to prepare new metrics dashboards and metrics views so they can iterate on their tracking and understanding of the business. This work eventually becomes the foundation of metrics tracking meetings that Grant uses to drive accountability

Grant on revisiting metrics with the team

“This is how it would get started. Me pushing the team to get metrics together because it becomes very important. In the early days it was me and analytics. These days it’s me, analytics, and our Biz Ops team. For our Biweekly Business Review [BBR], it was me working with Analytics and Biz Ops. Honestly, it was me driving a lot of it. One of the things that I like to spend my time on is the data and it's a relative area of strength, so I try to spend my time in areas where I can deliver a lot of value.”

Build weekly or bi-weekly check ins with leaders into your process to drive accountability. In these meetings, focus on metrics that are “off-track” or “lagging” and try to understand why and how the team will address these issues.
- At Segment, Peter met with his leadership team weekly track progress against quarterly goals
- When Whatnot was 50-100 employees, Grant ran a weekly meeting to track progress against goals
- Now at 400-500 employees, Grant runs a bi-weekly meeting to track progress against goals

Building Predictability

Like metrics, engineering predictability is an iterative process that you will need to invest in over time. Identifying the right metrics and drivers becomes the foundation of forecasting and predictability. This process looks different for B2C and B2B businesses
Build out an analytics team early, particularly if you are a consumer company to assist with metrics/planning

B2C Predictability

Consumer businesses are harder to forecast because they are not sales and contract driven
While you can forecast return on ad spend/CAC, user behavior will drive revenue and gross profit long-term
Predictability is hard to drive in the early days - to offset, shorten planning cycles to increase accuracy
In these settings, it’s critical to normalize that the business is dynamic and priorities will change frequently
- Explain to teams that flexibility and volatility are part of the process of building the company
- Consider not tying performance explicitly to goals if the business is highly volatile
- As parts of your business get more predictable, separate them from new initiatives in forecasting

Grant on asking “do we have the right goals?”

"One of the things that we always said as a company is we will do what works and we're not going to be beholden to a process that we set down... We kind of prepared the teams to be able to switch fast... It doesn't happen that often anymore, because we know what the core drivers of business are…And it's just a conversation, like, “hey, do we have the right goals?" This reflects the emphasis on being data-driven, adaptable, and continuously reassessing goals based on what the data indicates about what works.”

“We're still relatively young for our size. We're about four years old…Things get more predictable through time. But we're still early on things like international and new projects. So we tend to be more nimble around [new initiatives]”

Grant on revising plans

"We just launched in Germany, like, 3 months ago. And we want Germany to be good, and it beat all of our forecasts and expectations... So now we just changed the goals up... They were too easy so yeah, they're going up now."

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B2B Predictability

Predictability for B2B businesses is critical, particularly when you are making decisions to spend more on GTM
Just like with consumer businesses, it’s an iterative process to drive predictability. At Segment, they could initially forecast a couple of weeks out, then a couple of months out, and eventually (~$100M ARR) 1 - 2 quarters out.
Peter recommends mapping out the funnel backwards from closed-won and establishing metrics at each stage
- This helped Segment identify “Pipeline Coverage” as a key leading metric for success
- Pipeline Coverage is the total $ amount of pipeline you have relative to your target net new ARR
- At $100M ARR, they would know at the start of the quarter whether they’d hit plan based on coverage
Tactically, the biggest input to engineering productivity was enforcing good hygiene/standards in the sales team

Peter on Pipeline Coverage as a key metric for SaaS

“Another metric I found incredibly important for understanding how we were doing was looking at pipeline coverage. So we would look at the total amount of pipeline that we had each week. Pipeline grows at the beginning of the quarter and then the pipeline either by stuff getting punted out to future quarters, getting closed won, or losing kind of shrinks down to 1x…By the time we sold the company, like you could tell in like week two of the quarter almost exactly what you're going to close”

Peter on Pipeline Coverage as a key metric for SaaS

I think it was a goal of ours to build like engineer predictability. In B2B, you don't want unpredictability. And the way that you achieve that is both by adding metrics around these things, but also having very strict processes that [the team] is going to follow so that you can measure their actual performance. You want all your account executives performing in a homogenous way. [Predictability] also allows you to know, like, when can I hire more account executives successfully? If you have a very predictable way of generating these things, then you know when to hire the next account executive, how you expand the sales team, and that you're not hiring people into dead zones. Predictability wasn’t just like a thing that happened. It was a goal.”

C. Whatnot: Evolution of Strategy, Planning, and Execution

Mission, Vision, Strategy

Each year, Grant writes the first draft of Whatnot’s Mission, Vision, and Strategy
- He always starts with Mission and Vision and ladders down to the core focus areas for the upcoming year
- He also always outlines what Whatnot will not do during the year to drive alignment/focus
After writing his first draft, he distributes it to a wider circle of trusted individuals to incorporate feedback. After incorporating feedback, the strategy is locked for the year and it is communicated to the the entire company
As Whatnot has grown, Grant has incorporated more data and insights to support the strategy narrative. He works with the analytics team to tease out the right metrics. Data was still important in the early days, but not as widely incorporated.

Planning and Goaling

Planning has become less frequent as Whatnot has scaled. In the early days, Whatnot planned on a weekly basis. This shifted to monthly at around 50 people and stayed monthly until 150 people. After 150 people, the company shifted to quarterly planning. At 500 people (current scale), Whatnot plans in 4 month increments
In general, Grant sets company top-down goals for the company after incorporating feedback from leaders. As Whatnot has gotten larger, teams have become more involved in determining their inputs that ladder up into the agreed-up “company goals.” In the early days, this was more top-down driven.
Planning philosophy: “make planning as short as is reasonably possible, while making good decisions”

Accountability

Whatnot tracks progress against monthly and quarterly goals on a weekly and biweekly basis
They utilize a combination of two main documents: 1) an OKR tracker in Google Sheets and 2) a metrics deck
The OKR tracker tracks weekly performance against goals and tags goals as “On-Track”, “Lagging”, or “Off-Track”
The metrics deck covers key business performance metrics and are mainly pulled from established dashboards
- At 50-150 people, the deck was more oriented towards health tracking and was prepared weekly
- At 500 people, the deck is input driven, is prepared biweekly, and is used for discussing lagging inputs
In the early days, Whatnot would have a separate meeting to discuss OKRs and metrics. Today, they combine the meeting using the biweekly metrics deck that focuses on both health monitoring and input tracking for OKRs at a company level. Grant likes this approach better as its a single meeting on metrics and goals.

Meeting Structure and Agenda for Whatnot’s Biweekly Business Review

Structure

Expensive meeting. 40-50 people attend every other week
Analytics and Biz Ops prepares a pre-read deck. It is ~100 slides long and is sent around to the group in advance
Team comments on the deck in advance or during reading time. Team discusses comments
The majority of time is spent on off-track metrics or metrics where they are ahead or behind plan
The first version of the deck was created by Grant with support from Biz Ops and Analytics

Agenda

Executive Summary
User Feedback / Social Sentiment
Topline Business Metrics
Buyer Funnel
Seller Funnel
US Categories
Customer Support
Trust & Safety
International Performance
Discovery
Community
Marketplace
Logistics
Ads
Tech Stability

D. Segment: 100 Week Plan

Below is a case study on how Peter set and operationalized Segment’s strategy at $50M to $100M ARR

Peter believes narrative construction is key to communicating strategy. The right narrative drives urgency and alignment at scale

Peter on the importance of narrative building

"Strategy is the layer of the stack of mission value strategy where you have the most flexibility as CEO. If you try to constrain the strategy to any of the strategy frameworks that are out there It's transparently bullshit and not really the right way of approaching it. This is where your skill at synthesis as a CEO is tested the most. Can you create a narrative from scratch of what needs to happen and why that needs to happen? At the highest level that distills things down."

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When Segment reached $70M ARR, Peter developed a "100 week" narrative to transition the company to the enterprise. Salesforce and Adobe wanted to launch competing products and were telling customers that everyone needed a CDP (Segment's product). They had distribution, but no product. Segment had a product, but needed to build enterprise distribution. Peter picked 100 weeks as an arbitrary timeline to build distribution before Adobe and Salesforce could build a new and competing product. He communicated this to the company.

Peter on the 100 week narrative

“The articulation was that we have a hundred weeks until Salesforce and Adobe have a product in the market. They already have the GTM team, and so we have a hundred weeks until they get a product on the market. And if we don't have a footprint in all the enterprise companies before they have a product in market, we're going to get locked out of all their accounts. So we have a hundred weeks to get a footprint in all the enterprises.”

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This narrative aligned the company and created urgency as it clarified that Segment had 100 weeks to win the most attractive segment of the market.
They broke down this high-level narrative into 1) building a fast growing commercial business (e.g., tier just below enterprise) and 2) an enterprise business

Peter on why the 100 week plan worked

“It was a rallying call, it had FOMO and all the things that you would hope for in a strategy. We broke it down into needing a highly efficient and fast growing commercial business and then secondarily an enterprise growth story.”

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The 100-week plan was then broken into a financial plan with quarterly targets and input metrics that were owned by leaders and teams
They would track progress against the plan through: 1) weekly executive team KPI reviews and 2) all hands (that happened every couple of weeks)
All hands are an important communication forum as its your opportunity to highlight progress against the strategy and reiterate the initial narrative you outlined

Peter on breaking down strategy into metrics

“We broke down the strategy further into metrics. You can write these however you want, but for us this was OKRs. The important part of OKR is just that it keeps breaking things down into smaller and smaller and smaller pieces until you have things that people can actually go do this week. from an operating perspective, we had these weekly E-team KPI reviews, and all hands every couple of weeks. We [outlined] the structure for what was going to happen at each all hands at the company. Like when we were going to review the last quarter, when we were going to do the board recap, when we were going to talk about the next quarter. And we would show people this is how all these pieces of company infrastructure fit together into an execution model.”

Example Q1 KPIs that came out of the financial plan

ARR and Gross Retention
Productive Capacity [capacity of sales team]
Pipeline Coverage [pipeline over target ARR]
% Healthy Accounts [based on customer indicators]
Enterprise customers “promoters” [enterprise customers ready to advocate for Segment]
A Segment specific metric that captured Gross Margin
Rule of 40

E. Keeping External Stakeholders Aligned

External stakeholder alignment is just as important as internal alignment. You want your board and any other important stakeholders to be bought into the strategy of the company. They also can be helpful accountability partners for you as you execute quarter over quarter
Use the process of writing your board memo as a mechanism for driving clarity. Distill your key metrics, how they are progressing, how you are addressing issues, and where you need further focus. Try to use no more than a few pages. Peter, from Segment, wrote board memos each quarter for exactly this reason
Hold yourself accountable. You have accountability meetings internally. This accountability meeting is for you. Create a scorecard and present it to the board each meeting. This simply highlights performance against key metrics, learnings from the plan, and how you are tracking against them

Peter on Board Letters

“I tried to interweave metrics into (the board letter) a lot and keep it to, like just a couple page memo. It's like six pages, most of the length is charts, but starting with what the high level goals were. Just the exercise of actually writing the letter to investors… It forces a lot of clarity. Starting with ARR growth and then showing the metrics as we descend into what are the key drivers and blockers for the business to grow right now, what are the key bottlenecks at this time?

"For example, if attainment in the mid market was a problem. (I’d include) some stats showing relative attainment. And how we're trying to figure out how to fix that. We were trying to understand what was causing it. So kind of studying these like red zones of attainment with the metrics to support that on the AE side. And then just sort of where we're going forward in terms of what the path is going forward to [address these issues].”

Peter on Scorecards

“A board member forced us to do a scorecard. It shows key metrics, learning from the plan, how we were tracking against [our goals], and commentary. You know, the actual plan, the variance plan for the year and the core change. I think [scorecards] are super important. And probably underutilized.”

II. FAQ

Question #1: Changing goals and replanning

When targets are missed multiple times and there's a decision to change the execution strategy, how do you adjust this in the biweekly deck, especially when strategic changes occur at a micro scale?

Response

It depends on the level of predictability in the business. In general, want to try not to “re-plan”
In low predictability settings, emphasize change and that you will adjust course as is needed
In higher predictability settings, try not to regularly re-plan as does not hold the team accountable
Don’t set goals that are egregiously unattainable - will result in demotivation. Make sure there is a path

Peter on Re-forecasting (high-predictability)

“Re-forecasting is a big deal because you're not really holding yourself accountable to what you thought you would achieve, and it's very costly in terms of actually rebuilding a full financial model and renegotiating everything. So, I would really try not to do it. I think there were two years where we had to do it mid year.”

Grant on egregious goals

“We try and make the goals be stretched, but there's always a story behind it for how we can hit it. When we've had goals that are so large that it's just hard to wrap your mind around it, the teams have gotten demotivated. And then sometimes what happens if they are so far off you just kind of ignore them through time.”

Question #2: Risk profile on making investments once strategy is working

Did your risk-profile change once you knew the strategy was working? Could you be more aggressive?

Response

Yes, but needs to be supported by data
You should be OK throttling a team’s hiring plans or expansion if they are not performing or hitting the metrics

Grant on unlocking investments

“We did scale people fast. And we had the conviction from the data. But even across all of that, I was super close to it. I still approve every single hire at the company. I look at the teams and I ask myself is that team performing? Otherwise, you're not getting this person who you said you were about to hire. So yes, if you have the data, you scale it and you get conviction around it. But all across the board, I'm looking for what things are going to break. Again, I'm very, very close to the data in the business, so I know which things are performing, I know where the issues are, and so I'll throttle those things for you, depending on what's happening.”

Question #3: Margins

When did margins and financial metrics become a focus, and why at that stage?

Response

Tracking Gross Margin is important because it represents how much you keep for every dollar of sales
Both Peter and Grant initially didn’t focus on margins until they faced pressures in the business
Best practice is to build the instrumentation upfront, so you can track margins before issues arise in the business

Segment

They began tracking margins at ~$80M ARR
For a long time, Gross Margin was about 70% and it wasn’t a big deal
All of a sudden, Gross Margin declined to 50-55%. They had to track it and understand the drivers of cost.
With this information, they built a financial plan with their CFO to increase margins back to 70%+
They ended up achieving their margin targets by EOY and reaching 70%+ margins on the business

Whatnot

They began tracking margins once it started to impact cash flow meaningfully, which was in 2022.
They started to track it and understand the drivers, so they could implement changes to unit economics
2024 is the first year where Whatnot has explicit margin goals alongside their topline revenue goals