Adora Cheung - How to Set KPIs and Goals: A Guide for Early-Stage Startups

Adora Cheung's talk covers how early-stage startups should properly set KPIs (Key Performance Indicators) and goals. The talk emphasizes the importance of KPIs and goal-setting as essential elements for startup success, packed with practical advice to help startups move in the right direction. Below is a chronological summary of the key content.

1. What Are KPIs?

• KPIs (Key Performance Indicators) are quantitative metrics that indicate a business's health.
• Setting the right KPIs lets you objectively determine whether the business is doing well, average, or poorly.
• Adora says:

  "Numbers don't lie. When interpreted correctly, they show the most realistic picture of the current state."

The Role of KPIs

• Feedback mechanism: Verify whether current strategies (e.g., user acquisition, new feature launches) are effective.
• Priority setting: Decide where to focus time and resources.
• Course correction: Quickly adjust if heading in the wrong direction.

2. The Importance of Setting the Right KPIs

• Setting the wrong KPIs can lead a startup in an inefficient direction or even cause unnecessary failure.
• Adora warns:

  "If you set the wrong KPIs and goals, your startup can spin in circles or go down the wrong path for too long and ultimately fail."

3. How to Set the Right KPIs: Primary Metric and Secondary Metrics

Primary Metric

• The single metric that represents the startup's core performance.
• Choose "the metric you'd bet the entire company on."
• Why choose just one?
  • Focus: Focusing on one metric is more effective than managing multiple.
  • Simplicity: A single metric can capture 90%+ of business health.

4 Characteristics of a Primary Metric

1. Must quantify the amount of value delivered to customers.
   • Examples: Revenue, Active Users.
   • Adora explains:

     "If a user pays $100 for a product, they've valued it at a minimum of $100."

2. Must measure ongoing, recurring value.
   • Example: Monthly Recurring Revenue (MRR) is ideal for SaaS.
   • Adora adds:

     "A customer paying $100 monthly does so because they feel the product is valuable every month."

3. Should be a lagging indicator of success.
   • Example: Email signups don't represent real value. Instead, value already delivered (e.g., completed payments) is more important.
4. Must work as a fast feedback mechanism.
   • Example: Daily Active Users (DAU) provides fast feedback, while Monthly Active Users (MAU) is too slow.

Revenue vs. Active Users

• Revenue: The most ideal Primary Metric.

  "People paying real money means the product is genuinely needed."

• Active Users: Suitable for ad-based models (Facebook, Google) or where network effects are important.

The Importance of Defining "User"

• You must clearly define "user."
  • Someone who simply registered an email?
  • Someone who uses the product for 10+ minutes daily?
  • Adora advises:

    "If you define 'user' too loosely, you're only fooling yourself."

4. Secondary Metrics

• A Primary Metric alone isn't enough to understand the full business state.
• Select 3–5 secondary metrics for a 360-degree view.
• Examples: Retention Rate, Customer Acquisition Cost (CAC), Lifetime Value (LTV).

5. How to Set Goals

The Importance of Goals

• Goals promote growth and serve as tools to prove you're building what users want.
• Adora quotes Paul Graham's essay "Startup = Growth":

  "A startup's goal is growth. A startup that isn't growing isn't a startup."

Setting Weekly Growth Rates

• Set weekly growth rates to break goals into small units.
• Example: If targeting 10,000 DAU, set a 10% weekly growth rate. In the first week, focus on acquiring 100 new users.

Appropriate Growth Rates

• According to YC startup data, early-stage monthly growth rates are 20–50%, which translates to 5–10% weekly.
• Adora emphasizes:

  "If you achieve 10% weekly growth, you're doing very well."

Realistic Goal Setting

• Set ambitious but achievable goals.
• Early on, focus on organic growth and avoid paid advertising.

6. Goal Tracking and Execution

Goal Visualization

• Visually represent goals for motivation.
  • Example: Draw a 10-week growth graph and post it on your desk, mirror, or refrigerator.
  • Adora references the Airbnb founders' approach:

    "They checked every week whether they hit the goal, and if they failed, that was all they discussed."

Priority Setting

• Each week, execute the tasks with the biggest potential impact in order of priority.
• If goals aren't met, identify and address the biggest obstacles.

7. For Pre-Launch Startups

• Before launch, focus on defining the problem and understanding customers.
• But defining a Primary Metric in advance helps the team clearly understand target customers and early user acquisition strategy.
• Adora says:

  "Looking at 0 users and $0 in revenue is a very powerful motivator."

8. Closing

• Use YC's software to record and track your Primary Metric and goals weekly.
• Adora closes with this advice:

  "This one simple habit alone can make a huge difference for your startup."

This talk provides concrete methodology for early-stage startups to set KPIs and goals and achieve growth and success. As Adora says, "Numbers don't lie" — the right metrics and goal-setting clarify a startup's direction and open the path to success.