Setting Goals – metrics can drive behavior

A number of years, I joined the board of the Humane Society for Seattle and King County (www.seattlehumane.org), a local non-profit that runs an animal shelter, adoption facility, and does veterinary services for the animals in our care. For those that believe in animal welfare as I do, you will easily understand how an organization of this type can attract experience and well meaning board members.

Shortly after joining the board, I began to try to study and make sense of our metrics – especially euthanasia numbers. I well understood that not every animal was “adoptable,” some were too sick to be saved or had behavioral problems that made them unsafe to be in a house with either other pets or small children. But the numbers just didn’t make sense to me. So, along with the support of other board members, I began to ask for more details on the metrics, drilling to the next level of numbers. What emerged was a picture of management controls and lack of consistent strategy that meshed with the desires of the board. As a result, the board changed management first on an interim and then permanent basis. And, we established a goal that “no adoptable animal in our care would ever run out of time or space.”

Over the course of a few months, we focused on a metric that matched that goal (it’s called the Asilomar Live Save Rate) and have been successful in maintaining that metric at a level that qualifies us as a so-called “no kill” shelter for several years since. And then we were able to go to important, but secondary, metrics (e.g length of stay until adoption) that improved our operations and the care we gave our animal guests. I am proud of these accomplishments, but it has caused me to reflect on the importance of goals, strategy, and leadership in a more general sense.

In both the non-profit and start-up worlds (some claim many of my startups are non-profits! J), understanding your goals is a critical element in success. Goals must be meaningful to the organization and actionable. And have corresponding metrics that match those goals.

This seems simple, but in several of my companies, this has proved exceeding difficult. Many metrics follow results by too wide a gap to be actionable. In many cases, revenue is such a metric. But in almost every case, there are a handful of “value drivers,” those metrics that truly derive the value and health of the business. For example, in a telecoms consumer services business (like one a ran earlier in my career), the key value drivers were, (1) cost of customer acquisition; (2) average revenue per customer; and (3) churn. For each business type, these will be different.

The power of setting a good goal, understanding your value drivers/metrics, and having a strategy to maximize those value drivers and fulfill the goal is the path to success.

Film, Angels, and Entrepreneurs

Last week I was invited to speak at an event at Victory Studios in Seattle that was sponsored by the new Seattle chapter of the Institute for International Film Financing (IIFF). I told them I thought they had the wrong person, but they explained that in LA and San Francisco there had been some great interactions between tech angels and the film community – we had a lot to teach each other. I agreed to speak, but was concerned that I really knew nothing about the film business.

I love film (as well as theatre). I’ve loved movies for as long as I can remember and (from my previous posts) you know that I found the new 3D/IMAX experience entertainment-altering. I’ve also blogged about setting up my home theatre to watch movies and loving Netflix on the iPad. I enjoy the output of the film industry, but really have no knowledge about film as a business, nor have I ever given it much thought.

I found myself at a film studio, sitting among a panel of film experts, including experienced producers, speaking to an audience of established and aspiring film makers, producers, and directors. As I listened to them speak, I realized why I was there. There really were a ton of similarities!

Listening to a producer discuss how the director and stars had a strong desire to create the vision exactly the way they wanted it, without regard to the budget, sounded like a conversation I had just had with the CTO/founder of a tech startup who had delayed shipping on schedule to get it exactly right. A discussion about the need to consider marketing budgets in film production sounds so eerily similar to that of a web company that had only budgeted sufficient money to launch their product, but not enough for distribution. And there was a long discussion about using social networks to enhance views that could have been a web startup as well as a movie.

The similarities do abound. Is a short film marketable? (Is a single feature company marketable?) Can a director be a producer as well? (Can a tech founder be a CEO?) Etc.

But for me, the biggest learning experience is how the movie industry has paralleled the tech industry. It used to cost many $M to produce a film, just like it used to cost $20+M to build a software company. You can now produce a film for several $100k’s. The technology has made it easier to do the filming, do the editing, etc. Even distribution is changing markedly. For example, you can distribute a film entirely on line, using services like YouTube and Netflix.

However, I also realize that, while I have some expertise in startup deal structure and terms, this might not apply to film ventures. I haven’t yet taken the time to review the kind of deal structure, partnership arrangements, rights, etc of a film deal. Nor have I looked at the business/revenue models that apply to film. I sense that most film investors do so more on gut, instinct, and passion than the smart tech investor.

The main difference is that most tech (or medical) startups create a product that doesn’t have to be a “hit” to succeed. If you get it wrong, or your timing is wrong, you still have the opportunity to fix the situation. This makes investing in a single film very different than investing in other startups. Most of our tech startups are more like investing in a studio than a film. This might dissuade a tech angel from film.

Comments from experienced film investors very welcome.

Microsoft – Great Customer Service

Since I blogged about my poor experience with Netgear, today I had a much better experience with technology. Well, sort of anyway. I was finally able to locate Windows 7 drivers for a couple of arcane devices on my desktop server, so decided to upgrade from Vista to Win 7. After cloning my drive, I put in the Windows 7 installation disk and ran it. After about 30 min, it returned an obscure error about missing files. So.. I tried it a second time telling it not to go online and get the latest update. Again it failed. That was the bad news.

It took me quite a while to find the number I could call, but eventually did. With that number in hand, I called Microsoft customer service. The first person I spoke with just took my info, gave me a case number, said that I qualified for free support, and transferred me to tech support. My call immediately dropped and I had to call back. With my case number in hand, I got right through to Jeff, who spent the next hour on the phone with me to fix the problem. First, he took the error code I had received and did some research. Within a couple of minutes, he knew exactly what caused the problem – it was my optical drive which (while working for files) would occasionally fail and not find a file. He then suggested that I copy the installation files, which my drive wouldn’t do. So, he recommended going to another computer on my network, copying the disk there and then using the network to install it. That worked! And then it installed perfectly.

Through all of this, Jeff from Microsoft in the Philippines, could not have been more knowledgeable, friendly, or helpful. Not happy that the install didn’t work on the first try, but very happy to have such a good level of support.