Different ways to see through the company growth
Ok, I know the title is confusing, but you should either live with it or try to unseen it.
Did you look at the title again? If yes, please press 1, if not then congratulations… You proved that I completely suck at psychology. But ok, let’s move forward I will cry alone later in a dark-dark room where it’s only going to be me and my hopes of becoming the master overlord of emotional intelligence.
Anyway, today I want to talk about DATA or how to see through it. The thing is I have seen lots of product managers, business and data analysts, who can look at the data but cannot see it.
What I actually mean, by the word “SEE”, is the moment you look at your bar charts or a dashboard with lots of metrics and sophisticated numbers and immediately hear the chorus of the soundtrack of the Disney cartoon “Tangled” by Mandy Moore, Zachary Levi called I See the Light. At that exact moment, you understand what each and every number of every single metric means.
But before I move forward, let’s just enjoy this song for a minute or two. I can wait, don’t worry.
Ok, now that we are together let’s talk about some real shit. GROWTH. The reason, why I want to cover growth, in the scope of data, is because that way it is easier to understand some concepts based on real examples, and also lots of tech articles cover the growth of different startups every single day, so it is kind of a hot topic right now. It is one of the main factors why some startups and medium-size companies are able to raise investments, it is also one of the main reasons why some companies cannot handle it and go bankrupt.
How to see through the growth
First things first, let’s understand what growth is. The best way the growth can be presented is probably the trillion-dollar companies' stock prices or 400% market cap take-off of companies like Zoom. What I am talking about is this chart below.
As you can clearly see the Apple’s price point was $60.35 a year ago and now it is $122.15, that’s a 102% growth over the year.
As Forest Gump said: “He got me invested into some kind of fruit company and we don’t need to worry about the money no more”
So, you can probably say: “This is easy. Is this it?”.Hmmm… Let me just put my evil face and help you dive into the cruel world of data.
Let’s look at the example below.
Is this growth?
What you are looking at is DAU, WAU, and MAU over the last 12 months of Company A. In case you don’t know what the above-mentioned metrics are then, please read this article.
So, does this company have growth? (And I am not going to trick you by putting the same chart of DAU, WAU, MAU over a longer period, don’t worry.)
The right answer is… It is hard to say and we need more data because it looks like it is flat, but there should definitely be other metrics to check. Ok, let’s see what else we can find out about the same company.
What can you say now? Is this growth?
What you are looking at is the session duration of the same users over the last 12 months. As you can see same users spend more time on the platform. So now we need to understand whether this is growth or not. And in order to do that, we have to ask the right questions.
What do you think are the right questions to see through growth?
These are some, that I would ask:
Why is the active usage flat?
Why is the session duration taking off?
What’s the company’s service or product?
What’s the company’s industry?
Who’re the company’s target users?
What’s the companies business model?
Why is Bran Stark the king of Six Kingdoms in Game of Thrones? I mean, what the hell? Have you seen him? (Sorry if I spoiled the whole series for you. You would be disappointed by the ending anyway, so… You are welcome)
Now, let’s try to put scenarios of how the same data can be perceived differently depending on the answers to these questions.
Why is active usage flat?
The sales cycle of Company A takes 12 months. Meaning it takes a year to close the deal with the customer. Now that you look at the data, I guess you don’t think it is bad, that it is flat and it even may explain the upward slope in the chart. Also, you probably don’t think that this company is about to die slowly and painfully.
Why is the session duration taking off?
The session duration is taking off either
because there is a bad user experience and now users need to spend more time on certain actions
or
because they like the tool so much that now they switched from other tools to Company A’s one, where all their tasks can be done.
As you can clearly see depending on the context you see through the data differently. In one case it is NOT growth, but quite the opposite - it is a decline So you are probably saying: “the chart goes up, but it is a decline?” Yes. Isn’t it amazing?
If you read the second option the duration chart IS actually associated with growth.
What’s the company’s service or product? and What’s the company’s industry?
The company sells an ERP (Enterprise resource planning) platform, which helps to automate the process of big enterprise companies. For instance, if a sales representative of Samsung sells TV, then the accounting transaction is automatically generated thanks to Company A’s ERP platform.
Who’re the company’s target users?
As said above big enterprise companies. However, to be more specific. Let’s say the companies with 500+ employees, based in the EU or MENA, targeting large retail and consumer goods providers.
What’s the companies business model?
The following are the options:
Usage-based (in hours) charging, per user per month charging, or both.
As you can see, in case it is the first option, session duration increase means that the company definitely is getting some cash.
If it is the second option, the revenue may stay flat and does not seem there is growth. Although, there may be an upfront fee and in that case, it is hard to say whether we look at the right data.
Finally, if both, the company founders probably take bath in a bathtub filled with cash.
Final thought
So to sum it up, the company's profile is the following:
It is an ERP platform targeting big enterprise customers specified in retail and consumer goods with 500+ employees based in EU or MENA, charging either in usage-based format or in per user per month format or both. The sales cycle takes up to 12 months and active usage seems to be flat with an increase in session duration. Session duration growth can be because of two main reasons either the bad UX or the tool is so awesome, that it became an all-in-one solution.
So again, which one is it? Is there growth? Maybe not?
Well, it is hard to say and it is not important right now, what is important that you learned, at least a bit, to think differently and SEE through growth. Also… We still don’t know why in the God’s sack Bran Stark is the king of the Six Kingdoms. Nasty little bastard!!!