The silent business assassin: being all data driven without purpose

Bob Jansen
on
March 21, 2017

Having a clear purpose makes great founders. Deeply understanding why you spend your time and energy on building a company, is key. It allows you to navigate the tough calls, strategic decisions and leaps of faith.

It’s easy to fall prey to being too data-driven (growth hacking anyone?). Being too data driven and growth obsessed is the silent killer of the businesses in this generation. The ripple effect of your optimization tactics can only be measured over time.

The short-term optimization ripple effect, a silent business assassin

Obsession over data turns into a zero-sum game. There is always a metric you can influence to go up. The real effect on your business needs way more time to be measured. In most cases even up to months.

Let’s say you try a new landing page to sign-up people. Your sign-up rate on that page is 20% higher than any of your other pages. Great! Or is it? You don’t know the value of these new customers yet, and in most cases it will take months to figure this out (they might bring in less money down the line).

As a founder you need to be able and buy as much time as needed to prove that you create value for customers. If you don’t do this, you might not even be able to see the real impact of that new landing page.

Don’t let your data be your compass

Over the past 9 years we have worked on many different projects that eventually had enough data to make tough calls. None of the projects started out with that, so we needed a different compass to navigate decisions.

Our purpose is to help people build strong businesses that last. Preferably by showing how we do it ourselves. The motivation this gives us is so strong it got us through all the hard-times we’ve encountered.

We have never allowed data to steer us away from our purpose.

Here are the three basic questions we ask ourselves when making decisions on a day to day basis:

  • How will this bring us closer to ‘completing’ our purpose?
  • What is the impact of this decision on our chosen strategy?
  • Do we have data to support or improve our decision?

Only after going through this process we will make the final call. But as you see, we don’t start by looking at data. Our purpose and strategy is the starting point.

We identify ourselves as being data-informed. Before we look at the data at hand, we check if a decision fits with ‘us’. Because we do this we are moving closer to fulfilling our purpose at every move we make.

Being obsessed with data is a dangerous trap for founders and teams starting something new.

A steady cash-flow is the backbone of your business that allows you to see the long-term effect of your testing

Firmhouse has had a cash-flow from day one.. This has always given us the time to observe the effects of our tests thoroughly. It also taught us how to run a business. How to build a team. How to stay down-to-earth in good times, how to deal with the tough times.

Before you think of building a big business, you should be capable of staying in business. Create a deep understanding what it means to run your business on a day-to-day basis. Don’t postpone this for later. Your responsibility as a founder is to deeply understand what it means to run your business, before you even think of scaling it.

Don’t rush. Take your time and build something that lasts.