This is very insightful. I wonder who in the startup ecosystem can most afford to lose the game. Clearly, founders often times invest all of themselves into a business, and losses for them are more devastating than for the investor. Employees also tend to find losses unaffordable–they have their future incomes and employability staked on the success of the business. Family members are similarly invested and impacted by failure. For this reason, a founder should always look out for employees and family first.
It’s absolutely important to have alignment with your cofounder on what type of business you’re building. It’s hard to pursue both a lifestyle business and a venture business at the same time. The next steps and milestones look different for each one. For a venture-backed business, not only do you have to pursue growth at the expense of cash flows (hopefully not at the expense of margins, though many companies do this now anyway), but you also have to focus on getting external funding sources to make growth possible in the face of high asset intensity. On the other hand, for a lifestyle business, margin arbitrage is important to achieve, and you can’t achieve it by simply getting more users.
I absolutely agree. Even as people start looking into engagement, the metrics can tell a misleading story. For example, one of the metrics that we’ve been tracking is average time per session to get a sense of how engaged our users are. However, average time on page actually increased when our site load was heavy and load times increased. This would result in decreased conversion rates but a higher average time on page. The conversion rate is what actually matters for the business model, and time on page was just another vanity metric.