Yesterday, Startup Genome launched a new benchmarketing application for startups. Founders are able to access the type of stage of their startup and diagnose themselves for premature scaling as well as compare their company to other startups across myriad performance metrics.
A first of its kind, Genome’s Compass aims to eradicate the high rate of self-destruction among failing startups by updating the “very primitive” tools and knowledge of entrepreneurship.
Quoth the company’s blog:
Today we are releasing the Startup Genome Compass.
Many startups have trouble figuring out the right priorities to set and measuring their effectiveness once they do, almost always landing in the proverbial grey zone. “Is a 5% increase in retention good? Do I have enough users to declare product/market fit? Is now the right time to step on the gas pedal and scale?” We attempt to help entrepreneurs answer these questions by putting their metrics into the right context.
The Startup Genome Compass is a benchmarking tool for entrepreneurs to reduce this grey zone and make better product and business decisions by automatically classifying them by type and stage and comparing them against startups in the same type and stage across more than 25 key performance indicators
The Compass has many potential uses, Genome notes:
1. Measure progress by seeing your key performance indicators in comparison to startups that are similar to you.
2. Avoid premature scaling by identifying whether the 5 dimensions of your startup are aligned within and with each other. The 5 dimensions are customer, product, team, business model, financials and market.
3. Set the right priorities and align your team based on the benchmark your type and stage.
4. Find your weaknesses. See if your user growth or conversion funnels are good enough to move to the next stage.
5. Explore resources and tips that are relevant for your type and stage
6. Share your report with Mentors and Investors so they can support you better
7. Use the benchmark as a supplement for your monthly board meeting.
Startup Genome also diagnoses premature scaling, a “dominant cause of failure.” Genome found indicators of premature scaling in two-thirds of startups and the performance differences are remarkable:
1. No startup that scaled prematurely passed the 100,000 user mark.
2. Startups that scale properly grow about 20 times faster than startups that scale prematurely.
3. 93% of startups that scale prematurely never break the $100k revenue per month threshold.
Premature scaling indicators include building a product without a problem/solution fit, hiring too many people too early, and focusing on profit maximization too early.
Startup Genome is on the brink of something fantastic—a real revolution in how we measure successes and failures in startups, in how we define efficiency and effectiveness, in how we maximize our effects and the sciences of founding and growing a business. It’s been a long time coming, but Genome has it’s finger on exactly the right pulse. I can’t wait to see what they do next.