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To the complete entrepreneur and today is a special show because we’re actually syndicating this on StartScale, ExitRepeat, Serial Entrepreneur Secrets Revealed podcast. And if you’re listening to this, uh, you’re going to be in for a treat. Today we’re talking about KPIs. You know, it feels like you’re flying blind sometimes.

Well, that’s what we’re talking about today. And every startup needs to understand what their key performance indicators are. What are those metrics? Is there an algorithm we can actually follow to create a business and become successful? And that’s what we’re going to talk about today. It’s a show called The Complete Entrepreneur.

It happens every Thursday at 5 o’clock Eastern. And my co host is Michael Gilmore. Michael, I just hit the, uh, hit the intro. I mentioned that this is going to be syndicated on podcast, the show. And, uh, looking forward to this topic. It’s something that. We don’t often talk about, but if you don’t have those key metrics, you’re flying blind.

What do you think about this topic, Michael? Yeah, look, that’s an interesting question, Colin, like, um, but I’ve seen so many entrepreneurs, they’re racing around doing so many different things versus, and they don’t know how to measure what they’re doing. And every business will have a number of key metrics.

And I think Colin, what this topic is all about is, is really. Focus on the things that are really important and then measure them. And as, uh, as entrepreneurs, we need to be measuring everything we’re doing. Um, like, what are you doing with your time? And what, where are you putting your time, which is going to impact that key metric?

Um, uh, And for instance, I have a routine I do every single day. And that routine, uh, allows me to survey the very quickly, a couple of metrics and to verify what they’re telling me every single day. And that tells me the complete health of the business, the complete health. Michael, can I challenge you for a second?

Cause let’s just talk about startup worlds. You’re in a little bit more of a mature company and I do, do metrics really matter? Is this all about instinct? Like, entrepreneurial instinct knows what to do, we know we need to keep our costs tight, we know we need to get more customers, this is all about instinct at first, it has nothing to do with KPIs, we can fly blind.

I think if you fly blind as a startup, then you’re like a plane that is flying at a low altitude and you’re going to hit something. Uh, I really do. Uh, I’m a firm believer that, um, like you get some startups, they say, Oh, I don’t need to make a cashflow. I just need to go along and sell more product. Really?

Really? Are you selling at a profit or are you selling at a loss? How much for a profit? Oh, yeah, I’m definitely selling at a profit. Oh really? Prove it. Prove it. So many businesses have gone bust because they’ve been doing enormous sales and they believe, oh, I’m making 30, 40, 50 percent profit. Higher profits, right?

And they go bust because they actually weren’t. Because they didn’t have control of their metrics and Colin, you’ve seen one of my spreadsheets that I do for keeping track of cash flow and all that sort of stuff in the business and everything like that. I’m a firm believer that you really, as an entrepreneur, you need to be right on top of your numbers.

If you’re not on top of your numbers, you’re not on top of your business. And, uh, to go along and say, oh yeah, we just need to go along and fly by instinct. Look, I’m also a firm believer in instinct as well. Like if it, if it doesn’t smell right, it probably isn’t right. Right. Yeah. And so let me, let me come back here cause I was being facetious, facetious, of course, you know, and, and, you know, from the book, start, scale, exit, repeat.

Um, In the start section, we have something called systems and under systems, we have KPIs and that’s one of the things I talked to a lot of startups and I say a founder is just if you can do one thing and one thing only, it’s really figure out the KPIs, but just for a second, I’ll read a little just a little bit from the book here.

Michael be very quickly. Yeah. During the start phase, the startup relies heavily on your instinct as an entrepreneur. But you should still focus on tracking leading indicators, also known as KPIs, or key performance indicators. These leading indicators are simply the reference points that allow you to connect your KPIs to your stage gates.

This could be knowing that you could generate 100 sales from 1, 000 phone calls, or you could book 100 meetings, etc., etc. In other words, you need to be systematically tracking these leading indicators so that you understand the health of your startup, etc. and can hitch your smart stage gates. And there’s a lot of components to KPIs.

We talk about leading indicators, and I know we’re going to talk about that in a few minutes. Well, Michael, I just wanted to let you know that, uh, I’m obviously taking the other side of that debate to sort of generate the conversation and it’s exciting that Gabriel came on stage here as well, but I’m going to pass it back to you to tee it up in today’s show.

Yeah, sure. So it’s, it’s a, it’s a really, it’s going to be an interesting topic as we impact this topic of the next hour together. And it’s, it’s great to have other people up on the stage here with us. Gabriel, it’s wonderful seeing you up here. We’ll come to you in a few minutes. But, um, just to open up the whole sort of session, um, for those of you in the audience, you’re on the, the complete entrepreneur, the show, the complete entrepreneur has been running for a couple of years now, I think Colin.

And, um, and it’s a show which is, uh, unpacks, not just the business side of entrepreneurship, but what does it mean to lead the life of an entrepreneur, the stresses, the strains, the emotional toll that it can sometimes take as an entrepreneur. On your life and your loved ones for that matter. And it’s a show we run at Thursday at 5 p.

m. Thursday Eastern time every single week. And, um, and, uh, it’s a, it’s a show that both Colin, I particularly, we’re very passionate about entrepreneurship. I’ve been an entrepreneur. I think I started my first business when I was 16 years old. I raised some debt capital. And, uh, for that business and, uh, and moved forward.

I learned so much from the experience, but, um, 40 something years later, um, I’m still running businesses and still isn’t energized as ever about entrepreneurs and entrepreneurship. I wanted to help the community out in the, in, in any way possible. And this is one of those expressions of it, but today’s topic, we’re taking a look at, um, Uh, something that’s really, really quite interesting.

It’s what really basically the essence is, what are your businesses? K a K a KPIs and what drives them? Where, if you can, if you can put effort in one area, you get a 10 times return on that effort, but you put effort in another area, you get a one times return the effort. What is, what is your KPIs and really what drives them is so important to understand as a business owner.

But, um, so anyway, so if you’re in the audience and you’re saying, I’d love to be able to come up on stage and, uh, contribute to this topic. Please put your hand up. It’d be great to have you, have you up here just like Gabrielle. So I want to come back across to Gabrielle. Gabrielle, kick us, kick us along.

I’d love to hear from you. Hey, Michael and Colin. How are you guys? I’ve been a little busy, you know, I’m building a digital bank. And we have other, um, services that I’m going to talk to you guys in a little bit. And I think I talked to Colin couple, couple months ago, but right now I’m in, I’m pitching tomorrow, my, my, my startup, uh, with 200 plus investors right here in Orange County, California.

And then I’ve been talking to investors and everything. Well, from people like you guys, you know, people with experience, um, I’m a good software developer, you know what I mean? But I’m not a good business. I never built a business in my life. You know what I mean? And a lot of these angel investors, sometimes they don’t want to help me financially because I never built a business before.

You know what I mean? So I was wondering what you guys choose. What should I do? You know, should, should I find like a founder or someone who build a business before, because I’m a, I’m building a digital bank and it’s going to be focused on the emerging markets on Mexico. And then also we’re, we’re building like a venture capital software where we’re going to borrow money to startups in Mexico.

It’s going to be like a really easy to get funding from startups and they can pitch it online and they can get money right away and they don’t have to pay money, like all, all the apps that we have now, you know, like, uh, you want to pitch it, you have to pay like 350. And this one. They give you money first, the investors, and then, and then you can, you can use pay, you know, and then also we have, um, I’m building a software.

Well, this one, it’s a real complicated in the legal stuff. I’m building like a real estate crowdfunding software. We’re real estate developers in Mexico, like Puerto Vallarta, Tulum, or later on, it’s going to be global. Um, they can get crowdfunding, you know, in their real estate, um, uh, projects, you know, let’s say a real estate developer is building a huge building.

Um, they can build it and then they can, they can get funding, you know, from investors, global investors, you know, and then we’re going to grow that. Marketplace little by little, but I was just wondering, you know what I mean? Cause investors, they, they know my demo. They know my prototype. They know that I’m a good software engineer and I have a good team.

Uh, I have around four guys, but I never built a business in my life. To be honest, I used to manage a landscape company. I used to manage like, I don’t know, 20 guys, but I don’t know. I never, but. I have the book and I’m reading it every day and I like it, but sometimes I get really confused, you know, um, because everyone talks about experience, you know, everyone is like, Oh, uh, you have to have experience.

I built a business 20 years ago and I’ve been building and building businesses and then getting IPOs and all this kind of stuff. And I’m like, Oh, what, what’s, what’s an IPO? Of course I know what’s an IPO, but I was just, you know. I don’t know, to be honest. Gabriel, I think you raise a, a typical question from a lot of inventor, um, entrepreneurs.

Where the greatest software development or they’re really good at building this particular thing or providing this particular service. Um, and it’s quite common, but they’re not very good at how do they manage the business aspects. Thank you. Of the business and I think you’re heading off in the right direction.

Number one is as far as the Spruik Collins book here is read, start, scale, exit, repeat, and really read it, read it. You see running a business is skill set. Um, just like, um, uh, developing software, it’s a skill set and you can get some fundamentals in that skill set. The other thing I would highly recommend, uh, you do is get a business coach that can help.

Guide you and your, the business side of the business and help work with you, help shore up those skills. Um, and if I was to be very, very practical about things, I would sit down and, uh, and, and I, I’d, I’d learn like something like Excel. If you don’t know Excel, learn Excel. It sounds very, very mundane, but I would go ahead and I’d learn it and I’d learn how to build a model for your business in Excel.

I would once again, highly recommend that. Um, and you could do like a two day course if you really want to, or even a one hour course. The final thing I would say is get a really good accountant. And, uh, and I will make sure you get other professional services like a lawyer and things like that, which will help you and protect you, particularly around things like compliance and stuff like that, which you may not know about in, in running a business, you may, you may know how to run your software business and all that sort of stuff, but you don’t know about it.

Some of the compliance issues you may have to be across and all those sort of things. So it’s really, it’s, it’s looking at yourself and one of the, one of the best things you’ve done, you said, look, I lack skills in this area. A lot of entrepreneurs, they convince themselves they’re experts, uh, at the business side of their business.

You said, I lack skills. I don’t start reading. Read, read, read, read, read. I just devour books, do that continuously. Um, and starting with Collins is a good place to start. Um, and then get good people around you. Um, really good people around you and people that you can trust. By the way, I, I’m a, I’m a firm believer.

If you can’t go along and share with your accountant, like you share with your doctor. Didn’t get a new accountant and same thing with lawyers. They can only help you out as much as you are transparent with them. Be very transparent about everything. They’re you pay them, they work for you. Be transparent and get great advice.

Colin, uh, do you have some other thoughts for Gabrielle there? Yeah, well, first of all, if you’re in the U. S., Gabrielle, um, there’s an organization called SCORE, and when Michael was talking about getting a coach, you should definitely apply. It’s absolutely free. It’s put on by the Small Business Administration, and they have a statistic that you can increase your chances of success by more than three times.

The next thing I’ll say is you’re walking into a pitch, and, uh, you remind me of a company that I recently invested in, and pretty heavily, by the way. Um, and, uh, yeah, and I’m a little bit frustrated with the CEO, uh, Gabriel, and, and don’t take this the wrong way, but he’s very like you, like he’s a genius and he loves his product and he knows how to build a great product and every time I get on a call with him, he’s showing me this new feature, that new feature, and this new feature.

And let me be very clear. And when you start walking down the raise the money path features, like they’re, of course. They have to know and have confidence that you have the best product in the world to serve a particular market segment and solve a problem. But that’s sort of like, you know, you’ve got it or you don’t have it, you know, and what people want to see, what these investors want to see are KPIs.

And I know we’re coming back to key performance indicators here. They want to come back to a understanding of, okay, you’ve now proven your model. You now have x customers doing a digital bank that have x amount of revenue, your cost of acquisition is x, your lifetime value of customer is x. They want to know exactly what it costs to acquire a new subscriber, the value of that subscriber for the life of the subscriber.

Um, there are, are many other metrics depending on your business model. Um, but you know, there’s a virality metric in some situations. There are, um, you know, there are, uh, uh, RPUs, revenue per user. There’s a lot of metrics. No, but let me finish, Michael. But you need to walk into an investor presentation having all of this down.

Do not walk in. I would recommend highly don’t rock in to any investor presentation. And unless you’ve got your key performance indicators locked down and because and keep performing indicators, there are more, like I tend to suggest to startups, they focus more of the leading indicators, but there’s also those other indicators that we need to track those lagging indicators as well.

And those are the ones that, um, investors are going to look at. So they’re going to look at your company and they’re going to say, clearly he’s got Everything I need to invest in this company. He’s got a cost of acquisition of X, a lifetime value of X, ARPU, churn, all those things are in line with my business models.

Therefore I will invest X and that X will deliver X lift for the company. And both you and the investor will be very successful.

I was about to say Colin, you’re actually just talking right at the topic of today’s discussion, which is KPIs. Is when you go to an investor’s meeting, uh, Gabrielle, as Colin was saying, you’ve got to know your KPIs. Um, if I, without even thinking about it, I’d be saying exactly what Colin’s saying is, what’s the cost to acquire a customer?

What’s the lifetime value of a customer? I’d also want to know what’s the attrition rate. In other words, a customer stays with you, say, for 12 months, or they stay with you for one month. In other words, they try it out and they go, wow, yeah, not very good at all. Really. Uh, I’m out of here. Like how long do they, how long are they staying with you?

And, uh, and there will be an attrition rate. In a situation like that and uh, but also like Knowing the value of the customer is so important Let me come back to something. I remember a number of years ago. And by the way gabriel Fabulous like I wish you all the best like doing a pitch. Thank you If in front of, in front of like 200 people is got to be one of the most stressful things you could possibly do in your, in your, in your life almost.

Yeah, it really, it can be quite nerve wracking. Um, and then, and particularly if there’s a Q and a at the end of your pitch and. And to make sure you, you’re really fired on, um, like fired up about what are the numbers up, just get a word of advice. I remember one time, uh, I had this many years ago, I had a particular investor say to me, um, uh, they’re, they’re being a bit, um, uh, They’re trying to rattle my boat to see how I’d respond to a potential investor.

And then, and I did the big presentation and all that sort of stuff. And they said, Oh, this is all very good, Michael. What happens if Microsoft came to this market? And it’s quite often a typical question. Uh, the investor will do what they’re trying to test out here is not what happens if Microsoft really comes in.

They’re trying to, they’re trying to ascertain the response by the, um, uh, by the entrepreneur and measure it. I got it. I got a response. I think I got the right response. I, I already got an investor asked me and, and I was like, I was like, you know what, I’m, I’m 100 percent aware, you know, that these companies, you know, These huge companies, they can build the same system, you know, but I think that it’s cheaper for them to buy us, you know what I mean?

Than to build the same software and everything, you know what I mean? I don’t know what you’re talking about. Gabriel, that’s a great answer. The answer I ended up giving was, if we worried about what all these big I’m sorry. And then he asked me, he was like, well, what about if they just build it? You know?

And I told the guy, I was like, you know what? And he’s, he, he, he, he’s my first investor. He really, really, really, we have a good relationship. And he asked me then what happened if they do it? I was like, you know what? I have the best team. Pound, pound by pound. I have the best guys and I’m gonna fight until I die.

You know what I mean? I don’t care. I just, I just gonna give it all, you know what I mean? And that’s it. And he was really happy. He was like, well, let’s do it. Let me give you a small check. Yeah. It’s, it’s an interesting thing. Said, the response I ended up giving to the, to the part potential events investor was if Mark, if we’re.

All going to go and say that Microsoft may come in or Google may come into this market or whatever it is Then no one will invest in anything. So what the heck are we sitting here for? The fact is they’re not in there and Yeah, so You need to understand from an investor perspective. They’ve got a pool of money They’re actually want to invest they actually want to invest but they want you to invest in not just the business They want you to invest in the person and has the person themselves Um, uh, do they have it together as an individual, as an entrepreneur, or are they completely flaky?

So they’ll throw curve balls at you after the presentation, and they’ll be testing you and, and your resilience. That’s the thing they’re going to be testing. You see, as an investor myself, I want to know I’m investing not just in a business, but I’m investing in a person. And that’s why the show is there, called The Complete Entrepreneur, is the person’s personal life, for instance, is a complete mess, and so it’s going to be a massive distraction for them focusing on the business.

Michael, there’s all these things which are really important for me. And you, as a potential investor in something as well. And also he asked me, um, a really weird question. Um, he asked me, Hey Gabriel, what’s your exit strategy? And I was like, you know what? Um, I’m, I’m focused on growing my business. 100%. I think the exit strategy, it’s going to take, it’s going to take care of itself.

You know, he was really surprised. He was like, I was like, yeah. And because let’s grow the company, you know, let’s grow it and then it’s going to take care by itself You know, it makes sense for me. I don’t know what you think. Um, that’s an interesting question. Whatever do you call it? Yeah, Gabriel um, yeah, I think it was great answer, uh, because what we really want to do is build something great here and What i’m still missing from you and I know it’s today’s topic are the kpi so a lot believe it or not a lot of investors and this this particular investor may have They said give you a little bit of money like When you start to get the big money, what investors really want to see is that if I, here are your numbers, all I need to do is inject 5 million and you can acquire 10, 000 subscribers that have a lifetime value of X and ultimate valuation of Y or whatever.

And then we can exit the business and we all make 10 X our money. Um, you really need to get a good sense of your numbers and your KPIs. And. I’m not sensing you have that under control yet. Like I’m sensing that you’re brilliant. I’m sensing you’re enthusiastic, great entrepreneur that you can develop great software, but I’m not, I’m not understanding.

I do. Do you think that you are comfortable? You know walking in and pitching to a bc that you’ve got all the numbers locked down I’m curious gabriel what your thoughts are on that? No, definitely um Let me tell you. Uh, I have a business plan that I can I can share with you with you guys and I To be honest the the kpis I have like half, you know, for example, I have my marketing calls my my My team, and then I have kind of all the, all the, all the thing.

And then also I have like a little financial projection of how much, how much money do I need to make certain amount of money? For example, right now I’m talking to angel investors, but my final, my final amount I want, it’s 80 million and I want it. And then my software is going to be able to make around, you know, I don’t know in revenues, it’s going to make around 40 something.

And then, but this is every year, you know, in the little by little, we’re going to grow and I have like the cost for my clients, you know, but like their retention and how much time they’re going to stay with me. I don’t know, to be honest, there’s a lot of stuff that I don’t know. I don’t, I’m, I’m right now I’m taking, I’m watching YouTube videos about finance because I don’t know a lot about finance and EBITDA and all that crazy stuff and And but, yeah, I don’t have, I’m not 100 percent clear on my finance on, on my, on my numbers, to be honest.

Yeah, I could tell it. I mean, I think you can sense that. Gabriel, you can sense that. And when you say, you know, I want, might want 18 million dollars. No, no, no, no, no, no, no, no, slow down. Every, every, every response has to be definitive. So if I’m in your shoes, Gabriel, I’m saying we would 18 million. We’d like to raise 18 million because we know that by investing 12 million in acquisition at a cost of 400 per subscriber, we’ll generate 10, 000 subscribers.

And here’s our evidence of that. Here’s what we did in the past. We proved that concept. All we need to do is raise the money. It’s got to be definitive. It can’t be ambiguous. I think you’re a genius and humble at the same time. And I’m concerned that you gotta, you really have to lock down those numbers.

Michael, am I on the right track here with guidance? Oh, absolutely. Yeah. It’s, it’s, um, Knowing those numbers are absolutely critical. Particularly 18 million is a big chunk, chunk of a chunk of money. Right. And, um, like I know you’re talking to angel investors now, but one of the things you could say to an investor also is help them.

De risk what they’re doing, which is, this is the pathway. This is the cashflow across the next five, five years projected cashflow. This is how we’re going to go along and reduce our acquisition costs to customers across this. And this is the things we’re going to do along the path to do that. This is how we’re going to increase the amount of revenue we’re getting from customers.

And this is how path we’re going to do that. And by the way, we need. 1 million now in end of 12, end of 12 months, we need 5 million. Then we need a 10 million at the end of two years or something, whatever it, you create a, you create a story, which is believable. And also you create a sense of you have things completely nailed down.

And you actually understand exactly where you’re headed. And by the way, with this Gabrielle, you haven’t talked about the product at all. You actually haven’t talked about the product. You haven’t said we’ve got this particular feature and it’s so much better than competitors and all that sort of stuff.

You, you, you really haven’t talked about that. What you talked about is the KPIs. And, uh, if, if you happen to have a feature, you say, by adding this feature, we’re going to reduce our cost of acquisition from 400 down to 100, then that’s an interesting feature to go along and bring into the presentation.

The other thing is this, is that what is the one page summary of the entire business? What is the five page deck? And then behind the five page deck, you’re going to have. 50 pages of, um, uh, of appendices, which backs up the five pages with real hard cold data and everything like that. So that no one’s going to go along and say, Oh, Gabriel, that’s really good.

Here’s 18 million. No, one’s going to do that. Um, and they’re going to want to have some hard cold facts. And the job of an entrepreneur is to provide the investors with those facts. And remember, it’s not just, uh, look, I think it’s going to do this. It’s hard cold metrics and you’ve been tracking them.

Your KPIs, key performance indicators. You’ve been tracking them. And then you’re telling the story around what you’re doing to change those KPIs in a positive direction for the business. So I hope that helps you out there, Gabriel. Yeah. Thank you. And to be honest, you guys opened my mind really big right now.

Cause yeah, I, I have a good, I have a good software and everything, but I have to get my shit together right now. After this call, I’m going to, I’m going to start working on, on all the, all those KPIs daytime. Cause it’s, it’s, it’s real. I don’t, I don’t, I don’t know where I’m going to be honest. I have the airplane, you know, I’m getting pretty, I’m getting fill, I’m, I’m getting, I’m getting gas, but once I get the gas, well, I, that’s why I’m having a hard time probably.

But if I get the gas where I’m going, you know, I have to get my, my KPIs on track, you know, ’cause I, I have the feeling too that I’m gonna get, I’m gonna get some money too. Um, yeah. But yeah, definitely. Um, are you, are you going to invest this presentation with literally two hundred potential investors tomorrow?

Yeah, I’d almost, and I’ve been your viewer in this column, I’d almost be, um, it’s almost, uh, how can I put it? I’d be tempted to, to politely, um, pull out if it’s like a whole lot of people doing presentational, let’s just, uh, just politely pull out until you have these things down. Otherwise the investors may see you again in another context and they, they won’t, uh, they won’t listen anymore because they say, I’ve seen this.

I mean, the thing, Michael, it’s the right now. I’m just looking for about three, 300 to buy some, to buy some, to buy some technologies, because I have the demo and the prototype, but I, I, you know, there’s a lot of technologies that they already patent and it’s going to take a lot of time. Time to, to us to build it and we can just buy it, you know, we can just buy it and I’m just looking right now for Tomorrow, I’m I’m meeting a lot of wealthy people to be honest.

Um, I I already have like a Relationship with about two angel investors and a BC and they know me they we already talk They’re gonna they’re some of these guys they borrow me A little money, like Colin was saying, they borrow me like 25, 000, you know, like small amounts because I’m, I’m, I’m raising the three feet, the 300, 300 or something to buy the technology.

And then after that, once we have the thing, then, then. Then I’m going to raise, like you guys say, the 18 million, but it’s going to be to get a permit, you know, and it’s going to get to get a credit card, um, software thing, and, um, you know, we have to talk to Visa, MasterCard. I don’t know who’s going to help us.

Um, so stuff like that, you know, So let me just offer a slightly different version, Michael, because I was on your path as well. And it sounds like this is inevitable. So if you’re going to go down the path of making this presentation, To 200 investors. Um, do your demo. You’re comfortable with that. We already know that you’re going to kill it with that part and have one or two.

Just have one slide. If you can just do one slide that has the KP eyes. It says, okay, here’s what we expect with this application. We expect to sign up X number of people at X cost and that have a lifetime value of X. If you can deliver one slide with metrics or KP eyes to back up your demo. Okay. That’s a huge step forward.

That is not enough, but at least that’s something, uh, before you go in there and just sort of get slaughtered. And I think that’s what you’re thinking, Michael, right? I’m definitely thinking of that sort of like, if you’re raising 300, 000, it’s, um, I can put it is what are you using that money for? I’m using it to go along, buy this technology or something like that.

Well, can’t you just lease it or can’t you just go? But even if you’re bought it, like what’s the, what’s the growth plan? What KPIs are the growth plan that it demonstrates to the investors. This is what you need. We are doing and it shows them confidence that you understand your KPS. If you do not understand your KPIs and you’re walking into a 200 person bench, you’re going to get slaughtered.

Yeah, yeah, I would, um, yeah, look, it’s up to you, Gabriel, you know your business better than we do, we’ve only just met you, so we wish you, honestly wish you all the best. I understand, Collins, he’s right, um, I’m gonna, I think, He’s right. I’m, I have my financials. I just have to put everything together. And then I’m going to, I’m going to make that the slide and I’m going to, and I’ll figure it out right now.

But yeah, he’s, he’s really, really right. You know, like I say, you guys open my mind. Cause it’s true. You know, they’re going to ask for these questions, you know, what, what’s going on with the money where it’s going. You know what I mean? And then what you doing after, and then how much the KPIs are gonna help me.

You know, like, like the, how, how many people you’re gonna bring to the app, you know, and then how much money, you know, what’s the profits and everything, you know, I think he’s really, he’s really right to be honest. Yeah. Yeah. And sometimes Michael, and sometimes I, I often say that business is an equation.

And when you have investors, these are bankers, these are smart people, they’re investors. Everything is an equation. And if you understand the metrics, if you understand how the equation works, you can understand how the company is going to grow, how it’s going to eventually be profitable, how it’s going to Everything’s an equation and that’s it.

And then you got to think in their language. You’re thinking in your language Gabriel You’re a genius. You’re a technical you’re gonna have the best product ever But you also have to to take a step forward and think of it think in their world as well Vincent’s on on the path as well Yeah, we’re gonna come down to vincent in a second.

Um, and uh, just just one thing gabriel. It just is a Potential let’s imagine always a potential investor. There’s a few things Uh, I would say to what you suggest you use of the money, the money for is would be, why can’t you just go along and do a deal with a company that you need to go along and get some technology from where I want, I want to trial it out for three months and then that point onwards, like, uh, uh, do a longterm contract with you to be able to secure this technology in that three months, you can then go along and, uh, Release your, your system and get all your metrics and all that sort of stuff and everything like that, because my guess is a lot of these companies, they’ll do a deal, something like that.

Um, and once again, I’m guessing here, I don’t know your business at all. Um, the other thing is this, is if you’re raising 300, 000 on what valuation you’re raising it. You’ve only got to look at shark tank. Like I know it’s a bit of a contrived show and all that sort of stuff. And you get these entrepreneurs in there and they say, I’m raising 2 million on a hundred million dollar valuation, and I’m willing to sell 1 percent of my company, whatever, and, uh, It’s just ridiculous valuations and then the sharks come in there and they end up getting it from 40 percent of the company or something stupid like that, which is even ridiculous on that side as well.

So I’m a bit of a cynic when it comes to that show. It’s, the question I have to ask you, if you’re raising 300, 000 at what valuation and is it post money or is it pre money? That’s a good question. To be honest, I was, well, that’s the fundamental question from investors. I mean, this is, I mean, I was talking to, to a BC in Denver, um, where I used to leave and he told me a company like me, um, well, we’re not making money to be honest, we’re not, it’s just an idea with a demo and in my little team and it’s about In my opinion.

Well, if they ask me, I know they’re gonna ask me. I think it’s about $180 million. I, I think that’s kind of big. I know, but I don’t know why you, it’s, it’s, it’s not just an idea in a demo. It’s an idea in a demo with very clear KPIs, how we’re gonna get, you’re to a valuation of 180 million. See, the problem is you’re saying this is great and it’s worth 180 million.

There’s, you gotta link, there’s, there’s something in between that, and that’s those KPIs. And, and, and the other thing is, and then the bigger the valuation, the bigger the risk you’re making it for an investor. The bigger the valuation, the bigger the risk. So if you say, ah, my business worth $180 million, the first question they’re gonna ask is, so what’s your profit?

And you say, I’m not making anything. And the next thing I ask is, what’s your revenue line? Well, it’s, it’s, it’s essentially non-existent. They say, well, $180 million, that’s a big stretch. It’s like, that’s a, that’s a huge stretch. Yeah. And it becomes an impossible valuation to invest at. I mean, it actually is.

And yeah. Uh, Oh, I’m going to figure out right now. And I, I have a business coach and, and, and he’s, I’m going to call him right now and then we’re going to work on the KPIs and then I’m going to be the last guy. Uh, pitching tomorrow, the event is going to start from eight to two sets. It’s going to be a huge event, but, um, I want to go cause they’re not going to pay me my money back.

I pay around 2, 500, almost 3, 000 to pitch and there’s, there’s a lot of. Companies, the, well, there’s around 20 companies and I’m the 20, I’m the last guy pitching. But, um, and, and also my angel investor, he, he told me to go, you know, he’s like, um, you just come and I’m gonna, I’m gonna introduce you to a couple, couple of friends and then we can talk to them.

Um, but yeah, I’m gonna get my shit together big time guys right now. I’m gonna do it. Yeah. I think you got some work to do there, Gabriel. Big time. Anyway, let’s come down to Vincent. Vincent, welcome to the Complete Entrepreneur. It’s great to have you here. Thank you, Colin.

Yeah, yeah, yeah. It’s really muffled, uh, Vincent again. I think it’s happened last time. Uh, are you able to do something on your, your, your volume? Just as Vincent sorts that out. Colin, it’s, it’s an interesting, uh, much, that’s a bit better, Vincent. So KPIs,

how’s everyone doing? Doing well? We’re doing well. We always love it. We love it when you come on. You always add this element, a different element, a different angle. Yeah, yeah, I was gonna name my company originally A1. So I bring the flavor. Uh, no, the original idea was, uh, like if you add, like, uh, my services to any company, it makes it better.

Just like, you know, a steak. But, oh yeah, I got it. Got it. Yeah. Went with the audacity instead, um, which I’ll be launching this weekend. Um, so I’ve been reviewing my KPIs like no other. Yeah. Um, also doing, um, LLP and, uh, fund all at the same time. You know, little bit. Uh, so what are some of your KPIs, Vincent?

Like, what are some of the like key KPIs that you’re thinking about the key KPIs? Like what are some of the key, key key key key KPIs that you’re thinking about? Just hold on one second. I’m . I just muffled again. I was not sure what happened.

Oh, I think we’re lost. We lost Vincent again. I think so. Yeah. We always thought you’d have such a good conversation too. Nope, I’m here. Sorry about that. The Bluetooth went out, but now they’re back and plugged in. We’re good. So, KPIs. Let’s get at it. Um, well, so, right off the bat, I’m just going and reviewing my sheet and I’m going to mention my favorite ones.

Um, so, oh, oh, damn,

this is great. Um,

yeah, so basically, um, without KPIs, we’d be lost. Like, if we don’t have analytics, we’re lost. Just lost, um, truly, uh, as a entrepreneur and someone who’s been an analyst, uh, I have to say like, uh, both the customer lifetime value is probably the most important, right? COGS, um,

really, really the most important. What would be, like, I’m just curious, Eugene, what is your go to KPI? Because I have an array, I have my Porter’s Pipe portions. No, I think you’re on it. I like, uh, like, you know, like, um, I like my super swat, but that’s something I developed myself. . No, but let’s go with this.

R-I-R-O-I. So, ROI is a great sort of like return on investment for investors, but doesn’t really deliver a KPI for the business. But what you said earlier, you said you thought your, your number one was the, the lifetime value of the customer. And, and I think that probably is the killer KPI. So if we can break down a company into the cost of acquisition per subscriber, the lifetime value of a subscriber, the, um, and discount a discounted money flow, you know, and unfortunately we have high interest rates right now.

So that discounted money is a little bit higher than normal. It might just be as high as 12 to 18%. Then you can actually understand a valuation of a company or, or, uh, The value can go into a company, so I think you’re right about that, Vincent, that you’re right. The lifetime value of a customer. Now, how do you calculate that is complicated?

Um, I’m just curious if you want to add to that. Like, how do you calculate that? The lifetime value of a customer. Uh, estimates of total revenue and, uh, how you can reasonably expect a single cu like customer to account for that. Um, if you want the actual like formula, uh, it’s average purchase value to the number of transactions and retention.

Yeah. And, uh, yeah, I’ve, I’ve, I’ve seen that very similar calculations. Exactly. So, and if you can’t figure it out, cause I, it’s really complicated for me too. To figure out sometimes you now have perplexity. ai and you have all these AIs that can help you figure it out. But understanding that, understanding that one metric, understanding that one number is absolutely critical when you’re pitching a lot of businesses.

Um, probably every business I can, I’m trying to think as we have e commerce and we have, uh, subscription businesses, digital subscription. Digital subscription. 100%. Uh, e commerce. Yeah. Yeah. Pretty much. Although they tend to look at slightly different metrics, but, but, you know, I think every business has that concept.

It’s like, what does it cost to acquire a customer? What’s the lifetime value of the customer? How much can I make from that customer based on a net present value of interest rates? You know, if you bring it back and those sort of three elements are the equation of probably every company that ever existed.

Yeah, I think another thing is this, is that, uh, I personally view return on investment is an outcome of your KPIs. It’s not necessarily KPI in itself. Like I can change the return, the investment very quickly by nailing, uh, nailing the cost of a business, but I’ll nail the cost of the business. And it may be that, that, that.

Um, is a good strategy for six months, but then the business dies and you see these new CEOs, they come to these big corporations, then they want to become a hero very quickly. So the first thing they do is they lay off 10 percent of the staff and suddenly the return on investment goes up and all that sort of stuff.

But then the business collapses after the, after 12 months or something. Why? Because they actually needed a whole lot of those people they just got rid of. And because they destroyed one of the KPIs, which are actually driving the return on investment. Yeah. So the other thing I think about with, in terms of measuring the lifetime value of a customer, if I have an e commerce business, then I’d be setting various hurdles in there, such as, you know, these one off purchases.

Or is someone buying something on a regular basis? How regular, how regular is they buy? I want to know like the length of time between purchase, the average length of time between repurchasing or purchasing something else on my website or something like that, there’s these sort of things. So that, uh, it’s not just the size of the, uh, of the purchase.

Um, it’s how often that they purchase, because how can you put in the lifetime value of a customer if they’ve only ever purchased once and they never purchased again, there’s no lifetime value to that and you value that one at zero? Why? No, it’s not in the metrics, it’s not in the metrics, Michael. Yeah.

Wouldn’t the lifetime value, if it, if it’s just one, it would just be zero? That flat, right? No, it’s not. It’s an average of all your customers. Yeah, but I would disagree with you on that if you’re building Sustainable value all the time then you if you’ve only had one purchase then you’re doing there’s no lifetime value to that customer What you’re doing is only a sold one product wonder if you sell if someone comes to your website Let’s imagine and they buy once They may buy five products, but they buy one.

There is no lifetime value to that customer. ’cause what you do is you’re constantly, it’s your average, the kpi, the average of that, of all of them. It’s the average of all. No, no. I disagree with you on that because Mary, but let’s just before you jump in, Vincent, the reason why I say that because the lifetime value of a customer is if you’ve only got one purchase once, then it’s a new acquisition.

There’s no lifetime value. So new acquisition, but if you’ve got people coming back, then you could use a lifetime value. Okay. So, so, so, okay. I got you. I got you on this one. Cause we used this with our, our, uh, internet service companies as well. We would say the, the, the free trial we don’t include anyone who’s renewed the free trial now that we’re going to include them in the metrics.

Correct. It’s very different than what the yes, that’s absolutely correct. If you are running free trials for a particular thing, or it’s a first time. Discounted whatever those ones should not be included in your overall metrics for a lifetime. Yeah We should include the ones that renew or actually purchase or take the free trial and make it a full Uh a full membership.

That’s what we want to look at for lifetime For subscription basis the thing I want to know is what’s the repurchased What’s the repurchase value? So people who don’t just buy once from your site, but people who buy on an ongoing basis or something like that. I want to know how many times they’ve bought across the last 12 months.

I want to know the size of those purchases. I want to know the time between the purchases. Not just the first purchase, but the time between the first and the second, the second and the third, and so forth like that. That’s the thing I’m looking for. So, Vincent, to you, we’ve, uh, Colin and I aggressively agree with each other.

Yeah, I was about to say, like, uh, that was bickering, and then it went straight to, like, uh, yeah, like, I’m happy, like, we got there, but let’s say we’re doing development. Let’s say we built an app, right? Uh, and it’s, you know, one time you buy, uh, do the one time fee so they don’t have to deal with the ads, right?

But then, if you’re gonna do something and you’re only gonna make one sale, then why not set up an affiliate program? Right.

Yeah, I think what you’re saying is this, you’re, you’re, you’ve developed something which is a recurring business model, right? Which is a subscription. I’m going straight off what you said, the one time purchase. So you built, you build an app and lifetime purchase, you know, 3, but then you implement an affiliate program.

If you bring other people to it, then. Yeah, but it’s still a cost per, it’s an acquisition cost, right? So if you’ve got a business model where you’ve got one product, you’re selling once and that’s all there is to it, then it’s purely now your acquisition cost, you better have nailed that because if you’ve got something you’re selling for three bucks, then, uh, my guess is you better be below a buck 50 or you’re losing money.

For your acquisition cost. Yeah. So it’s, it’s why buck 50, you’ve got to make a hundred percent to cover all your other overheads and all that sort of stuff associated with the service that you’re providing for your app. Yeah. So it’s, if it’s a one off fee, um, then you absolutely have to be across it. But if it’s a lifetime value of a customer, then we’re KPI actually is.

I hope that makes sense, Vincent. That’s, that’s my particular, uh, view. I see, I see what you’re saying. I just, I personally have no, like, um, I don’t, uh, I can’t think of a time where I’ve considered just the one, the one off. It’s just, uh, like, community is so important. Um, The one off I feel like companies that do that like don’t really nurture their clients as well Yes, the recurring payment because like that incentivizes the company to make sure they’re taking care of the customer Yeah, there’s a lot of things you can do that The other thing is if you give away something you actually haven’t sold anything So having a say a 3 fee for an app or something like that makes sense That may be the basic app.

And then, oh, you want to get the payroll system to plug into that? Well, that’s a monthly fee of 10 bucks. Oh, you want to get the, um, inventory management system? Oh, that’s a, that’s a, a, um, 10 a month fee or something like that on top of that. But the core app. Cost you 3. So, you know, you’ve got a commitment from the customer.

They actually paid something, whatever that number is. Okay. Uh, I don’t mind if it’s three bucks or 3, 000. They’ve, they put their hand in their pocket. They pay for it. These, these whole sort of, um, freemium is all about try before you buy, but you actually haven’t done a sale until they bought. So then you can go along and there’s lots of business models where you add lots of other recurring business models on the core product.

A classic case will be something like a WordPress or a Joomla, you know, the content management systems or websites where the, the actual core system doesn’t cost you anything. But if you really want to make it work, it’s going to cost all sorts of amounts of money to be able to plug different plugins and that sort of stuff into it that you’ll then pay for it.

Sometimes they’re, they’re one off. Sometimes there are yearly fee and all that sort of stuff. I think the, the world has definitely gone to, I’d much rather 50 bucks every month than 5, 000, 5, 000 once off for the lifetime. It’s, it’s the subscription model is really blossomed out and did all sorts of different methodology because they’re getting that lifetime value of a user becomes much easier to understand and you can drive your business in a much more intelligent way off the basis of that versus one off potential mega payments that may happen one day.

But that’s just my, I have another, another KPI, Michael and Vincent and Gabriel that, um, that is very not as often quoted, it’s a viral co efficient. Okay. I’m interested in this one. I’m interested in this one. Call him the virality. Okay. So I’m, I’m sitting on a board, uh, never invested in the company. I’m like totally skeptical.

This company raised 8 million. It was called password box. And, um, we sold to Intel for, um, I don’t know if it’s public or not. Geez, I probably shouldn’t quote it, but let’s just say we sold for a Ew, I wish I could look it up in a second, but uh, I don’t know if it’s public or not, but we sold for a heck of a lot of money.

We had 180, 000 in revenue. But we had a very high viral coefficient, a high viral, a virality metric about virality, virality KPI. So if you actually have an app, like you’re talking about Vincent, that they’re just like, you do it and you only sell it once, it’s three bucks, but then all of a sudden, they invite two people.

And there’s a metric that Silicon Valley looks at and says, okay, for every person that uses app, they recommend X number of people. And if that virality is high enough, it’s exponential growth, then they will throw money at you. And it’s a, it’s a, it’s one of those metrics that a few companies need to look at or KPIs that can actually get you a huge valuation.

And I was involved in a company called Password Box that actually got that. So something to think about. I know we’re running out of time, Michael, but. Well, you’re speaking on something that’s very, very important, like, uh, and you’re speaking on something that I’m actually very much about to implement on one of these applications I’m about to drop, because, uh, I’ve been seeing it a lot lately, it’s like, uh, invite your friends, and, you know, you have this much extra.

Like, let’s say you get 25, uh, let’s say, questions, like, if it’s a chat bot or something, or information. But, um, then all of a sudden you get 10 extra a day, or a week, or whatever. So it incentivizes the user to basically be doing promotion for you. And all you’re doing is paying a little bit more computational fee.

Yeah, I’m just on AI right now asking what the virality rate of growth makes your app grow. Like, is there a number? Like, I’ve never really been, I’ve never really understood this KPI as well. Obviously I never invested in the company. I got paid off as a, as a, as a, as a director, but I never, you know, I never really understood it.

So it’s an interesting, it’s an interesting metric because there’s KPIs that are all over the place. We never even talked about forward looking KPIs today around the whole concept of like the number of leads, the number of phone calls, and those are actually more effective in a lot of ways than a lot of the laggard KPIs we talked about today.

But we definitely covered a lot of range today, didn’t we, Michael? Oh, yeah, it’s been, it’s quite, quite an amazing topic and it’s fantastic to have Beth Gambriel and Vincent up here. That’s for sure. Um, looking at KPIs, but a, an entrepreneur really needs to understand their KPIs and I find every business We’ll have different KPIs, uh, of how to actually measure.

Remember what I said before, if you’re on top of your KPIs, then they’ll be reflective ultimately in your profit, return on investments, all that sort of thing. Uh, to me, that’s an out, I just view my business, for instance, I view, The return on my investment and, uh, or the return on my equity or that I’ve gotten there, that to me is an outcome of managing my KPIs.

It’s not the KPI. It’s the outcome of the KPI. And, and it’s, it’s, that’s, that’s my view of, of the world, Colin, and I think it’s, it’s a really interesting thing to come to grips with. And I think as an investor, the thing, the thing I want to have confidence around is the entrepreneur really understands what their KPIs are and what drives their KPIs.

And, uh, and they have complete control. They may not have control over a whole lot of other parts of their business. Very well. It’s a bit loosey goosey. Like there’s a startup for goodness sake, but there’s one area they haven’t absolutely nailed. They know exactly what’s going on on this critical metric and you can bore in on that and they’ll tell you everything about what’s driving that.

That to me, that’s, that’s a critical thing there. Um, last question, Michael, really quick. Um, in my pitch deck, Uh, for the, A key, uh, for the KPI, um, what are the most important things should I tell my me, my investors? You know, uh, for example, I have, right now I have the CAC, you know, the customer acquisition cost, and then conversion rate, and then R-O-R-O-I and

Uh, I have one right here that. It’s called a bearish time to first transaction and the monthly active users and then install to registration rate and then customer retention rate. What’s, I was wondering for a pitch deck, what should I, for my KPI, what, what’s the most important thing you as an investor, you want to see?

You know, or I don’t know that that was my question. Yeah, that’s that’s an interesting one for your business Gabrielle off the top of my head. I want to know your customer acquisition cost I think you’re too early for lifetime valuable user. I really do Um, I don’t know how long you’ve been going for and how many customers you actually have on board But I want to know the customer acquisition costs.

I want to know where the money is going to go And I want to understand the projected cash flow earnings. Um, and if it looks like a hockey stick, I’m going to become really skeptical when you get these presentations of if we just get 1 percent of the Mexican market. Then we’re going to have like this enormous, we’re going to be making huge amounts of money.

Or if we just have 1 percent of the U S market, 1 percent of this. Yeah. And people think that quite often entrepreneurs think 1 percent is such a small number and to be quite blunt with you to get 1 percent of any market is a huge effort. But we’re just going to wrap things up right now. Colin, just for you to close out, would you agree what I’m saying there?

Absolutely. And, uh, well, it was a great show because we really bounced a lot. And I think we’ve opened people’s minds up that KPIs are not just something the accountants and the investors. There’s something that every startup needs to think about. And this is something that we all need to understand. It might be boring, but it’s not boring because it’s actually, enlightening.

Once you actually figure out what your KPRs are, then you can figure out your goal. You can figure out everything you need to do. You can build your activities around those KPIs while you’ve been listening to the complete entrepreneur tomorrow show. Um, start scale, eggs, repeat, serial entrepreneur secrets revealed has, is been canceled.

Uh, if you’re listening to the podcast, that will not matter. Don’t worry. We have more shows coming out, but if you’re listening to this, um, on clubhouse, it’s canceled because I’m flying to. Denver, Colorado, Michael to either accept the number one business book of the year award or accept the fact of one of three top business books of the year award.

So they chose three books for the IBPA Benjamin Franklin Awards. And so I had to cancel the show as I am on a flight. Well, congratulations for that, Colin, just to be nominated that have start scale, excerpt me, repeat, just nominated as being one of the top three business books of the year. And be up for the Benjamin Franklin award.

It’s amazing. I know, but I really want number one. I really want number one. Of course you do! You wouldn’t be an entrepreneur if you didn’t. It’s not like you’re in there wanting number three. Yeah, exactly. Yeah, but shoot for the stars. So, congratulations. That’s how you win. But I have to say, just on that one percent mark, isn’t that what Dr.

Dre got for beats? From Apple, sorry. Yep, yep, yep, yep, yep. That’s a perfect example. Like Dr. Dre, he brought beats to Apple and got 1% and think of 1% of Apple shit. Yeah. Oh, I didn’t know that. He actually got 1% Apple. No, that’s amazing. That’s, that’s amazing. But anyway, so you’ve been listed to the Complete Entrepreneur.

Next week we’re gonna be tackling the interesting topic, which in some ways it’s associated with this one and it’s goal setting. Why is it important not just to set goals, but to write them down and learn to hit your tags and accelerate your business forward by motivating your team with goals. How do you motivate the team with goals and what do you’ve got to do to do that?

And, uh, and goal setting to me is really, it’s almost like the guide rails for your business. Like, how do you actually. Do goal setting and, um, we’re going to be discussing that topic. It’s gonna be a great one and Colin, all the best for, um, uh, for the, the event tomorrow. Um, I know you and your, your loved ones must be so proud of the book, um, doing so well.

And, uh, and I look, we look forward to hearing some great news from you. But anyway, thank you very much to all those people up in the state, Vincent and Gabrielle, to my fellow moderator, Colin there, and all of you in the audience. You’re the reason why we do this. You’re the entrepreneurs out there slogging away in your own businesses.

And I wish you a wonderful week this week in whatever you’re doing. God bless you. See you later.


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