Setting KPIs and Goals with Divya Bhat | Startup School

**Divya Bhat** (0:09)
Good morning, I'm Divya, and today I'm gonna talk a little bit about KPIs and prioritization for an early stage startup. This is my second batch as a visiting group partner here at YC, where I've worked with hundreds of founders on hitting their demo day goals and navigating goal setting and execution as they search for product market fit. I myself am a two-time YC founder and have also held leadership roles at several fast growth startups. Just as a heads up, I'm gonna be giving you some homework at the end of this talk. My hope is that today we can improve the way you spend your time and expedite your journey to product market fit. So why are we talking about this? Now that you're a startup founder, there is nobody telling you how to spend your time. You might have heard some version of and not or, implying that you have to turn over every rock and optimize every metric to build a successful startup. While this is true to some extent, you still have to choose how you're gonna spend your time each day. Ultimately, as a startup founder, you wanna get to product market fit as quickly as possible. Prioritization matters and having clarity on your KPIs is crucial for prioritization. Let's start by defining these terms. KPI stands for Key Performance Indicator. These are the metrics that you track and report on, both internally and externally. These metrics make sure that you're measuring what matters and they tell you whether what you're doing is working. Prioritization tells you in what order you need to tackle your work each day. There are infinite things you could be doing each day and your work is never done. But time is finite. Prioritization tells you how you spend your time each day, how you direct your team to spend their time each day when you have one, and most importantly, prioritization helps you decide which super important things on your list you don't get to today. Here's what your task list may look like. Note that the highlighted items in yellow are the ones that I might decide to prioritize. Also note that every item on this list feels important, yet only a few are likely to truly move your business forward and toward product market fit. In a world where you can't possibly get to everything, you need to prioritize the tasks that'll move you toward your KPIs faster. So why are KPIs and prioritization in one talk? Well, prioritization means that you're working on the things most likely to impact your top KPIs. So it's critical that you choose the right KPIs and then are honest with yourself about which tasks are most likely to move those KPIs. When you're moving fast, it's extra important to make sure you're running in the right direction.
I'll use this analogy a few times today, so look out for it. We come across companies all the time who are working so hard, but optimizing for the wrong thing. We call these vanity metrics, things that make you feel good and things that you can brag about on LinkedIn. At the end of the day, if you fall into the trap of making these your primary KPIs, you're going to be spending your time on the wrong things. So why are KPIs and prioritization important? Well, as a founder, no one is going to tell you how to spend your time. It's very easy to feel busy and feel productive and not be moving your business forward. Here are some common examples of things you can be doing to feel busy today. Optimizing paperwork tasks. Maybe we're good enough is all that you needed. Perfectionism and craftsmanship on a feature that nobody's using anyway. Premature optimization or building for scale that you don't need to yet. Or choosing a more intellectually hard problem to solve rather than building what your users want. I remember in the early days of one of my companies, we were trying to pick a legal firm to work with. Sure, you need a lawyer and you need to pick a good lawyer. There are so many to interview and so many of them wanted to take us out to lunch or to drinks, have us visit their offices, the works. You guys, this felt flattering and glamorous. We felt so busy. But at the end of the day, we hadn't even launched. Yeah, choose a good lawyer. No, this is not impacting your KPIs. Do it quickly and move on.
Again, it's easy to run fast, but in the wrong direction.
You need to run fast and be running in the right direction. When you're doing a startup, time is at a premium. The faster you get to market, the sooner you earn money. And you can reinvest that money in your business and be less dependent on outside capital or even if you want to keep raising, you'll have more leverage to raise money on better terms. Taking more time to get to market means you burn more money. Lastly, moving slowly means that competitors have more time to copy you and catch up. Time spent without making real progress also has an emotional and mental cost and can raise red flags externally in fundraising and hiring. So don't waste time on things that don't matter. So let's talk about how to prioritize. There are two ways we can talk about prioritization.