Eric Ries, one of the leading lights of management theory in startups, made a very good point around the wrong kind of metrics. Metrics that don’t correlate with revenue or the chief value event and says nothing about the why are vanity metrics.
I couldn’t but help think of vanity metrics when I was reading about Path’s funding by Kleiner Perkins and Index. Path is an iphone app that let’s users share private moments with friends and put a constraint on the number of friends that could happen with.
The company is founded by Dave Morin, who ran Facebook’s platform, and a series of other very talented executives. Now let’s be honest: The funding and the competitive seed round before it is entirely based upon the team and their product instincts.
But at $8.5m the company probably felt like they needed to come up with some meaningless but suitably large number and they came up with this: “The company says they have hundreds of thousands of users who’ve experienced “over 2 million moments shared.”
Now let’s unpack that 2 million into what actually could be happening. If 2,000 users with 50 friends each shared a photo 2 times each week for the 10 weeks that Path has been operational then 2 million moments would have been shared.
They should have just said nothing at all.