How to build a successful venture studio: Process metrics and KPIs

Setting key performance indicators (KPIs) and metrics for the ventures you are working on in your venture studio is equally important as in any other business or organization. However, be careful not to fall for the pressure to use the parent company’s favorite KPIs in your new venture; grown-up metrics may not be suitable for baby ventures. For your ventures to be properly measured and managed, you must develop your own KPIs and metrics. In this chapter, we highlight a few suitable KPIs to adopt in each step of the venture building process. 

Discover

In the first step of building a digital product or venture, there are two main objectives to strive for: creating a value proposition and validating that value proposition. To measure the progress towards these goals, a KPI could be a share of customers who express an explicit need, while metrics then would be number of qualitative insights from interviews, outcome of user tests, extense of market sizing research or number of smoke test signups. 

Pilot

Once you have passed through this initial phase of discovering what your venture will be, it is time to test your solution in a pilot. Here, you are aiming to deliver a minimum viable product (MVP) and validate product market fit for which user engagement and customer acquisition might be suitable KPIs. Related metrics to start considering are daily/weekly/monthly active users, customer growth rate, customer retention, churn rate and customer lifetime value (LTV). 

Launch

When product market fit has been confirmed, the next set of KPIs will revolve around bringing the business to market and validating a growth hypothesis, i.e. how you plan to scale the business next. In this phase you should start acquiring larger sets of data which will help you focus your efforts and allow you to start measuring efficiency through metrics such as customer acquisition costs (CAC), CAC/LTV ratio, operational efficiency, and net promoter score (can also be measured in both the pilot and scale phases). 

Scale

In the final step of the venture building process, your main objective is to implement the growth hypothesis and scale the business, adopting KPIs related to sales volume, market share, user engagement, revenue and profit growth. Useful metrics to track when scaling include growth rate, monthly recurring revenue (MRR), gross margin, as well as continue to measure metrics such as CAC, LTV, active users, churn rate and conversion rate. Another strategic decision for this phase is to determine the final embodiment of the new venture (spinout, new business unit, or full integration), which requires analyzing these metrics to evaluate the relative absence or availability of enablers and constraints to growth in the corporate context.