Unlocking Non-Financial Metrics for Sustainable Business Success w/ Shreyaa Khemka | Owl Ventures

Shreyaa Khemka: 0:00

I think there's three broad things within your impact, whichis your reach, your access and your outcomes.

Anshika Arora: 0:07

Today we're talking about how you can measure the success ofyour product beyond revenue. We discuss the ways to measure your financial andnon-financial metrics in evolving markets, common data tracking, mistakes toavoid and the best ways to measure the long term success of your business.We're honoured to have Shreyaa on the podcast, who's a portfolio servicemanager at Owl Ventures. She also has years of consulting experience within thepublic and private sectors. She supports the company within their portfolios bydesigning programs and services to enhance their leadership and growth. She'sheld a range of roles during her career and has worked in various differentjurisdictions worldwide.

Anshika Arora: 0:41

I'm Anshika, the founder of Eternity, a one-stop shop to effortlessly connect, book and manage wedding services for couples andbusinesses alike, and I'm so excited to be hosting the BAE Lab podcast today,which is powered by HSBC Innovation Banking. Let's get into it. Thank you somuch, Shreyaa, for joining us on today's episode of the BAE Lab podcast. I'm soexcited to be talking to you about all things around measuring businesssuccess, so let's just get straight into it. So, number one what do you thinkare some of the key non-financial metrics that founders can be using to gaugethe success of their product or business?

Shreyaa Khemka: 1:16

Awesome. I think I categorize non-financial metrics intothree broad buckets. The first one is attraction and loyalty, and that includesyour you know customer acquisition, activation, retention, all your usagemetrics and NPS. The second one is your impact metrics. These are metrics thathelp you assess if you're fulfilling your mission, so they include your access,your reach and your outcomes. And the third one is assessing your long termvalue, so these are metrics that help you measure your impact on the broaderindustry, so this includes your market share growth, your partnerships, yourinitiatives and also your product innovation. To assess, like are youdisrupting the market? Like when you compare your features to your direct andindirect competitors, like where do you stand. So I feel like those are threebroad buckets that I think of when I think of non-financial metrics.

Anshika Arora: 2:06

I think that's a really interesting one because, forexample, me being in the founder boat there have been times when we track ourmetrics each month, and it was only very later on in my journey where Iactually started to track the non-financial metrics. So, on that, how often doyou think founders should be tracking financial versus their non-financialmetrics as well, to make sure? Because I know that often when you talk aboutinvestor updates, it's always right your financial metrics are the main thingsthat they're going to care about. But actually, what frequency do you think weshould be tracking non-financials, and should they be at the same level as thefinancials?

Shreyaa Khemka: 2:38

I think what's interesting is that a lot of yournon-financial metrics actually do feed into your financial metrics, right, likeat the early stages when, before you have your revenue metrics, like, you haveyour usage metrics and your satisfaction metrics and those are kind of what aregoing to that's what you're using for your revenue projections, right. So whenI think it's really important from the get-go to build a measurement frameworkbased on your business goals and your stage of growth, right, and those willinclude financial and non-financial metrics, just naturally, because yournon-financial metrics can be your leading and lagging indicators for yourfinancial success. And the other thing is, I think the way you need to be a bitmore deliberate is when you're assessing your impact and long-term value. So,when you think of the three buckets, I think it's most natural and obvious tocalculate and think about your traction and loyalty metrics.

Shreyaa Khemka: 3:31

I think the least obvious is your impact, because you're notnecessarily thinking about, for example, what your reach looks like, right,like your reach can. Your reach is essentially the how many users you have andwhat demographics. You are technically collecting that data, but you're notprobably bucketing it like that. But it also depends on what's important toyou, for example, if you're an education company or a healthcare company, thatmetric is really important because you want to make sure your product isreaching multiple demographics. It's easy for people to access your product,and so I feel like those numbers are more important for some industries.

Shreyaa Khemka: 4:07

So I think you have to build a framework. You have toidentify what is most important to you With long-term value, I think thatthat's not something very early stage founders are doing right. Of course, youare comparing your features, like your product features, but you're notnecessarily thinking about your market share growth, your partnershipinitiatives, like straight off the bat, as you iterate your product and yourproduct in your market share grows, your product grows, your company evolves.That's when you start thinking about your long-term value and that's when your metricframework, like your measurement framework, evolves, and that's when you startthinking about your other metrics.

Anshika Arora: 4:45

Yeah, I think that's really interesting I know you'vetouched upon it there briefly with the growth of market share and as you enterpartnerships, I guess my next question is more based around how should foundersappropriately balance, kind of the existing engagement and satisfaction oftheir current user base versus those growth and market share goals which areprobably a bit more acquisition metrics?

Shreyaa Khemka: 5:09

I think a user-centric approach is essential for sustainablesuccess.

Shreyaa Khemka: 5:14

Right, and, like I mentioned, your engagement andsatisfaction data is feeding directly into your growth, market share andrevenue.

Shreyaa Khemka: 5:21

And your engagement and satisfaction data at the beginningare your foundation as you iterate and find your product market fit. So inearlier stages you're more likely to focus on your engagement and satisfactionand that will come first and they'll continue to be important. But as you growyou start thinking about what is the quality of your engagement, what is yourcompetitive advantage of your product? Right? And then you're moving away fromjust thinking about your usage data and your net promoter score to actuallythinking about your customer acquisition cost, your churn, what are thefeatures that your product has that you know, what are your competitors doingand comparing your features to that. So I think it's more of a journey whereyou start with kind of finding a product market fit focus on your engagementand satisfaction, and then kind of finding a product market fit focus on yourengagement and satisfaction, and then kind of just level up on those samemetrics to focus more on quality, to just hone in on your product.

Anshika Arora: 6:10

And I know you've mentioned that the net promoter score.What kind of advice would you give to founders in terms of trying to gain thatactual information and that data? Because, of course, with usage metrics youcan see it like we can look online through our analytics, any founder is ableto track exactly what a user is clicking on. But I think that net promoterscore is very different and it's more about the experience and how valuableyour product really was. What do you often find are some of the best ways thatfounders can be measuring that?

Shreyaa Khemka: 6:36

So I think traditionally it's always been surveys andinterviews directly and asking that question just directly to your customers onthat scale of one to 10.

Shreyaa Khemka: 6:43

And now I've started noticing, when you send a newsletter orlike when you know someone hits submit on your website, like, you'll havemultiple places where you're basically collecting a net promoter score toassess satisfaction of your product and what the customer is thinking. So Ithink there's different ways of including it. I think in early stages, it isreally important to collect feedback and I think you need to be more deliberateabout it so your stakeholders have a voice as you're building your MVP. Andwhen I say stakeholders at this stage, I don't mean just your users, I alsomean those people whose role your product will either supplement or replace.And you need to conduct surveys, interviews, alongside analyzing your userjourney, to directly ask what folks are liking and what they're not liking,because you need to assess how the needs of your consumer are evolving and whenthey are willing to promote you.

Shreyaa Khemka: 7:34

It's not just about the what, not just about like the, what,right, like? Do they promote you? Yes, no, it's not that. It's like the Why?Why are they doing this? Why are they not doing it? So I think you need todouble click and you need to not just think about net promoter score. I thinkyou need to go a little bit deeper in your qualitative assessment and thencross, cross reference that data with your quantitative metrics to buildstronger insights.

Anshika Arora: 7:55

I think that's really interesting and definitely somethingthat I'll be taking forward, especially what you've said, that around not justmeasuring your existing stakeholders and your users, but actually who are youreplacing, and I think that's the piece that adds a lot more color about howvaluable your product really is when it's coming from someone else who's maybebeen an avid user of another product instead. So, that's super helpful. Thankyou for that tip. How do you think founders can measure and improve their longterm impact of their products?

Shreyaa Khemka: 8:24

This is an area that. So I work for an edtech focused vcfund and because we're education technology, like we have, we focus a lot onthe outcomes of our portfolio companies, because that's really important. Um,and you know, when you're measuring your impact, you're basically trying toassess how close you are to achieving your mission and, like I mentionedearlier, like I think there's three broad things within your impact, which isyour reach, your access and your outcomes. When you think of your reach, you'rethinking about how many users you have, what demographics they are and, forexample, I'll give you an edtech example as I go along. So, in education,right, like, if you are building a K-12 literacy product, it's you know are youable to reach minorities and are you able to reach previously disadvantagedgroups? As you're scaling your product? Your access, what is the ease,affordability and reliability of your product? Are people actually able to useit easily? Like, is it affordable to people? Will it be available when theyneed it? Right, like, you don't want people to be relying on your product andthen suddenly it's not going to be available based on, say, where you know acountry, or like a locality where the internet is not very strong.

Shreyaa Khemka: 9:33

And the third one is your outcomes. Um, and I think this isthe true measurement of how you're improving user lives. Um, of course, witheducation, it's much easier because I can measure something like you know. Ifagain, if it's much easier because I can measure something like you know againif it's a K-12 literacy product, what I'm trying to assess is that if they'reusing my product, then how much does their reading improve in one year versusif they weren't using the product? So that's a pretty easy measurement.

Shreyaa Khemka: 9:55

But I think for other companies that are not healthcare oreducation you can look at your customer satisfaction numbers. You can look atyour income for your partners, right? So, for example, if you are a ride sharecompany, right, like, then you look at how much income your drivers are making.And then I think another metric there is your team satisfaction is how, how,because that also kind of is your outcome right.

Shreyaa Khemka: 10:16

Like, are you running a team? Is your, is your culture ahealthy culture? Like, are people growing economically and professionally andsocially when they're at on your team? So I think those come under measuringthe long-term value of your product and long-term impact of your product. Whenyou think of long-term value, you also think about the innovation and thedisruption that you're causing in the industry, and then you start thinkingmore along the lines of like you know, then  you dive deeper into like what is my product doing?How does it compare to the direct and indirect competitors when it comes tofeatures? Especially when you start impacting indirect competitors, that's whenyou're kind of disrupting the market, right. So I think those are some of thethings that you think about when you think of long-term value.

Amardeep Paramr: 11:00

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Anshika Arora: 11:37

I think that's a really interesting point, especially aroundthe team metrics, because that's often overlooked as well. We're so focused onexternal and how is my business looking from the outside perspective? Butactually that internal metric, like you said, is super important for thatlong-term success and employee retention there, so that's definitely a goodone. I'm quite interested to know from, obviously, an investor perspective. Sofrom our ventures you see a lot of portfolio companies. At any point. Have youfound that the qualitative data that they've provided you with, and kind of thereasoning and that why, has been more valuable than the quantitative data?

Shreyaa Khemka: 12:12

A lot of times when we're conducting diligence of very earlystage companies, there often just isn't enough data um. There are projectionsbased on their current engagement and um user satisfaction and then they'llgive us the entire kind of like what the market looks like. And I think inthose cases, having strong qualitative data is really important because ittells the story of your users who you're trying to target, why they like yourproduct, what your traction and loyalty looks like and the impact that you'rehaving or the innovation that you are able or the innovation of your product inthe general market. Right, and I feel like that qualitative data um is reallyhelpful to help us assess, as investors, what that kind of projection lookslike, why your projection numbers are what they are, right, because you can'tjust base it solely on engagement and revenue. You there are all these otherfactors and what your users say about you specifically and the impact you'rehaving on your industry or the outcomes, especially from an ed techperspective, or if you're able to kind of prove um how your product performs,and that becomes really important. And, of course, like revenue is veryimportant because we're investors and that is something that we're looking at.But I think, when you're a very early stage company, your qualitative data is reallyimportant when we're assessing whether we want to invest in you, because we aretrying to understand, beyond just your user engagement and satisfaction, whatit might look like. What are users actually saying about you? What are yourprevious teammates saying about the founders? Right, like, what is the founderquality? What is the like? What is the team culture? I feel like all thosethings come in and we do take those into account when we are making aninvestment. And as you grow, your user analytics will tell you the what but notthe why. Right, like why what's working, what's not working, but not the whyit's not working or why it is working. And I think, as investors, we alwayswant to know, because even at an early stage, if a company comes and we'redoing a diligence and we look at the qualitative data and it tells us why theproduct is not working, through some qualitative data that tells us like okay,is this a solvable problem or not? Right, like, what is the roadblock and arethey going to grow? So I think we're using a lot of that qualitative data toassess um future growth, right beyond what you're giving us in a metric or yourbusiness plan, because you want to assess if we think the problem is solvableor not. Um, and that's what, that's the diligence we have to do. And um, even Iso I've also been on the product side before.

Shreyaa Khemka: 14:40

I've been an investor and I was working at a large K-12company. It was an online tutoring platform during the pandemic and we wereiterating really quickly and we had a freemium model, but our conversions werereally low from the freemium model. And again it comes back to like the useranalytics and the user journey can tell you the what, but it doesn't tell youthe why. Right, and at that point we actually did like a month long feedbackcollection program. Obviously, it was all agile, so it wasn't like the onlything we were doing, but we ran a program to assess, to really speak to ourcustomers and with education, your final consumer is not necessarily yourpaying consumer, right?

Shreyaa Khemka: 15:18

So you're talking to the parents trying to assess, like, whyare you not converting?

Shreyaa Khemka: 15:21

Why are you not moving past the free mail model?

Shreyaa Khemka: 15:23

And I mean, in their case, the issue was that they were likeoh, we don't know how long the pandemic is going to last and your payment planis one year and I don't want to do one year.

Shreyaa Khemka: 15:31

So that was a pretty solvable issue where like okay, likelet's just give them month to month and then let's see conversions, right. So Ithink it was pretty early on and, like our competitors at the time were also,had not reached that stage, because that's why we did the annual, becauseeveryone else was doing annual. But when you're really looking at your, whenyou're talking to users, when you understand why someone is not doingsomething, um, so I think that's really important and your investors, when wedo diligence, we are going to look into the data we are going to we're not we.We love seeing your deck, we love hearing your stories, but we are going to doour own diligence. We are going to talk to your diligence. We are going to talkto your consumers Sorry we are going to talk to your customers. We're going totalk to your employees. We're going to talk to your competitors to reallyassess whether your company can grow, and all of that is qualitative

Anshika Arora: 16:09

Yeah absolutely, and I think that's so interesting becauseone of the things that we were going to talk about was around when you have anevolving market, how do you understand if the product is changing over time?

Anshika Arora: 16:25

And I think you've really perfectly laid it out there that,for example, during the pandemic, it was just a different. Consumer buyinghabits were just very different. There were lots of fears, lots of uncertainty,and when you were to look at that data just standalone, it wouldn't tell theentire story very valuable, especially for founders. I guess, even if you'reputting it into pitch decks or even if it's your updates or any kind of storythat you're trying to drive, should always have the right balance of both, andI know that you've touched there briefly on competitors. So, for example, whenyou're doing due diligence, you're gonna look at competitors. What kind ofindicators do you think that founders should be looking at to try andunderstand their own competitive standing other than revenue themselves, sothat they can do a bit of that due diligence before the VCs start looking?

Shreyaa Khemka: 17:10

I think competitive benchmarking is a really importantactivity and it was also my favorite activity when I was a consultant. So Ithink of competitive benchmarking as competitive one that you do, which is moreoverarching when you're talking more about you know your market share, yourengagement, your customer satisfaction, your user feedback, which can bequalitative and quantitative, your brand awareness perception but then you alsodouble click and you look at your product and you benchmark your product and,especially when you're trying to build out specific parts of your product,you're also diving deeper into benchmarking features, performance andinnovation, um. So I feel like so that there's an overarching competitivebenchmarking when you're looking at what the market is and then you're alsolooking specifically at product and product features as you try to iterate umin different areas.

Anshika Arora: 17:46

Yeah, that's so interesting and I think that's definitelysomething that a lot more founders should be doing in early stages, because thebenefit and I found it recently when I started competitive benchmarking is evenjust looking at social metrics how am I growing versus them? Amongst otherthings, it's really valuable and really motivating as well, really to see ifyour competitors are moving at a certain pace, because then you understandwhat's right for the industry, because you can look at your own business andthink, okay, is this a slow season just for me? But if you realize actuallyit's slow for everyone, then it gives you that little bit more again color andpicture around it. I guess, to close off, go for it.

Shreyaa Khemka: 18:34

I will say one thing about this, though like, especiallywhen you're doing a competitive benchmarking or just in general, collecting anydata, one of the things that's important to remember here is that data is justnoise if you don't know what you're collecting and why you're collecting it. SoI think you have to be really deliberate when you build your measurementframework and iterate on it, right, like you're not going to collect the samedata from start to finish in your founder journey and even as you're doing yourcompetitive benchmarking. Like, yeah, it's really great to know all these otherthings that your competitor is doing, but I think it's equally important tounderstand what your goals and strengths are as your product and what you'retrying to grow, right. Of course, it is important to benchmark certain featureswhen you're trying to build out your product, but you're not going to build outeverything in one day, especially if you're comparing to a firm that's beenaround, say, even a year longer than you have. So in that way, it's moreimportant to assess, like, okay, is that?

Shreyaa Khemka: 19:31

What is our market share? Where? Where are wedifferentiated? Right? So I feel like, even when you're collecting that data,you have to be like okay, I'm trying to assess if there is a possibility for meto gain market share, where am I differentiated? And I want to focus on whichfeatures of theirs are the um users enjoying. So I can prioritize those right.So competitive benchmarking is not just for you to assess where you are againstyour competitors, but also for you to assess what to prioritize. but at thesame time, if you don't have an internal framework and a path like you're goingto get really distracted because you're not gonna, you're essentially don'thave a focus.  

Anshika Arora: 20:00

Yeah, I completely agree because, like you said, data has somuch power and so many strengths, but actually it can be very overwhelming andif you're bogged down in constantly just looking at the data and just trackingit and not making the tangible steps that your business needs to grow, toactually improve those metrics, it can be a really tricky one, and there'sprobably quite a fine line On that note. Would you say that you see any verycommon mistakes that founders make when it comes to measuring their businesssuccess?

Shreyaa Khemka: 20:39

I think just not having a measurement framework and then notiterating on it. Like it's great to collect data, even as an investor, I wantto see you're collecting data, but I think you need to be a bit more deliberatein terms of what you're collecting. And I think the second one is not lookingat employee metrics. So people management does not come naturally to a lot offounders just because you know that may not have been where they started theircareer or they may not have reached that. They may not have managed peoplebefore, and that can be pretty overwhelming. It can be very distracting forfounders to manage that and I think that's a skill set that they have to learnand they also need to focus on internal employee satisfaction as they try togrow. It is a part of the outcome and I would say, um, an important part of theoverall product outcome.

Anshika Arora: 21:28

Amazing. Thank you so much, Shreyaa. I've learned so much inthis session, as I'm sure so many other founders listening to this have, and Iknow there's a lot of things that I'm going to note down and improve in my ownframeworks that I currently have in place. So, as always, we ask our quickfirequestions to everyone who comes on the BAE or BAE Lab podcast. So, to start offwith, who are three Asians in Britain who are doing incredible pieces of workthat you think the audience should check out?

Shreyaa Khemka: 21:53

I'll start with someone in EdTech. There's Priya Lakhani,who is the founder CEO of Century Tech, and they build AI products for schools.There's Eshita Kabra Davies, who I met through BAE HQ, who runs By Rotationthat's disrupting the rental and resale market in the fashion industry. Andthen I love Gurvir and Amar for introducing me to this community, so they're onmy list as well.

Anshika Arora: 22:20

Amazing. Thank you so much. How can people find out moreabout you and the work you do directly?

Shreyaa Khemka: 22:25

So I have a LinkedIn and we have a website called owlvc.com,which is the fund that I work for and just reach out.

Anshika Arora: 22:32

Amazing and BAE HQ is all about being an ecosystem. What isthere? Is there anything that our audience can do to help you?

Shreyaa Khemka: 22:41

We love meeting founders.I think we set up a European officelast year and we've been actively investing in Europe for some time and we'rereally excited to meet the founders that are here and just get to know theecosystem better.

Anshika Arora: 

Amazing. Any final words from you?

Shreyaa Khemka: 

Data measurement isnot an afterthought. You have to be deliberate.

Anshika Arora: 22:58

I love that. Thank you so much, Shreyaa. It's been apleasure chatting to you. Thank you for having me.

Amardeep Parmar:

Thank you for watching. Don’t foregt to subscribe. See younext time.

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