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August 05, 2006

Daily Key to Success

“What is the one thing you do daily which is the key to your success as an entrepreneur?” someone asked me.  Well, in my case it is past tense and I both succeeded and failed in entrepreneurship as well as most anything else I’ve tried.  Moreover, lots of the things which make a successful entrepreneur like irrational exuberance, hard work, leadership, and contrary thinking are not on a daily cycle.  But I’ll try to answer the question.

If I’ve gotta pick one thing it’s an obsession with the DAILY metrics of whatever business I happen to be in. Hell, sometimes I even look at the hourly numbers.

When I was Microsoft’s email guy, I saw we started to get a lot of complaints about what was basically a throw-away product for academia: our SMTP gateway which connected internal email systems to something universities used called the Internet.  But the complaints were coming from corporations.  Corporate MIS guys, I was told, would never let their company’s communication go over something so unreliable and unsecure as this Internet.  Oh, yeah?  I became an Internet radical in 1993 and it changed my career.  The daily numbers from product support made me do it.

At AT&T where I founded and ran the Internet access business, AT&T WorldNet Service, I watched daily signups, daily churn (people who left), and average monthly usage by account type as well as customer complaints by PoP (point of presence) and quality as measured by our own tools.  I knew that all-you-can-eat flat rate pricing was a success when I saw that people willingly paid $19.95 for the simplicity when their average usage on a metered plan was around $11 and that their usage DIDN’T spike after that.

I also saw significant numbers of complaints about failures to connect when dialing in from places where our diagnostic tools said we were doing great.  The engineers said we didn’t have a problem; the customers said we did.  The customers – and the numbers - were right; the engineers were wrong. Turns out that one bad receiving modem in a huge bank of modems (remember them? When they were working they growled at you before connecting) could swallow a huge amount of calls.  Since it wasn’t working right, it didn’t report itself as failing. We needed to change the way we assigned calls to modems.  We also needed new diagnostic tools to see the network from the outside as our users did rather than from the inside as our engineers did.

Should it be the head of the service who correlates these numbers?  Sure. Who else is going to take on the established wisdom?

OK. I was an employee and not an entrepreneur at Microsoft and AT&T. At ITXC, which Mary and I founded, I was truly an entrepreneur – and I watched the numbers. My model was the captain of a ship who wakes out of a dead sleep when the sounds are wrong.  Hourly I watched calls by country, call durations, call completion rate, and all the other metrics of our wholesale international phone calls over the Internet company.  Usually our network operations center (NOC) spotted problems before I did.  That’s the way it should be.  But not always.  Sometimes the engineers told the NOC to ignore a problem.  Sometimes the engineers were right.  But not always.

My numbers obsession meant that I knew about our problems – usually – before our customers did.  It meant I knew when our monitoring tools weren’t good enough or when there were problems no one wanted to tell me about.  We developed new tools to automate detection of the patterns that set off my personal alarms. Sure, I spotted many more problems than really existed and drove people crazy.  But I understood my business and, by example, created a culture of attention to the metrics and the rhythm of the service.

Not all obsessions with daily metrics are good.  I spent much too much time watching ITXC’s stock price.  Had an illusion that I could affect it in the short term. Not!

Nevertheless, a successful entrepreneur obsesses over the pulse of his or her business.  Much of that pulse is numbers.

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» Key to Success is watching your numbers from WebMetricsGuru
The main key to success for an entrepreneur is an obession with the daily metrics of your business, according to Tom Evslin. I am impressed with Tom's attention to detail (with Metrics numbers) and it's exactly the kind of thing... [Read More]

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