The North Star and the Business Metrics

When I published the last post, a business head at an early stage startup messaged to tell me he related to the problem firsthand. With that validation, this post is a natural extension to the last one.

If you were a navigator surfing the oceans thousands of years ago, you would be guided by the “North Star” – the star Polaris which is a constant fix on Earth’s northern horizon and be guided by it. Centuries later compass was invented and you still had a directional insight into which way is North and use that to chart your course to the destination. It’s only in the last five decades that we invented Electronic Marine Navigation.

Atlas Pro

The same is true of every new business. At first you don’t know. You try building from what you do know. The problem is even more expressed if you are creating a category that has never existed before.

I can’t think of a better example than that of Amazon. The very business is built on frameworks and principles. And how they built AWS is a fine example and a very good sample to look at when building your own new revenue streams. Colin Bryar was Chief of Staff to Jeff Bezos at Amazon. He explains this neatly in his recent book Working Backwards that he co-authored with Bill Carr, another Amazon veteran.

This is how the story of AWS’ first 18 months goes from ideating to launch.

For 18 months it was pretty much writing documents and meeting Bezos to discuss what are the problems they are gonna solve.

Different groups at Amazon were experimenting on what worked well for using web services internally to deploy build software. Andy Jassy built a small team to investigate that. For 18 months it was pretty much writing documents and meeting Bezos to discuss what are the problems they are gonna solve.

While Amazon had validation that web services were important from their own developers who were using a third party service to develop a part of the Amazon’s website that was publishing the company’s catalog. Developers did that coz it was better than the internal tools.

Amazon was also working with a set of partners building websites for third parties back in early 2000s. They did not have data points but this is where one of their business principles comes in handy: “the spirit of invention”. They weren’t certain how big would this product scale or if there were others who were already building this infrastructure product in-house. Heck! Amazon was not even a B2B company at that point and all their users were either end-consumers or third-party sellers!

Amazon website in 2005. Credits: versionmuseum

This is exactly where they used their guiding principle of spirit of invention:

  • Is it worth trying?
  • Is it worth pursuing?
  • Keep reiterating and asking the above Qs as we build
  • Settled in on first two things they wanna roll out: compute and storage
  • Refined the above two functions constantly for a period of 18 months and then launched it to customers
  • Seek constant feedback from customers and further reiterate the product builds
  • Mature and conquer the market over the years

I think the above framework is pretty brilliant if you are to launch a whole new product – a whole new revenue stream. I personally can relate to framework in my capacity as an Ops guy trying to build the function in the absence of any data to evolving with directional insights to metrics to measure.

Try using the above framework to your new launches: products or processes. You would be surprised by the clarity it brings.

Happy Building!

10 Awesomely Tasteful Animated GIFs | WIRED

One thought on “The North Star and the Business Metrics

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