Returns

This is a post about getting a return on effort invested in the context of a startup.

"How can you get a 5-10x return on every product improvement you make?"

I have been asked this question before. It helps you focus on what features or actions should be completed next in the course of building a startup. So, how can you figure out what will give you a 5x + return?

I believe it is useful to view this question out of two lenses: AARRR & process optimizations.

AARRR is completely customer facing & gives you five different ways to get your return (Learn about it here, think about it often). I believe it is wise to focus on only one of these metrics at a time to realize your gains. Unless of course you have the resources to get returns in all 5 categories in parallel.

It can actually be difficult to meet these goals in the AARRR funnel, but it can definitely be done if you focus on your weakest points. For Munchables, it's Acquisition & Referral, but you should definitely find the areas in which your metrics are suffering.

Process optimization is a very straightforward way to hit your 5x (or more) return. Just find a process that you do manually now (for example: creating shipping labels, writing weekly checks), figure out its current cost, compare that to the cost to automate it & then automate it in some way that takes the manual aspect out of the equation. Of course, the difference in current cost & automation cost should be 5x over at least 3 months and at most 18 months - any longer & it does not seem prudent to make that sort of investment of resources in the context of a startup.

If you're looking for more instructional, clear-cut or illustrative information about this - please tweet me so I can elaborate on it.