🤩 Heartcore Insights

Edition #108

Hi there,

Welcome to the 108th edition of Heartcore Insights. Curated with 🖤 by the Heartcore Team.

If you missed the past newsletters, you can catch up here. Now, let’s dive in!

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Don't Let Your North Star Metric Deceive You - Reforge

• We’ve all heard the rallying cry of the “One Metric That Matters”. “Choose your north star and focus”. “Grow 7% week over week”." “If you grow daily active users, the rest will follow”.

• But blindly buying into the concept of the one metric that matters (OMTM) is a fatal oversimplification. 4 Reasons OMTM is misleading:

1. Good North star metrics are an output metric: output metrics help you set long term goals: $6M in rev, 100k weekly active users, 1M MAU. Input metrics: 10k pageviews, 1,200 registrations, 700 upgrades from free to paid. You can’t focus exclusively on output metrics because they’re too broad, and not actionable. To win the game you need to focus on the individual plays that drive the score. Monitor output metrics to know how you’re doing, but build experiments around the input metrics you can directly influence.

2. Output metrics are a lagging indicator: by definition, it can take time for the output to reflect positive or negative changes in the inputs. Output metrics can hide customer growth problems percolating under the surface. By the time the problem surfaces as poor results, and you recognize you have a problem, the damage is done. If interested, this piece expands on how this can play out with a B2B SaaS company that focuses exclusively on MRR as their north star metric.

3. A single north star metric only captures one dimension of your business: a single north star metric is like looking exclusively at the score to get insight into how to win the game. There are multiple dimensions of a business that determine its health, and each should be measured by your key metrics. Shaun Clowes, former Head Growth at Atlassian, describes how his teams address the full range of these dimensions: “There's always a constellation of input metrics that we swap in and out under the umbrella of our output metrics, based on what we're learning at the time. The output metrics tend not to change much since they're valuable business outcomes, while the inputs change reasonably regularly. Though the output metrics don't generally change, from quarter to quarter, we may focus on different ones depending on what’s going on with the business.”

4. North star metrics don’t account for the tradeoffs between metrics: sometimes tradeoffs between metrics happen and you don’t realize it until it’s too late. Let’s say you’re on the growth team at LinkedIn and one of your big goals is to improve ad monetization. You might choose ad revenue per user to be your north star. To increase that number you could insert more ad spots into the news feed. But this would likely come at the cost of long term retention and/or user engagement. If the team were to optimize exclusively against ad dollars, unchecked by retention and engagement metrics, this would kill the the news feed, and possibly the rest of the product.

A Simple Tool To Create Effective Board Meetings

• Board meetings are a critical part of running a startup, but they can easily become low ROI activities consuming a ton of the time of the CEO and executive team and not helping the company move forward in a meaningful way.

• To make a board meeting effective, you need to enable an environment of brutally honest conversations. You want to facilitate transparent, direct, and constructive conversations.

• To do this, many folks focus on the board presentation and notes. But over time more and more execs and people internally are included in creating and delivering the notes. This can create a few challenges. The larger the group, the more a board can feel uncomfortable asking you the CEO super direct questions in front of the rest of your team.

• But when things go unsaid, they will blow up in a bigger way at a later date. So how do you solve this?

• Build “The CEO Report”. The purpose of the CEO Report is to use it as a tool to shape the board meeting conversation. You (a) surface your deepest concerns in the most direct and honest way, (b) give context that might not be captured in the board meeting notes directly, (c) state where you need help, engagement, and feedback.

• The main sections of the CEO Report are:

1. Overview: provide a summary. Never bury the lead. Put the most important takeaway at the top.

2. Green: this section is for areas that are going well.

3. Yellow: this section is for emerging complexities and potential future issues. These are not things you need to take take care of right now, but you want to be in the back of people’s heads as they engage in the board meeting.

4. Red: immediate challenges that need work and focus. This is where most of the focus and discussion will be.

• In addition, a good idea could be to add a section at the bottom to aggregate questions from the board. This could provide a good historical reference to look back on.

• A CEO Green / Yellow / Red Report should be delivered to the board privately. It is NOT for broader management consumption, nor other team members. It is for board members + CEO.

• The report should be discussed privately live, pre-board and set the tone for the meeting - how is the CEO feeling, what areas need focus? You can use this report to build trust with the Board. The moment the board feels like you are sugarcoating something, you will lose that trust. Being open and transparent will help you work with the board to solve challenges.

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• Creator Economy 2.0: What we’ve learned, why it’s hard, and what’s next

• Why Now’s the Perfect Time to Retool Your Hiring Process and Get Creative

• How Talent Teams Can Better Weather Boom-and-Bust Cycles

• The Give-to-Get Model for AI Startups

• Why Do Investors Care So Much About LTV:CAC?

• Warp “How We Work” Notion

• Roadmap: Climate and energy software

• What to do when product growth stalls

• All the hard stuff nobody talks about when building products with LLMs

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🇪🇺 Notable European early-stage rounds

• Borderless, a UK-based startup offering an automation solution that encompasses the hiring and onboarding of international workers, raises £2.5M with Backed/TinyVC - link

• Sereact, a Germany-based startup developing technology that lets warehouse robots autonomously “pick-and-pack”, raises $5M with Point Nine/Air Street - link

• Translucent, a UK-based accounting & financial management platform for multi-entity businesses, raises £5M with LocalGlobe/Chalfen Ventures - link

• Qualifyze, a Germany-based supply-chain compliance platform for the pharmaceutical industry, raises €12M with HV/Rheingau Founders - link

• Anytype, a Germany-based peer-to-peer, open-source tool that promotes digital freedom, privacy, and control over data, raises $13.4M with Balderton/Inflection - link

• Lindus Health, a UK-based “next-gen contract research organization” (CRO) that makes it faster and easier to run clinical trials, raises $18M with Creandum/Peter Thiel - link

🇺🇸 Notable US early-stage rounds

• Panobi, a US-based growth-tracking platform, raises $5M with Index - link

• Grit, a US-based generative AI-powered developer assistant, raises $7M with Founders Fund/Abstract- link

• Daybreak, a US-based startup offering online counseling services for teens, raises $13M with USV/Lux - link

• Socket, a startup that provides a scanning tool to detect security vulnerabilities in open-source code, raises $20M with a16z/Abstract/Wndrco - link

• Mendaera, a US-based startup integrating robotics into healthcare, raises $24M with Lux/Founders Fund - link

• ProjectDiscovery, a US-based platform that detects new, exploitable vulnerabilities in codebases, raises $25M with CRV/Point72/SignalFire - link

• Ghost, a US-based Ghost, provider of a B2B marketplace for surplus inventory, raises $30M with Cathay/USV/Equal Ventures/Eniac - link

🔭 Notable later stage rounds

• Inworld AI, a US-based maker of an AI-based character engine for games has raised $50M with Lightspeed/M12 - link

• Endor Labs, a US-based startup that offers a platform developers can use to manage and secure their open-source dependencies, raises $70M with Lightspeed/Coatue/Dell - link

• Viome, a US-based startup that applies AI to patients’ microbiome data to provide them with tailored supplements, raises $86.5M with Khosla/Bold - link

• Modular, a US-based startup creating a platform for developing and optimizing AI systems, raises $100M with General Catalyst/GV/Greylock - link

• Poolside AI, a US/Paris-based startup that aims to build a tool that can write code using natural language, raises $126M with Felicis/Redpoint - link

• Hugging Face, a US-based startup allowing users to build, train, and deploy art models using the reference open source in machine learning, raises $235M with Salesforce/Nvidia - link

• Ramp, a US-based corporate card and expense automation platform, raises $300M million, with Thrive/Sands/General Catalyst/Founders Fund - link

🖤 - Heartcore

• Our portfolio company Kaia Health featured in the Sifted “9 digital health soonicorns to watch” 🎉 - link

• Our very own Björn Nilsen spoke to Eleanor Warnock on the balance between B2C & B2B in Europe - link

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