The Lighthouse

A key to a successful startup journey is to always know where you’re headed. The company has to always have a single lighthouse that it is pursuing. More importantly – everyone on your team has to know exactly what that lighthouse is. This might sound easy, but in reality most startups fail miserably on choosing a lighthouse, communicating it clearly to the team, and sticking to it obsessively.

A healthy lighthouse can usually be reduced to a chart. Curiously, the most trivial chart – the revenue chart – is hardly ever a good lighthouse to choose… I’ll explain why below. The lighthouse, if properly communicated to every single person in the company, should determine pretty much everything that gets done by by each team member. In a company with a clearly communicated lighthouse, everyone – junior or senior, engineer or biz dev, in NY HQ or in the Israel R&D – should prioritize tasks nearly identically. If your company is struggling often with priorities, your problem is extremely simple to diagnose – you are most likely missing a clear lighthouse.

For a web company, the trivial lighthouses are – page views, unique users, etc. Choosing trivial metrics as the company’s lighthouse is acceptable, but the problem is that it will likely be the same lighthouse used by many other companies. That means that that the faster/bigger boat, not necessarily the smarter one, will likely win. If you are the biggest baddest boat around (aka “Google”) – you should be fine. If you’re among the 99.9% other startups, you might want to dig deeper and find your unique lighthouse.

A good lighthouse is also clearly actionable. A lighthouse that implies action will help everyone focus on the biggest opportunities. For example – when all search engines were focused on ranking sites based on keyword counts, Google’s lighthouse was to perfect the ranking of results based on the site’s authority. Later when Google was a late entrant to the PPC search advertising market, their lighthouse was maximizing the yield of each ad shown while their main competition was focused on maximizing the bids.

Which brings me to another attribute of a good lighthouse. And this one isn’t always achievable, but it’s beautiful when it is –
A great lighthouse is fairly invisible outside the company. In Google’s example, it isn’t immediately clear to an outsider how search results are ranked, and is therefore very difficult to play the same game. A good lighthouse let’s you compete in a crowded market while playing a game that’s completely different from your competition.

Revenue is therefore almost never a good lighthouse. It is not actionable and it does inherently not let you play a different game in the same ball field. But unless you’re doing not-for-profit work, revenues is probably a primary goal for you and your shareholders. The right way to reconcile this gap is to ensure that your chosen lighthouse has a reasonable eventual linkage to revenues. For example, if your lighthouse is to maximize unique users, that can later (if successful!) be translated to advertising revenues.

The lighthouse cascade

Most importantly for startups – a lighthouse is *not* permanent. It should evolve as the company grows and develops its product. The important thing is to know when to transition lighthouses, how to do it, and most critically – how to communicate to everyone what the current lighthouse is.

Each lighthouse should have a logical connection to the next one. For example, your 1st lighthouse might be to focus on building a big user base, while your 2nd lighthouse might be to maximize the page-views (so the actionable parts are to grow both the user base, as well as page-views-per-user). Each metric should eventually be a supporter of those future metrics.

The lighthouse metrics should not only cascade logically from one to the next, but also eventually have a strong connection to revenues. Choosing a good lighthouse and planning how your metrics will eventually cascade into revenues does not ensure your company’s success, but it is nearly impossible to succeed if you (and your whole team) don’t know what your lighthouse is at all times.