Have your startup numbers at the tips of your fingers

The goals of a startup are in three steps: validate the problem you’re solving; develop a repeatable sales process; build a scalable business model. These early stages are typically a tough time, with the inevitable focus on managing the cash whilst holding a vision and searing ambition.

With a hundred and one things to do, one of the main issues I frequently come across with startup founders is that they don’t pay enough attention to their numbers, especially the critical ones. Numbers are second nature to me, but for many first time entrepreneurs they hold an inherent fear. However, it is something you need to learn and take the time to do on a weekly basis. Running your numbers keeps you accountable and will help you sleep a bit better at night.

It’s simply knowing and understanding the inner workings of your business model and the financial levers which generate the numbers, which then enable you to focus on acquiring new clients, leads and sales. If your start-up is getting some traction and generating leads or sales, you need to know your numbers to make sure that you are just not generating cashflow with no profit.

From the outside, it seems ridiculous that people don’t look at something so simple closely. Entrepreneurs who know their numbers have a tremendous advantage over those who do not. The financials tell a story, and understanding the story is one of the most important ingredients for long-term success.

But this isn’t boring, geeky stuff. Having the numbers at your fingertips will show you if the business is starting to work. Confidence must be tempered with the reality that we all make mistakes. We need to measure things all the time. That way we can correct those mistakes and make adjustments as soon as possible.

Entrepreneurs that do everything by gut instinct are missing a trick. Hunches will take you so far, but as you scale, you need to analytical too in order to make good decisions, and for that you need good information. So what numbers should you be looking at?

In the early days of a startup there isn’t much to measure, but that doesn’t mean you shouldn’t start building a dashboard and focusing on building key numbers right away. I think there are ten key sets of metrics that you need to keep at your fingertips: on the left hand, where are we today? on your right hand, where we heading?

This will give you insight into your current progress and operational cadence, and help short-term forecasting, whilst also ensuring you are focused on growth velocity and trajectory. It’s a combination that ensures you have a dual focus on the ‘business of today’, and the ‘business of tomorrow’. This current/future orientation is a good step toward focusing discipline and attention on the information needed that will lead to informed decisions.

On your left hand

For me, knowing where you are is just common sense. It’s all very well having moonshot ambitions, but you need to know the current pulse in order to know what to do next. Think about yourself as a pilot navigating a journey – you need to know altitude, speed and direction – do you know where you are today against your plan?

The vital signs should focus on current performance to budget, targets and milestones regarding customers, revenue, product development, cash, and operational gearing to answer the questions: are we creating stickiness in our market with what we are currently doing? Do we understand where we are, what’s working today, and what’s not?

Once we have a grip on the ‘business as usual’ drivers, we can then look to the horizon. So, for example, here are suggestions for key number headings of ‘today’:

Customer metrics: building traction Do you know your customer numbers, how much it costs you to attract each customer and your churn rate? It’s a good way to monitor the efficiency of your sales process. How is your customer base growing, how sticky is your base? The absolute value is important here, so is the trend. There are a wealth of other customer metrics that feed into these high level ones.

Revenue metrics: creating a growth engine As you grow, develop a working product and gaining customers you need to start measuring how your business is scaling. Your revenue run rate measures how sales are developing over time. It helps you see how likely you are to hit your forecasts, capture any trends or patterns and tease out potential problems with your pricing strategy.

 Looking at average revenue per user is a starting point. An average can’t tell you anything about the quality of your sales, you need to get really granular, and do so on a weekly basis to get close to the drivers.

Product Development metrics: roadmap milestones Retaining a focus on building out your product is important and shouldn’t be put to one side whilst also seeking to build customer attention. It’s important to keep a line of sight on the product development roadmap milestones and creating a backlog of customer driven development from features identified. The agile development process has built in metrics around user stories, points and sprints, and these should always be in focus.

Cash flow: burn rate Staying on top of your burn rate – how much cash goes out the door every month – is critical. Running out of cash is an avoidable car crash, but needs attention. Knowing your burn rate is like looking down the track towards a finishing line with the stopwatch running. You need to know how much time is left before you run out of money.

Understanding your runway is vital – at the current burn rate, how many months of spend do we have remaining? Short runways cause entrepreneurs to be myopic, and removes the liberty to tweak and iterate when necessary. It also forces them to focus on the next fundraising round instead of growing the business. It’s a separate discussion from this blog, but fund raising should be focused on milestones, not the runway.

Operation gearing: learning The early stages are about trying things out, learning, and improving. How much operational efficiency does your startup have? In other words, are you getting a return on your spending or are you underinvesting in critical but areas? When you’re ramping up, you’ll need to spend more on marketing and hiring and to get traction, and you need to build these into your metrics.

On your right hand

As your left hand holds metrics for today, so your right hand should hold numbers with a forward-looking orientation, focused on the ability to scale fast, and typically go through three stages – traction, transition and growth. Each of these stages requires different priorities that are reflected in different objectives, strategies, team etc., but all focused on your North Star – your overall aim.

The North Star has been used for navigation since man began sailing, and applying it as a metaphor to startups is useful to get clarity in the maelstrom of things to do. For me, your North Star is determined by answering the question: How many people are getting authentic value from our product?

So, on your right hand, hold a set of metrics that inform about progress on your North Star, capturing the velocity, direction and momentum on progress. It’s a simple goal and easy to measure. I use authentic value to avoid vanity metrics. The moment when a user gets authentic value means you are getting traction, and can anticipate revenue, and when you have paying customers, you have a chance to turn your startup from an experiment into a business.

Simply, traction refers to the initial progress of a startup, seeking product-market fit, gaining market share and mind-share from its target audience.  If you achieve success in the traction stage, you have forward movement, finding what moves the needle of your initial growth, testing different offerings, and nailing down your product-market fit. Your aim is to maximise what makes you unique and what makes you valuable to customers.

The truth is that many startups make the same mistake of thinking if something doesn’t work, it must be everything, or they just guess the wrong reason why their business is not working. The truth is, any part of a customer’s experience can influence them. Here are some other metrics to consider, the 5C Scorecard:

Customer Numbers Growth A simple, binary index, set and measured for each period, provides visibility, clarity and simplicity of your North Star.

Conversion Rate Growth to be a very telling KPI in that it reveals a combination of the company’s ability to sell its products to its customers and the customers’ desire for the product. It is particularly instructive to track and review Conversion Rate over time and regularly run experiments to improve.

Customer Acquisition Cost Reduction is the unit cost of spend on sales and marketing, on average, to acquire a new customer. This tells us about the efficiency and effectiveness of our marketing efforts, and you need to be looking at this reduce as customer numbers uplift.

Customer Retention Rate Growth indicates the percentage of paying customers who remain paying customers during a given time period. When retention rates improve over an indicative time period, you know you have a sticky product that is keeping customers happy.

Customer Lifetime Value Growth is the measurement of the net value of an average customer over the estimated life of the relationship. Improving the ratio is critical to building a sustainable company.

For a company seeking outside funding, knowledge and management of these metrics is critical to allowing investors to understand your business and potential.

Clear data leads to productive conversations, recognising that whilst there are lots of moving parts in your startup which you need to stay on top of, a forward focus on customers forms the core of a dashboard of growth metrics. Over time, new financially based metrics can be plugged-in as it’s important to put an emphasis on the numbers you need to actively improve profitability.

But that’s the key: don’t use numbers to measure a startup financially at the outset, use them to guide and drive growth ambitions and the direction of travel and development of your business model.

Equally there is a ‘lead’ and ‘lag’ orientation to metrics, some track was has happened, others can be used to look forward. Progressions are far more important than numbers without any context: what was that number last month, compared to this month? How has it changed? What is the growth curve? Is it static? Is it dynamic?

Use your numbers to ask questions, the things you need to know to be sure that what you’re doing is having any effect at all. It is difficult to prioritise product and customer growth: Should we write a new feature? Remove a feature? Fix a bug? Redesign a user interface? Remove a step in the sign-up process? Write a blog post? Offer an e-book for a lead nurturing campaign? Change pricing? Hire a customer support person?

You must have an understanding of what levers can be pulled towards achievement of your North Star, which is then reflected in KPIs. The focus should not be on the KPIs themselves, but the meaning behind them and knowing what impacts each one.

In reality, the numbers should just confirm your instinct on performance and progress, but often they produce a reality check of where you are on the runway, offering a balance to the emotional ‘feel’ of what represents real progress on growth aspirations.

In my experience, startup founders can fall into the habit of innocently deceiving themselves with their own view on data, by only focusing on the KPIs and data that sounds positive and offers a positive outlook. We all have cognitive bias, tending to hone in on the metrics we know are improving over time, and ones that sound impressive without much context.

For example, I’ve seen startups ignore the hard stats of monthly active user numbers, but talk about the number of web site visits or downloads of white papers. Beware of ‘vanity metrics’ such as these, they don’t provide any meaningful indication on issues on which you should be making decisions. Focus on metrics and numbers that you can improve, and that inform you on your direction of travel in a meaningful, clear way.

To me, the indicators that matter most in the life of an embryonic startup are about customer development. If you don’t have a handle on these numbers, then you’re simply fiddling round the edges, and your actions will make far less of an impact on growth direction, velocity and scaling ambitions.

Entrepreneurial learning journey: the startup life cycle

So, you’re on the journey from idea to product, through startup to a high growth business. Each stage of the startup lifecycle brings a set of obstacles and challenges to deal with and overcome. You have to be alert and flexible in your thinking, adapting your strategy as you progress, different approaches are needed for each stage.

Your startup leaps through stages of growth just as our own human development lifecycle. Birth begins when we shoot out into the light. From there we learn to walk and talk, ride a bike and go to school. Having your first kiss, passing your driving test, casting your first vote…life is a series of milestones.

The story of your life, and life to be lived, is a series of chronological steps, so what are the parallel steps in your natural development and your start-up life journey?

Stage One – Being born: problem-solution fit

Birth marks the beginning of life free and independent of umbilicus, placenta and amniotic fluid. Yet perhaps life starts with conception, followed by the slow motion bloom of the foetus consciousness. What was the genesis of your startup, the moment of passion that created that ‘eureka’ moment?

Your expulsion from your mothers’ body jump-starts your being as a singleton, singularity stemming from the amorous clash of parental chromosomes, the emergence of a fresh life into a brand new day. Human birth is as romantic as that of any two startup adventurers first meeting – Jagger and Richards on a train platform, Hewlett and Packard at a family party, Jobs and Wozniak at a geeks club trading computer spare parts. Serendipity, chemistry and collision in both.

In response to Malvolio’s caption from Twelfth Night, some are born great, some achieve greatness and some have greatness thrust upon them, the birth of a startup is the start of a unique journey and a chance to make your mark. You’ve got your business idea and you are ready to take the plunge. But first you must assess just how viable your startup is likely to be.

In some ways, this is the soul-searching phase. It’s where you take a step back and experiment with the feasibility of your business idea, and also ask yourself if you have what it takes to make it a success.

At this point, ask yourself two questions: What problem am I solving? and Does my proposed solution solve it effectively? If you have a clear answer to the first question and a confident ‘Yes’ for the second, then you’ve got problem-solution fit, and a hypothesis, and it’s time to start testing your idea.

Stage Two – Learning to walk and talk: MVP

Learning to walk and talk are the next stages. Man crawls, walks upright and then resorts to a walking stick. Walking involves unconscious intent, nothing can halt the urge to stand up and move. Walking plots our journey in life, homo erects marks a triumph, four to two reprises Darwin’s evolution in a moment in time. When we stand up we join the same category as creatures as quirky as ostriches. George Orwell had the same opinion.

Of course babies’ first steps are theatrical, learning to walk usually takes place in a domestic theatre of relatives urging and applauding, capturing incremental advance on a camera for posterity. So it is with a startup, stumbling around, unsure of the initial direction, a sense of clumsy movement often falling over to pick themselves up again.

Making physical contact with another person means crossing the room, the feet enable the touching of hands, socialisation starts, as the first encounter with the first customer with your MVP. New language means a period of babble, a sound of nascent expression so subjective it leaves an infant stranded between private articulation and public incomprehension – so be careful your first articulation of your startup is a clear conversation, not babble!

This is the riskiest stage of a startup. Much of your time is spent going back-and-forth, tweaking your MVP based on feedback of your first pilot users. You’re just starting to walk and talk about your idea with potential customers and there will be noise and some trip up and painful moments too.

The purpose of this next step is to test your product hypothesis with the smallest possible investment of time and capital, hence, minimum viable product. You are proving demand and learning about customer behaviour, while minimising risk. Once you’ve validated your MVP focus on getting users into your product – it’s time to grow your customer base and get out into the market.

There is a big gap between what early adopters expect from a product, and what the bigger chunk of the market actually needs. The main reason behind ‘startup infanticide’ is the failure to identify and overcome this gap.

Geoffrey Moore’s Crossing the Chasm best describes the Grand Canyon that every adventurous entrepreneur must leap over to ‘get to the market’. The Chasm is the region of uncertainty a business goes through before it gets to product/market fit. And the shortest way to get there is by actively listening to the customer and implementing the promised features on schedule.

Stage Three – Learning to ride a bike: product-market fit

Learning to ride a bike is often the first learning process we undergo, creating a freedom of movement not experienced before. Learning to ride a bike, boyhood youth and summertime, it’s a defining activity of childhood. It has a giddy purposelessness to go round in circles, free wheeling without regard to why and where. It is about freedom of movement independently, mastery of technical domination of the machine keeping the handlebars steady and level, not breaking too hard and maintaining pressure on the pedals.

It’s also the mastery of self, getting your legs to do new things in conjunction with your hands and eyes. The bike gives you a chance to coordinate and bring chaos from order. Balancing on two thin discs of metal.

Yet the overriding sense you need when learning to cycle is embracing risk, as sooner or later the person pushing you has let go. Without getting into cycloanalysis, the moment of where conviction meets doubt is that leap of and the irrational jump from dependence to independence, from security to self-determinism, the madness of a decision the split second when reason must in the name of action go into suspense and you start to pedal away on your own.

For a startup, this is the moment of risk for product-market fit, winning customers to prove your value proposition. You’re now creating you own forward momentum, but as Einstein said, to keep your balance you have to keep moving, an epic contradiction from just a minute ago when to stay balanced you had to stay still, now you have to hurtle forward from safety to risk. You’re on your way, my boy, but keep those knee plasters readily to hand.

In a startup, now it’s about managing fear and doubt, not knowing to self-belief, just like learning to ride a bike you focus on the wide horizon in front of you, and you make something of it for yourself. The urge to dig in your heels and pedal hard, to cut an arc into this new panorama, but the freedom means you have to make decisions and with options of turning left rather than right.

With dad left behind you, shouting encouragement proud and panting, you are now off on your own. The peculiar sound of riding a bike, an auditory rush of inner silence, a paradoxical sense of self-esteem, random deviations for you to control your own direction and pootle about. Note to self: I did it.

It’s about creating trust with customers, building credibility through exceptional experiences. An engaged user community is the fastest way to get to any startup to the next stage.

Stage Four – Facial hair: scale

When I turned thirteen, I promptly grew a moustache. Well, not exactly, it was stubble, but the first shadows of facial hair grew rapidly and randomly, and it got me thinking back to that first shave at the onset of puberty. The rite of passage seems monumental, frisky hair sprouting up all over the frisky body.

While shaving may be new to teenagers, it’s been around a long time. As early as 3000BC soldiers would pluck hairs using two clam shells as tweezers. Alexander the Great encouraged his soldiers to shave so their hair couldn’t be pulled and twisted in combat. The word barbarian comes from the image of a man who was hairy and unshaven, basically unbarbered.

Beards are back and the ‘hipster’ style is alive and kicking, as a walk in Manchester’s Northern Quarter reveals. There are dudes sporting neatly trimmed Vandykes, as Charles I wore to the scaffold, or the sharp goatee of an old-time religionist, or even the waxed mustachios’ of villains from a Victorian melodrama. There are even a few with what I describe as the ‘Captain Birdseye’, a rampant bushy display, often resembling a mass of seaweed lifted from the beach and stuck on the face.

I have never been tempted from clean-shaveness save for occasional bout of laziness, I am too afraid of emulating Edward Lear’s Old Man With a Beard, who finds it has become a home to Two owls and a hen, four larks and a wren. For me, the constant dread would have been stray bits of piecrust lying dormant and wasted.

Startups in this puberty stage often see rapid growth as the business model is emerging and you build a repeatable customer process. It can still be a hairy experience as your conversion and retention rates bristle, but you’re growing up, it’s time to scale, by investing in people and process.

This is perhaps the most important stage in the lifecycle of a startup, getting to a point where customers can comfortably whip out their wallets and pay for the service they receive on a regular basis, scaling is a tipping point of capability and capacity.

Stage Five – Your first kiss: maturity

A first kiss, like Romeo and Juliet, the emotion and meaning, the climax of that tete-a-tete, the sensory neurons in the lips that fire off impulses to the brain. A kiss is a matter of delight, a delicious fluttering feeling of hope, expectation anxiety, curiosity, relief, abandon – this blog could be a sonnet.

The romantic idyll and wondrousness of Romeo and Juliet playing with each others words, fondling where formality mocks the courting protocols, and before you know it, it’s a snog without ending. Unlike mowing the lawn, there is not a natural conclusion to a kiss. A lust for life, as Iggy sang.

You can’t kiss and speak at the same time, rational speech is cut off as kissing opens a different mode of communication in a relationship. Although we can’t talk while we kiss, kissing eventually speaks volumes.

Understanding your position in the startup lifecycle as you hit maturity might help you keep your feet on the ground whilst metaphorically kissing a lot of customers. Now is not the time to get giddy, emotional and let your feet to leave the ground. However, it is the time to develop proper long-term relationships based on trust and value.

Not all startups will experience these stages of the growth lifecycle, and those that do may not necessarily experience them in chronological order – everyone’s biological clock has its own unique time line. Some see astronomical growth – for example Airbnb – whilst others’ jump to scale can be as painful as puberty where the hormones run wild, or a troublesome teenager where behaviour is unpredictable.

As John Lennon says, life is what happens to you whilst you’re busy making other plans. However, based on my experience, many startups will see a growth journey that has some resemblance to the stages defined above, and awareness may help you anticipate what is coming next, and how you can best prepare yourself.

The tortoise & the hare: what’s your startup growth strategy?

The Tortoise and the Hare is one of the memorable Aesop’s Fables, the story of a hare who ridicules a slow-moving tortoise. Tired of the hare’s boastful behaviour, the tortoise challenges him to a race.

‘Look at me!’ said the hare to the other animals, ‘Just look how fast I can run’, he boasts. The hare certainly was very fast and knew it. So when the tortoise agreed to race him, the other animals did not think the poor tortoise stood a chance.

The hare soon leaves the tortoise behind and, confident of winning, looks back to see that the tortoise is so far behind him, he decides to rest under a tree, falling asleep.

He is later awakened by the cheers of the other woodland creatures as the tortoise crosses the finishing line, realising that he’d slept too long and allowed the tortoise to pass him. His competitor, crawling slowly but steadily, has arrived before him.

But would that ever happen in real life? Could a tortoise really beat a hare in a race? And what if the race were a metaphor for a business startup, what’s the best tactic – steady progress or go-for-it sprint?

First, we need to consider what kind of race it is. Different races have very different requirements and competitors. If we break it down into three races, all might have quite different results.

Firstly, in a sprint, given that it can reach speeds of 60km/h, the hare would win hands down. Secondly, if it was an endurance race, it might be more even. Tortoises have the ability to persevere through harsh conditions over long distances. However, the same goes for some hares who are also well adapted to extreme conditions.

Onto the third race, and it’s one that the tortoise comes out ahead. It’s the evolutionary race. Hares have only been around for 40 million years, whereas tortoises for 200 million years. Couple this with their long lifespan, and the tortoise certainly comes out ahead.

But there is another factor we could consider: the distance travelled over lifetime. Given its long lifespan, would the tortoise travel further? If we consider that a giant tortoise might travel 120km in one year, over say a lifespan of 100 years, they would travel 12,000 km.

A hare would smash that in only one year if they were running at their top speed for three hours of each day. That would come out at 65,000km a year, but anybody who has spent time outside knows that hares spend most of their time running in circles.

In the simplest terms, no metaphors, the tortoise would win if it depends on how long the race is. If the race was over an hour the tortoise doesn’t have any chance, but over its long lifetime, my money is on the tortoise.

Clearly it’s difficult to compare the two animals like for like when you consider all the variables such as age, lifespan and range, the answer is more complicated than one winner alone, but the biological evidence suggests there is some truth to Aesop’s fable: slow and steady – over a long lifetime – certainly can win a race.

So, back to the business analogy, pity the tortoise in the C21st. Stolid, careful, slowly-but-surely, the ways of the tortoise seem quaint in the face of an onslaught of hares running amok, creating new businesses or disrupting old ones. The tortoise is the old business model, cautious and slow to react, whereas the hare is the epitome of the entrepreneur, dashing around, energised. But remember, in the classic Aesop’s fable it is the plodding tortoise, and not the speedy hare, that crossed the finish line first.

The moral of the fable is the proverbial slow and steady wins the race. Such basic and wise words, but many times we find ourselves living as the hare rather than the tortoise.  We define goals for ourselves, become excited, pursue them with fervour, and, all too often, get distracted and put them to one side. The story teaches us the virtue of setting and maintaining a pace to achieve our goals.

How do we stay on track? How do we balance the pursuit of our dreams between speeding away and burning out like the hare and plodding along like the tortoise, afraid we won’t ever get there?  I think we all know deep down the tortoise is, undoubtedly the winner of the race, but the hare has its place, too.  The fundamental task in achieving our goals is breaking them down into many smaller goals and assigning ‘tortoise’ or ‘hare’ characteristics to them.

The tortoise represents our overall, long-term startup goals and the planning that is required to achieve them. These are not goals that can be completed tomorrow. You must set a pace for yourself to reach these landmarks by breaking them down into smaller, more easily attainable goals. It is through this slow and calculated process that you will build the framework that will guide your decisions towards the end result

We know, certainly, that we can’t sustain ourselves trying to sprint our way to a finish line that could be years away, so where does the hare and his hyperactive tendencies come into play for us?  Well, since we took our time when we started off and carefully pieced together an outline that breaks down our goals into bite size pieces, we can now pursue each of them, one by one, with lightning pace.

The tortoise teaches us that a slow, methodical pace is what will efficiently take us long distances.  The hare teaches us that quickness is useful for short durations and bursts of activity when needed. Be it big or small, make it a point to take one step forward every day.

Here are a few lessons I learned from this popular fable.

Lesson #1: Sometime we take too long to make decisions

The hare did not think out his plan clearly, but he acted when he saw his opportunity.  The lesson learned is though he probably had many failures, he learned a valuable lesson that would take him through life. Then again, you can’t get anywhere if you’re still sitting at the starting line when others are pushing forward.

Lesson #2: It’s ok to make mistakes, they only make you more aware

The hare learned to be more persistent and that being the fastest does not always equate to being the winner. Persistence always wins as it helps you to build muscle and gives you a steely determination and focus.

Lesson #3:  Competition is not always between you and someone else

As we saw for the hare, his only competitor was really himself and his own thinking.  Our limited beliefs, his being ‘I am the fastest so I can lie around and take a nap’, was his downfall.

Some of us think this way as well, I am the best, strongest, etc. So I don’t really need to learn more, do more or expend extra energy to accomplish the next task.  Complacency, as we see in the tale, leads to failure.

Lesson #4: Slow and steady really does win the race

The tortoise was a perfect example of this, even in the face of sure defeat he persisted.  He kept going and never ever looked back. Persistence will take your further than worry, boasting, or fear any day. You already won it in your mind! That’s where it all begins.

Lesson # 5: Don’t worry about the startup next to you, just run your own race. 

There’s no denying the need for speed. Start-ups spend more time on pivots than ever before, but the devaluation of experience has gone so far that wisdom has fallen out of the very definition of business intelligence Of course, experience may not bring speed, but it does bring a greater ability to reflect and put into perspective what is happening around you.

In fact, your skill set is exactly what inexperienced entrepreneurs need, yet so often don’t value. The youthful hare may talk a good game, but my money’s on the tortoise.

Of course, startups are all about growth, but speed isn’t necessarily the only virtue to consider. What are the true growth metrics you should look to tag?

Most startups include their growth metrics either when pitching or updating investors, e.g., “X% growth week over week”; “Y% growth month over month”. Some of the stats are easy to interpret – you don’t need to do the math to understand 50% monthly growth over a sustained period is pretty good. But for other statements of growth, it’s less obvious to me. That is, I can’t immediately intuit if 10% monthly growth is ‘good’ and what does that mean, and obviously this depends on industry – 10% monthly growth for a mobile app may be not so good whereas for an enterprise software company, it might be healthy and borderline explosive.

I like to use Paul Graham’s metric, the ‘rule of 72’, to think about growth. The idea is that if you are growing X% over one period and you sustain that growth, then you will double your size in 72/X time periods.

As an example, let’s say a startup says they’re growing 12% month-on- month in users. Using the ‘rule of 72’, they will double in users in six months (i.e., 72/12), and quadruple users in 12 months, and so on. This works for any time period. So if an early startup says they’re growing at 12% weekly, then they should be doubling their growth in six weeks. This obviously works for any metric – revenue, users, traffic, etc.

Like all simple calculations, this is a rough approximation and has many caveats. This is just a rough estimate – that is, in my examples above I think the real answer is 6.12 months, and this estimate becomes less accurate as the growth rate gets higher. For example, 72% growth in one month doesn’t mean you will double your growth in one month. You’d need to grow 100%.

This also assumes that the growth rate will be constant over time. This is the biggest caveat since it doesn’t reflect probably about 99% of real-world examples. The thing about startup growth rate is that it’s inherently unsustainable. Sure, your bottom line will keep growing, but as your revenue continues to increase, your growth rate will inevitably diminish.

So if the success of your startup is measured by your growth rate, how do you know if you’re growing fast enough? It’s back to the tortoise and the hare again, what is the race being run?

Startups today are growing faster than they have in the past. US VC backed startups in 1998 grew revenue 63% p.a on average. In 2015, the median startup grew at 85% CAGR before going IPO.

These increasing growth rates are fuelled by three key trends. First, the acquisition channels startups use to acquire customers make more potential customers and enable far more cost effective marketing than twenty years ago. Second, purchasers of products, both consumers and enterprises, are much more inclined to purchase products from startups than ever before. Third, the private equity investors are willing to invest in high-growth startups despite the greater losses sustained during most rapid growth.

As a consequence of these three trends, startups are able to grow faster than ever before, and we are seeing new records set each year resulting in the phenomenon of the unicorn.

Whatever your pace of growth, short or medium term objectives, the lessons from the race run between the tortoise and the hare offer real learnings around focus, decision making, tactics and how complacency can undermine you. However, the real message for your startup business is that in reality, it’s not a competition with another business that matters, rather it’s a competition with yourself.

Leave the shirt in a better place: reinvention & growth, the All Blacks way

An anniversary passed recently, 16 September 1905, 110 years since the first New Zealand rugby team came to Britain, the Originals, as they are now known. The week in which the 2015 All Blacks beat Argentina in the first match of the recent World Cup marked the anniversary of their predecessors’ 55-4 defeat of Devon in the first game of their tour.

The Originals blazed through Britain, just like the 2015 All Blacks have. In 1905 they scored 976 points and conceded only 59. They bewildered their opponents. They were fitter, stronger, sharper and more scientific. No one had even conceived that it was possible to play the way the All Blacks did, let alone seen it done. They were not used to seeing the ball pass through so many hands, or the manner in which forwards mingled with backs.

Nineteen years later, the 1924 touring All Blacks won all 32 games, scoring 838 points and conceding just 166. They became known as the Invincibles. Current All Blacks coach Steve Hansen can justifiably claim to have carried on the tradition of both the Originals and the Invincibles in England with the recent World Cup victory.

Hansen has made his mark, and the British and Irish Lions tour to New Zealand in 2017 is likely to be his swansong, having indicated he intends to step down at the end of his contract. In losing only three tests since their 2011 World Cup success, Hansen has taken the team to new heights. However, he will have rebuilding next year following the retirement of six outstanding players – Richie McCaw, Dan Carter, Ma’a Nonu, Tony Woodcock, Keven Mealamu and Conrad Smith.

But Hansen is already looking forward to moulding a new group for the number one team in the world, who were clearly the best team at the World Cup by any measure – physical and mental fitness, coaching and the type of rugby they played. They set new standards by becoming the first team to win back-to-back World Cups. They have kept raising the benchmark, kept improving and taken the game to new levels.

It goes without saying that the All Blacks are going to miss those iconic players – Nonu and Smith have played over 60 games as the centre pairing together. It is almost 800 caps worth of experience in total they will be losing. However for the All Blacks, no one individual is irreplaceable. The same conversations happened after Andrew Mehrtens, Tana Umaga and Zinzan Brooke retired. Someone always comes along, because the culture is one of long-term thinking and planning, always reinventing, creating future All Blacks.

There is some ridiculous talent waiting to come through. Akira Iaone, a number eight, Ardie Savea, the brother of Julian, is an openside with a huge future. Sam Cane, who would be a starter for most other teams, has been groomed in McCaw’s shadow, likewise, Beauden Barrett and Malakai Fekitoa have learnt the ropes from Carter and Nonu. Dan Coles described Keven Mealamu as the player he ‘looks up to’.

By the time the Lions arrive in New Zealand in two years’ time, it will be the likes of Brodie Retallick, Aaron Smith and Nehe Milner-Skudder on the front foot. At the next World Cup in 2019, they will be senior men. These fresh faces are the next generation who will have regenerated the team. The focus is always on the future, the next group of potential world champions is already here, in place. The All Blacks are constantly reinventing.

Players come and go, and yet the All Blacks keep winning. Knowhow and leadership, let alone experience, will be missed badly, but New Zealand prepared for this eventuality almost as soon as the celebrations died down in 2011, and so will overhaul themselves in 2016.

The All Blacks embrace a values-based team ethos that evidences that above all the physical and mental toughness, a progressive, forward looking culture is a key driver of success. Leave the shirt in a better place is one of the values within the organisation culture inherent in the All Blacks’ mindset, which creates this constant reinvention of the successful team.

It’s your obligation and responsibility to add to the legacy – to leave the jersey in a better place. The legacy is more intimidating than any opposition. So the All Blacks invent, reinvent, grow. The same applies to great businesses, past achievements in no way guarantee future success. Enduring companies and individual entrepreneurs earn their longevity through near constant reinvention, stretching to create their next evolution.

The reinvention process is a combination of inner and outer awareness. We need to know what our timescale is for what we’re doing, we need to know how the competencies we’ve built can extend in new directions, and we need to attend to how our business fits into the new world. When we do all three, we can be confident, committed and flexible in the value that we create for customers.

Some reinvention is innovation driven, for example Apple move from desktop computer devices into handheld devices and the iPhone, but the majority is a forced result of changing market structures. For example, there are a lot of forces converging in the car industry right now, including powertrain electrification and trends toward active safety systems, semi-autonomous driving, and vehicle connectivity. Is it an understatement to call this an interesting time?

These technology innovations have turned the industry on its head, with disruption coming from every angle, from the potential ways we fuel our vehicles to the ownership model. We have a whole generation that just wants access to vehicles as opposed to ownership for example, through services such as Uber and Zipcar. Even the dealership model is changing, with Tesla selling directly to consumers.

In terms of connectivity, so much of the technology is being developed outside the auto industry. Whether it’s vehicle-to-vehicle and vehicle-to-infrastructure communication, semi-autonomous and fully autonomous driving, or connecting to the cloud, these are all major disruptions coming fast and furiously.

The reality is that the major car manufacturers will not own, or develop, most of these technologies, so they have to reinvent themselves to be a thoughtful integrator of other peoples’ technologies and understand where they add value. The role of a traditional car manufacturer has changed dramatically to become a part of a mobility ecosystem. In this new world, they need to figure out what they have to own and what they don’t and to be a great integrator of technologies and services.

This ‘reinvention’ shows that it’s not easy to do, and that most reinvention that does occur is involuntary, the inevitable result of massive and painful industry disruption where the market place is reinvented, but with new players. The winds of disruption are howling across the industrial landscape of most Western economies and the ability of incumbent market leaders to defend their positions and build sustainable futures are increasingly fewer and further apart.

As one thinks about the future of Apple, they will continue to innovate from within and enhance their current product and market fit. They will likely enter the world of wearables, cars and maybe the health market in some way. Now add to this the idea of Apple using their cash to build through licensing and acquisitions and buying strategic products that could be sold through their online and physical stores and supported by their great customer experience and you have what I believe could be the next major version of Apple as Apple reinvents itself again.

So from an SME perspective, what are the elements in a reinvention strategy we can take from the All Blacks, Apple and the car industry? Here are my thoughts:

Rebound First and foremost, complaining about your competition or falling away of your traditional customer base won’t help. It only makes things worse and demoralises those around you, and yourself. Today’s laurels are tomorrow’s compost, look forward. What are you aiming for? What does success looks like in 12, 24 and 36 months time? There’s no point in feeling sorry for yourself, reframe your own future.

Restart Forget about how you’ve done business in the past. It was good enough then but it won’t give you the results you want in the future. In order to become the best business you can be, start with a clean sheet of paper. What type of customers would it serve? Why should customers buy from me, and not others?  People get stuck in their own rut doing business the same way.

Rebalance Do you remember the reason you went into business? The end result of your risk taking should be freedom and fulfilment, not continuous hard work and a feeling of déjà vu. Dedicate time to rebalance your focus. If it’s all the business of today, no one is steering towards business of tomorrow. Specify what you should be doing, working ‘on’ the business, and not simply ‘in’, and rebalance your priorities.

Revisit How can you win customers competing against a myriad of others based solely on the lowest price? In the new economy, the old strategy won’t work. Offering the same things every competitor does provides no advantage. Are your business strategy and business model viable in today’s marketplace? Will it build a winning company that works for you? Identify what markets and products will work in the next 12, 24 and 36 months.

Retool What should your business do to make use of technology, to increase efficiency and deliver growth? Use the menu of digital tools to build a greater awareness of your brand and your offerings. Where can you leverage our online business model to greater impact?

Refinance The best businesses are also the best financed. A strong financial foundation provides the platform to innovate, and invest for growth. Now is the time to take a hard look at your finances, your financial systems, and your cash requirements. Focus on managing your cash and use this information for strategy and pricing decisions.

Restructure Most companies use the same organisation chart for years without ever changing it. But over time, the old structure doesn’t work as business and customer demands change. Perhaps it is time to restructure and take a look at job roles, responsibilities, etc. What does the structure need to be to deliver the success desired?

Refocus What do you do differently to attract customers to buy your services? How do you gather new fans? Have you changed your target market to expand your customer base? It is time to refocus your customer strategy and look for new customers in new markets by offering something exciting that gets customers paying you for the value you create?.

Rebuild Take a fresh look at your overall company branding, image, logo and website. Do they create any excitement? Do they give out the right impression to your customers? Does it promote technical expertise and value? Rebuild your marketing, almost as a relaunch.

Revamp What business routines do you call over and over, year after year? Have you called any new plays lately? Your management style must be agile, what innovations have you introduced to refresh the business and shock customers (in the nicest possible way?) Think inside out, think like a customer.

Refresh How much time do you give your team to training to renew or develop new skills? Identify the training and development needs for each member of staff to get them performing at a higher level. Use personal coaching to stimulate and to get their heads up and seek to perform the best they can be.

Relive Are you living your dream with your business? Why not? Never forget your dream. Write down specifically what you want your business to do for you personally in the next 5 to 10 years. Next decide what you must do to turn your vision into reality. Make it personal, so your business enables you to work to live, not live to work.

Begin reinventing by asking the right questions, you must be inquisitive and open to the challenges ahead. The following questions can help:

  • What fundamental consumer needs have you been serving? What new experiences can address those needs?
  • How will you identify your core strengths? What is the best way to increase investments in those true differentiators?
  • In what ways can you identify new potential sources of value, and where in emerging ecosystems should you engage?
  • What can you do to assess current skill levels and capabilities objectively? How should you acquire new skills to fill gaps?
  • What sorts of reinvention torchbearers already exist in your organisation? What can you do to incorporate their influence into strategy and education?

The reinvention of our business life means marching off the edge of our existing maps. It’s a challenge to create new opportunities through reinvention, but don’t let yourself be put in the position where you fall into the complacency or ignorance trap, and forced into the reinvention game to survive – like the large supermarkets now responding to the low-cost providers.

Be agile, embrace the need for change and take a lesson from the All Blacks – go again when you’re on top of your game. Be next-in-line like the All Blacks reinvent, from the Originals, to the Invincibles to the World Champions of 2015, and you won’t go far wrong.

What’s your slice of the pie?

In the current economy, most businesses operate a competitive strategy based on taking a larger slice of the pie, gaining market share from others. A few are innovators, and create their own market space and make the competition irrelevant with unique value propositions. But far too few many opt for pie-splitting instead of pie-growing strategies.

Nielsen Research identified that of the billions spent each year on marketing and innovation, estimates are that only £1 in every £8 spent on marketing (13%) and £1 in every £20 (5%) invested in innovation, results in a company growing the market capacity as a growth strategy.

The majority of the expenditure just shifted market share from one business to another. These pie-splitting strategies often drive short-term, unsustainable results where companies are merely ‘renting share’, that is until someone else comes along with sharp elbows and takes a few % off their revenue and reduces their existing customer base by way of a tactical response. Supermarkets exhibit this behaviour.

In the long-run, too much share stealing without genuine market growth destroys industry profitability for all participants: everyone is just chasing the same customers and end up cannibalising their offering and their business, for the lack of game changing innovation.

This is shouted out loud and clear in Nielsen’s research: the single largest result of marketing is subsidised volume at nearly 55% of all market spend. This is spend where there are no new consumers or incremental sales units are achieved, instead, customers who would have purchased a product anyway are being given discounts, cutting profits. They just sit back and let everyone eat away at other’s margin in a price/discount war.

One might think that all consumers would be happy with lower prices, but The Cambridge Group analysis across dozens of categories shows that the truly price sensitive customer tends to be only 10-30% of a market. Most customers actually want new value and innovation, and are willing to pay for this.

With regard to innovation, the numbers indicate that innovation may result in splitting the pie and not always growing the pie — and in some cases, innovation inadvertently shrinks the pie. Nielsen looked at sales from new products in various categories within the grocery market in recent years to evidence this.

In one year £2.7 billion in new sales was generated via new products in the grocery channel but £3.2 billion was lost due to failed products and ‘lost’ products that were pulled from the shelves – a net negative £500 million. Put another way: for every incremental £1 gained from a new product, £1.20 was lost due to product de-listing.

So is growing the pie an impossible task? No, but the path to pie-growing strategies centres on innovation that drives category growth. The lesson is: innovate to grow the overall market size, not just your own market share.

First, innovation needs to be redefined in terms of ‘what does success look like?’ Too often businesses set financial targets, almost at random – ‘let’s aim for £5m of new sales from this new product’ without regard as to where the additional revenue will come from. Ideally it comes from category growth – growing the market by introducing a new value proposition that attracts new customers.

As highlighted above, if it comes from a competitor’s share or, even worse, cannibalising a product in our own portfolio, it’s a less effective innovation. Innovations that grow the pie allow a business to benefit disproportionately instead of reapportioning existing shares. Innovations that are truly differentiated and are appealing enough to command pricing power have a much greater chance of growing the market size and thus uplift sales and margin.

I think it’s about the ability to innovate your ‘mental model’ of your business, to reflect the new realities of an industry, and remove the confusion of what you’re trying to achieve with ‘growth’. This confusion begins with a flawed mental model that fails to reflect reality but still serves as the basis for taking action. ‘Growth’ is often just ‘grow revenue with a new approach’, not genuine innovation. Why would that succeed?

So what exactly is a company’s mental model? Simply put, a robust mental model eliminates internal confusion and sets down a clear strategy and metrics of success. The mental model is a framework that simplifies a strategy with clarity and focus on articulated goals.

Without a strong mental model strategy can become open to interpretation, decision-making can become bogged down, or both can occur at once. Simply, it articulates ‘this is what we’re going to do’ with total transparency.

I recently took this approach with a client of mine in engineering. They had set a target of 20% top-line growth, mobilised their marketing and sales teams to win more business – and set out with gusto to succeed. The top line grew. But profits declined.

The company’s top salesman, winner of the annual incentive trip to some exotic holiday destination five years in a row, was almost singlehandedly putting the company out to business. How? The strategy called for delivering the highest quality service to customers who were the biggest users of their products. That will keep the competition out, won’t it? The sales team prided itself on bringing in the biggest deals with huge volumes from these target customers. Their mental model was essentially ‘big customers, big volumes, big profits’. They had a swagger, and at face value it looked good.

While this interpretation of the strategy seems valid, there was a fatal flaw: big customers with big volumes also command big discounts, and advantageous payment terms. Making matters worse, most of these high volume customers did not value high quality and their cost-focused approach put the high-quality products the company had invested in at a disadvantage.

As a result, profits steadily eroded as the top line grew. They’d won a larger slice of the pie, but at what cost? A simple exercise for building a revised mental model brought a new focus, answering a series of key questions:

· Which customers are the most profitable?

· How well aligned is our value proposition to their demands?

· What differentiates our value proposition from competition?

· How will we compete and win?

· What will customers pay for our differentiated offering?

Comparing the answers to these questions quickly revealed that individual business functions were operating from their own radically different mental models. Sales and engineering had very different views of the most profitable customers, with sales focused on scale, whilst engineering focused on precision.

Working together, the teams identified a previously unrecognised value proposition – an innovation. With this new information, marketing identified customer segments with the most profitable projects. They were smaller customers with moderate volumes that valued quality.

By focusing on these customers and building a new value proposition focused on their needs, the sales team started filling the factory’s capacity with profitable jobs. Ultimately, the dialogue begun around the dislocated mental model created the reality check. The realignment externally with customers based on innovation and segmental analysis needed to turn the business around, was achieved.

In my experience, a successful mental model must provide an accurate reflection of your reality. A major flaw, is starting from faulty assumptions. There is a tendency, especially under pressure, to see the world as we wish it were, or how it used to be, rather than as it really is.

Thus our growth ambitions, over simplified in raw financial (revenue) metrics are ill considered and doomed to failure at the outset. Just because we achieved 20% growth last year, why can that simply be replicated again?

Starting a dialogue about your company’s mental model can lead to significant improvements. Begin with the types of questions above. One potential outcome is to confirm that everyone understands and is aligned behind a shared mental model. Another outcome is to identify gaps to be addressed. Building a stronger mental model can only increase your odds of success.

A bi-product from the project, was my realisation that creating an organisational culture that is focused on learning is more effective than simply focused on winning. If you are focused on winning then there is always an implicit win/loss associated with every action or result, and it’s a binary outcome with a binary measure of success chalked on the scoreboard.

Winning consistently can elicit complacency and a lack of thinking. Most companies lose more than they ever win, so they are constantly playing some game to make losses feel like wins or over emphasise actual wins. A company needs to learn that they cannot get long-term success without challenging and refreshing their mental model, because success masks the curiosity of learning and doing new things or creating new ideas. Success disables innovation, losing provides for agitation and a desire (and need) to improve.

Companies often have this culture hang up, and fail to recognise that they are the most vulnerable when at their most successful. They can focus on winning when in growth mode as it’s easier to have lots of winners. However for long-term sustainable success a business needs to revolve around learning and a culture of introspection.

Fundamentally, the issues are rooted in our culture of competition. Pie-splitting as a growth strategy is attractive because it is more familiar and easier. It’s also generally based on sales and marketing tactics, not adding value to products. For many of us it is deeply ingrained that for one to win, the other has to lose, and we feel good when we win.

Pie-growing takes more courage, as it is a more uncertain and riskier strategy. It also takes more creativity, as well as an ability to stand in your customers’ shoes. But as Edison said, don’t invent something that you can’t sell, so what does innovation look like from your customers’ perspective?

Innovation was defined for me some 52 years ago on Saturday just gone, on May 25, 1961. President John F. Kennedy stood before a joint session of Congress and announced This nation should commit itself to achieving the goal, before this decade is out, of landing a man on the Moon and returning him safely to Earth.

This must be the greatest vision of innovation of all time, the Man on the Moon is a resounding statement of ambition and intent. It has become one of the most compelling, unifying visions ever articulated by a leader.

So, on this anniversary, it is worthwhile to highlight it and reflect that every business must craft innovation into their mental model of what they want to achieve in terms of growth and doing something new. Does your mental model meet the Man on the Moon standard?

It’s not about new ideas being pie in the sky, rather it’s about an abundance of ideas to create a larger pie. Pie-growing not pie-splitting is the only route to genuine growth, creating new, uncontested market space. Then ask yourself, who ate all the pie? The answer is easy: the market innovator with a new mental model.

All we are saying, is give youth a chance

A country or a society that does not recognise, nurture and harness the potential of its young people has no future, it is a fact that youth bring hope and change, shaping what can be, looking forward. The idea of the youth being the energy and a regenerative force in society cannot be ignored as there are certain perceptions and views expressed by society about its youth, where they are seen as a metaphor of optimism, revolution and rejuvenation. A contradictory image of youth which is commonly expressed, is one filled with problems and instability.

Whatever these views and perceptions are, it is at a young age that the foundation for taking society to a higher level of development is laid. My daughter Katie, 17, and son James, 21, give me hope and inspiration for the future with their attitude and exuberance everyday – whilst their appetite and hunger for everything in the App Store (i-this, i-that, i-another) gives me hope and inspiration for my future when they’re off my payroll (only joking J&K).

Unfortunately, despite rhetoric from Cameron & Osborne, our public institutions and structures seem not to create a conducive atmosphere for young people to unleash their hidden potential. Opportunities are not created for young people who are creative and forceful and if opportunities are available, they based on the politics of short-termism with public funded programmes seemingly designed to cleanse the conscience of those in power. I see no vision or strategy with innovative, disruptive thinking, nor genuine desire with well thought through investment plans, to change culture and create genuine opportunity. Where are the inventive solutions signposting youths’ long-term direction?

A practical example is when a young person with a business idea or plan approaches a financial institution for support. Demands are made for huge personal collateral security before granting the request, but the financial institutions are aware that the collateral will not be provided due to a lack of resources. This is a serious form of ostracism.

An even greater problem is when an outlet or audience for youth expression is not created. Those who do not want to grant the youth an audience to express their ideas confound the problem.  The truth is that there is a clear difference between performance and potential. You can judge someone by his or her performance, but you cannot judge his potential. It is hidden until an avenue is created for the person to unleash their talent.

I believe it’s time for those in a position of power and responsibility to create a platform for young people to reach their maximum potential. Let’s develop the habit of motivating our young folks and create infrastructures to support their initiatives – but bring a 20-year horizon to the thinking, not a short-term tick-box mentality. This Government have deflected their lack of sincere moral commitment with short-term financial pledges failing to recognise that in many ways, the future of our country rests with young people, like James and Katie. Their ability, vision, commitment, enthusiasm, skills and ambition to manage, change and grasp opportunities must be encouraged, not discouraged.

But we now know their focus is more on secretive political fund-raising dinners than wanting to make a difference for our young generation. If our leaders, policy makers, and society at large believe that the youth are our future, then it’s time to invest in them for the long-term. As Nick Clegg said recently, being Neet is a tragedy for the young people involved and a ticking time bomb for the economy and our society, when he announced a £126m funding package which will offer for the first time individual, tailored support to 16 & 17 year-olds who are not in education, employment or training (‘Neets’).

This problem isn’t new, but in the current economic climate we urgently need to step up efforts to ensure our most troubled teenagers have the skills, confidence and opportunities to succeed. Clegg’s move forms part of the £1bn Youth Contract launched last November, which aims to lift young people out of unemployment – the rate is now 20%+ – with more than one million 16 to 24-year-olds in the UK currently unemployed.

Work experience and training for young people at a cost of £1bn. Sounds familiar? Well, it is, that was the description of the Youth Training Scheme (YTS) launched back in 1983, but that £1bn was in 1983 prices. Leap forward to 2011 and the coalition Governments scheme has some similarities, but its £1bn will clearly not go as far as the YTS money nearly 20 years ago.

The principle of paying an employer a wage subsidy is another common theme, so too the number of places available. Gordon Brown’s ‘New Deal’ employment option also involved subsidies for employers. So how successful were these previous schemes? The Centre for Economic and Social Inclusion argues that subsidies have tended to have very low take-up.  It also points to research suggesting th. But the Centre says evidence from the United States reveals success in transitional job schemes for those furthest from the labour market.

The Youth Contract is aimed at private sector opportunities. The aim is to match people up with employers who might go on to offer them real jobs. The drawback is that it depends on the willingness of private sector companies to step forward. At a time of economic uncertainty, that may not be as straightforward as ministers hope. And of course, the situation is uneven, with us folks living in the North suffering more than the Beautiful South, so potentially this just widens the demographic trends further.

I’ll step down from my soapbox, but I find it depressing how the national electorate can be hoodwinked by political shenanigans and empty rhetoric from a Government shirking its moral and political leadership responsibilities. It’s not all about budgets and austerity cuts, its about what sort of society you want to live in, but of course, we know the answers to that coming from the Bullingdon Club Old Boys as they fib about their VAT-category pasty eating habits.

It’s really only obliquely related to some of the stuff above, but there’s something heart warming in the success this season of Burnley FC’s Youth Team to openly celebrate and counter the glumness I’ve expressed and feel about Youth opportunity.

Burnley have gone out of the FA Youth Cup at the semi-final stage this week against our bitterest rivals Blackburn Rovers. Having lost the first leg at Ewood 0-1 last week we were beaten again, 1-2 at Turf Moor. A Steven Hewitt penalty a few minutes from the end was our only reward. It was the least we deserved from the two legs, although overall any fair judge would say the better team have gone through. Blackburn scored twice early in the second half on Wednesday to virtually put an end to the tie but you had to admire the way we kept going when all looked lost. They lifted their heads again, very much kept their discipline, and continued to play some decent football.

There were 10,000 home supporters on the Turf, and Shay McCartan’s storming run at the start of the second half gave the crowd something to shout about. Despite the teams’ efforts – with special mention for man-of-the-match Aryn Williams, Cameron Howieson, a Kiwi from Dunedin, and Steven Hewitt, it wasn’t to be.

To put this into context, Blackburn are a Premiership Academy team, fuelled and funded by the rich financial resources this status brings, whilst Burnley are a Centre of Excellence, playing games on picturesque pitches at Gawthorpe, nestling in the countryside outside Burnley near the Gawthorpe National Trust estate.

It was the hunger, determination, enthusiasm and passion of the Burnley youth that made you proud to be a Claret. After the first of the Rovers goals I saw players encouraging each other. When the second went in I feared the heads might drop and we could take a heavy defeat. Not on your life; they kept at it and were finally rewarded with the penalty for a clear handball.

Blackburn were big, strong, pretty quick and very aggressive – and dare I say it – wise to the cynical side of professional football. Judging by the size of their players I think Venky’s genetically modified chicken also had something to do with it. Fortunately, our lads are all proper players, but they’re slight, when one of our subs came on I thought he was a mascot.

It wasn’t just about Aryn, Shay, Cameron or Steven on the night, or all season, it’s about the whole youth squad who have taken us a lot further than any of us hoped. On the night, we were:

Burnley: Josh Cook, Aryn Williams, Alex Coleman, Jack Errington, Luke Conlan, Luke Gallagher (sub: Jason Gilchrist 68), Steven Hewitt, Archie Love (sub: Luke Daly 82), Cameron Howieson, Shay McCartan, Adam Evans. Subs not used: Callum Jakovlevs, Charlie Holt, Alex Mullin.

No one could have envisaged wins against Ipswich, West Brom and Fulham in previous rounds, but that’s what they did. They’ll have their heads down now, no doubt disappointed that the adventure is over. They’ve no need to have heads bowed though, they can stand heads up and proud of what they’ve achieved this season. So its hats off to Terry Pashley and Andy Farrell who lead the Youth coaching set-up, and to the Burnley FC Directors for investing in youth. If only others could follow this example.

At a point in the season when the first team have been struggling for form, they’ve captured the imagination of fans and given us something to shout about. I’ve long since given up predicting which young players will make it, but you derive great satisfaction from watching your youth team and daring to dream about the future.

But back to the bigger picture. Much education today is monumentally ineffective, all too often we are giving young people cut flowers when we should be teaching them to grow their own plants. We cannot always build the future for our youth, but we can build our youth for the future. Youth cannot know how age thinks and feels – if youth only knew, if age only could – but old men are guilty if they forget what it was to be young, and all that it entails for the individual, and society.