Some of us agree that money shouldn’t be the leading indicator of how good your life is.
Most people chase it, since there’s a wealth gap, but everyone would agree that after a sum (which varies with every person), your life doesn’t really improve dramatically with each cent/dollar/million that you add after that.
However, it is an indicator of success. Not because “I made $580m and I’m the best”. Rather, because the more you make, chances are the more you impacted people.
The assumption is: if people gave you their money (so that you’ve raised so much for yourself), it’s likely that you’ve made more than that for each and every one of them.
It’s not the best indicator. Some people steal, some people lie to get there and some people simply talk themselves up.
But it’s the best we’ve got and for the lack of a better indicator, we’ll keep on using that.
You can’t rely upon “number of downloads” since it’s not the common ground for impacting people.
Why is it the best indicator we’ve got? It’s the common denominator. Everyone uses money in this exchange and it’s the bottom line where we can compare everyone. Again, flawed as it is, we don’t have a better option on a worldwide scale.
We do that as well in another area
When we talk about tech companies, we’ve got the same thing happening.
Ironically, it’s more often not money that is not the indicator of success. And the thing that we use to measure success (or potential success) also does another job.
It answers the non-answerable question of: how much should we value your startup for?
In other words, how much money is your company worth? The answer is:
Number of users
For the lack of a better generalised point of comparison, we’re using # of users. Everyone’s got users when we talk about tech companies.
And yes, not all users are equal. 1000 users of Ferrari’s website are not equal to 1000 users of TransferWise’s website.
Or are they? Just like the immortal bit of wisdom about the value of a bottle of water, it depends who we’re asking.
The bit of wisdom says: what’s the value of a bottle of water? To the citizen of a well-developed city, it might be even 0. To a person in the desert — might be their life.
1000 users of Ferrari’s website might be a useless audience if you’re selling something that’s so far away from them. Targeted audiences are where the value is at — but also when you’re talking to the right people.
The conclusion
- The number of users is the most common denominator when it comes to the value of tech companies.
- For the lack of a better indicator, we’ll keep on using that, the same way we use net worth to more or less measure the impact a person’s had on others
- If your amount of number of users seems worthless, you’re talking to the wrong person.
About Ch Daniel
I’ve updated this signature in July 2020, so older mentions of the signature might not make sense.
I currently don’t write on this blog anymore. I wrote daily for 9 months on this very blog, but now I’m focused on building the CH Group.
If you want to follow my newer articles, check out the CH Group’s blog.
See everything I do here: Chdaniel.com
