Using a North Star metric is a popular operating mode for startups. For those who are unaware, let me define North Star metric - North Star Metric is the single metric that best captures your product's success.
Theoretically, it encourages teams to create solutions that add real value to their users. Practically, it is abused and misused.
Let us consider an example to understand this:
Pinterest started with MAUs as their Noth Star metric to measure engagement. They realized MAU does not capture the value that a user gets from the platform.
To resolve this, they migrated to using WARC (weekly active repinner or clicker). Clicking or pinning indicated that Pinterest showed the users something enjoyable, and this seemed to be a useful metric to measure the value that users received from Pinterest*.*
As impressive and logical it may sound, there are notable concerns with this:
- WARC blends two actions (repin and click) into one metric. Let us learn why this is bad:
- Any increase in clickbait images will increase the number of clicks, which consequently will increase WARC.
- The increased WARC signals increased engagement. But, this engagement is fake and will lead to a negative long term impact.
- Secondly, WARC completely ignores the supply side of the equation. A high WARC does not motivate the teams to focus on creating new content. Even recycling old content will keep WARC high.
Due to the above limitations, Pinterest decided not to use WARCs in the long term.
Generally, using one metric oversimplifies the product's success. A single metric creates tradeoffs that product teams don't realize they are making. The best way to tackle this is to identify a set of metrics that measure all critical aspects of the product.