January 11, 2023

Telemetry: the precursor to high performance

Whether they realize it or not, founders are in a race against time. They need to achieve results to win customers and outpace their competitors. Efficiency should be prized by founders above almost everything else, as well capitalized challengers or large incumbents create a strong sense of urgency. This mirrors another field with similarly intense competition, scrutiny, and pressure to perform: Formula 1.

There are many similarities between the experience of entrepreneurs and racing teams:

  • Both appear simple to the uninformed: “Everyone IPOs or is acquired” and “You just have to go fast.”
  • Both have variables out of their control: “The market” and “the weather.”
  • In both, the access to more money does not guarantee success.

And most importantly, in both you can only be successful if you consistently monitor and measure your telemetry.

In F1, racing comes down to optimizing the car’s performance, and exceptional driving. Race cars must push the limits of physics to be the most efficient performers on the track and achieve their goals (getting onto that podium). Over one hundred sensors collect telemetric data that’s analyzed for actionable insights. These insights are then conveyed to the driver for real-time adjustments as the race progresses: when to accelerate, when to brake, how to overtake other drivers, when to pit stop, etc. 

Even tiny adjustments can have a compounding impact on performance, so F1 teams leave nothing to chance: they are constantly comparing telemetry at a given point to other time periods, other laps, other drivers, and more. They comb through terabytes worth of data before and after a race to better prepare, and learn from any mistakes.

In business, telemetry is the discipline of continually monitoring as many crucial data points as possible to understand how a company’s component parts are performing. It’s a system for effectively translating disparate “ground truth” information into digestible dashboards for CEOs. Aside from flagging early warning signs that could avert a catastrophic failure, telemetry enables CEOs to quickly make precise optimization decisions that could completely inflect the trajectory of the business. 

Most CEOs think about metrics too simply, but outlier CEOs have exceptional telemetry. They understand the importance of not just measuring business outputs (churn, signups, etc), but what metrics can detail functional performance. If their company is not profitable, they recognize the urgency, and need the ability to know as soon as possible if some area of the company is weighing down the business and causing inefficiency. Rather than only reporting on standard metrics like revenue and cash spent on sales & marketing when it comes time for a board meeting, they understand the intricacies of their business via nuanced “sensors” closest to the key components, such as:

  • What percentage of salespeople are achieving 100% of their quota? 
  • How much does it cost Marketing to generate a meeting for Sales?
  • What has the rate of customer adoption been like for our newest feature?
  • What is our revenue per employee?
  • Is our rate of voluntary employee attrition increasing or decreasing?

A lot of founders avoid telemetry because it’s radically honest. They’re worried about a dip or negative trend making them or their team look bad to investors. But trying to hold your business accountable without sophisticated metrics is like an F1 driver trying to win a race by relying on only an odometer for their speed. You have to be willing to measure reality if you want to make a dent in it. F1 teams don’t worry if a mistake is brought up by some of the data: they use it as an opportunity to root out and fix the underlying problem. Doing this kind of self-assessment consistently is critical in business, too; otherwise, founders run the risk of getting caught up in sunk costs and ending up too far off track. 

The difference between outlier companies and the rest often becomes clearest in down markets. Outliers know to keep urgency high and act as if they have a limited runway or moment of opportunity. Just as the most skilled F1 drivers know how to act on telemetry to their advantage in any weather, especially inclement one, outlier CEOs adapt with precision in challenging environments and give themselves the best chances of pulling away from the competition.

“In racing there are always things you can learn, every single day. There is always space for improvement, and I think that applies to everything in life.” – Lewis Hamilton