Burning money?

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Burning

Fuel poverty and health campaigners today called on the newly launched Public Health England to address the devastating impact of cold homes on the health of the nation.

Campaigners welcomed the shift in responsibility for public health to local authorities and the opportunity this creates to address a major root cause of health problems in the UK – the woeful levels of insulation in the nation’s homes.

Mostly as a result of poor insulation levels, fuel poverty now affects over 5 million households in the UK. Living in cold homes doubles the likelihood of a respiratory illness such as asthma in children and quadruples the risk of mental health problems for teenagers. Fuel poverty is estimated to cost the NHS over £1bn every year.

The Energy Bill Revolution campaign estimates that on average over 7,000 people die every year from living in cold homes.  The big freeze that has affected the UK in recent weeks almost certainly means that more people have died because they cannot keep their homes warm.

The Energy Bill Revolution is calling for carbon tax to be used to fund an ambitious energy efficiency programme to super-insulate the homes of the fuel poor. The Government will collect over £60 billion in carbon tax over the next 15 years which is enough to make every fuel poor home highly energy efficient and slash their energy bill by over £300 ever year.

Carbon Tax can provide a massive financial boost for Public Health England and local authorities to support the delivery of such a programme.  This would help improve the health of some of the UK’s most vulnerable citizens, keeping them out of hospital and easing the burden on the NHS.

The Department of Health’s new ‘Public Health Outcomes Framework for England, 2013-2016’ identifies reducing fuel poverty as one of its key indicators for addressing the wider determinants of heath. Reducing mortality from cardiovascular and respiratory diseases and excess winter deaths are also identified as indicators against which the whole public health system should deliver improvements. It is vital that local authorities, in partnership with health and well-being boards, prioritise these indicators in local strategies if they are to fulfil their responsibilities to protect the health of their local population.

 Jo Butcher, Public Health Adviser for Friends of the Earth, said:

“As energy bills continue to soar and another cold snap hits the UK, millions of fuel poor households face difficult ‘heat or eat’ choices. It is a national disgrace that so many die each year due to cold, damp and poorly insulated housing. Public Health England must prioritise action to tackle fuel poverty and the Government must use carbon tax to fund a much bigger programme to insulate UK homes. Energy efficiency is commonly perceived to be the domain of the environment sector but I hope the new public health service will demonstrate it has a central role to play. The transfer of public health to local authorities is good news – they are used to managing housing and environmental health issues and are well placed to bring together the range of services that need to be involved in tackling the cold homes crisis.”

Jane Landon, Deputy Chief Executive at the National Heart Forum, commented:

“Cold, damp homes are responsible for avoidable deaths and needless health problems for many people in this country. The Government has committed to reducing avoidable mortality and action to tackle fuel poverty and its effects must be a priority to help achieve this. We welcome the establishment of Public Health England. Its role in the delivery of public health nationally and locally and its focus on reducing inequalities is a new opportunity to tackle fuel poverty.”

Energy Bill Revolution, the largest fuel poverty alliance ever assembled, is backed by 120 organisations representing the children’s, health, environmental, housing, disability and consumer sectors, businesses, academia, politicians, local councils and the public. The Energy Bill Revolution is asking Government to recycle the substantial funds it receives from carbon tax revenues (an average of £4bn annually over the next 15 years) into energy efficiency programmes to eradicate fuel poverty www.energybillrevolution.org

Startup metrics – one VC’s top 10

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Here’s Redpoint VC Tomasz Tunguz’s top 10 metrics, including a new one for me – TSM – or trailing six month (average), which he says are the ones he’s found most useful in board meetings:

With the analytics tools today, it’s easy to measure hundreds if not thousands of different metrics for your business. Cutting through all the chaff to determine the most important or insightful metrics can be quite a challenge.

Below are the ten metrics I’ve found to be most useful in board meetings. They answer the questions of how should a startup founder might measuring the business at the highest level. You should have many more metrics than these, but I’ve highlighted the ones that I recommend presenting to your board and reviewing each week.

Metrics Format

Clear data leads to productive conversations. To best understand a data point and its implications, we have to put it in context.

I’ve found dividing top level data in three slides, one for company priority (Distribution, Engagement, Revenue) helps to set the right context. Within the slide, a table that shows the metric and compares it to last month, then explicitly calculates the monthly change, the trailing six month average and finally compares the metric to the goal best communicates the state of that metric. See below for an example.

Metric This month Last Month % change TSM Average Goal
Active Users 100,000 50,000 100% 125% 75%
Total User Base 500,000 400,000 25% 7% 10%

The TSM Average column is the Trailing Six Month Compound Growth Rate. It is calculated in this way:

(ending_value/starting_value)^(1/num_periods-1)-1.

In most businesses, a monthly growth percent is too volatile to be meaningful. However the TSM Average smooths out the monthly change. Comparing the monthly to the TSM, we can get a sense of whether the monthly growth is accelerating or decelerating and how it compares to the goal you set each quarter. In this example, the total user growth was slower this month than in the past six month, but activity is way up. The next question, the one board members and founders should ask, is why?

Metrics/Question Pairs

Now that we have the base format of the metrics, let’s talk about which metrics matter. Each metric is followed by the question it’s designed to answer. Pick the ones that are relevant to your business.

Distribution

  • New users added last month by channel/TSM growth rate: How are well are we growing the user base? Which user sources are the best?
  • Total user base/TSM growth rate: How important is our monthly growth compared to our total user base?
  • Cost of customer acquisition, lifetime value, pay back period: Can we grow faster through paid acquisition? Are we acquiring customers profitably? How much can we afford to spend on new customers? How is this changing over time?

Engagement

  • Active users (can defined in several different ways depending on your product) by channel/TSM growth rate: Are we getting better at giving our customers what they want/need? Which channels of users are most effective in finding us the right kind of user?
  • % of users using top 3 key features in a given month: Are our product initiatives the right ones?

Revenue

  • Revenue / TSM Revenue growth: Are we growing our revenue?
  • Conversion to paid rate in that month/by cohort: How many users converted to paid? Are we improving our ability to convert customers to paid?
  • Avg spend per paying customer of a managed account vs solo account: What is the impact of the account management team?
  • Churn rate/ TSM Churn rate: How well do we retain our customers?
  • Burn rate: When are we profitable? When do we run out of cash? When do we need to raise?

These are the metrics that have been most valuable/insightful for me working with our companies.

So if that didn’t do the trick and get you focusing on the numbers maybe this fun video from Guy Kawasaki at UC Berkley will help – skip to 08:30 to bypass the introduction – and to get straight to the first mistake entrepreneurs make:

Guy focuses on one simple message, if you wanted to sum it up, it’s that’s VC’s are just interested in the numbers. But that begs the question, what numbers are they interested in when seeking investment?

Here’s Tomasz’s answer when I asked him that generic question: “Each business is different. Each VC is different. But ultimately if you can show profitable unit economics I think that’s a good start.”

So my suggestion? To give yourself a better chance of succeeding ask the VC before your meeting what they use as key generic KPIs to judge investment, and why? Then adapt to your specific business case.

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