Welcome to Business by the Numbers, our new blog series where we talk to some of the most influential people in the cloud, internet infrastructure and web hosting industries about the role data analysis plays in their organization.
We wanted to lead off this series with an interview with Lance Crosby, former CEO of SoftLayer and now head of StackPath, a next-generation intelligent and secure web services platform. Crosby has been a huge proponent of using a data-centric approach to validate gut business decisions, and that there are always data points to track if you know where to look.
Here’s our Q&A with StackPath CEO and Chairman Lance Crosby:
Open-i Advisors: Lance, you’ve got an amazing track record of industry successes including founding SoftLayer (which IBM later made the core of its cloud business) and your more recent creation of StackPath. Can you give us an example of how data helped challenge an assumption or gut reaction when it came to a business decision?
Lance Crosby: It’s all about the data and you can’t manage what you don’t measure. Listening to one’s gut is important when starting a new business, but I am a strong believer in using data to validate what the gut is saying.
There are numerous examples of when we used data to validate assumptions. One that comes to mind is while at SoftLayer, we gave HostGator rates that generated a lower margin than other customers. This may seem counterintuitive to making money but my gut told me that HostGator’s’ size would drive economies of scale and drive higher overall EBITDA. I had a feeling that would be the case, and the data verified that.
Another example, also at SoftLayer, is customer churn. We all know that unhappy customers are more likely to leave, but thanks to data we learned that customers with a support ticket that wasn’t resolved within 7 interactions were 72% more likely to cancel their services. It became a company initiative to satisfactorily fix all customer issues in 6 interactions or less which allowed us to retain customers and garner the stellar customer service reputation that SoftLayer, and now StackPath, is known for.
OiA: Some aspects of a business are easy to measure while others seem difficult or impossible to track. How do you track business operations that don’t seem to have obvious trackable data points?
LC: It’s true that some things are easier to measure than others, but everything has data points you can track. Every single activity, process product, or service can be measured. Financial measurements are often the easiest to measure, operational measurements are more complex, and performance measurements are even more complex and partially subjective, but if you can define it, you can measure it. You may have to change your language and get super-specific about the KPIs (key performance indicators) that are most important, but once you do that you can measure it.
As an example, at StackPath part of the way we measure sales performance is using lead and lag indicators. Lead indicators are activities and lag equals results. So using sales as an example, say a sales rep makes 100 calls (lead indicator) and ends up with 10 sales (lag indicator) as an average, we now can reasonably predict results and adjust lead indicators accordingly.
OiA: Are high-level company-wide metrics enough or is it important to get more granular data? How do you decide when and where to drill down?
LC: Company-wide metrics are nice as they provide an overview of how the company is doing in general. For example, if we have 100 employees, and we do $1M in revenue, the metric is $10k per employee. But it is important to drill down by department, product, etc. to know WHY the company is doing as it is doing and to be able to make adjustments as necessary.
StackPath has dozens of teams and hundreds of people across the US and internationally. I want to be able to know what is going on with any team at any location at any time so drill down on everything because you can’t manage what you don’t measure.
OiA: What KPIs in general do you find most valuable and why?
LC: General metrics are generally useless. The more specific you can make them, the better. At StackPath, in general, the KPIs I find most valuable are:
- Profit: This might go without saying, but profit is one of the most important performance indicators to help me determine how we’re doing as a company.
- Customer projections: especially with our content delivery network (CDN) business, it’s important for us to know when our customers are going to need more bandwidth so we can serve up content to end-users with high performance and low latency. Analyzing their resource demands and usage patterns helps us do this.
- Real-time average weighted costs of megabits per second (Mbps): Speaking of PoPs, we track daily, weekly and monthly averages in real time for network ops and price planning.
- Sales by region: we are building a highly scalable platform of core services at the cloud’s edge. Knowing how sales are going by region helps us determine locations of and enhancements to our next point-of-presence (PoP).
- Employee satisfaction: A lot of times, companies focus on all the things I just listed, but forget about one of the most important KPIs of all – employee satisfaction. Happy, loyal staff work better. They help boost both productivity and morale. While one of the harder KPIs to measure, it is worth the effort to provide ways for employees to ask questions, share their concerns and ideas, and to provide feedback.
OiA: Is more data always better? How much data should a company collect and keep? And since obviously security is a concern of yours – what are the security implications of holding this data?
LC: I always like to tell people to “be a data hoarder” and to store all the data you can afford. You may not use it today, but it could prove invaluable in the future.
Security is a major concern of mine – that’s why I founded StackPath. Unfortunately, every day there seems to be another breach and more data is compromised. The StackPath platform is an integrated response to a fragmented problem created by too many individual, appliance-based, bolt-on security solutions. It’s time to give businesses internet services that have security built in, not bolted on, so they can be reliable guardians of their data.
Please post a comment to this blog, and also let us know who we should interview next in our Business by the Numbers series.