On Missing Projections: A Thread (1/11)

@bambuearth missed its June projection by almost $40k, while also spending $42k more than projected on ads.

Disaster. Right?

Wait...right?

Maybe. Or maybe there's a subtle thing happening in that sentence that skews the whole picture.

2/ Let's start with the negative.

In May, Bambu did $398k against $96k in ad spend (4.14 MER). In June, we did $416k against $165k in ad spend (2.52 MER).

And when I put it like that, I'm doing that same subtle thing in a different way.

So what's the "subtle thing"?

3/ It's baseline-setting. It's selecting a point of comparison that frames both my emotional and strategic response to the numbers.

Start with the May comp: that's downstream from the pandemic's short-lived, historic easing of digital customer acquisition.

4/ That was never going to be replicable.

So what about June's projection ($455k rev, $122k spend, 3.73 MER)?

Well, it was just that: a projection. And it was built mid-pandemic ecom boost.

Let me ask you: have you been able to predict even one week out in this time?

5/ Projecting early ecom growth is incredibly difficult to begin with. The error bars are going to be wide. The pandemic only widened them.

Which is to say: my baselines were set in a really crazy moment.

So let's go back to before that moment. What happened in February?

6/ In February, Bambu did $238k in revenue against $130k in spend (1.83 MER).

So June represents 76% growth at only a 27% increase in ad spend from February. Judged against February, June is incredible.

Here's all that in one chart for clarity:

7/ So was June disappointing?

Yes and no.

The growth slowed down and we have to be honest about ourselves about the real customer acquisition problems yet to be solved (including thinking through what @TaylorHoliday is getting at here): https://twitter.com/TaylorHoliday/status/1286700000831926272

8/ But the growth has still been rapid in the grand scheme of things.

Plus I left out an important detail: June saw our highest total Returning Customer revenue ever. Which is a crucial (and very positive) sign as we keep a close eye on our LTV assumptions.

9/ Saying that we "missed projections" really doesn't tell us much. Why did we miss projections?

Because more specifically, we missed our customer acquisition projections. And again, those were initially set mid-pandemic-boost.

10/ The day to day emotional and strategic rollercoaster of ecom entrepreneurship is real.

But here's something I've learned after a few years: you have to get good at regularly zooming in and then back out, understanding both the big picture and the specific problems to solve.

11/ If you can't do that, not only will you prioritize the wrong problems and risk your cashflow, you'll be an emotional wreck while you do.

Hang in there. Think hard. Get outside input.

And understand the baselines you're setting.