Pick a North Star metric

MEMORANDUM

TO: Executive Team FROM: Staff Product Manager DATE: October 24, 2024 SUBJECT: Crewmate North Star Metric Recommendation for Offsite & Board Reporting

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1. Executive Summary: The False Comfort of Top-Line Growth

In Q3, GMV grew 15.3% to $9.8M. On the surface, the marketplace looks healthy. In reality, that growth masks an accelerating decay in our core business.

The GMV increase was driven almost entirely by four enterprise clients: they expanded shift volume by 62% and raised hourly rates by 11%, increasing their share of GMV from 34% to 46%. Meanwhile, our 2,790 independent venues—the diversified bedrock of our marketplace—are failing: * Independent shift volume dropped by 4,800 fills/month (-11%) despite posts increasing to 58,000. * Independent fill rate plunged from 78.9% to 67.9%, falling below the critical 70% threshold where 6-month retention collapses from 84% to 41%. * Independent venue quarterly churn nearly doubled from 5% to 9%. * Operations spent $93,000 last month ($1.1M annualized) on $15 "rescue bonuses" to prop up same-day fill rates, which carry an unacceptable 13% no-show rate. * Supply spent heavily on $25 sign-up bonuses; 70% of those new sign-ups never worked a single shift.

Each team is currently optimizing for a siloed proxy that actively harms the broader platform. We must align around a single, un-gameable measure of marketplace health.

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2. Recommended North Star Metric: Successfully Completed Shifts (SCS)

Definition: The count of shifts that are matched, worked, and completed without a dispute or no-show.

$$\text{Successfully Completed Shifts (SCS)} = \text{Shifts Claimed} \times (1 - \text{No-Show / Dispute Rate})$$

#### Why This Metric? 1. Captures Mutual Value Exchange: Venues don't pay for posted shifts or claimed shifts; they pay for labor that shows up. Workers don't benefit from registrations; they benefit from earned wages. SCS represents the exact transaction where value is realized and Crewmate earns its 18% fee. 2. Exposes False Liquidity: Fills that result in no-shows (currently 13% for rescue shifts and 6% baseline) destroy venue trust. Fill rate treats a no-show as a success until a dispute occurs; SCS counts only real completions. 3. Corrects Cross-Functional Misalignment: To grow SCS, Demand cannot post unfillable shifts, Supply cannot recruit ghost workers, and Ops cannot paper over structural matching issues with subsidy-driven, unreliable fills.

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3. Metric Tree and Input Ownership

``` [North Star: Successfully Completed Shifts (SCS)] | +--------------------------------+--------------------------------+ | | [Fill Volume] [Fulfillment Reliability] | | +-----+-------------------------+ +-------------+-------------+ | | | | [Fillable Shift Demand] [Retained Worker Supply] [Attendance Rate] [Dispute-Free Rate] (Demand Team) (Supply Team) (Operations) (Product/Ops) ```

Each tier-one input has a single owner accountable for driving it:

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4. Paired Business Measure: Net Contribution Margin per Shift

A North Star can encourage excessive spending to generate volume. To ensure sustainable, profitable growth, SCS must be paired with Net Contribution Margin per Completed Shift.

$$\text{Net Contribution Margin} = (\text{Take Rate} \times \text{Shift Value}) - (\text{Acquisition Subsidies} + \text{Rescue Bonuses} + \text{Dispute Costs})$$

• Why it matters: In Q3, Ops spent $93,000/month on rescue fills, and Supply spent $197,500 on registration bonuses for workers who never activated. Subsidies directly cannibalized the marketplace margin.
• The Constraint: Teams cannot buy SCS growth through operational bailouts or uneconomic supply acquisition. Every completed shift must generate positive net platform margin.

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5. Gaming Vectors and Guardrails

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6. Re-anchoring the Executive Team: What Current Metrics Become

To establish SCS as our operational standard, the executive team must reframe their existing target metrics from headline drivers to supporting inputs:

#### CEO: GMV $\rightarrow$ The Enterprise Valuation Output * What it becomes: A downstream financial output metric for quarterly investor updates. * Why: GMV inflated by rate hikes and enterprise concentration gave false confidence while 9% of our independent client base vanished. GMV will grow healthily only if SCS grows sustainably.

#### Head of Demand: Shifts Posted $\rightarrow$ Liquidity-Adjusted Posts * What it becomes: Advance-notice shifts posted ($>24\text{h}$ lead time) with market-clearing rates. * Why: Unfilled posts drive churn. Posting low-lead-time, below-market shifts destroys venue trust when fill rates sit at 58%. Demand's target is shifts that can realistically clear.

#### Head of Supply: Active Workers $\rightarrow$ Activated Core Workers ($3+$ shifts/month) * What it becomes: Cohort activation rate within 30 days of onboarding. * Why: Raw registrations jumped to 7,900 via a $25 bonus, but only 30% ever worked. Focusing on workers reaching 3+ shifts increases 90-day retention by $5.5\times$ (66% vs. 12%), creating dependable supply.

#### COO: Gross Fill Rate $\rightarrow$ Net Verified Completion Rate * What it becomes: $\text{Completed Shifts} \div \text{Posted Shifts}$ net of cancellations, no-shows, and rescue subsidies. * Why: Buying fill rate with a 13% no-show rate and a $93,000 monthly subsidy masks operational deficits. Operations must optimize for clean, reliable shifts, not emergency rescue band-aids.

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7. Recommendation for the Offsite

At next week's offsite, we should formally adopt Successfully Completed Shifts (SCS) as our sole operational North Star, paired with Net Contribution Margin per Shift.

Adopting SCS unifies product, supply, demand, and operations behind marketplace quality, directly targets our independent churn crisis, and presents the Board with a repeatable growth engine rather than masked churn.

Memo: One North Star for Crewmate

To: Exec team | From: Staff PM | For: Offsite decision, ahead of the board report

Recommendation

North Star: Shifts worked as booked, per month. This counts shifts that were filled, worked, and not disputed. It is always reported split by chains and independents.

Paired business measure: Net revenue. This is our 18% take on worked shifts, minus worker incentives (sign-up and rescue bonuses).

A shift that gets filled and actually worked is the one event that keeps both sides of the marketplace. Venues at 90%+ fill keep posting (84% are still posting at six months, against 41% for venues under 70%). Workers who get three or more shifts in their first month stay (66% against 12%). Every team's work feeds this one number.

Why not the four metrics on the table

Q3 looks good on each team's number. The data underneath says otherwise.

• GMV (CEO): up 15%, from $8.5M to $9.8M a month. All of that growth is chains. Chain GMV rose from $2.9M to $4.5M, helped by an 11% holiday rate rise that will unwind. Independent GMV fell from $5.6M to $5.3M, down 6%. Four customers now produce 46% of GMV. GMV hid our biggest problem, and next quarter it will flatter or punish us on chain pricing we don't control.
• Shifts posted (Demand): up 19%. About 13,000 of the 15,000 extra shifts were chains. The metric also counts a shift that never fills as a win.
• Active workers (Supply): registrations up 30% after the $25 bonus. Only 2,370 of the 7,900 Q3 registrants (30%) have worked a shift.
• Fill rate (COO): this is the closest to right, but it fell from 83% to 77%. Chains held at 93%, while independents dropped from 79% to 68%. It has three flaws:
• It assumes the 36% of unconfirmed shifts were worked.
• It is propped up by rescue fills, which have a 13% no-show rate.
• It improves if venues simply stop posting hard shifts.

The real story: the average independent venue is now below the 70% fill line where retention collapses. Independent churn nearly doubled, from 5% to 9% a quarter. Chains, at 93%, lost no venues.

Estimated baseline. This applies the 6% no-show/dispute rate seen on confirmed shifts to all filled shifts.

This is the honest version of Q3: real growth from chains, with the independent base eroding.

Metric tree

Shifts worked as booked = Shifts posted × Fill rate × Worked-as-booked rate

1. Shifts posted by active venues. Owner: Head of Demand - 1a. Independent venues still posting (quarterly churn, now 9%) - 1b. Share of independent posts made 24+ hours ahead (now 69%). Same-day shifts fill only 58% of the time and are 31% of independent posts, against 8% for chains. - 1c. Chain shift volume (account management) 2. Fill rate, by segment - 2a. Fill rate on shifts posted 24+ hours ahead. Owner: Head of Supply. The driver is new workers reaching three shifts within 30 days, because that is the pool that becomes reliable supply. - 2b. Same-day fill rate (58%). Owner: COO 3. Worked-as-booked rate. Owner: COO - 3a. No-show rate (4% standard, 13% on rescue fills) - 3b. Venue confirmation rate (64%). Product builds the confirmation flow; the COO owns the rate.

Fill rate by segment, and the share of independents at 90%+ fill, remain diagnostics the COO reports weekly.

The business pairing

Our gross take is about $1.76M a month. Net revenue subtracts what we pay to manufacture activity, which has become material.

Rescue bonuses. An independent shift averages about $134 GMV, so we earn about $24 on it. A rescue bonus costs $15. After the 13% no-show rate, that is about $17 per rescue shift actually worked, or roughly 70% of our take. Last month that was $93,000.

Sign-up bonuses. At $25 per sign-up, 7,900 registrations cost up to about $200,000, if the bonus was paid on sign-up. Fewer than a third of those registrants have worked.

Net revenue makes these trade-offs visible. GMV hides them.

We should still show the board GMV as context, with the chain price effect disclosed. It should not be what we steer by.

How this could be gamed, and the guardrails

What each team's metric becomes

Nobody loses their number. Each team's number becomes an input, and no team's metric can go up while the North Star goes down.

Decisions for the offsite

1. Adopt the North Star and its definition, including the 7-day dispute window.
2. Adopt net revenue as the paired measure, with GMV as board context.
3. Confirm the owners for each input above.
4. Approve the incentive changes: both bonuses paid on completion.
5. Agree the board narrative: real chain growth, an independent problem we have identified, and a plan to fix it.

Before the board meeting

Data will backfill the North Star by segment for Q2 and Q3, using actual confirmed and disputed records instead of my estimate. We do not yet know the dispute rate on unconfirmed shifts. That is the main uncertainty in the baseline.

Data will also separate how much of the Q3 fill rate came from rescue fills, so we report the underlying independent rate. I expect it to be below 68%.