Pick a North Star metric

MEMO

To: Executive Team From: Staff PM Date: October 24 Subject: Pre-Read: Selecting Crewmate’s North Star Metric

The Diagnosis: Why Our Current Metrics Are Failing Us

On the surface, Q3 looks like a triumph: monthly GMV grew 15% to $9.8M, posted shifts hit 92,000, and worker registrations jumped 30%.

Beneath the surface, our core marketplace is cannibalizing itself because every team is optimizing for its own siloed number:

1. GMV is masking an independent venue exodus. Enterprise chains grew from 34% to 46% of GMV in Q3, buoyed by a massive spike in posts and an 11% seasonal wage hike. This pulled worker supply away from Independent venues. Independent fill rates plunged from 78.9% to 67.9%. Waitstaff didn't disappear; they went to higher-paying, earlier-posted Enterprise shifts. Because venues with a <70% fill rate only retain at 41% (versus 84% for >90% fill rate), independent venue churn nearly doubled from 5% to 9% in Q3. We are trading our diversified, high-margin core for concentration risk in just four Enterprise clients.
2. Demand is chasing volume over fillability. Demand hit 92,000 posted shifts, but 31% of Independent shifts are posted with less than 24 hours' notice (filling at just 58%, compared to 8% same-day posts for Enterprise). Counting unfillable, last-minute shifts as "Demand success" sets Ops up to fail.
3. Supply is buying hollow registrations. Driven by a $25 sign-up bonus, Supply registered 7,900 workers in Q3, but 70% of them never worked a single shift. We are paying for top-of-funnel vanity while starving the marketplace of actual labor.
4. Ops is subsidizing "fake" fills. To defend Fill Rate against same-day posts and low active supply, Ops spent $93,000 last month ($15/shift) on 6,200 "rescue fills." However, rescue shifts have a 13% no-show rate (vs. 4% normally). Worse, without those 6,200 subsidized fills, our Q3 fill rate would have been 70.4%, not 77.2%.

Most importantly: a "filled" shift is not a worked shift. Across confirmed shifts, 6% result in no-shows or disputes. A venue with a no-show has an empty floor; they don’t care that our dashboard marked the shift "filled."

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The Recommendation: Monthly Completed Shifts (MCS)

I recommend our North Star Metric be Monthly Completed Shifts (MCS)—defined as shifts that are posted, claimed, and actually worked without a no-show or venue dispute.

Why MCS? A North Star must capture the exact moment we deliver value to both sides of the marketplace and earn our 18% take rate. * Why not GMV? GMV is an output, not an input. It is artificially inflated by wage inflation (Enterprise's 11% bump) and shift duration, masking underlying marketplace decay. * Why not Fill Rate? Fill rate is a ratio. You can achieve a 100% fill rate by firing all Independent venues and shrinking the business. Furthermore, "filled" ignores our 6% no-show problem. * Why not Shifts Posted or Active Workers? Each represents only half the marketplace. Unfilled posts cause venue churn; idle workers cause supply churn.

MCS forces alignment: Demand must source fillable shifts, Supply must activate reliable workers, and Ops must ensure completion, not just claims.

(Note on instrumentation: Currently, 36% of shifts are "assumed worked" unless disputed. Product will immediately build frictionless check-in/out to close this blind spot, though the silent-dispute baseline is accurate enough to begin tracking MCS today).

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The Metric Tree & Ownership

$$\text{Monthly Completed Shifts} = \text{Posted Shifts} \times \text{Fill Rate} \times \text{Completion Rate}$$

Using Q3 baselines (92,000 posted $\times$ 77.2% fill $\times$ ~94% completion), we are currently at ~66,750 MCS. Here is how we break the tree down by owner:

1. Head of Demand: Quality Posted Shifts * Inputs: Active Venues $\times$ Shifts/Venue $\times$ % Posted >24hrs in Advance. * Focus: Stop Incentivizing raw post volume. Work with Independents to post schedules earlier (reducing their 31% same-day post rate) and price shifts competitively against Enterprise.

2. Head of Supply: Activated & Retained Workers * Inputs: New Worker Activation (% hitting $\ge$3 shifts in Month 1) + Retained Active Workers. * Focus: Our data shows workers who complete $\ge$3 shifts in their first month retain at 66% at month three, vs. 12% for everyone else. Supply must shift the $25 bonus from registration to completing the 3rd shift.

3. COO (Ops) & Product: Match Efficiency & Reliability * Inputs: Fill Rate (segmented by Enterprise vs. Independent) $\times$ Completion Rate ($1 - \text{No-Show/Dispute Rate}$). * Focus: Replace blanket $15 rescue bonuses with algorithmic reliability scoring (penalizing no-shows, rewarding streaks) and better matching to keep Independent venues above the critical 90% fill threshold.

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The Paired Business Measure: Net Contribution Margin (or Net Revenue)

To satisfy the Board and prevent us from buying growth unprofitably, MCS must be paired with Net Contribution Margin (Gross Revenue minus direct variable incentives like the $15 rescue and $25 sign-up bonuses).

In Q3, we averaged $9.8M in GMV, yielding ~$1.76M in gross revenue (at 18%). However, accounting for the ~6% no-show rate (~$105k in uncollected fees) and ~$160k/month in worker bonuses ($93k rescue + ~$66k sign-up), we burned over 15% of our gross revenue on flawed incentives. Pairing MCS with Net Contribution Margin proves to the board that operational discipline drives durable GMV.

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Gaming the Metric & Our Guardrails

Every metric can be gamed. Here is how teams might game MCS, and the guardrails we will lock in to prevent it:

• Gaming Risk 1: Over-indexing on Enterprise. Because Enterprise shifts fill at 93% with low same-day rates, teams could abandon Independents entirely to juice MCS.
• Guardrail: % of Independent Venues with $\ge$80% Completion Rate. We must protect the long-tail marketplace. If Independent health drops, we fail.
• Gaming Risk 2: Splitting shifts. Demand could ask venues to turn one 8-hour shift into two 4-hour shifts to double MCS.
• Guardrail: Average Hours (or GMV) per Shift. Must remain stable within historical bands.
• Gaming Risk 3: Buying completions. Ops and Supply could ramp up $15 and $25 bonuses to force completions at a financial loss.
• Guardrail: Incentive Spend as a % of Gross Revenue (capped via our paired business metric).

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Summary: What Your Current Metric Becomes

For the Board and our weekly operating reviews, here is how our scorecard evolves:

MEMORANDUM

TO: Executive Team FROM: Staff Product Manager, Crewmate DATE: October 24, 2023 SUBJECT: North Star Metric Recommendation & Offsite Alignment

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Executive Summary

Next week, we must select a single North Star metric for the board. Currently, our teams are locally optimized: Demand chases posted shifts, Supply chases registrations, and Ops chases fill rate. Meanwhile, the CEO tracks GMV, which is a lagging scoreboard, not a driver.

To fix this, our North Star must capture sustainable marketplace liquidity. I recommend we set our North Star as Completed Shift Value (CSV), paired with a health guardrail of Gross Margin.

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The Recommendation: Completed Shift Value (CSV)

#### Why not the alternatives? * GMV (CEO preference): GMV is vanity. In Q3, our GMV grew from $8.5M to $9.8M, but enterprise chains drove that growth solely by raising hourly rates 11%. Independent volume actually degraded. GMV masks marketplace health and rewards inflation. * Shifts Posted (Demand): Drives low-quality supply ingestion. Independents are already posting shifts that fail to fill, leading to churn (venues with <70% fill rates drop out at a 59% rate). * Active Workers (Supply): Driven by vanity sign-ups ($25 bonus cost us $197k in Q3 for registrants who never worked). * Fill Rate (COO): Can be artificially inflated by restricting demand or via expensive artificial interventions (e.g., Ops’ $15 rescue bonus, which is masking a bleeding independent segment).

#### Why Completed Shift Value (CSV)? CSV represents the actual dollar value of shifts that are successfully worked and confirmed. It directly ties our 18% take rate to real economic activity, stripping out pricing inflation, unfulfilled demand, and ghost shifts. It forces Demand, Supply, and Ops to pull in the same direction: matching real workers to real shifts that actually happen.

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The Business Measure Pair

A North Star cannot stand alone without a quality/sustainability check. * North Star: Completed Shift Value (CSV) * Paired Business Measure: Gross Margin ($)

Why? CSV can be gamed by heavy discounting or expensive operational workarounds (like our $15 rescue bonus, which cost $93k last month alone). Pairing CSV with Gross Margin ensures we are growing profitably, not subsidizing our way to top-line numbers.

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Metric Tree & Owners

To move CSV, every team owns a specific input in the compounding loop.

``` [NORTH STAR: Completed Shift Value (CSV)] | +---------------------------+---------------------------+ | | [Total Completed Shifts] [Average Shift Value] | | +---------------------------+ | | | (Owned by Enterprise [Independent CSV] [Enterprise CSV] & Independent PMs) | | (Head of Demand / (Head of Enterprise Sales) Independent PM) ```

#### Metric Tree Inputs & Owners

1. Independent Completed Shifts (Owner: Head of Demand / Independent PM) * Sub-input: Independent Shifts Posted (Guardrail: maintain >80% fill rate). * Sub-input: Independent Fill Rate. 2. Enterprise Completed Shifts (Owner: Head of Enterprise Sales) * Sub-input: Enterprise Shifts Posted (Q3: 34k/mo). * Sub-input: Enterprise Fill Rate (Q3: 93% — must maintain SLAs). 3. Worker Activation & Retention (Owner: Head of Supply) * Sub-input: 30-Day D1-to-D30 Retention (% of workers completing $\ge 3$ shifts in month one; currently the key predictor of 3-month retention at 66% vs 12%). 4. Marketplace Integrity & Completion (Owner: COO) * Sub-input: Shift Confirmation Rate (closing the gap from our current 64% manual confirmation baseline). * Sub-input: No-show / Dispute Rate (keeping it <5%).

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Gaming Risks & Guardrails

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Team Metric Transformations

To align execution with the new North Star, existing team KPIs must evolve:

• CEO / Board:
• Old: GMV ($9.8M Q3 average).
• New: Completed Shift Value (CSV) and Gross Margin ($).
• Head of Demand:
• Old: Raw shifts posted (incentivized spamming unfillable indie shifts).
• New: Independent Completed Shift Value (ICSV), subject to a $\ge 80\%$ fill rate minimum.
• Head of Supply:
• Old: Raw worker registrations (incentivized wasteful $25 sign-up bonuses that yielded low-intent users).
• New: Worker Activation Rate (% of new registrants who complete $\ge 3$ shifts in their first 30 days).
• COO / Operations:
• Old: Overall raw fill rate.
• New: Net Reliable Fill Rate (Total completed shifts minus no-shows/disputes, excluding unviable rescue-subsidized interventions).
• Enterprise Sales:
• Old: Enterprise shift volume.
• New: Enterprise Contract CSV Yield & Renewal Rate (ensuring our 4 annual contract chains scale predictably without margin erosion).

Conclusion

By adopting CSV and Gross Margin, we give the board a honest reflection of our marketplace health, eliminate perverse incentives across Demand and Supply, and force Ops to solve systemic matching issues rather than masking them with cash. Let’s lock this in at the offsite.

To: Exec team From: Staff PM Re: Proposed North Star for the offsite

Recommendation

North Star: completed shifts per month, meaning shifts that were filled and worked, with no no-show and no dispute.

Paired business measure: net take revenue, meaning our 18% take minus all supply incentives (rescue bonuses, sign-up bonuses, no-show credits). Q3 gross take was about $1.76M a month before incentives.

GMV stays in the board pack, shown with a price/volume split, as context rather than as the North Star.

Why not GMV

Q3 looks strong on GMV (+15%, $8.5M to $9.8M), but the underlying picture is weaker:

• Chains drove the growth, and price is part of it. Chain GMV rose from about $2.9M to $4.5M, helped by an 11% holiday rate increase. GMV can't tell price from volume.
• Independents shrank. Their GMV fell about 6%, and their filled shifts fell 11% (44,200 to 39,400).
• The blended fill rate hid the problem. It fell from 82.7% to 77.2%, even though chains (steady at 93% fill) grew their share of posts. Independent fill fell from 79% to 68%.

Completed shifts measure delivered volume, which is price-neutral. They exclude no-shows, and each one is worth roughly $25 of take (18% of the Q3 average shift value of about $138). They also tie directly to the revenue we keep.

Fill rate would have caught the independent decline, but it is a ratio that averages two very different segments. Filled shifts overcount, since they include shifts that never happen. Registrations and active workers are inflated by bonuses.

Metric tree

Completed shifts = shifts posted × fill rate × completion rate

• Shifts posted = active venues × posts per active venue. Owner: Head of Demand.
• Active venues: venues that posted in the last 30 days. Watch 90-day retention: 84% of venues with fill ≥90% are still posting after six months, versus 41% of venues under 70%. Independent churn was 9% in Q3, up from 5%.
• Posts per active venue: includes same-day share. Same-day shifts are 31% of independent posts and fill only 58% of the time.
• Fill rate = filled ÷ posted. Owner: Head of Supply.
• Active workers: workers with three or more shifts in the trailing 30 days.
• Activation rate of new sign-ups: share who work three or more shifts in their first month. Only 2,370 of 7,900 Q3 registrants (30%) have worked at all.
• Completion rate = worked ÷ filled. Owner: COO.
• Verification coverage: share of filled shifts confirmed by the venue. Today it's 64%.
• No-show and dispute rate: 6% of confirmed shifts. Rescue-filled shifts run at 13%, against 4% for the rest.
• Net take (the paired measure) = completed shifts × average shift value × 18%, minus incentives. Owner: Finance lead, to be named. The brief names no CFO.

Paired business measure: net take

Net take is the number that tells us whether incentives pay for themselves. The rescue program is the clearest case. At last month's 6,200 rescue fills, $93,000 in bonuses against roughly $154,000 of take on those shifts (assuming the Q3 average shift value) means the bonus absorbs about 60% of take before counting the extra no-shows. That is a reasonable trade if it saves fills that would otherwise be lost, but we need the net figure to know.

How it could be gamed, and guardrails

1. Fill rate bought with bonuses. Report rescue fills separately, with their cost. Cap incentive spend at 50% of take on each completed shift. Rescue is at about 60% today, so it breaches the cap.
2. Completed shifts inflated by auto-confirmation. The 36% of fills nobody confirms are currently assumed worked. Count a shift only once it is confirmed or its dispute window closes undisputed. Target verification coverage of 90% or more.
3. Sign-up bonuses inflating supply. The North Star doesn't use registrations. The guardrail is the activation rate and three-month retention of each sign-up cohort. Today it is 66% for workers who hit three shifts in month one, against 12% for everyone else.
4. Posting inflated with unfillable shifts. Track fill rate by segment, and 24-hour same-day fill separately. Watch venue retention.
5. GMV growth from price. Show GMV per completed shift alongside total GMV, so price increases are visible.
6. Concentration in chains. Independent active venues must not fall quarter over quarter, and independent churn stays at or below 5% a quarter (the Q2 level). Chains are now 46% of GMV, so this is the risk to watch.
7. No-show rate. Keep it at or below 5% of verified shifts overall.

What each team's metric becomes

• CEO: GMV becomes net take revenue as the paired business measure. GMV stays in the board pack, with a price/volume split.
• Head of Demand: shifts posted becomes active venues and completed shifts from venues we retain. A post counts only as an input, not as success.
• Head of Supply: active workers becomes three-month retained workers, by sign-up cohort. Fill rate is reported with rescue fills shown separately.
• COO: fill rate becomes completion rate and verification coverage, plus cost per completed shift. Fill rate stays as an input.

Data gaps to close before the board

• Baseline. Because 36% of fills are unverified, we cannot state the exact Q3 completed-shift count. Filled shifts (71,000 a month) is an upper bound.
• Enterprise GMV per filled shift fell from about $148 to $143 despite the 11% rate rise. I can't explain this from the data. The rate rise also applies only from August, so Q3 contains only part of it. We need shift-mix data.
• Same-day share in Q2 for independents isn't provided, so we can't say how much of their fill decline is mix rather than demand.
• Rescue economics use the Q3 average shift value as a stand-in. We need actual rescue shift values, and the sign-up bonus cost, which the brief doesn't give.

Decisions for the offsite

1. Adopt completed shifts as the North Star, with the definition above.
2. Adopt net take as the paired measure.
3. Approve the guardrail thresholds, including the 50% incentive cap.
4. Decide the rescue program: keep as is, cap it, or redesign it. My recommendation is to keep it only for shifts where the net take stays positive after the bonus.
5. Name the owner of net take.