Frequently Asked Questions about the Fluency Score
The philosophy, mission, and logistics of the Fluency Score, Fluent’s flagship data product.
Why do we need the Fluency Score for early-stage startups?
There is robust data for selection, analysis, and tracking for all other investment asset classes. How many financial apps do you have on your phone? Now, with the Fluency Score, early-stage startup investment is no longer a black hole while waiting for return to prove out (often years after the initial investment).
Because a more standardized reporting system has not been available for early stage companies, our industry has relied on the pitch of what a company hopes to become as a driver for investment decision making. In part because it is based on what a company says they will become and how well they can craft that story, in part because pitches are not standardized, and in part because deployers of capital are humans who haven’t had standardized data to rely on, the evaluation of a pitch is inherently biased and based on pattern-matching.
The Fluency Score allows the startup industry to make data-driven decisions based on standardized reporting of what is true about a company’s journey to product-market fit, traction, and growth.
Why is the Fluency Score better for organizations than developing an inter-organization data tool?
Internal tools may solve an organization’s problem on the surface, but
1) cannot benchmark that data against industry trends,
2) cannot access the evolving insights of an increasingly predictive data tool because of sample size, and
3) will only be sufficient until network effects make the Fluency Score the industry standard for a de facto data layer, at which time the siloed internal data will be obsolete (whereas customers who are early adopters of the tool have a leg up because their dataset will be deeper and richer).
One more very important benefit: the Fluency Score creates efficiency for founders!
Internal data tools have their own quirks and values, and founders have to cater to each organization’s system to show up in the best light. This is an enormous time suck for founders. Furthermore, it allows founders who don’t know how to play the game to fall through the cracks, creating non-optimal matching that is bad for everyone!
Why does the Fluency Score focus on product-market fit?
The Fluency Score deliberately focuses on product-market fit because PMF contributes to 16 of the top 20 reasons startups fail and, also, because it’s the factor entrepreneurs have the most control over. PMF is something that can be managed and optimized. Bringing data and more objectivity to this critical element is a huge win for startups and the innovation industry.
Furthermore, the need for product-market fit is universal in that it is just as important for a B2B SaaS company as it is for a B2C e-commerce company or a marketplace. The magic of the Fluency Score algorithm is that it standardizes disparate revenue models so that companies can be compared apples to apples with a single metric.
Why is it important to standardize how traction is understood (even when founders report on it in wildly different ways)?
Investors are missing out! Founders are reporting their traction in non-standard, inconsistent, and thus incomparable ways depending on their revenue model (SaaS, transaction-based, marketplace), their familiarity with startup lingo, their business’ complexity, and their industry.
As a result, some founders show up looking fancy with logos of companies for unpaid pilots, whereas other founders with identical unpaid pilots might simply report “zero” for sales. This is inherently an equity problem, and solving that problem is an underlying principle of the Fluency Score.
The Fluency Score has been designed (and refined with two years of R&D and real-world testing) to standardize these inputs so that rich qualitative information from founders about their business can be processed and analyzed via a jargon-free process that evens out the variation in how founders “pitch” (or don’t pitch) their traction data.
Learn more about the Fluency Score
Fluency Score Process
What is the data collection process?
The data needed to produce a Fluency Score is collected directly from the founder through a single adaptive data collection form, totaling no more than a half hour of the founder’s time. After that, leave it to our proprietary algorithm to analyze over 300 data points, create a standardized score, break out a visualization of five vectors of risk, and provide customized recommendations.
What kinds of companies can the Fluency Score measure?
Because the Fluency Score process is longitudinal, measuring the speed and focus of work, it can measure innovating companies from Day 1 all the way through Series A, and is vertical agnostic. If a company is innovating their business model, the Fluency Score can quantify and illustrate that risk.
However, it’s important to note that each Fluency Score measures a single business model. Some companies are an umbrella for two business models — for example, a consulting business and a direct to consumer e-commerce business. In that case, our clients often chose to measure the business model which promises to be the future of the company, or perhaps the one with the most potential to scale. Measuring both business models is also something we do, as that’s simply two separate scores. In these cases, two scores keep the risk factors clearly separated for the business entity to make smart decisions that further their goals.
How does the Fluency Score tell me about the founder/team?
The algorithm is focused on product-market fit on purpose, to bring clarity and objectivity to an area of business development that is often the source of the greatest risk in an early stage company. We recognize there are other very important elements in evaluating a company that are outside of the focus area of this tool.
The Fluency Score process also measures the Velocity with which the team is de-risking their business model assumptions (the speed they are executing at and to what extent they are focusing on their riskiest assumptions). This Velocity data is often a very clear window into the team’s execution strategy and is a great way to visualize/measure team performance as well. Not exactly the same thing as grit/experience, but definitely in the same category.
How often does a company need a score?
A Fluency Score is a snapshot in time that can be used for diagnostic purposes, not a set-in-stone final output. In fact, a score should change over time! The only way to improve a Fluency Score is to build a better business, derisking the business model in fast and focused ways.
Clients who order a single Fluency Score for a company see enormous value in that single report. However, more than one score shows the true power of this data tool.
Multiple Fluency Scores for a company start to draw a trend line for that company, illustrating their progress and tracking how inflection points (programming, resources, investment) impact them.
We recommend multiple Fluency Scores because businesses are constantly growing and evolving. Some clients choose to order pre- and post-program scores. Others prefer to set a cadence of scores quarterly to be able to communicate company progress with third-party objective data.
Because scores are a snapshot in time they are no longer “fresh” after three months. The measure of business model risk should change in that amount of time.
Why does the Fluency Score collect qualitative data directly from founders?
Some data tools trying to solve for similar problems scrape data. Scraped data is too lightweight, contains too many vanity metrics, can be gamed, and is often inapplicable for early-stage companies. It cannot help us understand product-market fit in rich ways, nor can it accurately (or even at all) measure what’s happening in early-stage companies.
How is this data different from what I learn from a pitch?
Innovative businesses are most often asked to pitch a vision of a future state they hope to create. The vision is important, but often masks the reality – and the risks – inherent in that approach.
The Fluency Score takes an objective approach to measuring what is already built, already known and de-risked about the business as a counterpoint and reality check to the pitch.
What is the basis for the Fluency Score algorithm?
Innovation industry experts know how to reliably and predictably build entrepreneurial success. They use best practices in design thinking, lean startup methodology, and agile frameworks.
The Fluency Score incorporates these best practices into the algorithm’s core measurement and reporting.
Our standardized qualitative data collection process asks jargon-free questions that will not surprise you as a supporter of entrepreneurs, as they are based on a logical progression of de-risking a business model in the market with customers.
What has this business learned in its journey to product-market along the following vectors: Problem-Customer Validation, Solution and Market Demand, and Growth Strategy?
Our proprietary algorithm quantitizes (yes, it’s a word!) over 300 data points to produce a single, standardized, numerical score and a visualization of how that risk breaks out.
What is the experience like for founders?
To complete a Fluency Score, a founder answers questions online (no prep needed!). The time needed varies based on the maturity of the company, but is up to about 30 minutes.
Founders love talking about the work they’ve already done to derisk their business. So often as an industry we ask them to pitch what their business will become, which requires the art of storytelling. But the Fluency Score isn’t interested in that narrative. Rather, it evaluates what is true about the business as it is right now — a snapshot in time of what has been derisked in the market with customers. And founders love to share what they already know about their company’s product-market fit!
What will I need to do when we buy Fluency Scores for a batch of companies?
Getting started is easy! All we will need are the email addresses of the companies for which you are ordering scores.
How can I improve my Fluency Score?
De-risking a business model in the market with customers, at every step, is the basis for the Fluency Score.
Focus on vectors that have “gaps” and think of those as opportunities to really move the needle for the company. What is still unknown in that area, and how can you push ahead with high quality learnings from customers to continue to resolve your business model assumptions.
There are lightweight recommendations in each Fluency Score report to help you kick off strategic thinking about how to do that work. Where there is risk, create a stage-appropriate lean experiment to test your assumption in the market with customers!