3 ms·

Ask HN: Does everything has to have a ROI?

I'm one of the founders of a startup operating in the HR bubble and while so far none of our clients asked, one of our advisors - SV senior position, relatively big startup - suggested we figure out a way to calculate the ROI for using our solutions. I feel that we're not particularly fit to be evaluated in this particular way, because we're more likely a hygiene solution: if you don't do what we help you do, things will stink. Beside this, we're doing behavioural qualification so we don't address orgs that don't have a clear and present need for our solution. But, I don't want to be right, I want to be smart (or at least less stupid) and I can imagine a scenario where this ROI issue could come up, and I wonder how can I navigate it. Thanks in advance!

_the_inflator 6y ago
Here is a way to learn to describe processes and quantify the gains you created: https://www.ycombinator.com/library/8d-how-to-build-a-great-series-a-pitch-and-deck https://www.ycombinator.com/library/8d-how-to-build-a-great-... (Belongs to this https://www.ycombinator.com/library/20-deck https://www.ycombinator.com/library/20-deck ) Especially this exercise is extremely helpful: "Explain how the world currently works. Aim to show, not tell"
- johnsmith4739 6y ago
  What a great find, thank you
mindcrime 6y ago
The one way I know of to quantify something like "what's the value of preventing something bad from happening" is to use the kind of techniques described in Douglas Hubbard's How To Measure Anything[1]. Teach some experts within the customer company how to do calibrated probability assessment[2], then build a model, and run a Monte Carlo simulation[3] over that model. That gives you a way to at least loosely quantify things. It's not perfect, but for what you're doing it probably doesn't need to be. [1]: https://www.amazon.com/How-Measure-Anything-Intangibles-Business-ebook/dp/B00INUYS2U https://www.amazon.com/How-Measure-Anything-Intangibles-Busi... [2]: https://en.wikipedia.org/wiki/Calibrated_probability_assessment https://en.wikipedia.org/wiki/Calibrated_probability_assessm... [3]: https://en.wikipedia.org/wiki/Monte_Carlo_method https://en.wikipedia.org/wiki/Monte_Carlo_method
- johnsmith4739 6y ago
  I will give this a try, looks promising
jbjbjbjb 6y ago
I think you’re talking about a risk reduction ROI. = Reduction in risk / cost of compliance - 1 I saw this in a security context https://www.cisecurity.org/blog/the-one-equation-you-need-to-calculate-risk-reduction-roi/ https://www.cisecurity.org/blog/the-one-equation-you-need-to...

_the_inflator 6y ago

Here is a way to learn to describe processes and quantify the gains you created: https://www.ycombinator.com/library/8d-how-to-build-a-great-series-a-pitch-and-deck https://www.ycombinator.com/library/8d-how-to-build-a-great-... (Belongs to this https://www.ycombinator.com/library/20-deck https://www.ycombinator.com/library/20-deck ) Especially this exercise is extremely helpful: "Explain how the world currently works. Aim to show, not tell"

johnsmith4739 6y ago
What a great find, thank you

mindcrime 6y ago

The one way I know of to quantify something like "what's the value of preventing something bad from happening" is to use the kind of techniques described in Douglas Hubbard's How To Measure Anything[1]. Teach some experts within the customer company how to do calibrated probability assessment[2], then build a model, and run a Monte Carlo simulation[3] over that model. That gives you a way to at least loosely quantify things. It's not perfect, but for what you're doing it probably doesn't need to be. [1]: https://www.amazon.com/How-Measure-Anything-Intangibles-Business-ebook/dp/B00INUYS2U https://www.amazon.com/How-Measure-Anything-Intangibles-Busi... [2]: https://en.wikipedia.org/wiki/Calibrated_probability_assessment https://en.wikipedia.org/wiki/Calibrated_probability_assessm... [3]: https://en.wikipedia.org/wiki/Monte_Carlo_method https://en.wikipedia.org/wiki/Monte_Carlo_method

johnsmith4739 6y ago
I will give this a try, looks promising

jbjbjbjb 6y ago

I think you’re talking about a risk reduction ROI. = Reduction in risk / cost of compliance - 1 I saw this in a security context https://www.cisecurity.org/blog/the-one-equation-you-need-to-calculate-risk-reduction-roi/ https://www.cisecurity.org/blog/the-one-equation-you-need-to...