An important lesson from Wall street 💰

Welcome to the 8th edition of the GrowthX Newsletter. Every Tuesday & Thursday I write a piece on startups & business growth. Today’s piece is going to 95,300+ operators & leaders from startups like Google, Stripe, Swiggy, Razorpay, CRED & more

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Question - What can we learn from the Wall street? 📈
Answer - How to gauge health of a business. 🩺
Question - How?
Answer - Measure "Quick ratio"

You must be wondering,
What's quick ratio, Abhishek?

Let's take a Swiggy example.
1. Typical Swiggy user orders food once a week.
2. Anyone who stopped ordering once a week - zombies.
3. Anyone who ordered for the first time - babies.
4. Anyone who were a zombie but started ordering again - returned zombies

The quick ratio for Swiggy.
Quick ratio = (babies + returned zombies) / zombies
Quick ratio = positive user growth/ churn

Case 1
50 babies added in July.
100 users became zombies same month.
80 zombies returned the same month.
Quick ratio = (50+80)/100 = 1.3
Quick ratio > 1,
Swiggy is growing.

Case 2
50 babies added in July.
100 users became zombies same month.
50 zombies returned the same month.
Quick ratio = (50+50)/100 = 1
Quick ratio = 1,
Swiggy is not growing.

Case 3
50 babies added in July.
100 users became zombies same month.
30 zombies returned the same month.
Quick ratio = (50+30)/100 = 0.8
Quick ratio < 1,
Swiggy is de-growing.
It's as simple as that.

👉🏼 Next time you need the answer to is your product is growing, use quick ratio.

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