CAGR = RRI-1

Compounded annual growth rate (CAGR) is a very common metric when looking at how fast a startup is growing. Unfortunately neither Excel nor Google has a formula named CAGR. Instead, you need to use the RRI function.

When you do this, there is one pitfall to avoid.

There are three parameters to RRI. The first is the number of values. The second is the starting value. The third is the ending value. E.g. =RRI(COUNT(A2:Z2),A2,Z2) to calculate the growth of the values in row 2, columns A-Z.

But this is wrong, as the second parameter need to be one fewer than the total number of values.

To compute the actual CAGR (assuming these are annual values) the correct formula is =RRI(COUNT(A2:Z2)-1,A2,Z2).

Who thought one fewer was the right number? That answer is lost to history. Apparently RRI was not one of the VisiCalc or Lotus 123 functions. It was added to Excel only in 2013.

A few months ago I was interviewed on a podcast where the key question was “What is your superpower?” Sounds innocuous and simple, but it was one of those moments to reflect on life and not just provide a truthful answer, but something interesting and thought provoking. My answer was “If only”. What if _____? I’ve been an entrepreneur for over thirty years, founding or co-founding 10 companies. I...

I’m in a reprise mood this season… recently thinking about a blog post from 2015 with a lesson learned in an old movie on how to blow up a dam. A lesson about the expectations when making a big change to the world. The lesson comes from Force 10 from Navarone, starring Harrison Ford and Robert Shaw. This is a movie I first saw on a Sunday afternoon on TV as a pre-teen, and then dozen...

There are so many lessons in startups, startup investing, and technology adoption that come from looking back a few decades. For example, I’m out of the 1970s nostalgic computing rabbit hole, but that journey has subsequently led to reviewing the technological progress of the late 1900s and early 2000s. This week, that was the rise of the RISC-based CPU, which was then obviously going to...

The buzzword of 2024 is “AI” and like social, mobile, cloud, fintech, and blockchain, every startup is claiming to have it and every big startup fundraising is claiming to expand what can be done with it. Or in short, we’ve been here before. A Grand Unified Theory of the AI Hype Cycle does a very good job explaining how this will play out in 13 steps, and how it already played...

I’ve never been able to explain why I have so hard of a time believing consultants. What is it about their role that make their conclusions so often so wrong? None other than Steve Jobs explains… in less than two minutes. “I don’t think there is anything inherently evil in consulting” … but “You never really taste it.” – Steve Jobs Share...