High-growth start-ups are often evaluated based on 16 key metrics, each crucial for understanding the company’s health and potential for success. These metrics are grouped into four categories: financial, user, sales and marketing, and other.
Financial metrics include revenue, gross margin, and cash burn rate. These provide insights into the company’s profitability, cost of goods sold (COGS), and cash expenditure rate. User metrics, such as active users and user engagement, measure the product’s popularity and the degree of user interaction.
Sales and marketing metrics cover customer acquisition cost (CAC) and lifetime value (LTV). These help determine the cost-effectiveness of gaining new customers and the projected revenue from a customer over the relationship’s duration.
The ‘other’ category includes employee-related metrics, such as headcount and employee churn rates. These gauge the company’s size and staff retention ability.
Each metric is crucial in its own right, but the interplay between them can also offer valuable insights. For instance, a high LTV/CAC ratio indicates a profitable business model, while a rapid increase in revenue coupled with a high cash burn rate may signal a need for caution.
These metrics, when used correctly, can guide start-up founders and investors to make informed decisions, ensuring the company’s growth and sustainability.
Go to source article: http://a16z.com/2015/08/21/16-metrics/