Startup Metrics That Actually Matter (And Ones That Don't)

Every VC has favorite metrics. Every blog post lists different ones. Most startups track too much and understand too little.

Here’s what actually matters at each stage.

Pre-Product-Market Fit

You’re figuring out if anyone wants what you’re building.

What Matters

Engagement Quality: Are users coming back without prompting? Do they use core features?

Qualitative Feedback: What do users say? (Not surveys—actual conversations)

Activation Rate: What % of signups reach your “aha moment”?

What Doesn’t Matter (Yet)

  • Revenue (you’re learning, not earning)
  • Growth rate (premature scaling kills)
  • CAC/LTV (not enough data)

At this stage, one engaged user who loves your product tells you more than 1,000 users who signed up and bounced.

Post-PMF, Pre-Scale

You’ve found something that works. Now you’re systematizing it.

What Matters

Monthly Recurring Revenue (MRR): The core number. Everything else ladders to this.

MRR Growth Rate: How fast is revenue growing? 10% month-over-month is good. 20%+ is great.

Net Revenue Retention (NRR): Are existing customers paying more over time? 100%+ means your base grows even without new customers.

Gross Margin: Revenue minus direct costs. Should be 70%+ for software.

Burn Rate: How much are you spending monthly? How long until you run out?

What Doesn’t Matter (Yet)

  • Market share (too early)
  • Brand metrics (focus on product)
  • Complex attribution models (not enough data)

Rule of thumb: If it doesn’t affect MRR or runway, deprioritize it.

Scaling Stage

You’re pouring fuel on a working fire.

What Matters

Customer Acquisition Cost (CAC): How much to acquire a customer? Track by channel.

LTV/CAC Ratio: Lifetime value divided by acquisition cost. Should be 3x+ for a healthy business.

Payback Period: How long until a customer’s revenue covers acquisition cost? Under 12 months is good.

Sales Efficiency: Revenue generated per dollar of sales/marketing spend.

Churn Rate: What % of customers leave monthly? Under 3% monthly for B2B SaaS.

What Still Doesn’t Matter

  • Vanity metrics (downloads, registrations without conversion)
  • Competitor metrics (focus on yourself)
  • Metrics you can’t act on

The Metrics You Should Ignore

Downloads / Registrations

Only matters if they convert to active users. 100K downloads and 1K actives is a failure.

Social Media Followers

Followers don’t pay bills. Track followers → website → conversion, not followers alone.

Media Mentions

PR is nice. It rarely correlates with growth.

NPS (Early Stage)

Net Promoter Score matters at scale. At 100 customers, just talk to them directly.

Number of Features

More features isn’t progress. Solving problems is progress.

How to Actually Track Metrics

The One Dashboard

Create one dashboard with 5-7 metrics. Update weekly. Review with the team.

Our dashboard:

  1. MRR and MRR growth
  2. Active users (weekly)
  3. Activation rate
  4. Net revenue retention
  5. Runway (months)

That’s it. Everything else is available but not front-and-center.

Leading vs. Lagging

Lagging indicators: Revenue, churn, NRR. Tell you what happened.

Leading indicators: Activation rate, engagement, NPS. Predict what will happen.

Track both. But lead with leading indicators—you can still change outcomes.

Cohort Everything

Averages hide problems. Look at cohorts.

“60% activation rate” might mean recent cohorts are 40% and old cohorts were 80%. That’s a problem averages don’t show.

The Investor Perspective

VCs will ask about metrics. Here’s what they actually care about:

Seed Stage: Team, market, early engagement signals. Metrics are secondary.

Series A: MRR (usually $50K-200K), growth rate (15%+ monthly), clear path to scale.

Series B: Revenue ($2M+ ARR typically), unit economics (CAC/LTV), efficiency metrics.

Match your tracking to what matters for your stage and next fundraise.

The Operational Perspective

Forget investors. What does your team need?

Engineering: Ship velocity, bug rates, system reliability.

Sales: Pipeline, conversion rates, deal velocity.

Marketing: Channel performance, conversion funnel, cost per lead.

Support: Response time, resolution rate, customer satisfaction.

Each function needs its own metrics. But company-wide, keep it simple.

The Framework

  1. Identify the One Metric That Matters (OMTM) for your current stage. Focus there.

  2. Support with 2-3 secondary metrics that drive the OMTM.

  3. Review weekly with leadership, monthly with company.

  4. Cut metrics that don’t drive decisions. If it doesn’t change behavior, stop tracking.

  5. Update as you grow. Metrics that mattered at 10 customers don’t matter at 10,000.

More metrics isn’t more clarity. It’s more noise. Be ruthless about what you track.