startup-metrics

What this skill does

# Startup Metrics

> Know the metrics that matter at each stage and what investors actually look for. Master the A16Z and YC frameworks for measuring startup progress.

## When to Use This Skill

- **Fundraising prep** to know which metrics to highlight
- **Board meetings** to report on the right KPIs
- **Strategic planning** to set goals that matter
- **Product decisions** to understand what to optimize
- **Diagnosing problems** to find what's broken
- **Benchmarking** to know if your metrics are good

## Methodology Foundation

| Aspect | Details |
|--------|---------|
| **Source** | A16Z (Andreessen Horowitz), YC (Y Combinator), SaaS metrics best practices |
| **Core Principle** | "Measure what matters. Vanity metrics feel good but don't predict success. Focus on metrics that indicate real product-market fit and sustainable growth." |
| **Why This Matters** | Wrong metrics lead to wrong decisions. Right metrics reveal truth about your business—good or bad—before it's too late to course-correct. |


## What Claude Does vs What You Decide

| Claude Does | You Decide |
|-------------|------------|
| Structures analysis frameworks | Strategic priorities |
| Synthesizes market data | Competitive positioning |
| Identifies opportunities | Resource allocation |
| Creates strategic options | Final strategy selection |
| Suggests implementation approaches | Execution decisions |

## What This Skill Does

1. **Identifies key metrics by stage** - What to measure when
2. **Calculates core SaaS metrics** - ARR, MRR, churn, LTV, CAC
3. **Benchmarks performance** - Good vs. great vs. concerning
4. **Diagnoses metric problems** - What poor metrics indicate
5. **Prepares investor-ready dashboards** - What VCs want to see
6. **Prioritizes metric improvement** - What to fix first

## How to Use

### Get Stage-Appropriate Metrics
```
I'm a [stage] startup in [industry].
What metrics should I be tracking?
What benchmarks should I aim for?
```

### Calculate Core Metrics
```
Help me calculate my SaaS metrics:
[Provide: MRR, customer count, churn data, acquisition costs]
```

### Diagnose Metric Problems
```
My metrics: [list metrics]
What's concerning? What should I focus on fixing?
```

## Instructions

### Step 1: Understand Metrics by Stage

```
## Metrics Framework by Stage

### Pre-Seed (Validation Stage)
**Focus:** Is this a real problem worth solving?

| Metric | Why It Matters | Good Signal |
|--------|---------------|-------------|
| Problem interviews | Validate problem exists | 10+ interviews, 70%+ confirm |
| Solution interviews | Validate solution fits | 60%+ would use |
| LOIs/Waitlist | Real interest signal | Signed commitments |
| Engagement (if prototype) | People want to use it | Daily active usage |

**Not important yet:** Revenue, CAC, LTV, growth rate

---

### Seed (Product-Market Fit Stage)
**Focus:** Do people want this? Will they pay?

| Metric | Why It Matters | Good Signal |
|--------|---------------|-------------|
| **MRR/ARR** | Revenue traction | Any consistent revenue |
| **MoM Growth** | Trajectory | 15-20%+ MoM |
| **Retention** | PMF indicator | >80% monthly retention |
| **NPS** | Customer love | >50 NPS |
| **Engagement** | Product usage | DAU/MAU >20% |

**Emerging importance:** Early unit economics, CAC/LTV ratio

---

### Series A (Scale Stage)
**Focus:** Can this scale? Are unit economics viable?

| Metric | Why It Matters | Good Signal |
|--------|---------------|-------------|
| **ARR** | Revenue scale | $1-2M+ |
| **ARR Growth** | YoY trajectory | 3x YoY |
| **Net Revenue Retention** | Expansion + churn | >100% (ideally >120%) |
| **LTV/CAC** | Unit economics | >3:1 |
| **CAC Payback** | Efficiency | <18 months |
| **Gross Margin** | Business viability | >70% (SaaS) |

---

### Series B+ (Optimization Stage)
**Focus:** Efficiency and path to profitability

| Metric | Why It Matters | Good Signal |
|--------|---------------|-------------|
| **Magic Number** | Sales efficiency | >0.75 |
| **Rule of 40** | Growth + profitability | >40% |
| **Burn Multiple** | Cash efficiency | <2x |
| **Net Dollar Retention** | Account growth | >120% |
| **Quick Ratio** | Growth quality | >4 |
```

---

### Step 2: Calculate Core SaaS Metrics

```
## Metric Calculations

### Revenue Metrics

**MRR (Monthly Recurring Revenue):**
MRR = Sum of all recurring revenue per month

**ARR (Annual Recurring Revenue):**
ARR = MRR × 12

**MRR Components:**
- New MRR: Revenue from new customers
- Expansion MRR: Upgrades and cross-sells
- Contraction MRR: Downgrades
- Churned MRR: Lost customers

**Net New MRR:**
Net New MRR = New + Expansion - Contraction - Churned

---

### Growth Metrics

**MoM Growth Rate:**
Growth = (MRR this month - MRR last month) / MRR last month × 100

**YoY Growth Rate:**
YoY = (ARR this year - ARR last year) / ARR last year × 100

**CMGR (Compound Monthly Growth Rate):**
CMGR = (Ending MRR / Starting MRR)^(1/months) - 1

---

### Retention Metrics

**Gross Revenue Retention (GRR):**
GRR = (MRR - Churned MRR - Contraction MRR) / MRR × 100
Maximum: 100% (doesn't include expansion)

**Net Revenue Retention (NRR) / Net Dollar Retention (NDR):**
NRR = (MRR + Expansion - Contraction - Churned) / MRR × 100
Can be >100% (good!)

**Logo Churn:**
Logo Churn = Customers lost / Customers at start of period × 100

**Revenue Churn:**
Revenue Churn = Churned MRR / MRR at start of period × 100

---

### Unit Economics

**Customer Acquisition Cost (CAC):**
CAC = Total Sales & Marketing Spend / New Customers Acquired

**Lifetime Value (LTV):**
Simple: LTV = ARPU × Gross Margin × Customer Lifetime
With churn: LTV = (ARPU × Gross Margin) / Monthly Churn Rate

**LTV/CAC Ratio:**
LTV/CAC = LTV / CAC
Good: >3:1

**CAC Payback Period:**
Payback = CAC / (ARPU × Gross Margin)
Good: <18 months

---

### Efficiency Metrics

**Magic Number:**
Magic Number = Net New ARR this quarter / S&M Spend last quarter
>1.0 = Very efficient
0.75-1.0 = Good
<0.5 = Inefficient

**Rule of 40:**
Rule of 40 = Revenue Growth Rate + Profit Margin
>40% = Healthy balance of growth and profitability

**Burn Multiple:**
Burn Multiple = Net Burn / Net New ARR
<1x = Excellent
1-2x = Good
>2x = Concerning

**Quick Ratio:**
Quick Ratio = (New MRR + Expansion MRR) / (Churned MRR + Contraction MRR)
>4 = Excellent growth quality
```

---

### Step 3: Benchmark Against Standards

```
## Metric Benchmarks

### SaaS Benchmarks by Stage

| Metric | Seed | Series A | Series B |
|--------|------|----------|----------|
| ARR | <$1M | $1-5M | $5-15M |
| MoM Growth | 15-25% | 10-15% | 5-10% |
| YoY Growth | 3x+ | 2-3x | 1.5-2x |
| Gross Margin | >60% | >70% | >75% |
| LTV/CAC | >3x | >3x | >4x |
| CAC Payback | <24 mo | <18 mo | <12 mo |
| NRR | >100% | >110% | >120% |
| Logo Churn | <5%/mo | <3%/mo | <2%/mo |

### What "Good" Looks Like by Company Type

**SMB SaaS (low touch):**
- Logo churn: 3-5% monthly
- NRR: 80-100%
- LTV/CAC: >3x
- CAC: <$1,000

**Mid-Market SaaS:**
- Logo churn: 1-2% monthly
- NRR: 100-120%
- LTV/CAC: >4x
- CAC: $5,000-20,000

**Enterprise SaaS:**
- Logo churn: <1% monthly
- NRR: 110-150%
- LTV/CAC: >5x
- CAC: $20,000-100,000+

### Engagement Benchmarks

| Metric | Consumer | B2B SaaS |
|--------|----------|----------|
| DAU/MAU | >20% | >40% |
| D1 Retention | >40% | >50% |
| D7 Retention | >20% | >30% |
| D30 Retention | >10% | >20% |
```

---

### Step 4: Diagnose Problems

```
## Metric Diagnosis Guide

### If MRR Growth is Slowing...

**Possible causes:**
1. Market saturation (ran out of easy customers)
2. Product-market fit weakening (competition, changing needs)
3. Sales inefficiency (declining magic number)
4. High churn eating new growth

**Diagnostic questions:**
- Is logo churn increasing?
- Is CAC increasing?
- Is conversion rate declining?
- Is expansion revenue flat?

---

### If Churn is High...

**Possible causes:**
1. Onboarding problems (never got value)
2. Product gaps (missing critical features)
3. Wrong customers (sold to people who shouldn't buy)
4. Com