How to Choose Your Metrics

The Startup Help Desk

In this episode we answer questions about choosing and using metrics. Metrics are one of the best tools you have to run your startup, but only if you use them well. We are here to help! In this episode we answer questions including:

• What metrics should I put on my dashboard?
• What do we do if our competitors are lying about their metrics?
• How do we report metrics like revenue, which have many definitions?

All of these questions were submitted by listeners just like you. You can submit questions for us to answer on our website TheStartupHelpdesk.com or on X/Twitter @thestartuphd - we'd love to hear from you!
Reminder: this is not legal advice or investment advice.
Q1: What metrics should I put on my dashboard?
There is a lot of danger with creating a dashboard. The risk is that you may track the wrong metrics or track too many metrics, creating a “wallpaper” that distracts from the foundation of your startup “house”.
The common three metrics to track are: distribution, engagement, and churn. The core company dashboard should not include more than 3-4 metrics.
Cash and runway are other critical metrics. For monthly investor updates in particular, you will likely want to share data about your current cash and runway.
When you focus on select few metrics – specifically, the metrics that are core to bringing value to your business or value to your customers – you can make decisions focused on core components of the business.
Q2: What do we do if our competitors are lying about their metrics?
Do not start lying about your metrics, too! Without even considering the ethical side of this (and ethics alone: you shouldn’t lie about your metrics), consider this scenario:
- Imagine that you make your metrics look better to fundraise.
- Fundraising starts a growth curve where you need to consistently accelerate in order to fundraise again.
- Your next round will need even more incredible metrics – good luck with that!
Instead of playing catch-up via fake metrics, differentiate from your competition in another way. Your metrics are one part of a multifaceted story. Tell the story that emphasizes your competitive advantage and paints a compelling road forward from where you are today.
Q3: How do we report metrics like revenue, which have many definitions?
When it comes to reporting revenue, consult with an accountant and a lawyer so that you have an effective accounting process in place!
Different audiences may desire different formats for understanding revenue. For example, “revenue” may mean something different to your board, your investors, and your sales team (and the sales team's commission plans). For each of these audiences, they want to understand revenue in terms of how it reflects the current status of the business and how it can help predict the future status of the business.
One thing to note: it is not uncommon for a startup to run into challenges trying to collect all of the revenue due to it! Thus, actually collected money can be different from bookings. “Actually collected money” is always important, and it increases in importance as your startup grows.