Runway (months)
Recurring Revenue
| Burn Multiple | Efficiency |
|---|---|
| Under 1x | Amazing |
| 1 - 1.5x | Great |
| 1.5 - 2x | Good |
| 2 - 3x | Suspect |
| Over 3x | Bad |
Compound Monthly Growth Rate
Churn Rate
Run Rate
Do not confuse this with your recurring revenue. Your run rate is the annualized sum of ALL revenue (including non-subscription revenue)
LTV : CAC Ratio
Active Users
A startup should have an incredibly simple way of defining an "active" user. It will differ dramatically in some cases, is an active user someone who logs into your app, or someone who performs some action within it?
Aim for a measurement that truthfully reflects your expectations and goals for your users, as well as what represents a user getting value from your product.
Conversion Rate
A conversion rate is the percentage of people who "convert" (i.e. sign up, pay, take the next step, etc) after being shown something (like a landing page, payment screen, or new feature).
Your most important conversion rate is typically payment conversion, but in the early days it may be sign ups or usage of certain features.
Product Market Fit
Ask your users how disappointed they'd be if they couldn't use your product. If at least 40% says they'd be "very disappointed" then congrats, you're likely starting to see product-market fit.
PMF score focuses on the user — their needs, how they actually feel, etc — while NPS is entirely hypothetical ("would you refer...").