Measuring the success of a startup is not just about looking at the money in the account or the number of followers on networks. It's about understanding if what you're building makes sense, if it's growing and if it's ready to scale. And for that, you need KPIs.
What are KPIs and why do they matter?
KPIs (Key Performance Indicators) are metrics that help you know if your business is going in the right direction. They give you context, focus and a basis for decision making. In a startup, every resource counts, measuring well is as important as executing well.
Essential KPIs for startups (by key area)
1. Business growth
- MRR (Monthly Recurring Revenue)Monthly recurring revenue, ideal for SaaS models.
- CAGR (Compound Annual Growth Rate)compound annual growth rate.
- Monthly growth rate of users or customers.
2. Customer acquisition
- CAC (Customer Acquisition Cost)How much does it cost you to attract a new customer?
- Leads generated by channelidentifies where the real value lies.
- Conversions by channel or campaign.
3. Retention and activation
- Retention ratehow many users are still active after X amount of time.
- Churn ratehow many customers are lost.
- Time to Valuehow long it takes for a customer to perceive value from the first use.
4. Operational and financial efficiency
- Burn ratehow much money you are "burning" per month.
- Runwayhow many months you can continue to operate with your current fund.
- LTV (Lifetime Value)Total value that a customer leaves you over time.
- LTV/CAC ratioIdeally, it should be at least 3:1.
5. Engagement and product
- NPS (Net Promoter Score)measures the satisfaction and loyalty of users.
- DAU/WAU/MAU (daily, weekly, monthly active users).
- Activation rateWhat percentage of users reach the "a-ha moment".
Tips for using KPIs wisely
- Less is moreDon't measure 30 things. Choose 5-7 key KPIs and review them every week or sprint.
- Each KPI should have a clear objectiveIf you don't know why you measure it, you probably shouldn't measure it.
- Tailor your KPIs to the stage of your startupThe indicators of a company in validation are not the same as in the scaling-up phase.
- Visualise your datause dashboards that are clear and accessible to the whole team.
Having KPIs is not a fad. It is a necessity. Startups that measure well, understand their business better and make decisions with less intuition and more judgement.
Choosing the right KPIs can make the difference between iterating meaningfully or getting lost in the noise. And if you don't know where to start, start with a question: what do i need to know today to make a better decision tomorrow?