Continuing with 12 Key Levers of SaaS Success from David Skok at SaaStr, Mamoon Hamid gave an excellent presentation Numbers that Actually Matter. Finding Your North Star.
Here are a few notes from the presentation:
- Quick Ratio (QR) = New MRR + Expansion MRR / Churned MRR + Contraction MRR
- Goal is a Quick Ratio greater than 4
- Product-market fit happens one customer at a time one month at a time
- Mostly ignored any product-market fit metrics
- Churn/Expansion/Contraction MRR is a lagging indicator of product-market fit
- MRR is the price that the customer pays, the North Star is the value that they get
- Focus on a leading indicator of the MRR decision
- Your North Star measures the value you deliver
- Bad: Mostly measuring price paid as opposed to value delivered
- MRR, paid seats
- Good: Measures value delivered in bulk
- MAU, DAU, messages sent
- Better: Unquestionably indicates Product Market fit has been reached with the customer
- Number of users with L28 >= 16
- Messages sent w/in 30 days in signup
Read the presentation Numbers that Actually Matter. Finding Your North Star. and figure out the North Star for your product.
David Cummings on Startups 