The best metrics to track in a startup

There are lots of different things you can track in a startup, and ways to track them. Metrics fall into two categories:

Actionable metrics: metrics that lead to customer insight and help make informed decisions
Vanity metrics: metrics that do neither

A useful way to get started is to track metrics for your product/service that you think are related to the value of the business. Then track them as a percentage of the total user-base for that months cohort.

For example: 10% of users who were active this month sent a message vs 5% last month. This metrics shows positive growth.

Reporting 100 messages sent this month vs 50 last month is not helpful — it is a vanity metric (and in this fictional case misleading as although the number of messages sent was lower, they were sent by a larger proportion of users, so the lower count could just be a fluctuation in the number of visitors that month — as opposed to a problem with the product).

Another factor is leading / lagging metrics.

Leading metrics are generally harder to gather but they can be influenced. Lagging metrics are outputs and cannot be optimised.

For example, if you are tracking your weight, the scales will give you a lagging metric. Leading metrics will be food consumed and calories burnt.

A final point of consideration are the baseline metrics. What does success look like? At what point can you concentrate on other metrics?