A Twitter thread by martin_casado.
0/ There is a dazzling amount of inconsistency in what GTM metrics are presented at board meetings of early stage b2b companies. Here is my hit list of the most important, and why:
1/ CARR - total contracted annual recurring revenue is the single best metric for the health of a business. It encapsulates new logo growth, expansion, and churn in a single number. If you only show one number, use this one.
2/ Live ARR - Some board members prefer LARR to CARR because it can take a long time to implement a deal. And some never make it. Both is best, but for early stage companies I prefer CARR as it signals the market.
3/ Net New ARR - includes $ bookings from new logos booked and expansion net of churn and downsells. This is the best leading indicator of market pull.
4/ Net Dollar Retention - lately economics of b2b companies are more driven by expansion than up front ACV. This is the best indicator of that motion. Remember it is net of churn and downsells.
5/ Gross Dollar Retention - Gross retention reflects your churn and downsell and is often an indicator of how mission critical your product is.
6/ net new logos - as my buddy @devdutt says, 'new logos are oxygen'. They're the foundation you'll have to expand in the future.
7/ new logo ACV - tracking “Annual Contract Value" of new logos and % growth over time helps you you manage your GTM strategy. This is particularly important if you're trying to move upmarket.
8/ CAC payback - If you have a couple quarters of sales data, measuring CAC payback ( s&m / (net new ARR x % GM) ) gives you a read on sales efficiency. The average startup has a CAC payback of 12-18 mos. If you sell to large enterprises (18-24 mos) and SMBs (6-12 mos)
9/ quota attainment - what percent of reps hit quota. This generally sits between 70-100% (if it's >100% a lot, you need higher quotas) This is the anchor number for knowing whether to scale sales. Quota should be at least 3x OTE (hopefully more) for this to be meaningful.
10/ net burn - early sales really takes an entire company, so I'd rather see total burn than trying to break out GTM unit economics. Ultimately I like to look at cumulative burn and comparing it to how much dollars it's generated
11/ net new weighted pipeline - pipeline generated in the previous period less pipeline removed (sold or lost). Good indicator of market pull, and a leading indicator for scaling sales. Generally a bogus number early on, but good discipline to be in the habit of reporting.
12/ Some of these only really become relevant after a few years of selling. But presenting them early on creates a common framework to center board discussions. And there is a lot of value in that /fin