Thoughts from BERKONOMICS – Dave Berkus
After 50 years in entrepreneurship and 200+ startup investments, here’s what most first-time founders get dangerously wrong: They obsess over the wrong metrics.
The five most important metrics
I’ve watched brilliant ideas fail because founders tracked vanity numbers while ignoring the real drivers of sustainable growth. The truth? There are only 5 metrics that truly matter in your first 18 months:
Everything else is a distraction.
1. Cash runway (in months)
2. Customer acquisition cost
3. Monthly burn rate
4. Net revenue retention
5. Gross margin
An example not to follow!
[Email readers, continue here…] Here’s why this matters: I recently mentored a SaaS startup that was celebrating their 100,000 users. Impressive, right? Except they were bleeding $80,000 monthly because their CAC was 3x higher than their customer lifetime value. They were scaling themselves into bankruptcy. The reality is simple: Early-stage success isn’t about vanity metrics. It’s about building a sustainable engine for growth. Focus on these 5 numbers. Track them weekly. Make decisions based on their trends. Your startup’s survival depends on it. What’s the ONE metric you’re obsessing over right now?
Note: This post created entirely from Dave’s books but by a new, experimental system called V30.ai, still in restricted beta. These are not Dave’s words, but Dave’s insights and in his style, and not using any outside data. Picture created using DALL-E3.
Pretty good for a robot 🙂
So you resisted even editing?
Dave, thank you for the experiment with AI writing your column. I still think you do a better job of presenting information, providing examples, and effecting the mentor tone of voice than AI. So, we’ll keep you! John-
Dave, I think this is a brilliant example of using AI trained on your own work and words. To the extent that any non-fiction writer (or, for that matter, fiction writer as well) can create an AI from which to extrapolate key elements of their work, so that anyone can ask questions of it, is brilliant and definitely an indication of intellectual progress!
I remember the Osborne Computer in 1981, The first portable PC. Everyone was excited and impressed with it. The company folded after about a year. Osborne had an entrepreneurial mind, not a managerial mind. Michael Dell and Mark Cuban had both around the same time, well we know their mercurial success Dave, thank you. Io Triumphe!.
Since many start ups do not have revenue, I would think many should track product development. Also, aren’t these measures a little redundant – cash runway and monthly burn rate (assuming one can do elementary arithmetic and know cash on hand) provide much the same information. One also might want to track sales revenue.