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16 Startup Metrics

From a16z by Andreessen Horowitz (a16z) ~15 min read

Why we picked it

The reference primer on the metrics and market-sizing logic investors use, including bottom-up market sizing that keeps founders honest about how big a market really is. Canonical a16z source.

  • Size markets bottom-up from customer count and willingness to pay
  • Know the metrics that actually signal a healthy business
  • Distinguish real traction from vanity metrics
  • Use consistent definitions when comparing yourself to the market
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Answers What tools should I use to track competitors and market landscape? How do I size the market and figure out if it's big enough? How do I understand the competitive landscape for an Indian market specifically? What are unit economics and why do they matter? How do I calculate CAC (customer acquisition cost) and LTV? What is a good LTV to CAC ratio? What metrics should I actually track as an early-stage SaaS founder? What is churn and how much churn is too much? What is a SAFE and how does it actually work? What's the difference between a valuation cap and a discount on a SAFE? How is my startup's valuation actually decided at the early stage? What do the key terms in a term sheet actually mean?