23 Terms Every Founder and Investor Must Know

Running a startup buries you in metrics. Most of them don't move anything. Whether you're raising, tuning growth, or trying to read your own traction honestly, these 23 are the ones worth knowing cold.

They split into five buckets: Market, Growth, Revenue, Efficiency, and Product & Sales. Each one gets a definition, when to reach for it, and a real example.

Market Metrics

1. TAM (Total Addressable Market)

Definition: The total demand for your product across the entire market. Example: If you're building a fitness app, your TAM might be the entire global digital health market, say $50B. Use Case: Shows investors how big the opportunity gets if everything goes right.

2. SAM (Serviceable Available Market)

Definition: The slice of the TAM you can actually serve given your business model. Example: You're only targeting English-speaking markets with mobile apps. Your SAM might be $10B. Use Case: Defines what's reachable with the product you have today.

3. SOM (Serviceable Obtainable Market)

Definition: The realistic share of the SAM you can capture in the short term. Example: With your marketing budget and sales capacity, you estimate you can win $50M worth of that $10B market. Use Case: Keeps your growth projections grounded enough that people believe them.

Growth Metrics

4. DAU (Daily Active Users)

Definition: Unique users who touch your product each day. Example: Your app gets 25,000 daily active users. Use Case: Tracks short-term engagement and whether the product is sticky.

5. MAU (Monthly Active Users)

Definition: Unique users within a 30-day window. Example: You track 250,000 MAUs. Use Case: Shows your reach and the broader growth trend.

6. DAU/MAU Ratio

Definition: The share of monthly users who come back daily. Example: If you have 25,000 DAU and 250,000 MAU, your ratio is 10%. Use Case: Over 20% is decent. Over 50% is strong, the kind of number you see in habit-forming products.

7. User Retention Rate

Definition: The percentage of users who come back after a set window, like a week or a month. Example: Out of 1,000 signups, 300 return next week = 30% retention. Use Case: The clearest read you have on product-market fit.

8. Churn Rate

Definition: The percentage of users or customers who walk away. Example: You had 1,000 customers and 100 churned this month = 10% churn. Use Case: High churn usually points at weak onboarding, product gaps, or a value problem.

Revenue Metrics

9. MRR (Monthly Recurring Revenue)

Definition: Predictable monthly revenue from subscriptions or contracts. Example: 1,000 customers paying $30/month = $30,000 MRR. Use Case: Tracks whether revenue is growing on a steady base.

10. ARR (Annual Recurring Revenue)

Definition: MRR multiplied by 12. Example: $30K MRR → $360K ARR. Use Case: Handy for projecting the year.

11. ARPU (Average Revenue Per User)

Definition: What each user contributes on average. Example: $10,000 MRR from 500 users → $20 ARPU. Use Case: Guides pricing and how you monetize.

12. LTV (Customer Lifetime Value)

Definition: Total revenue you expect from one customer over their whole run with you. Example: A customer stays for 3 years at $30/month → LTV = $1,080. Use Case: The benchmark for whether your unit economics actually hold up.

Efficiency Metrics

13. CAC (Customer Acquisition Cost)

Definition: What it costs to land one paying customer. Example: You spend $5,000 on marketing and get 100 customers → CAC = $50. Use Case: The number behind any honest read on marketing ROI.

14. LTV/CAC Ratio

Definition: LTV divided by CAC. Example: LTV = $1,080, CAC = $270 → Ratio = 4. Use Case: Anything above 3 is generally healthy.

15. CAC Payback Period

Definition: How long it takes to earn back CAC through customer payments. Example: CAC = $180, customer pays $30/month → Payback = 6 months. Use Case: Shorter payback means you get cash back faster and can put it back to work sooner.

16. Burn Rate

Definition: Monthly cash out the door minus revenue, if you have any. Example: Spending $50,000/month with $10,000 revenue = $40K burn. Use Case: Drives cash planning and when you need to raise.

17. Runway

Definition: How long until the money runs out. Example: $200K in the bank, $50K monthly burn → 4 months runway. Use Case: Tells you how urgently you need to raise or cut.

Product & Sales Metrics

18. NPS (Net Promoter Score)

Definition: A read on satisfaction and how likely people are to refer you. Example: Customers rate you a 9 or 10 → NPS = high. Use Case: An early signal that people love the product, or that something's off.

19. Sales Pipeline Value

Definition: The combined value of every lead and deal in your funnel. Example: 5 potential deals worth $20K each = $100K pipeline. Use Case: Helps you forecast sales and plan hiring.

20. Sales Conversion Rate

Definition: The percentage of leads that turn into paying customers. Example: 50 conversions from 500 leads = 10% conversion. Use Case: Tells you whether your leads and your sales motion are any good.

21. Contribution Margin

Definition: Revenue minus variable costs per unit. Example: Selling price = $100, serving cost = $40 → margin = $60. Use Case: Shows profit per unit before fixed costs enter the picture.

22. ACV (Average Contract Value)

Definition: The average deal size for your B2B customers. Example: 4 contracts worth $200K → ACV = $50K. Use Case: Feeds your forecasting and your sales quotas.

23. Gross Margin

Definition: (Revenue – Cost of Goods Sold) / Revenue Example: Revenue = $100K, COGS = $40K → Gross Margin = 60%. Use Case: Businesses with high gross margins can afford to spend more on growth.

Final Thoughts

Know these 23 metrics and your story gets sharper, your growth decisions get better, and investors take you more seriously.

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