The Death of Growth Theater: A Metrics Framework for Honest Startups

Most startup metrics are vanity metrics—they can go up while the business gets worse. This post provides five metrics that actually predict company health (NRR, TTV, Organic Referral Rate, Payback Period, Support Ratio), with formulas, benchmarks, and implementation guidance.

The Pattern I Keep Seeing

At Upland, we celebrated 100,000 registered users while 30-day retention sat at 4%. At Sparkblox, we trumpeted mint counts while utility metrics stagnated. The pattern repeats across every company I've worked with or advised.

Growth theater: the performance of traction without the substance of value creation. It's the startup equivalent of teaching to the test—you hit the metrics but miss the point entirely.

I've been guilty of this myself. At Sparkblox, I knew our utility metrics were weak. I presented mint counts to the board anyway because they looked good. When the project struggled, I couldn't feign surprise. I had optimized for the appearance of progress over actual progress.

This post is my attempt to provide a concrete framework for cutting through the theater and measuring what actually matters.

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The Vanity Metrics Diagnostic

Not sure if you're measuring vanity metrics? Run this diagnostic:

Question 1: Does this metric distinguish good users from bad?

"Registered users" doesn't distinguish someone who signed up and never returned from someone who uses the product daily. It's therefore meaningless as a health indicator.

Better alternative: Weekly Active Users with a defined activation threshold (e.g., "completed at least 3 core actions")

Question 2: Can this metric go up while the business gets worse?

"Gross Merchandise Value" can increase while you lose money on every transaction. Revenue can grow while margins collapse. Time-on-site can improve because your UX is confusing.

Test: Imagine scenarios where this metric improves but you'd be worse off. If you can easily imagine such scenarios, the metric is incomplete.

Question 3: Does improving this metric require creating real value?

You can increase "email signups" by making the dismiss button harder to find. You can boost "page views" by splitting articles into slideshows. These are metric games, not value creation.

Test: If you can improve the metric through dark patterns, it's measuring engagement, not value.

A metric is only useful if improving it requires creating real value for users. If you can game it without helping anyone, it's theater.

◆

The Five Metrics Framework

After 15 years of building products, these are the five metrics I've found actually predict company health:

1. Net Revenue Retention (NRR)

What it measures: Are existing customers spending more over time?

NRR = (Starting MRR + Expansion - Contraction - Churn) / Starting MRR × 100

Example Calculation:

Starting MRR: $100K
Expansion (upsells): +$15K
Contraction (downgrades): -$5K
Churn (cancellations): -$8K

NRR = ($100K + $15K - $5K - $8K) / $100K = 102%

NRR	Assessment	What It Means
<90%	Critical	Leaky bucket. Fundamentally broken.
90-100%	Warning	Treading water. Acquisition cost matters a lot.
100-110%	Healthy	Can grow without aggressive acquisition.
110-130%	Strong	Product-market fit likely.
>130%	Exceptional	Best-in-class companies (Snowflake, Twilio).

Why it matters: NRR is the only growth that compounds. If NRR >100%, every dollar of acquisition becomes worth more over time. If NRR <100%, you're constantly refilling a leaking bucket.

2. Time to Value (TTV)

What it measures: How fast do new users reach the "aha moment"?

TTV = Median time from signup to [defined activation event]

The hard part: Defining your activation event. It should be the moment users first experience core value:

Product	Activation Event	Target TTV
Slack	Sent 2,000 team messages	<7 days
Dropbox	Uploaded first file to shared folder	<1 hour
Superhuman	Reached inbox zero	<1 day
Notion	Created and shared a page	<30 min

At HelpWith, reducing TTV from 3 days to 1 day improved 30-day retention by 23%. Every day added to TTV decreases retention. The relationship isn't linear—it's exponential decay.

3. Organic Referral Rate

What it measures: What percentage of new users come from existing users without incentives?

Organic Referral Rate = (Users from organic referral) / (Total new users) × 100

How to measure: "How did you hear about us?" survey at signup with specific options. Track "friend/colleague" responses. Exclude paid referral programs.

Rate	Assessment	What It Means
<10%	Weak	Product probably isn't remarkable.
10-25%	Moderate	Some organic growth.
25-40%	Strong	Product-market fit signal.
>40%	Exceptional	Product sells itself.

If people aren't telling friends without being bribed, you haven't built something worth talking about. This is the purest signal of genuine value.

4. Payback Period

What it measures: How long until a customer becomes profitable?

Payback Period = CAC / (Monthly Revenue × Gross Margin)

Example Calculation:

CAC: $600
MRR: $100
Gross Margin: 75%

Payback = $600 / ($100 × 0.75) = 8 months

Payback	Assessment	What It Means
<6 months	Excellent	High capital efficiency.
6-12 months	Good	Standard for healthy SaaS.
12-18 months	Concerning	Watch carefully.
>18 months	Problematic	Business model questions.
>24 months	Broken	You're running a charity.

5. Support Ratio

What it measures: Does your product get easier to support as it scales?

Support Ratio = (Support tickets per month) / (Monthly Active Users)

What to track: Not just the ratio, but the trend. Plot it monthly. Is it going up, down, or flat as you grow?

Trend	Assessment	What It Means
Declining as you scale	Excellent	Product improving; users understand it better
Flat	Neutral	Support scales linearly with users
Rising	Red Flag	Product getting harder to use or quality declining

"Support ratio? That seems minor compared to the others."

It's a leading indicator. Products people understand don't generate tickets. A declining support ratio often predicts improving NRR and referral rates 3-6 months later. It's the canary in the coal mine.

◆

Implementation: Building Your Dashboard

Define Your Activation Event

Analyze users who retained vs. churned. What actions did retainers take early? Interview your best users. Track correlation between early actions and long-term retention.

Instrument Your Product

Track: signup timestamps, activation event timestamps, all revenue events, acquisition channel, referral source, support ticket volume.

Calculate Baselines

Before you can improve, you need to know where you are. Calculate each metric for the past 6 months. Plot the trends.

Set Targets

Based on benchmarks and your current position, set 90-day targets for each metric. Be realistic but ambitious.

Review Weekly

Metrics change slowly. Review weekly to spot trends. Don't panic about week-to-week variance; focus on the direction.

◆

Common Objections

"Our investors want to see user growth."

Show them NRR and payback period too. Good investors understand that raw user counts without retention are meaningless. Bad investors don't—and you probably don't want their money.

"We're pre-revenue, so NRR doesn't apply."

Use engagement retention instead. Are users who signed up 30 days ago still active? 60 days? 90 days? Same principle, non-revenue metric.

"Our product is different."

Maybe. But the underlying questions are universal: Are users getting value? Are they sticking around? Are they telling others? Are the economics sustainable? Every product can answer these.

◆

The Choice

Growth theater ends when the money runs out. But it doesn't have to end that way.

You can choose to measure what matters. You can choose to be honest with yourself and your stakeholders. You can choose to build something real.

This week: Identify which of your current metrics are vanity metrics
Next week: Calculate your current NRR and payback period
This month: Define your activation event and start measuring TTV
This quarter: Build a dashboard with all five metrics

The Pattern I Keep Seeing

Growth theater: the performance of traction without the substance of value creation. It's the startup equivalent of teaching to the test—you hit the metrics but miss the point entirely.

This post is my attempt to provide a concrete framework for cutting through the theater and measuring what actually matters.

◆

The Vanity Metrics Diagnostic

Not sure if you're measuring vanity metrics? Run this diagnostic:

Question 1: Does this metric distinguish good users from bad?

"Registered users" doesn't distinguish someone who signed up and never returned from someone who uses the product daily. It's therefore meaningless as a health indicator.

Better alternative: Weekly Active Users with a defined activation threshold (e.g., "completed at least 3 core actions")

Question 2: Can this metric go up while the business gets worse?

"Gross Merchandise Value" can increase while you lose money on every transaction. Revenue can grow while margins collapse. Time-on-site can improve because your UX is confusing.

Test: Imagine scenarios where this metric improves but you'd be worse off. If you can easily imagine such scenarios, the metric is incomplete.

Question 3: Does improving this metric require creating real value?

You can increase "email signups" by making the dismiss button harder to find. You can boost "page views" by splitting articles into slideshows. These are metric games, not value creation.

Test: If you can improve the metric through dark patterns, it's measuring engagement, not value.

A metric is only useful if improving it requires creating real value for users. If you can game it without helping anyone, it's theater.

◆

The Five Metrics Framework

After 15 years of building products, these are the five metrics I've found actually predict company health:

1. Net Revenue Retention (NRR)

What it measures: Are existing customers spending more over time?

NRR = (Starting MRR + Expansion - Contraction - Churn) / Starting MRR × 100

Example Calculation:

Starting MRR: $100K
Expansion (upsells): +$15K
Contraction (downgrades): -$5K
Churn (cancellations): -$8K

NRR = ($100K + $15K - $5K - $8K) / $100K = 102%

NRR	Assessment	What It Means
<90%	Critical	Leaky bucket. Fundamentally broken.
90-100%	Warning	Treading water. Acquisition cost matters a lot.
100-110%	Healthy	Can grow without aggressive acquisition.
110-130%	Strong	Product-market fit likely.
>130%	Exceptional	Best-in-class companies (Snowflake, Twilio).

Why it matters: NRR is the only growth that compounds. If NRR >100%, every dollar of acquisition becomes worth more over time. If NRR <100%, you're constantly refilling a leaking bucket.

2. Time to Value (TTV)

What it measures: How fast do new users reach the "aha moment"?

TTV = Median time from signup to [defined activation event]

The hard part: Defining your activation event. It should be the moment users first experience core value:

Product	Activation Event	Target TTV
Slack	Sent 2,000 team messages	<7 days
Dropbox	Uploaded first file to shared folder	<1 hour
Superhuman	Reached inbox zero	<1 day
Notion	Created and shared a page	<30 min

At HelpWith, reducing TTV from 3 days to 1 day improved 30-day retention by 23%. Every day added to TTV decreases retention. The relationship isn't linear—it's exponential decay.

3. Organic Referral Rate

What it measures: What percentage of new users come from existing users without incentives?

Organic Referral Rate = (Users from organic referral) / (Total new users) × 100

How to measure: "How did you hear about us?" survey at signup with specific options. Track "friend/colleague" responses. Exclude paid referral programs.

Rate	Assessment	What It Means
<10%	Weak	Product probably isn't remarkable.
10-25%	Moderate	Some organic growth.
25-40%	Strong	Product-market fit signal.
>40%	Exceptional	Product sells itself.

If people aren't telling friends without being bribed, you haven't built something worth talking about. This is the purest signal of genuine value.

4. Payback Period

What it measures: How long until a customer becomes profitable?

Payback Period = CAC / (Monthly Revenue × Gross Margin)

Example Calculation:

CAC: $600
MRR: $100
Gross Margin: 75%

Payback = $600 / ($100 × 0.75) = 8 months

Payback	Assessment	What It Means
<6 months	Excellent	High capital efficiency.
6-12 months	Good	Standard for healthy SaaS.
12-18 months	Concerning	Watch carefully.
>18 months	Problematic	Business model questions.
>24 months	Broken	You're running a charity.

5. Support Ratio

What it measures: Does your product get easier to support as it scales?

Support Ratio = (Support tickets per month) / (Monthly Active Users)

What to track: Not just the ratio, but the trend. Plot it monthly. Is it going up, down, or flat as you grow?

Trend	Assessment	What It Means
Declining as you scale	Excellent	Product improving; users understand it better
Flat	Neutral	Support scales linearly with users
Rising	Red Flag	Product getting harder to use or quality declining

"Support ratio? That seems minor compared to the others."

◆

Implementation: Building Your Dashboard

Define Your Activation Event

Analyze users who retained vs. churned. What actions did retainers take early? Interview your best users. Track correlation between early actions and long-term retention.

Instrument Your Product

Track: signup timestamps, activation event timestamps, all revenue events, acquisition channel, referral source, support ticket volume.

Calculate Baselines

Before you can improve, you need to know where you are. Calculate each metric for the past 6 months. Plot the trends.

Set Targets

Based on benchmarks and your current position, set 90-day targets for each metric. Be realistic but ambitious.

Review Weekly

Metrics change slowly. Review weekly to spot trends. Don't panic about week-to-week variance; focus on the direction.

◆

Common Objections

"Our investors want to see user growth."

Show them NRR and payback period too. Good investors understand that raw user counts without retention are meaningless. Bad investors don't—and you probably don't want their money.

"We're pre-revenue, so NRR doesn't apply."

Use engagement retention instead. Are users who signed up 30 days ago still active? 60 days? 90 days? Same principle, non-revenue metric.

"Our product is different."

Maybe. But the underlying questions are universal: Are users getting value? Are they sticking around? Are they telling others? Are the economics sustainable? Every product can answer these.

◆

The Choice

Growth theater ends when the money runs out. But it doesn't have to end that way.

You can choose to measure what matters. You can choose to be honest with yourself and your stakeholders. You can choose to build something real.

This week: Identify which of your current metrics are vanity metrics
Next week: Calculate your current NRR and payback period
This month: Define your activation event and start measuring TTV
This quarter: Build a dashboard with all five metrics