{"id":771,"date":"2021-06-15T00:02:07","date_gmt":"2021-06-15T00:02:07","guid":{"rendered":"https:\/\/future.com\/?p=771"},"modified":"2022-06-02T14:03:40","modified_gmt":"2022-06-02T21:03:40","slug":"north-star-metrics","status":"publish","type":"post","link":"https:\/\/future.com\/north-star-metrics\/","title":{"rendered":"Choosing Your North Star Metric"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">When learning to ride a motorcycle, you\u2019re taught that where your eyes go, your bike goes. Look to your right and you\u2019ll drift right. Look left, go left. There\u2019s a lot of power in where you focus your attention.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">That&#8217;s why nailing your North Star Metric(s) \u2014 the top-line metrics that all company priorities are aligned around \u2014 is so crucial. Whatever companies choose as their guiding metric, all energy and brainpower will flow in that direction. This can be hugely effective \u2014 it has worked wonders for companies like Airbnb, Netflix, and Uber, especially early on \u2014 but it can also be dangerous. By maintaining a laser focus on a single metric for too long, teams risk short-term thinking, missing new opportunities, and sacrificing the user experience. I share some data and case studies below to provide lessons for narrowing in on your own North Star Metric, knowing when to broaden your lens, and when to pivot your approach.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Broadly, there are six categories of North Star Metrics:<\/span><\/p>\n<ol>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Revenue <\/b><span style=\"font-weight: 400;\">(e.g. ARR, GMV): <\/span><i><br \/>\nThe amount of money being generated \u2014 the focus of ~50% of companies.<\/i><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Customer growth<\/b> (e.g. paid users, marketshare): <i><br \/>\nThe number of users who are paying \u2014 the focus of ~35% of companies.<\/i><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Consumption growth<\/b><span style=\"font-weight: 400;\"> (e.g. messages sent, nights booked): <\/span><i><br \/>\nThe intensity of usage of your product, beyond simply visiting your site \u2014 the focus of ~30% of companies.<\/i><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Engagement growth<\/b><span style=\"font-weight: 400;\"> (e.g. MAU, DAU) <\/span><i><br \/>\nThe number of users who are simply active in your product \u2014 the focus of ~30% of companies.<\/i><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Growth efficiency<\/b><span style=\"font-weight: 400;\"> (e.g. LTV\/CAC, margins) <\/span><i><br \/>\nThe efficiency at which you spend vs. make money \u2014 the focus of ~10% of companies.\u00a0<\/i><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>User experience<\/b><span style=\"font-weight: 400;\"> (e.g. NPS) <\/span><i><br \/>\nThe measure of how enjoyable and easy to use customers find the product experience, overall \u2014 the focus of ~10% of companies.<\/i><\/li>\n<\/ol>\n<p><span style=\"font-weight: 400;\">So what are the optimal North Star Metric(s) for startups? I surveyed current and past employees at over 40 of today&#8217;s most successful growth-stage companies to compile the table below; the findings provide a helpful framework for organizations seeking their own guiding metrics.<\/span><\/p>\n<h2><strong><a href=\"https:\/\/future.com\/wp-content\/uploads\/2021\/06\/Lenny-Rachitsky_North-Star-Metrics_Graphic-2-2.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-1168 size-full\" src=\"https:\/\/future.com\/wp-content\/uploads\/2021\/06\/Lenny-Rachitsky_North-Star-Metrics_Graphic-2-2.jpg\" alt=\"\" width=\"4000\" height=\"11160\" srcset=\"https:\/\/future.com\/wp-content\/uploads\/2021\/06\/Lenny-Rachitsky_North-Star-Metrics_Graphic-2-2.jpg 4000w, https:\/\/future.com\/wp-content\/uploads\/2021\/06\/Lenny-Rachitsky_North-Star-Metrics_Graphic-2-2-108x300.jpg 108w, https:\/\/future.com\/wp-content\/uploads\/2021\/06\/Lenny-Rachitsky_North-Star-Metrics_Graphic-2-2-367x1024.jpg 367w, https:\/\/future.com\/wp-content\/uploads\/2021\/06\/Lenny-Rachitsky_North-Star-Metrics_Graphic-2-2-768x2143.jpg 768w, https:\/\/future.com\/wp-content\/uploads\/2021\/06\/Lenny-Rachitsky_North-Star-Metrics_Graphic-2-2-551x1536.jpg 551w, https:\/\/future.com\/wp-content\/uploads\/2021\/06\/Lenny-Rachitsky_North-Star-Metrics_Graphic-2-2-734x2048.jpg 734w\" sizes=\"auto, (max-width: 4000px) 100vw, 4000px\" \/><\/a>A framework for choosing your North Star Metric<\/strong><\/h2>\n<p><span style=\"font-weight: 400;\">The #1 question to start with: Which metric, if it were to increase today, would <\/span><b>most<\/b><span style=\"font-weight: 400;\"> accelerate my business\u2019 flywheel? As you\u2019ll see below, refining your ideal North Star Metric (NSM) \u2014 deciding which of the six categories above to focus on \u2014 depends heavily on your business model, how your product grows, and how your product is used.<\/span><\/p>\n<h3><b>Type of company: <\/b><span style=\"font-weight: 400;\">Marketplaces and platforms<\/span><br \/>\n<b>Most common North Star Metric: <\/b><span style=\"font-weight: 400;\">Consumption growth<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Marketplaces and platforms make money from usage \u2014 the more consumption they drive within their platforms, the faster they grow. Marketplaces that take a cut of each transaction, like <\/span><b>Airbnb<\/b><span style=\"font-weight: 400;\">,<\/span><b> Uber<\/b><span style=\"font-weight: 400;\">, <\/span><b>Lyft<\/b><span style=\"font-weight: 400;\">, and <\/span><b>Cameo<\/b><span style=\"font-weight: 400;\">, focus their NSM on the volume of transactions (nights booked, rides taken, and orders placed, respectively).\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Platforms that instead charge a flat fee per usage, like the cloud communications platform <\/span><b>Twilio<\/b><span style=\"font-weight: 400;\"> and the fintech giant <\/span><b>Plaid<\/b><span style=\"font-weight: 400;\">, spotlight activity: in this case, messages sent and bank accounts linked. At first glance, it may seem that concentrating on GMV would be the better choice in both of these cases, but as I\u2019ll discuss below, a focus on revenue as a NSM can lead companies astray.<\/span><\/p>\n<h3><b>Type of company: <\/b><span style=\"font-weight: 400;\">Paid-growth driven businesses<\/span><br \/>\n<b>Most common North Star Metric<\/b><span style=\"font-weight: 400;\">: Growth efficiency<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">When<\/span> <span style=\"font-weight: 400;\">your business is driven by performance marketing, there are two common NSMs: margins and LTV\/CAC. Businesses like the meal kit service <\/span><b>Blue Apron<\/b><span style=\"font-weight: 400;\">, the ecommerce bedding company <\/span><b>Casper<\/b><span style=\"font-weight: 400;\">, and telehealth startup <\/span><b>Hims<\/b><span style=\"font-weight: 400;\"> all fixate on optimizing margins because they ship a physical product with many layers of costs. The more they make per-unit, the faster they grow.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Meanwhile, companies that are purely digital and invest most of their budget into performance marketing, like the mediation and sleep app <\/span><b>Calm<\/b><span style=\"font-weight: 400;\">, tend to zero in on LTV\/CAC because most of their spend goes into digital ads. <\/span><span style=\"font-weight: 400;\">Some companies in this category also consider \u201cpayback period\u201d their NSM in order to optimize how quickly they can reinvest in their growth.<\/span><\/p>\n<h3><b>Type of company: <\/b><span style=\"font-weight: 400;\">Freemium team-based B2B products<\/span><br \/>\n<b>Most common North Star Metric: <\/b><span style=\"font-weight: 400;\">Engagement and\/or customer growth<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">This category of products, which includes companies such as the collaborative online document startup <\/span><b>Coda<\/b><span style=\"font-weight: 400;\"> and <\/span><b>Slack<\/b><span style=\"font-weight: 400;\">, grows through a bottom-up acquisition model. These businesses aim to hook free users who then invite their colleagues. Eventually, after businesses reach a certain level of usage, they upgrade to a paid plan.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Depending on the maturity of the business and how bottom-up driven their growth is at this stage, these companies either optimize for engagement (e.g. Coda uses \u201cDAU14,\u201d HubSpot uses \u201cWAU\u201d), paid customers (<\/span><b>Airtable <\/b><span style=\"font-weight: 400;\">uses \u201cWeekly Paid Seats\u201d and<\/span><b> Asana <\/b><span style=\"font-weight: 400;\">uses \u201cWeekly Active Paid Users\u201d), or paid teams (<\/span><b>Slack <\/b><span style=\"font-weight: 400;\">uses \u201cNumber of Paid Teams,\u201d while <\/span><b>Dropbox <\/b><span style=\"font-weight: 400;\">uses \u201cTeams using Dropbox Business\u201d). The more mature and sales-driven the product is, the more companies focus on customers over engagement.<\/span><\/p>\n<h3><b>Type of company: <\/b><span style=\"font-weight: 400;\">UGC subscription-based products<\/span><br \/>\n<b>Most common North Star Metric<\/b><span style=\"font-weight: 400;\">: Consumption<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">For select products that are driven by content creation, like <\/span><b>Twitch<\/b><span style=\"font-weight: 400;\"> and the video messaging platform <\/span><b>Loom<\/b><span style=\"font-weight: 400;\">, it can be more effective to optimize consumption \u2014 say, five-minute plays, or videos created that are viewed \u2014 rather than engagement. This is because the sharing and consumption of content is at the heart of their growth flywheel.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Though consumption and engagement are similar metrics, the former is much more active \u2014 creating a video, for example, rather than merely visiting the site. Consumption is more likely to result in users sharing the content, thus driving the growth flywheel.<\/span><\/p>\n<h3><b>Type of company: <\/b><span style=\"font-weight: 400;\">Ad-driven businesses<\/span><br \/>\n<b>Most common North Star Metric<\/b><span style=\"font-weight: 400;\">: Engagement<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Every company that monetizes through web traffic (by running ads), such as <\/span><b>Facebook<\/b><span style=\"font-weight: 400;\">, <\/span><b>Pinterest<\/b><span style=\"font-weight: 400;\">, and <\/span><b>Snap<\/b><span style=\"font-weight: 400;\">, opts for a North Star Metric based on engagement.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The question is whether one focuses on Daily Active Users (DAU), weekly (WAU), or monthly (MAU). <\/span><b>Facebook<\/b><span style=\"font-weight: 400;\"> and <\/span><b>Snap<\/b><span style=\"font-weight: 400;\"> target DAU because, for better or worse, social media is a daily habit for most. Meanwhile, Pinterest looks at WAU, since it doesn\u2019t expect its users to need the product daily. And <\/span><b>Spotify&#8217;s<\/b><span style=\"font-weight: 400;\"> podcast business hones in on MAU, most likely because podcast listening is more sporadic for users.<\/span><\/p>\n<h3><b>Type of company<\/b><span style=\"font-weight: 400;\">: Consumer subscription products<\/span><br \/>\n<b>Most common North Star Metric: <\/b><span style=\"font-weight: 400;\">Engagement or customer growth<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Consumer subscription products such as the language learning app <\/span><b>Duolingo<\/b><span style=\"font-weight: 400;\">, dating app <\/span><b>Tinder<\/b><span style=\"font-weight: 400;\">, and the exercise tracking app <\/span><b>Strava<\/b><span style=\"font-weight: 400;\"> tend to choose either engagement or customer growth as their North Star Metric. <\/span><b>Duolingo<\/b><span style=\"font-weight: 400;\"> and <\/span><b>Strava<\/b><span style=\"font-weight: 400;\">, for example, both focus on engagement (e.g. DAU and MAU, respectively) because they have a large free-user base that eventually migrates to paid; thus, the more engaged their free users are, the more they know they\u2019ll add paid customers.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Alternatively, companies like <\/span><b>Tinder<\/b><span style=\"font-weight: 400;\">, <\/span><b>Spotify<\/b><span style=\"font-weight: 400;\">, and <\/span><b>Webflow<\/b><span style=\"font-weight: 400;\"> zero in on customer growth over engagement. Interestingly, Tinder concentrates on the percentage of paid accounts, rather than an absolute number. That\u2019s because with so much natural churn \u2014 as people presumably find their soulmates \u2014 they are much better off if they can get early users to upgrade quickly. <\/span><b>Patreon<\/b><span style=\"font-weight: 400;\"> found that growing successful creators (by tracking the number of new creators making over a certain dollar amount) was the key to its early growth flywheel. <\/span><b>Spotify<\/b><span style=\"font-weight: 400;\">, which has both a subscription business (music) and an ad-based business (podcasts), focuses on engagement, customer growth, <\/span><i><span style=\"font-weight: 400;\">and<\/span><\/i><span style=\"font-weight: 400;\"> consumption.<\/span><\/p>\n<h3><b>Type of company: <\/b><span style=\"font-weight: 400;\">Products that differentiate on experience<\/span><br \/>\n<b>Most common North Star Metric<\/b><span style=\"font-weight: 400;\">: User experience<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Some products win or lose based purely on their user experience \u2014 how delightful, easy, and useful customers find the product. Thus, these types of companies include a quality-oriented North Star Metric.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">While<\/span><b> Robinhood<\/b><span style=\"font-weight: 400;\"> and <\/span><b>Superhuman<\/b><span style=\"font-weight: 400;\"> rely on net promoter scores (NPS) \u2014 which reveal how likely a user is to recommend a product \u2014 Duolingo looks at a metric it calls \u201clearning competency\u201d using the Common European Framework of Reference for Languages (CEFR), which is the international standard for measuring language ability. They do this because for their product experience, it <\/span><a href=\"https:\/\/blog.duolingo.com\/goldilocks-and-the-cefr-levels-which-proficiency-level-is-just-right\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">makes sense<\/span><\/a><span style=\"font-weight: 400;\"> to define language proficiency at different levels that match the user\u2019s goals.\u00a0<\/span><\/p>\n<h2>Other notable and unique North Star Metrics<\/h2>\n<p><span style=\"font-weight: 400;\">While most companies fit within the six structures outlined above, some are not so neatly boxed in \u2014 their North Star Metrics are based on factors specific to their particular business model. Shopify, for example, focuses on growing customers (i.e. \u201cactive merchants\u201d) rather than on consumption (the number of transactions). This is because rather than solely collecting a take-rate, the company also charges a subscription fee. Thus, they\u2019re looking for long-term supply growth with lucrative recurring subscription revenue.<\/span><\/p>\n<p><span style=\"font-weight: 400;\"><strong>Patreon<\/strong> strives to drive awareness among potential users; breakout success stories are fuel for their growth. The platform uses a unique North Star Metric I\u2019ll call <\/span><i><span style=\"font-weight: 400;\">activated<\/span><\/i><span style=\"font-weight: 400;\"> supply, which translates to \u201cnumber of creators making over a certain amount.\u201d That\u2019s most likely their key metric because these profitable creators drive their top-of-funnel growth.<\/span><\/p>\n<p><span style=\"font-weight: 400;\"><strong>Miro<\/strong>, the visual collaboration software, uses \u201cnumber of collaborative boards\u201d as its North Star Metric, which indicates that the core of its growth strategy is inter-organization virality.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Similarly, <strong>Amplitude<\/strong>, a B2B subscription product, focuses on \u201cWeekly Learning Users\u201d \u2014 users who consume and share more than three charts per week.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The popular consumer subscription business <strong>Netflix<\/strong> measures consumption in the form of \u201cmedian view hours per month,\u201d rather than measuring customer growth. The reason? Most likely they\u2019ve found that the intensity of usage directly drives retention to their service.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">There\u2019s also an interesting distinction between focusing on paid users vs. <\/span><i><span style=\"font-weight: 400;\">active<\/span><\/i><span style=\"font-weight: 400;\"> paid users as your North Star Metric. The project management software companies <strong>Asana<\/strong> and <strong>JIRA<\/strong> both spotlight weekly <\/span><i><span style=\"font-weight: 400;\">active<\/span><\/i><span style=\"font-weight: 400;\"> paid users, while companies like <strong>Airtable<\/strong> and <strong>Slack<\/strong> simply focus on paid users. The difference, I suspect, is rooted in the recognition that inactive paid users will soon churn. Thus, there\u2019s more power in tracking high-value paid users.<\/span><\/p>\n<h2>Using \u201cjobs to be done\u201d to determine your North Star Metric<\/h2>\n<p><span style=\"font-weight: 400;\">An alternative approach to choosing your North Star Metric is to ask yourself: <\/span><i><span style=\"font-weight: 400;\">What jobs are our users hiring our product to do? <\/span><\/i><span style=\"font-weight: 400;\">The \u201c<\/span><a href=\"https:\/\/hbr.org\/2016\/09\/know-your-customers-jobs-to-be-done\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">jobs-to-be-done<\/span><\/a><span style=\"font-weight: 400;\">\u201d framework (originally coined by <\/span><a href=\"https:\/\/hbr.org\/2016\/09\/know-your-customers-jobs-to-be-done\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">Clayton Christensen<\/span><\/a><span style=\"font-weight: 400;\">) focuses on the task or progress your customer is trying to make in a given circumstance, and not just on \u201cknowing your customer\u201d or something similar. It\u2019s a way of identifying the driver behind a given purchase or usage and optimizing for that in a way that your competitors can\u2019t or won\u2019t. In this case, the North Star Metric needs to measure what matters most when fulfilling the job to be done for the customer or user. For example:<\/span><\/p>\n<p><b>Plaid\u2019s job to be done<\/b><span style=\"font-weight: 400;\">: Link my bank account to an app I\u2019m using<\/span><br \/>\n<span style=\"font-weight: 400;\">Thus, prioritize \u201cbank accounts linked.\u201d<\/span><\/p>\n<p><b>Miro\u2019s job to be done<\/b><span style=\"font-weight: 400;\">: Collaborate with colleagues remotely<\/span><span style=\"font-weight: 400;\"><br \/>\nThus, target \u201ccollaborative boards\u201d as a North Star Metric.<\/span><\/p>\n<p><b>Twitch\u2019s job to be done:<\/b><span style=\"font-weight: 400;\"> Watch gamers play live<\/span><br \/>\n<span style=\"font-weight: 400;\">Thus, focus on \u201cfive-minute plays,\u201d the number of users who have watched a stream for five consecutive minutes or more.<\/span><\/p>\n<p><b>Lyft\u2019s job to be done:<\/b><span style=\"font-weight: 400;\"> Get a quick ride someplace<\/span><br \/>\n<span style=\"font-weight: 400;\">Thus, focus on \u201cnumber of rides.\u201d<\/span><\/p>\n<h2>So what about revenue as a North Star Metric?<\/h2>\n<p><span style=\"font-weight: 400;\">Cash is king, the old mantra goes \u2014 and about half the startups I surveyed prioritize revenue as their North Star Metric. Some of this is about being able to <\/span><a href=\"https:\/\/a16z.com\/2013\/10\/23\/cash-flow-and-destiny\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">dictate your own destiny<\/span><\/a><span style=\"font-weight: 400;\"> as a venture-backed company. But is revenue the right North Star Metric?\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Companies like <\/span><b>Amplitude<\/b><span style=\"font-weight: 400;\">, <\/span><b>Figma<\/b><span style=\"font-weight: 400;\">, <\/span><b>Notion<\/b><span style=\"font-weight: 400;\">, <\/span><b>Patreon<\/b><span style=\"font-weight: 400;\">, and <\/span><b>Superhuman<\/b><span style=\"font-weight: 400;\"> actively focus on revenue as a North Star Metric \u2014 be it ARR, GMV, or plain old revenue growth \u2014 while companies like <\/span><b>Airbnb<\/b><span style=\"font-weight: 400;\">, <\/span><b>Miro<\/b><span style=\"font-weight: 400;\">, <\/span><b>Netflix<\/b><span style=\"font-weight: 400;\">, <\/span><b>Tinder<\/b><span style=\"font-weight: 400;\">, and <\/span><b>Spotify<\/b><span style=\"font-weight: 400;\"> purposely <\/span><i><span style=\"font-weight: 400;\">avoid<\/span><\/i><span style=\"font-weight: 400;\"> concentrating on revenue. The reasons for this include:<\/span><\/p>\n<ol>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><i><span style=\"font-weight: 400;\">It\u2019s spiky, and thus hard to make operational. <\/span><\/i><span style=\"font-weight: 400;\">At Airbnb, for example, revenue was impacted by factors such as currency exchange rates, average lengths of stay, and host pricing decisions. But by honing in on a metric one level removed, such as \u201cnights booked,\u201d teams could better track the impact of their work more directly.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><i><span style=\"font-weight: 400;\">Focusing on revenue goals too early can lead to suboptimal decisions, <\/span><\/i><span style=\"font-weight: 400;\">such as spending too much time optimizing pricing \u2014 or being afraid to lower pricing, for that matter \u2014 which can hurt your long-term business growth.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><i><span style=\"font-weight: 400;\">\u00a0A goal around revenue can be uninspiring to the team. <\/span><\/i><span style=\"font-weight: 400;\">People often join companies to accomplish a specific mission; rarely is that mission simply growth in generating revenue. Metrics that are one step removed, such as number of paid customers, are more motivating because teams can assume that a paid customer is finding value in the product, so the company (and thus the employee) is delivering value.<\/span><\/li>\n<\/ol>\n<p><span style=\"font-weight: 400;\">Of course, in the end everyone cares about revenue, but there are some good reasons to avoid making revenue growth your singular North Star Metric. Instead of concentrating exclusively on revenue as your north star, what\u2019s another metric that is a leading indicator of revenue, one that is operationally easy to track and optimize?<\/span><\/p>\n<h2>There\u2019s typically only one North Star Metric<\/h2>\n<p><span style=\"font-weight: 400;\">Some have cautioned against a single North Star Metric, <\/span><a href=\"https:\/\/hbr.org\/2020\/05\/dont-let-a-single-metric-drive-your-business\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">arguing that<\/span><\/a><span style=\"font-weight: 400;\"> you\u2019re likely to over-rotate on one aspect of the business and constrain your growth. But the majority of companies continue to align around a sole metric (particularly if you exclude revenue) because it\u2019s the best way to make a noticeable impact. Having that single focal point often leads to a more cohesive planning and decision-making strategy, company-wide.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Companies that do have multiple North Star Metrics typically only do so when they layer on a metric for quality (e.g. Superhuman, Slack, Duolingo), or when they have multiple products with different goals, like Spotify does with subscription music and paid podcasts, looking at both customers, engagement, <\/span><i><span style=\"font-weight: 400;\">and<\/span><\/i><span style=\"font-weight: 400;\"> consumption.<\/span><\/p>\n<figure><a href=\"https:\/\/future.com\/wp-content\/uploads\/2021\/06\/Alex-Masmej_North-Star-Metrics_Pros-and-Cons-ALT-scaled.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-1062 size-full\" src=\"https:\/\/future.com\/wp-content\/uploads\/2021\/06\/Alex-Masmej_North-Star-Metrics_Pros-and-Cons-ALT-scaled.jpg\" alt=\"\" width=\"2560\" height=\"1005\" srcset=\"https:\/\/future.com\/wp-content\/uploads\/2021\/06\/Alex-Masmej_North-Star-Metrics_Pros-and-Cons-ALT-scaled.jpg 2560w, https:\/\/future.com\/wp-content\/uploads\/2021\/06\/Alex-Masmej_North-Star-Metrics_Pros-and-Cons-ALT-300x118.jpg 300w, https:\/\/future.com\/wp-content\/uploads\/2021\/06\/Alex-Masmej_North-Star-Metrics_Pros-and-Cons-ALT-1024x402.jpg 1024w, https:\/\/future.com\/wp-content\/uploads\/2021\/06\/Alex-Masmej_North-Star-Metrics_Pros-and-Cons-ALT-768x301.jpg 768w, https:\/\/future.com\/wp-content\/uploads\/2021\/06\/Alex-Masmej_North-Star-Metrics_Pros-and-Cons-ALT-1536x603.jpg 1536w, https:\/\/future.com\/wp-content\/uploads\/2021\/06\/Alex-Masmej_North-Star-Metrics_Pros-and-Cons-ALT-2048x804.jpg 2048w, https:\/\/future.com\/wp-content\/uploads\/2021\/06\/Alex-Masmej_North-Star-Metrics_Pros-and-Cons-ALT-1300x510.jpg 1300w\" sizes=\"auto, (max-width: 2560px) 100vw, 2560px\" \/><\/a><\/figure>\n<h2>To nail your output metrics, calibrate the input metrics<\/h2>\n<p><span style=\"font-weight: 400;\">Rarely can you or your team directly or solely impact a North Star Metric, such as increasing active users or increasing revenue. Instead, these metrics are the <\/span><i><span style=\"font-weight: 400;\">output<\/span><\/i><span style=\"font-weight: 400;\"> of the team\u2019s day-to-day efforts, such as increasing the conversion of a flow, or driving more traffic to the site by running more Google ads. That\u2019s why these are called <\/span><i><span style=\"font-weight: 400;\">output<\/span><\/i><span style=\"font-weight: 400;\"> metrics and <\/span><i><span style=\"font-weight: 400;\">input<\/span><\/i><span style=\"font-weight: 400;\"> metrics. Once you have your North Star Metric (an output), your next step is to break this metric down into its component parts and decide which metrics (the inputs) to invest in.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">When I was at Airbnb, for example, our North Star Metric was \u201cnights booked.\u201d This isn\u2019t a metric you can easily build a roadmap around because it\u2019s too broad. Where do you even start coming up with ideas for how to increase the number of trips people book? Instead, we listed out the <\/span><i><span style=\"font-weight: 400;\">input<\/span><\/i><span style=\"font-weight: 400;\"> metrics that feed into this higher-level metric. For example, if you increase the guest conversion rate, add more Airbnb homes, or boost the number of visitors to the site, you\u2019ll increase the number of nights booked. With such granular and actionable input metrics, you can actually come up with concrete ideas and align teams around them as goals (e.g. \u201cAdd 10,000 new homes to the platform in Q1\u201d). At the same time, the entire company still had a higher-level North Star, which each of these team efforts funnel into.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Whenever you have a candidate for your North Star Metric(s), determine what levers move this metric, and then focus your ideation around those <\/span><i><span style=\"font-weight: 400;\">input<\/span><\/i><span style=\"font-weight: 400;\"> metrics. Here\u2019s a (non-exhaustive) set of input metrics for each of the six types of North Star Metrics I outlined above:<\/span><\/p>\n<figure><a href=\"https:\/\/future.com\/wp-content\/uploads\/2021\/06\/Alex-Masmej_North-Star-Metrics_Input-Levers-scaled.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-1063 size-full\" src=\"https:\/\/future.com\/wp-content\/uploads\/2021\/06\/Alex-Masmej_North-Star-Metrics_Input-Levers-scaled.jpg\" alt=\"\" width=\"2339\" height=\"2560\" srcset=\"https:\/\/future.com\/wp-content\/uploads\/2021\/06\/Alex-Masmej_North-Star-Metrics_Input-Levers-scaled.jpg 2339w, https:\/\/future.com\/wp-content\/uploads\/2021\/06\/Alex-Masmej_North-Star-Metrics_Input-Levers-274x300.jpg 274w, https:\/\/future.com\/wp-content\/uploads\/2021\/06\/Alex-Masmej_North-Star-Metrics_Input-Levers-936x1024.jpg 936w, https:\/\/future.com\/wp-content\/uploads\/2021\/06\/Alex-Masmej_North-Star-Metrics_Input-Levers-768x841.jpg 768w, https:\/\/future.com\/wp-content\/uploads\/2021\/06\/Alex-Masmej_North-Star-Metrics_Input-Levers-1403x1536.jpg 1403w, https:\/\/future.com\/wp-content\/uploads\/2021\/06\/Alex-Masmej_North-Star-Metrics_Input-Levers-1871x2048.jpg 1871w, https:\/\/future.com\/wp-content\/uploads\/2021\/06\/Alex-Masmej_North-Star-Metrics_Input-Levers-1300x1423.jpg 1300w\" sizes=\"auto, (max-width: 2339px) 100vw, 2339px\" \/><\/a><\/figure>\n<p style=\"text-align: center;\"><b>* * *<\/b><\/p>\n<p><span style=\"font-weight: 400;\">The companies I surveyed in this post have all been around for many years. Even so, about a quarter of them told me that their North Star Metrics had recently changed, or were about to change. For example, <\/span><b>Dropbox<\/b><span style=\"font-weight: 400;\"> centered on engagement (MAU) early on, then shifted to a focus on paid customer growth as they transitioned their business model from B2C to B2B. <\/span><b>Figma<\/b><span style=\"font-weight: 400;\"> and <\/span><b>Uber<\/b><span style=\"font-weight: 400;\"> moved away from revenue as their NSM in order to double down on market share. <\/span><b>Spotify<\/b><span style=\"font-weight: 400;\"> set its sights on consumption once it introduced its podcasting business. <\/span><b>Netflix<\/b><span style=\"font-weight: 400;\"> has changed its NSM more times than people can count \u2014 originally it focused on the percentage of DVDs that arrived the next day in the mail, later on the percentage of members who watched at least 15 minutes of streaming in a month, and more recently, on median view hours per month.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The examples listed above are growth-stage companies. In the earliest stages of a company, however, before you\u2019ve found the fabled product-market-fit, your singular aim should be answering one question: \u201cAm I building something people want?\u201d Instead of fixating on revenue or customer growth or MAU, I recommend you start by focusing on \u201ccohort retention\u201d \u2014 are enough people sticking after using your product? If you can\u2019t get people to stick around, nothing else will matter in the end. (You can read more about retention <\/span><a href=\"https:\/\/www.lennysnewsletter.com\/p\/what-is-good-retention-issue-29\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">here<\/span><\/a><span style=\"font-weight: 400;\">.)<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Finally, no matter what stage you\u2019re at as a startup or company with a new product line, expect your North Star Metric to change as your strategy shifts. It will evolve as you learn more about what keeps your team focused, motivated, and building toward the ultimate vision. Your North Star Metric is your strategy, and your strategy is your North Star Metric. Choose wisely.<\/span><\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>When learning to ride a motorcycle, you\u2019re taught that where your eyes go, your bike goes. Look to your right and you\u2019ll drift right. Look left, go left. There\u2019s a lot of power in where you focus your attention.\u00a0 That&#8217;s why nailing your North Star Metric(s) \u2014 the top-line metrics that all company priorities are&#8230; <a href=\"https:\/\/future.com\/north-star-metrics\/\">Read More<\/a><\/p>\n","protected":false},"author":20,"featured_media":1064,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[410],"tags":[],"class_list":["post-771","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-metrics-kpis"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.8 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Choosing Your North Star Metric | Future<\/title>\n<meta name=\"description\" content=\"How to decide the guiding metrics for every type of business, based on a survey of employees at over 40 of today&#039;s most successful growth-stage companies.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/future.com\/north-star-metrics\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Choosing Your North Star Metric\" \/>\n<meta property=\"og:description\" content=\"How to decide the guiding metrics for every type of business, based on a survey of employees at over 40 of today&#039;s most successful growth-stage companies.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/future.com\/north-star-metrics\/\" \/>\n<meta property=\"og:site_name\" content=\"Future\" \/>\n<meta property=\"article:published_time\" content=\"2021-06-15T00:02:07+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2022-06-02T21:03:40+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/future.com\/wp-content\/uploads\/2021\/06\/8_a16-article-card-North-Star-metrics_V3.png\" \/>\n\t<meta property=\"og:image:width\" content=\"1200\" \/>\n\t<meta property=\"og:image:height\" content=\"628\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/png\" \/>\n<meta name=\"author\" content=\"Lenny Rachitsky\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:image\" content=\"https:\/\/future.com\/wp-content\/uploads\/2021\/06\/8_a16-article-card-North-Star-metrics_V3.png\" \/>\n<meta name=\"twitter:site\" content=\"@a16z\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Lenny Rachitsky\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"14 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/future.com\/north-star-metrics\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/future.com\/north-star-metrics\/\"},\"author\":{\"name\":\"Lauren Murrow\",\"@id\":\"https:\/\/future.com\/#\/schema\/person\/7641ca4ffa5f6c3ff3c990d2df202b1a\"},\"headline\":\"Choosing Your North Star Metric\",\"datePublished\":\"2021-06-15T00:02:07+00:00\",\"dateModified\":\"2022-06-02T21:03:40+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/future.com\/north-star-metrics\/\"},\"wordCount\":2897,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\/\/future.com\/#organization\"},\"articleSection\":[\"Metrics &amp; 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