WhoBuilt

B2B Startup Metrics

Dec 15, 2023· 24 min· 130K views·Watch on YouTube

Speaker

Tom Blomfield, a Y Combinator group partner and former Monzo and GoCardless founder, explains how startups can track and use B2B metrics.

Set up a small, consistent metrics system

Blomfield says good metrics help founders make better decisions, but tracking too many numbers can be misleading when a startup has only a few hundred or thousand users. He recommends choosing four or five key metrics before launch, using a simple analytics tool, and agreeing on written definitions across the team. Keep those definitions consistent over time, and stay close to customers instead of relying on metrics alone.

Focus on revenue, burn, and runway

Blomfield warns against vanity metrics such as page views, GMV, and gross transaction value, which can rise without improving a company’s revenue. He recommends putting revenue at the center of B2B measurement and including net monthly burn and runway in investor updates. For example, $1 million in the bank and $100,000 in monthly burn gives a startup 10 months of runway.

Use retention to understand durable growth

Retention measures how many customers keep paying after they sign up, and cohort tracking shows how that changes over time. Blomfield contrasts sticky cohorts, which build a lasting “layer cake” of revenue, with a leaky bucket where customers churn out. Net dollar retention includes both lost and expanded customer revenue: in his example, a cohort grows from $100,000 to $110,000 monthly revenue in a year, or 110% retention. He suggests early-stage B2B SaaS companies aim for 125% or more, while 110% to 120% can be good for mature companies.

Protect gross margin before scaling

Gross margin is revenue minus costs that increase with each customer, such as model credits for an AI service. Blomfield cautions that free credits can hide costs, while operational businesses may have margins as low as 5% to 15%, compared with roughly 95% for pure software. He advises fixing negative unit economics before scaling, as Monzo did by bringing technology in-house and adding paid services.

Takeaways

  • Choose four or five key metrics before launch and define them clearly with the team.
  • Track revenue, net burn, and runway together in investor updates.
  • Measure customer retention by cohort to see whether revenue accumulates or leaks away.
  • For B2B SaaS, investigate net dollar retention below 100% before pushing harder on sales and marketing.
  • Know your per-customer costs and fix negative unit economics before scaling.

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What was claimed 9

  • role at
    Tom Blomfield is visiting partner at Y Combinator
    “I'm a group partner at Y Combinator”
    YouTube
    Verified3 sources· Talk
  • feature
    PostHog: SQL analytics tool usable on top of pretty much any SQL database
    “PostHog ... has a great SQL analytics tool”
    YouTube
    Unverified1 source· Talk
  • metric
    Monzo: Active user was someone who made a financial transaction at least once a week
    “an active user was someone who made a financial transaction at least once a week”
    YouTube
    Unverified1 source· Talk
  • metric
    GoCardless: Customers are very sticky because they implement a payment solution once and do not like changing it every month
    “people implement a payment solution once and don't really like to change it every month”
    YouTube
    Unverified1 source· Talk
  • metric
    Monzo: Profitable
    Verified2 sources· Talk
  • metric
    net dollar retention: 110% to 120% is pretty good for mature companies
    “For mature companies, 110% to 120% is pretty good”
    YouTube
    Unverified1 source· Talk
  • metric
    net dollar retention: Early-stage B2B startups should target 125%; 150% or higher would be great
    “net dollar retention for an early-stage B2B startup should be 125%”
    YouTube
    Unverified1 source· Talk
  • metric
    Uber: Scaled a business that initially had negative gross margin
    “Uber did this. They used capital as a weapon”
    YouTube
    Unverified1 source· Talk
  • metric
    Monzo: Initially lost 30 or 40 pounds per customer and later made 30 or 40 pounds per customer
    “we ended up making 30 or 40 pounds per customer”
    YouTube
    Unverified1 source· Talk

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