11 Key GTM Metrics for B2B Startups

0/ There is a dazzling amount of inconsistency in what GTM (go-to-market) metrics are presented at board meetings of early stage B2B (business to business) companies. Here is my hit list of the most important, and why:

1/ CARR – Total contracted annual recurring revenue is the single best metric for the health of a business. It encapsulates new logo growth, expansion, and churn in a single number. If you only show one number, use this one.

2/ Live ARR – Some board members prefer LARR to CARR because it can take a long time to implement a deal. And some never make it. Both str best, but for early stage companies, I prefer CARR as it signals the market.

3/ Net New ARR – Includes $ from new logos booked and expansion net of churn and downsells. This is the best leading indicator of market pull.

4/ Net Dollar Retention – Lately the economics of B2B companies are more driven by expansion than up front ACV (annual contract value). This is the best indicator of that motion. Remember it is net of churn and downsells.

5/ Gross Dollar Retention – Gross retention reflects your churn and downsell and is often an indicator of how mission critical your product is.

6/ Net New Logos – As my buddy @devdutt says, “new logos are oxygen.” They’re the foundation you’ll have to expand in the future.

7/ New Logo ACV – Tracking annual contract value of new logos and % growth over time helps you manage your GTM strategy. This is particularly important if you’re trying to move upmarket.

8/ CAC Payback – If you have a couple quarters of sales data, measuring CAC (customer acquisition costs) payback gives you a read on sales efficiency. The typical calculation is (sales + marketing) / (net new ARR x % gross margins). The average startup has a CAC payback of 12-18 mos. If you sell to large enterprises, 18-24 mos; and SMBs, 6-12 mos.

9/ Quota Attainment – What percent of reps hit quota? This generally sits between 70-100% (if it’s >100%, you need higher quotas). This is the anchor number for knowing whether to scale sales. Quota should be at least 3x OTE (on target earnings), hopefully more, for this to be meaningful.

10/ Net Burn – Early sales really takes an entire company, so I’d rather see total burn than trying to break out GTM unit economics. Ultimately, I like to look at cumulative burn and compare it to how many dollars it’s generated

11/ Net New Weighted Pipeline – Pipeline generated in the previous period less pipeline removed (sold or lost) is a good indicator of market pull, and a leading indicator for scaling sales. Generally a bogus number early on, but good discipline to be in the habit of reporting.

12/ Some of these only really become relevant after a few years of selling. But presenting them early on creates a common framework to center board discussions. And there is a lot of value in that.

Many thanks to @peter_lauten, @aleximm, @kshenster, and @sarahdingwang for their help with this Tweetstorm.

The views expressed here are those of the individual AH Capital Management, L.L.C. (“a16z”) personnel quoted and are not the views of a16z or its affiliates. Certain information contained in here has been obtained from third-party sources, including from portfolio companies of funds managed by a16z. While taken from sources believed to be reliable, a16z has not independently verified such information and makes no representations about the enduring accuracy of the information or its appropriateness for a given situation.

This content is provided for informational purposes only, and should not be relied upon as legal, business, investment, or tax advice. You should consult your own advisers as to those matters. References to any securities or digital assets are for illustrative purposes only, and do not constitute an investment recommendation or offer to provide investment advisory services. Furthermore, this content is not directed at nor intended for use by any investors or prospective investors, and may not under any circumstances be relied upon when making a decision to invest in any fund managed by a16z. (An offering to invest in an a16z fund will be made only by the private placement memorandum, subscription agreement, and other relevant documentation of any such fund and should be read in their entirety.) Any investments or portfolio companies mentioned, referred to, or described are not representative of all investments in vehicles managed by a16z, and there can be no assurance that the investments will be profitable or that other investments made in the future will have similar characteristics or results. A list of investments made by funds managed by Andreessen Horowitz (excluding investments for which the issuer has not provided permission for a16z to disclose publicly as well as unannounced investments in publicly traded digital assets) is available at https://a16z.com/investments/.

Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others. Please see https://a16z.com/disclosures for additional important information.

The enterprise is changing

Sign up for our enterprise newsletter to get the a16z take on the trends reshaping B2B and enterprise tech.