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Venture Capital

How Startups Get Their Metrics Wrong

Y Combinator is hosting two Demo Days this week for startups in its latest batch to pitch throngs of investors. As is typical, some begin bringing investors on board before the rush, and so I have had a series of hurried meetings this past week with many of them.

By and large, the teams I have been meeting are excellent and inspiring. The level of talent seems to be increasing cycle to cycle. That said, in rapid-fire meetings with these and some other young companies over the last few weeks, I have been surprised how few can reduce their mission to a single understandable and achievable metric.

When it comes to pitching metrics to investors and setting goals for their businesses, founders make several mistakes over and over again. (To discuss this column with me and other subscribers, tune in here Monday at 9 a.m. PT.)

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As it has become easier and easier to accept payments online and people have become more and more willing to pay for all sorts of digital goods, I think companies have fewer excuses for not being able to justify their business based on revenue and profit.