Why the focus on MRR and not CF/NOI?
Hey everyone! I have greatly appreciated the info in the forums and the contributions from this community.
I was curious to hear why the main performance metric seems to be MRR/ARR? There doesn't seem to be much discussion of metrics that account for costs - Earnings, EBITDA, CF or what have you. Is this ever a concern or discussed as more sophisticated due diligence is conducted by investors? When comparing two Saas and both are 100k MRR but one "gets there" by spending heavily and the other has much better margins...is that ever a factor? Is it simply assumed the costs can be fairly well-controlled? or that they are industry standard? Just any color to how this is handled would be appreciated.
Typical caveats...I am super new to Saas space and perhaps my ignorance is the reason why it seems like top-line revenue takes such a predominate focus (I'm stumbling around here as a founder =). My background is in institutional real estate and finance. The equivalent would be to focus on "top-line" rents w/out taking operating and capital costs into consideration (which would be considered "incomplete").
Thanks and have a great weekend ahead!
Margins on SaaS are usually amazing, so the other numbers aren't as important.
Most boostrappers dont run ads. So CAC is low etc.
That makes sense and sort of what I supposed. As mentioned, I’m very early stages and blowing through multiple “marketing channels” and strategies- including PPC and paying for content creation. So when looking at my runway...I’m just so focused on CF as I burn these ad dollars. :D. Of course, this just may mean I don’t have that coveted product-market-fit. Thanks!
CF is important if you're burning cash.
Most indie hackers are part time, so they don't actually have a runway.
I think it's around stage of companies and type being generally easrly sass as most cost is just inital r&d, operation being close to 0 or close to fixed not growing lineraly with number of users
that being said, this isn't a bussiness selling site, so it doesn't try to track finanace much, if you look at sites tradinging sites/bussiness like flipa you'd find more details and/or some extreme building in public will state some more of that
This video talks about the primary number for each type of bussines for example
https://www.youtube.com/watch?v=lL6GdUHIBsM
Good stuff. Thanks for the response! I’m still at the “obsessing about users”-stage...so I am focused on spending any/all profits on marketing, which brought upon the question. Thanks @hatkyinc