Startup Metrics: Insights from Anu Hariharan and Adora Cheung

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This article is a summary of a YouTube video "Anu Hariharan and Adora Cheung - How Investors Measure Startups Q&A" by Y Combinator
TLDR Startups should prioritize team metrics, finding their first users, and raising as little money as possible while focusing on growth and revenue.

Startup Evaluation Criteria

  • 💡
    "It all comes down to only three things: team, product market fit, market opportunity."
  • 💡
    Startups that have gone through Y Combinator (YC) have the advantage of learning from their previous experiences and applying those lessons to their current ventures.
  • 💡
    Anu Hariharan and Adora Cheung meticulously planned and tested their startup idea before committing to it, including building a financial model and assessing market demand, to ensure it had the potential to become a billion-dollar company.
  • 💰
    "If you think you have a clear path to the next milestone, just raise the minimum amount of money you need to hit that milestone."
  • 💰
    Historically, investors have struggled with education startups due to scalability issues, but with new tools like Slack and Zoom, startups like Lambda School have been able to scale effectively.
  • 💡
    When pitching to investors, it is important to outline a clear plan for how the funding will be used to achieve specific targets, such as reaching a certain annual recurring revenue (ARR) milestone.
  • 📈
    Investors primarily evaluate startups based on their current progress and what they are currently doing, rather than solely focusing on future potential.

Importance of Team and Product

  • 🌟
    "If you're working on something people want, there's a lot of light and demand, and so you should be able to find users easily."
  • 🌍
    Investors should not discriminate between remote and local teams, as successful companies like GitLab and Zapier have proven that remote teams can be just as successful.
  • 💡
    Having a co-founder can be beneficial for solo founders as they provide valuable context and support during the challenging startup journey.
  • 💸
    Revenue should be the primary metric for startups when seeking investment, as it is the most effective way to generate cash and attract investors.
  • 📈
    Having users and revenue already, and showing growth, is considered good evidence for investors in the early stage.
  • 📊
    There is only one number that truly matters and dictates the health of a company, despite the various metrics that may be tracked.


  • What are the key factors for success in a startup?

    — The key factors for success in a startup are team, product, and market fit, with team being the most important.

  • How can startups find their first users?

    — Startups can find their first users by knowing and being able to find their first 10-50 users, as this indicates founder market fit and demand for the product.

  • What should startups prioritize when fundraising?

    — Startups should prioritize raising as little money as possible while focusing on growth and revenue.

  • How can startups gain traction and generate revenue?

    — Startups should focus on low-cost effective ways to gain traction and generate revenue, as having users and revenue is the best investment for success.

  • What is the most important metric for the success of a startup?

    — The most important metric for the success of a startup is revenue, followed by other correlated metrics that investors will want to know about.

Timestamped Summary

  • 💰
    Investors measure startup success based on team metrics, unique insight, and opportunity size, with team being the most important factor, and it's crucial to know and find your first 10-50 users for founder market fit and demand.
  • 💡
    Two Stanford dropouts built a successful FinTech company by creating a clear roadmap, testing market demand, and hiring experienced executives to scale the business in Latin America.
  • 💰
    Startups should focus on raising as little money as possible and prioritize growth, but having some initial funding from friends and family can help show traction and credibility.
  • 💰
    Investors prioritize traction and LOI spending over non-binding indications of interest or support when evaluating a B2B company, and startups should focus on building their product and gaining a few customers before engaging with potential investors.
  • 💰
    Valuing startups is an art, with ownership percentage varying based on stage and traction, while new tools like Slack and Zoom are helping education startups scale better.
  • 💰
    Pitch your startup with a clear plan for ROI and milestones, and only seek investment if confident in ability to grow with users and revenue already.
  • 💰
    Choose the right accelerator/incubator aligned with your goals, don't worry about money at seed stage, and focus on raising only necessary funds to avoid dilution.
  • 💰
    Focus on revenue and customer satisfaction, track cohorts to ensure growth with primary customers, and don't get too obsessed with tracking all metrics when pitching to investors.
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This article is a summary of a YouTube video "Anu Hariharan and Adora Cheung - How Investors Measure Startups Q&A" by Y Combinator
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