Table of Contents
The scene is a well-rehearsed act in the grand play of Indian venture capital. A founder, radiating confidence, stands before a screen. On it, a graph points aggressively towards the sky. “We hit 10 million downloads last quarter,” they announce. The number hangs in the air, impressive and absolute. It’s the headline for the press release, the validation for the team, the proof of traction. But in the minds of the seasoned investors in the room, a silent, more important question is being asked: “…and how many of those people came back the next day?”
Welcome to the Metrics Theater.
It’s the most popular show in the Indian startup ecosystem, a dazzling performance where companies showcase impressive-sounding but ultimately hollow numbers, while the real, often brutal, metrics of business health are kept safely backstage. We have become masters of tracking the applause—the downloads, the page views, the registered users—while ignoring the box office receipts: the active users, the retention cohorts, the unit economics. This isn’t just a quirky habit; it’s a systemic delusion that serves the short-term narrative of fundraising while poisoning the long-term quest for building a sustainable business.
The Sugar Rush of a Vanity Metric
Why are vanity metrics so seductive? Because they are easy, cheap, and feel fantastic. In a cash-rich, high-burn environment, nothing is easier than acquiring a download. A clever ad campaign, a cashback offer, a viral social media post—and suddenly you have a million “users.” This number is simple to understand and glorious to report. It fits neatly into a tweet. It makes your parents proud. It creates the show-sha of success.
This aligns perfectly with a cultural need to project an image of rapid progress. In the Metrics Theater, a big, simple number acts as a powerful signal of momentum, even if that momentum is artificial. It’s the digital equivalent of hosting a lavish wedding: the performance of prosperity is, for a moment, more important than the underlying financial health.
The Sobering Chai of Actionable Metrics
While the vanity numbers provide a sugar rush, the actionable metrics are like a cup of strong, unsweetened chai—sobering, sometimes bitter, but ultimately what gives you the real energy to keep going. These are the numbers that don’t just measure; they inform.
- Retention Rate: This is the single most honest metric in a startup. It answers the question: “Is the thing we built actually useful?” A high download count with a 90% drop-off rate after one week doesn’t mean you have product-market fit. It means you have a leaky bucket. You’re pouring users in the top, and they’re gushing out the bottom.
- Unit Economics: This is the dhanda metric. Stripped of all jargon, it asks: “Are we making or losing money on a single customer transaction?” Many startups, in their race for growth, offer subsidies and discounts that lead to negative unit economics. They are literally paying customers to use their product. While this can be a short-term strategy, the Metrics Theater allows this unsustainable practice to continue for far too long.
- LTV to CAC Ratio (Lifetime Value to Customer Acquisition Cost): This is the god-metric of sustainability. It asks: “Will the total value we get from a customer over their lifetime be significantly more than what we paid to acquire them?” A healthy business needs this ratio to be at least 3:1. In the Metrics Theater, the focus is all on the CAC (how cheaply can we get a download?), with almost no honest look at the LTV.
The Director of the Play: The Fundraising Narrative
Why does this theater persist? Because it’s a performance for a very specific audience: the next round of investors. In the hyper-growth model, particularly at the early stages, VCs are often betting on market size and a founder’s ability to capture it quickly. A simple, explosive growth metric like “user sign-ups” is an easy way to tell that story.
The founder, knowing this, optimizes the company to produce the numbers that will look best in the next pitch deck. The dashboard that the company runs on internally (if it even exists) is often wildly different from the carefully curated “investor dashboard.” The entire company becomes geared towards producing a good quarterly performance for the investors, rather than building long-term value for the customer.
The Realists: Companies That Refused to Perform
The companies that have built lasting value are the ones who refused to take the stage in the Metrics Theater. They were obsessed with the boring, backstage numbers from day one.
Zerodha is a prime example. They could have chased “registered users” by offering sign-up bonuses. Instead, they obsessed over “active, trading clients” and profitability per trade. Their internal dashboards were ruthless about costs and revenue. This focus on real metrics, not vanity ones, allowed them to build one of the most profitable, resilient businesses in the country.
This focus on reality is a cultural choice. It requires a founder with the courage to face the brutal truth of their own numbers and the discipline to build a team that does the same. It means celebrating a 1% increase in week-over-week retention more than a million new downloads.
Building a Culture of Truth
Escaping the Metrics Theater requires a conscious and often painful cultural shift.
- Find Your “North Star” Metric: Align the entire company around a single, actionable metric that truly reflects the value you create for customers. For Facebook, it was “Daily Active Users.” For Airbnb, it was “Nights Booked.” This North Star should be a measure of engagement, not acquisition.
- Make the Real Numbers Visible: Create a company-wide dashboard that highlights the hard truths: cohort retention, unit economics, LTV. Make these the numbers that are discussed in every all-hands meeting.
- Reward Substance, Not Show: Tie incentives and promotions to improvements in real metrics. A product manager who increases the 30-day retention rate should be a bigger hero than the marketing manager who acquired a million cheap downloads.
Ultimately, the metrics you choose to track are a reflection of your startup’s soul. They reveal whether you are building a business or just a story. The story might get you the next round of funding, but only the business will survive the test of time. It’s time for Indian startups to draw the curtains on the Metrics Theater and get to work on the less glamorous, but infinitely more rewarding, reality of building a great company.
What’s the most misleading vanity metric you’ve ever seen a company celebrate? Share your thoughts in the comments!
