Relying On Averages Denies The Full Picture For Startups
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It's important to consider more than just averages when assessing and strategizing for startups. Judah Taub points out that it's the extraordinary startups, those that defy the norm, that tend to generate substantial returns. There are three examples of metrics where considering more than the average is beneficial: Customer Acquisition Cost (CAC) and Annual Contract Value (ACV), the essential nature of the product, and the startup's growth trajectory.
When it comes to CAC and ACV, exceptional products often command higher willingness to pay and require fewer resources to attract initial customers. Moreover, during cost-cutting phases, startups don't necessarily need to slash their prices, as essential services or products tend to be insulated from budget cuts.
Regarding growth trajectory, go beyond typical growth tables that rely on averages. Outstanding startups often exhibit unique growth patterns, such as the network effect or negative churn. In the startup investment landscape, identify these winning startups, which often outperform the average; these outliers are the real gems in the startup ecosystem.
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