North Star Metric

Every company tracks dozens of metrics. North Star Metric (NSM) is the one that matters most. If this number goes up, everything else follows: revenue, retention, word-of-mouth. Characteristics of a good NSM: (1) Measures value delivered to customers (not vanity metrics like signups), (2) Predicts revenue and retention, (3) Actionable by the team (they can directly influence it), (4) Simple to understand and communicate. Examples: Airbnb—nights booked. Facebook—daily active users. Spotify—time spent listening. Slack—messages sent by teams. Medium—total time reading. Each captures core value delivery. NSM vs. vanity metrics: Signups are a vanity metric (meaningless if no one uses the product). Active users are better. But NSM goes deeper: What action indicates users are getting value? For Slack, it's not "users who log in" but "teams sending 2,000+ messages"—that's when Slack becomes essential. How to find your NSM: Ask: "What user action indicates they're experiencing our core value?" For a note-taking app, it might be "notes created per week." For a CRM, "contacts added and updated." For a marketplace, "successful transactions." Look for the metric where engaged users cluster. NSM evolves: Early stage, your NSM might be "activation rate" (getting users to aha moment). Growth stage, it shifts to "weekly active usage" or "transactions per user." Mature stage, it becomes "net revenue retention." NSM should reflect your current growth phase. Avoid multiple North Stars: Some teams try to balance 3-5 top metrics. This dilutes focus. Pick one. Align the entire company around it. You can track other metrics, but everyone should know the North Star and how their work impacts it.

When Facebook's NSM was DAUs, they discovered that users who added 7 friends in 10 days were far more likely to stick around. This insight drove their entire onboarding strategy around friend suggestions.