As a startup investor, distinguishing between vanity metrics and genuine market demand is crucial. It's easy to be dazzled by big numbers... even though some of those numbers don't actually translate into sustainable growth.

Here are 6 vanity metrics to watch out for (and what to focus on instead):

The Viral Launch

We've all seen some version of this: a startup's product launch video goes viral, racking up millions of views and thousands of signups.

Sure, it's exciting. But are those signups converting into actual sales?

Viral launches can create a buzz, but virality is fleeting. Many of the signups that come from viral launches go absolutely nowhere.

What to look for instead? Metrics that show stickiness:

• Daily and weekly active users (DAU/WAU)
• Retention rates over time

These indicators will tell you whether users are finding true value in the product.

The Flash-in-a-Pan Revenue

Everyone wants to see big revenue numbers. That seems like an obvious sign of market pull. But what happens when those revenue channels are squeezed dry?

Early sales often come from unscalable channels, like:

• Founder's personal network
• One-time partnerships
• Heavy discounts that eat into margins

So while sales are always a good thing, pay more attention to:

• Experimentation in a variety of acquisition channels
• Improving customer acquisition costs (CAC) over time
• Healthy lifetime value to CAC ratios (LTV/CAC)

We’re looking for indicators that the team can generate sales consistently and at scale.

The Waitlist Mirage

"We have a waitlist of 1,000 people."

Sounds impressive, right? But here's the thing: Waitlists can be inflated through tactics that have nothing to do with genuine interest in the product.

For example:

• Giveaways and contests that have nothing to do with the actual product
• Low-friction social media campaigns
• Hype-driven marketing without substance

The result? A bloated list of "interested" users who may never convert to paying customers.

What really matters is the conversion rate from waitlist to active users. A smaller list with high conversion is way more valuable than a massive list of tire-kickers.

Pro tip: Ask about the waitlist-to-user conversion rate. It'll tell you volumes about real demand.

The Niche Engagement

Imagine a startup with a small but incredibly passionate user base. They're posting constantly, engaging deeply, and singing the product's praises from the rooftops.

The danger here is mistaking niche appeal for broad market potential. A product that's adored by a small, insular community (think: niche hobbyists or the founder's immediate network) may struggle to expand beyond that initial group.

Instead, look for:

• Expansion beyond the core user base
• Growth that doesn't require excessive hand-holding or personalized outreach
• Extensive customer discovery

Scaling a company will involve solving a widespread problem, not just catering to a few passionate customers.

The Enterprise Pilot

Enterprise startups often tout their pilot programs with big-name companies.

And certainly those pilots are impressive. They show the founder is hustling to get the product into circulation.

But enterprises run pilots all the time. It's how they test out new technologies without committing to long-term partnerships.

Dig deeper:

• How many pilots have converted to paid contracts?
• Are there renewals and expansions with existing clients?
• Is the average deal size increasing over time?

These indicators show that the product is delivering real value and becoming integral to customers' operations.

The Fundraising Hype

It's easy to get caught up in the excitement of big funding rounds and marquee investors. But investor enthusiasm ≠ product-market fit.

Just because a startup has raised a massive round from top-tier VCs doesn't mean they've cracked the code on customer demand.

Sometimes, it just means they're really good at pitching.

What really matters?

• Strong engagement metrics
• High customer retention
• Evidence of customer referrals

These are the true signs that a product is resonating with its target market.

Focus on what really matters

It takes time and practice to differentiate between vanity metrics and metrics that matter.

As investors, it's our job to look past the hype and try to spot the startups that are truly making progress.

Don't be afraid to ask tough questions about things like retention, engagement, and customer referrals. And when in doubt, you can always run your concerns past your friends from Camp Hustle.

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