Mostly Metrics - The Creator's Challenges with CJ Gustafson

**Ray Rike** (0:00)
Hello, I'm Ray Wright, Founder and CEO of Benchmarkit, and your host of the Metrics that Measure Up podcast. We talked to a wide variety of the top B2B SaaS and Cloud thought leaders, CEOs, executives, investors, and people just like you, to discuss the metrics and benchmarks they use to make metrics informed and benchmark validated decisions. Now, on to today's show.
Welcome to the Metrics that Measure Up podcast. Today, we are joined by CJ Gustafson, the CFO at PartsTech, author of the Mostly Metrics newsletter, and most recently host of the Running the Numbers podcast. CJ is a second time guest on the show. I'm looking forward to discussing a few new topics this episode with CJ. First, the danger of vanity metrics. Second, we'll get some hot takes from CJ on overrated metrics. Third, cautions on usage-based pricing. And fourth, a creator's life. The content grind is real, CJ. So would you mind taking a moment to give a brief overview of your journey to becoming a second time guest on the Metrics that Measure Up podcast?

**CJ Gustafson** (1:23)
Absolutely, Ray. It's a pleasure to grace these hollowed podcast grounds again. I've looked up to you and the work you do in the metric space for a long time now. Whenever I get a chance to talk numbers and jam out with one of the legends in the game, I get excited, so thanks for having me on. By background, I'm a CFO to venture back, Siri C software company. On nights and weekends, I'm building a mini media empire, I say, in the CFO space with mostly Metrics. That's the newsletter on Substack and the Run the Numbers podcast that's produced on the Turpentine Network. Both of these, they cater to finance strategy ops people, FinStratOps, if you're a dork like me, at tech companies mostly. And the goal is to help you get better at your job, improve your company's performance, and have fun at the same time. A tall task.

**Ray Rike** (2:09)
Wow. FinStratOps. I think about financial strategy, I think of financial operations. You're the first person I've seen put them all three together, CJ.

**CJ Gustafson** (2:19)
I almost bought the domain, but my wife wouldn't let me.

**Ray Rike** (2:22)
Oh, trust me, I have way too many domains, like all these FinOps domains that I bought about two years ago, but that's a whole nother creator's dilemma, my monthly expense on unused domains. But hey, let's dive right into Metrics. And when you and I were exchanging emails before this episode, we were talking about topics and you said, let's talk about vanity metrics and why they're so dangerous. So you're a CFO, you're looking at metrics all day long. What's your take on vanity metrics and why they can be so dangerous, CJ?

**CJ Gustafson** (2:52)
Oh, all right. Well, vanity metrics are numbers that make you look good. They give you those fuzzy warm feelings, but they have no material impact on your ability to actually make good decisions and improve your business. So another word, I mean, you could call them are superficial metrics and that's because they fail to drive durable revenue growth. They're the equivalent of what I would call empty calorie metrics, Ray.

**Ray Rike** (3:16)
So a high level definition, but let's get into some details. Are there a few that you've seen presented to you as a CFO or you've talked to some of your guests about? You're like, oh my God, that's the perfect example as a stay away from me vanity metric.

**CJ Gustafson** (3:30)
Yeah, not only presented to me, but I've been guilty of them in the past too. But, you know, I'm willing to fess up. So I think anything that's cumulative. So a cumulative metric may look pretty in a chart, but they're among the worst in driving any sort of business insight, really. And a cumulative metric, it's impossible to make it go down. So I don't know how you can get much insight from it. An example would be maybe all-time users or all-time bugs fixed, if you're like a cybersecurity company or all-time transactions, if you're a platform. And like I said, I've been guilty of putting these on a slide because they tend to actually work sometimes when you're raising money or trying to make, you know, people say, wow. But the problem is they fail to provide any ratio or rate to them. They don't give you any historical context and you can't really drive any sort of behavior changing outcome.
So that's the first one I'd kill. I think another one I would kill is total headcount. Headcount on its own, it's really just a reflection of cost without any context to productivity. That's why ARR per head or employees, one of my favorite metrics. I call it the goat of SaaS metrics. But if you talk about total headcount, you're really just reflecting how many people you have on payroll. Like, hey, I have 500 people who work here. Look how big of a company I am. It's like, well, what if you could do the same amount of work with 250 people? You don't know that. So I think that's the second vanity metric that I would definitely kill right away.