(Contributed by Jason Cohen, Capital Factory Partner)

Metrics summarize tons of processes, causes, and effects into a single number. It’s a two-edged sword.  It’s powerful because it lets you reason about complex systems, especially how it’s changing. It helps you focus on what’s important at a macro level.

But it’s dangerous when it combines so many disparate and disjoint processes and systems that the number loses precision. Because then you think you understand something that you don’t. That’s how bad decisions are made with confidence.

I argue that for many SaaS businesses, the incorrectness of the LTV metric outweighs the value it supposedly confers.

Read the full blog post here.