I asked my investment professional friends on twitter:

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Contrary to popular belief, you don't need to sell big deals to Fortune 500 enterprises to be successful.

@investianalyst points out how ACV is really a vanity metric that’s a byproduct of your business model, not a driver of it.

In fact, the world’s biggest and best software companies tend to have smaller ACV’s.

Remember: Increases in ACV aren’t free. Usually to increase ACV, it means some other metric of importance gets worse, like CAC.

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The price-to-earnings (P/E) ratio relates a company's share price to its earnings per share. A high P/E ratio could mean a company's stock is overvalued, or that investors are expecting high growth in the future.

However, @brianferoldi points out how GAAP accounting forces companies to mark up “other income” when their holdings increase in value, and down when their stocks fall. This throws off false signals as to the health of the underlying core operations of the company

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Most businesses have maintenance capex. If they don’t spend that capex, the business’s earning power will go down each year.

Per @10kdiver if you want the business to stay alive, what’s actually available to service debt is either:

The businesses needs oxygen. Don't suffocate it.

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Many software businesses maniacally focus on ARPU (Average Revenue Per User) and how it grows over time. But overemphasizing growth in ARPU without digging into account retention masks a potentially leaky bucket

From talking with @alithecfo, if ARPU increases, but you’re losing users at a rapid rate, that’s not healthy or sustainable growth.

You’re really on a treadmill and will need to keep spending to acquire new users.

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Contrary to popular belief, not all "revenue" is created equal. Multi-year contracts with deep first-year discounting or volume ramps over time drive deltas between the first and last year's ARR.

Many companies will claim the larger, exit year Contracted ARR (CARR) as ARR. But CARR will not track to current period GAAP revenue or billings.

@lukesophinos says using a non-standard definition of ARR can lead to unexpected mark downs by investors during financing events.

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Many ignore working capital in calculations of ROIC (Return on invested capital). Working capital includes all the capital in current assets and current liabilities (like accounts payable, and accounts receivables).

Depending on the business model there can be a lot of money tied up in the cash conversion cycle.

According to @mt_capital1 to avoid overstating returns you should calculate as:

`(Net Operating Profit After Tax) / (Working Capital + Property Plant and Equipment)`

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CAC (Customer Acquisition Cost) is what you spend in S&M (sales and marketing) to land a net new customer. And CAC Payback Period is the number of months it takes to break even on that new customer.

Per myself lol @cjgustafson222, S&M costs should be lagged by the average sales cycle of the sales engine you’re measuring. And Customer Support costs should match the current period.

The goal is to align the dollars you spent in the past to generate the sales (ARR) you are seeing today.

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LTV (Lifetime Value) to CAC (Customer Acquisition Cost) measures the efficiency of your go-to-market engine. It shows you how many times over the average customer pays for itself. However, it leaves out R&D and G&A spend.

From talking to @thealexbanks consider using Burn Multiple for a more holistic view.

It determines how much the entire company is burning to generate each incremental dollar of ARR And takes into account functions across the entire company, not just sales and marketing.

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Accrual Revenue isn't actually cash. It's a GAAP based accounting view of the world, looking at when revenue should be recognized for services delivered.

Accrual Revenue will almost always lag cash received from new business. It will lag both ARR and Billings.

From talking to @kurtishanni if you make hiring and spending decisions based on it, you can cap growth and leave money on the table.

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@iamclintmurphy frequently sees companies:

For eCommerce and DTC businesses @joe_portsmouth says common errors include:

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