Founder glossary · 14 terms

The numbers founders get asked about, defined.

Each term has the formula, a worked example, what good looks like, and the mistakes people make. Where there's a calculator, it's linked.

ARPA

Average revenue per account, the average monthly revenue each paying customer brings in.

ARR

Annual recurring revenue, the yearly value of a company's recurring subscription revenue, usually MRR × 12.

Break-even point

The point where revenue exactly covers all costs, so the business neither makes nor loses money.

Burn rate

How much cash a company spends each month. Net burn subtracts revenue; gross burn doesn't.

CAC

Customer acquisition cost, the total sales and marketing spend needed to win one new customer.

CAC payback period

How many months of gross profit it takes to earn back what you spent acquiring a customer.

Churn rate

The share of customers (or recurring revenue) a business loses in a period, usually measured per month.

Default alive

A company that will reach profitability before its cash runs out, if costs stay flat and revenue keeps growing at its current rate.

Gross margin

The share of revenue left after paying the direct costs of delivering the product to customers.

LTV

Customer lifetime value, the total gross profit a customer brings in over the whole time they stay with you.

MRR

Monthly recurring revenue, the predictable subscription revenue a business earns each month.

Net revenue retention

Revenue from existing customers now, including upgrades and minus churn, as a share of what they paid before.

Runway

How many months a company can keep operating before it runs out of cash, at its current net burn.

Unit economics

Whether a business makes or loses money on each customer, before fixed costs.

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