When experienced founders say “know your numbers,” they’re not just advocating for financial literacy; they’re emphasizing a fundamental survival skill. This phrase encapsulates the idea that successful founders must have intimate, real-time knowledge of the metrics that determine whether their company lives or dies.
At its core, “knowing your numbers” means understanding the key performance indicators (KPIs) and financial metrics that drive your business, and recalling them instantly without consulting a spreadsheet. It’s the difference between saying “our customer acquisition cost is somewhere around $50-100, I think” and saying “our CAC is $73, down from $89 last month because we optimized our ad targeting.”
What Numbers Actually Matter?
The specific numbers vary by business model, but generally include:
Financial metrics: Monthly recurring revenue (for SaaS), monthly sales/revenue, burn rate, runway, gross margin, cash in the bank, break-even point
Growth metrics: Customer acquisition cost (CAC), lifetime value (LTV), LTV: CAC ratio, churn rate, growth rate
Operational metrics: For CPG companies, these include cost of goods sold (COGS), retail velocity (units per store per week), inventory turnover, and cash conversion cycle. For software companies, it includes conversion rates, activation rates, and engagement metrics.
The critical insight is that these numbers tell a story about your business’s health and trajectory. They reveal whether your business model works, whether you’re on track to run out of money, and where you should focus your efforts.
Case Study 1: RXBAR’s Unit Economics Mastery
When Peter Rahal and Jared Smith launched RXBAR in 2013, they embodied “know your numbers” from day one. As a consumer packaged goods (CPG) company, their numbers were particularly unforgiving—physical products have real costs, inventory ties up cash, and margins are often thin.
Their cost of goods sold (COGS) was around $1.20 per bar, their wholesale price to retailers was $2.00, and the suggested retail price ranged from $2.99 to $3.29. That gave them roughly 40% gross margins at wholesale — tight margins for a young CPG brand still covering marketing, operations, and overhead.
*(These values are an approximation, not public information.)
More importantly, they understood their velocity metrics. They knew exactly how many bars were selling per store per week at each retail location. When they got into their first CrossFit gym, they tracked that they were moving 50-60 bars per week. This number became their benchmark. They knew that if a new retail location couldn’t hit at least 30 bars per week, it wasn’t worth the distribution effort and shelf space negotiation.
They also knew their cash conversion cycle intimately. With retailers typically paying on 30-60 day terms while they had to pay their co-manufacturer upfront, they understood exactly how much working capital they needed for each production run. When they were scaling from $10,000 to $100,000 in monthly revenue, Rahal knew they needed approximately $40,000-50,000 in inventory at any given time to avoid stockouts while managing cash flow.
This granular understanding of unit economics allowed them to make smart decisions about growth. They could calculate exactly what it would take to expand to a new region or retailer, and whether the projected velocity justified the cash outlay. When Kellogg acquired RXBAR for $600 million in 2017, it wasn’t luck—it was a company built on founders who knew every number that mattered and optimized relentlessly around them.
Case Study 2: Buffer’s Radical Transparency
Buffer, the social media management platform, took “know your numbers” to an extreme by making many of its metrics public. Founder Joel Gascoigne understood that transparency would force discipline in tracking the right metrics.
From the early days, Buffer meticulously tracked their MRR (monthly recurring revenue), churn rate, and customer count. When they reached $100,000 in annual revenue, Gascoigne knew they were at $8,333 MRR with approximately 1,000 customers, giving them an average revenue per user of about $8.33. He knew their monthly growth rate hovered around 10-15% in those early stages.
This precision allowed them to make informed decisions about pricing changes, feature development, and when to hire. When they noticed churn creeping up from 5% to 7% monthly, they immediately investigated and discovered it correlated with a specific customer segment that wasn’t finding value in a particular use case. This led them to improve onboarding for that segment and add features that reduced churn back to acceptable levels.
Buffer’s understanding of their unit economics—knowing that their CAC was around $250-300 while their LTV was approximately $1,800-2,000—gave them confidence to invest in content marketing and other acquisition channels with longer payback periods. Without these numbers clearly in mind, they might have panicked at the upfront costs or missed the opportunity to scale profitably.
Why This Matters for Every Founder
The ability to know your numbers serves several critical functions:
Decision-making speed: When you internalize your metrics, you can make decisions quickly without waiting for analysis. Should you spend $5,000 on this marketing channel? If you know your CAC and LTV, you can answer immediately.
Fundraising credibility: Investors expect founders to know their numbers cold. Fumbling for answers during a pitch signals that you don’t have control of your business. Conversely, rattling off key metrics with confidence demonstrates mastery.
Pattern recognition: When numbers live in your head, you notice trends and anomalies immediately. You’ll catch problems early and spot opportunities faster than founders who only check dashboards weekly.
Team alignment: When leadership knows and communicates numbers consistently, it creates clarity throughout the organization about what matters and whether you’re winning.
Getting Started
If you’re a founder who doesn’t yet know your numbers, start small:
1. Identify the 5-7 metrics that most directly indicate your business's health
2. Review them daily until they’re memorized
3. Track weekly changes and understand what drives movement
4. Calculate how many weeks of runway you have at the current burn
5. Know your unit economics cold—what it costs to acquire a customer and what they’re worth
The founders who survive and thrive aren’t necessarily the most visionary or charismatic—they’re often simply the ones who understood their numbers well enough to make the right decisions at critical moments. In the uncertain journey of building a startup, your metrics are the instrument panel that tells you whether you’re flying level or about to crash. Learning to read them instinctively isn’t optional—it’s survival.