Your Startup’s Most Important Metrics

Re:Your Startup’s Most Important Metrics by JumpCrisscross on Tuesday March 26, 2013 @02:54PM (#5445292)

"The TSM Average column is the Trailing Six Month Average. It is calculated in this way:
(ending_value/starting_value)^(1/num_periods-1)-1."

This is actually the formula for compound monthly growth rate, a modification of the commonly used compound annual growth rate (CAGR), with an extra -1 thrown in after num_periods. The correct formula for compound growth is:

    (ending_value / starting_value) ^ (1 / num_periods) - 1

The T6m average is the arithmetic average of, surprise, the last six months:

    T6m(x) = 1/6 * sum(x[1], x[2],..., x[6])

where x is a vector of the last 6 months' data (sales, users, etc.). The T6m average will be in the same unit as the monthly figures, not percentages.

[ Parent | on HN ]

Re:Your Startup’s Most Important Metrics by ttunguz on Tuesday March 26, 2013 @10:32PM (#5447434)

Yes, you're right. Fixed this. I prefer the compound growth rate to the rolling average.

[ Parent | on HN ]