Throwing Out the Playbook: How Savvy Investors Focus on What Matters More

Many investors rely on standard playbooks to guide their investment decisions - focusing heavily on metrics like ARR, user growth and churn, and total and serviceable addressable market size. But the most successful investors know when to throw the traditional playbook out and instead zero in on the key factors that often matter more.

Rather than obsessing and passing on most deals over “vanity metrics,” smart investors focus outside the metrics, and look to understand the founders, executives, operations, and go-to-market strategy. They know the team, their vision and “the business” matters far more than hockey stick growth KPIs.

Great investors take the time to really understand the people behind the business. They look for hungry, humble, and smart founders who have tenacity, integrity, and a clear vision for success. They examine the broader executive leadership team as operators to ensure there is talent, capabilities and experience to complement the skillsets and experiences of the founders.

Savvy investors also deeply analyze the operational fundamentals and scalability of the business. They want to know the company that can deliver on growth sustainably through solid operations, not just empty hype.

Experienced investors are also pragmatic when it comes to valuations and financing terms. They aim for sensible valuations benchmarked against fundamentals; not excessive vanity valuations based on frothy comparable deals. And they secure favorable financing terms that protect their investment.

While core metrics cannot be ignored, what ultimately matters most is backing the right team with the right plan in the right market, not growth figures on a pitch deck. When investors throw out the model-driven playbook and focus on these fundamental factors, they set themselves up for the best outcomes.