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The Ugly Truth About 'Vanity Metrics': 3 Keys to Gaining an Accurate Picture

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You’ve probably heard of the Fyre Festival. Two documentaries have been made about this music event fiasco, after all. But you might not know how the scam ultimately got its legs, beyond being the brainchild of a man ultimately convicted of fraud. It comes down to one word: metrics.

Using inflated and outright false metrics, festival co-founder Billy McFarland gained trust from investors to fund the event. Festivalgoers, on the other hand, were persuaded to purchase tickets on the basis of “vanity metrics” -- or, more to the point, multiple influencers liking or sharing posts about the event.

While this scam has already joined a growing list of questionable activities taking place online (and offline, at that), it actually leads to a much bigger question: Is the startup space encouraging founders to do just this kind of thing -- on a much smaller scale -- in an effort to prove the potential for explosive growth?

Whether you’re starting a new venture or attempting to grow a business, one of the greatest hurdles you’ll often face is knowing what exactly to measure. Fortunately, there are myriad data points that can yield valuable insights for founders and investors alike.

Customer acquisition cost (CAC), for one, can be very valuable to a small business owner. This metric shows the cost associated with a sale, including everything from actual cost of goods sold to indirect costs like marketing, advertising, sales payroll, etc. Of course, tracking CAC can be difficult for some startups, as it may require associating........

© Entrepreneur