"We’re Chasing Activity, Not Value" — Hiring Committee Debrief, One of the Big Tech Companies
The meeting room was cold. Forty degrees, maybe. Or maybe it was just the mood. Four senior product leads, two engineering directors, and a freshly off-the-plane VP of Product from Seattle sat around the glass table, staring at a dashboard on the TV. It showed daily active users rising—1.2 million, 1.3 million, 1.4 million. The product had launched six months ago. Growth looked healthy.
Then the VP said, “Great job hitting DAU targets. But why is revenue flat?”
Silence.
One PM finally replied, “We’ve optimized for engagement. Sessions are up 27% month-over-month.”
The VP leaned back. “So you’re telling me people are opening the app more often, but not paying? Or referring anyone? Or getting better outcomes?”
Another PM hesitated. “Well… we’re still figuring out monetization.”
The VP turned off the screen. “Then you don’t have a North Star. You have a flashlight pointed at your feet.”
That was the moment I realized: most product teams aren’t missing execution. They’re missing direction. And not just any direction—a true North Star, the one metric that reflects real user value and sustainable growth.
In China, this idea has been quietly shaping products for years. Companies like Pinduoduo and ByteDance didn’t grow by chasing vanity metrics. They built around a single, focused outcome: transaction volume for PDD, watch time for TikTok. But in the West, we’ve been slower to catch on. We talk about OKRs, KPIs, OKRs again, but we’re still confusing motion with progress.
Let me fix that.
The North Star Isn’t What You Think—And Why Most Teams Get It Wrong
I’ve sat in over 30 hiring committee meetings in the past 18 months. One pattern stands out: candidates define their North Star as DAU, session count, or feature adoption. Almost never do they mention retention, monetization, or user outcomes.
When I ask, “Why did you pick DAU as your North Star?” the answer is usually, “Because it’s a leading indicator.”
Wrong.
DAU is a lagging indicator of sign-up campaigns or push notifications. It tells you people opened the app, not that they got value.
A real North Star Metric (NSM) is the one metric that best captures the long-term value a product delivers to its users—and the business. It’s not a proxy. It’s the outcome.
Let’s be concrete.
At a fintech startup I advised in 2022, the team initially chose “number of accounts created” as their NSM. Classic mistake. They were proud when sign-ups hit 50,000 in a month. But only 3% ever made a transaction. The real North Star? Monthly transacting users.
We switched. Overnight, the roadmap changed. Instead of optimizing the sign-up flow, they built in-app nudges for first transactions, simplified KYC, and added instant deposit bonuses. Three months later, transacting users grew 4x. Revenue followed.
The counter-intuitive insight? The North Star isn’t about growth—it’s about gravity. It’s the force that pulls users back because they’ve experienced real value.
Another example: a SaaS company selling project management tools. Their original NSM? Number of teams created. Sounds reasonable. But data showed teams with 3+ active users had 80% 6-month retention. Teams with only 1 or 2 users? 22%. So we shifted the NSM to “teams with 3+ active users in 14 days.”
Suddenly, onboarding wasn’t just about creating a team. It was about driving collaboration. The product team added template-based project starters, teammate invite rewards, and Slack integration nudges. Activation rate jumped from 18% to 39% in two quarters.
Your North Star should hurt. If it doesn’t force hard trade-offs, it’s not strategic.
How We Picked the Right North Star—Stakeholder Meeting at a Mid-Sized SaaS Company
It was a Thursday morning. Product, marketing, sales, and execs sat in a war room. The CEO kicked off: “We need a North Star. Our growth has plateaued.”
We whiteboarded 12 possible metrics:
- DAU/MAU
- Feature adoption
- Trial sign-ups
- Paid conversions
- Customer satisfaction (NPS)
- Expansion revenue
- Activation rate
- Session duration
- Referral rate
- Support tickets resolved
- Churn rate
- Lifetime value (LTV)
Then we applied the NSM litmus test:
- Does it reflect user value?
- Is it leading, not lagging?
- Can the product team directly influence it?
- Is it correlated with long-term business growth?
We killed DAU (lagging, not value-based). Killed NPS (lagging, noisy). Killed feature adoption (activity, not outcome).
Two candidates remained: activation rate and expansion revenue.
Activation rate was strong—measuring when a user completes core actions (e.g., invites teammates, runs first project, connects data). But it was early-cycle.
Expansion revenue—existing customers spending more—was clearly tied to value. But it was slow-moving, reactive.
Then a product manager spoke up: “What if we combine them? Not ‘activation’ or ‘expansion’—but ‘high-value active accounts’?”
We defined it: Accounts with 5+ weekly active users and at least one paid upgrade or add-on in the last 30 days.
It passed all four tests:
- Reflects value (teams are active and investing)
- Leading (can be influenced in real time)
- Actionable (product can improve collaboration and upgrades)
- Correlated with LTV (data showed these accounts had 6.2x higher 2-year retention)
The CEO paused. “That’s… specific. Are we sure this isn’t too narrow?”
I said, “Better narrow and true than broad and fake.”
We locked it in.
Six months later, that metric grew 2.8x. Net revenue retention hit 138%. And for the first time, product and sales were aligned—not because we forced alignment, but because we shared a true North Star.
The 3 Counter-Intuitive Truths About North Star Metrics
After working with 17 product teams in the past three years, I’ve seen patterns no one talks about.
1. The Best North Star Is Often Not Revenue
This shocks people.
Revenue is important. But it’s lagging. By the time revenue drops, the damage is done.
The best NSMs are behavioral—actions users take that predict future revenue.
At a fitness app, we tracked “workouts completed in 7 days.” Not subscriptions, not downloads.
Why? Data showed users who completed 3+ workouts in the first week had 74% 90-day retention. Those with 0–2? 11%.
So we made “3 workouts in 7 days” the NSM.
Product built streaks, personalized workout plans, and post-workout celebrations. Marketing shifted from “Join now” to “Start your first workout today.” Even support used it: “Let’s get you to your third workout.”
Result: 68% of new users hit the milestone within a week. Paid conversions rose 52%.
Revenue followed—because behavior led.
2. One North Star Doesn’t Fit All Products
I consulted for a company with three products: a free note-taking app, a premium team workspace, and an enterprise knowledge base.
They wanted one NSM for the whole company.
Bad idea.
Each product had a different value proposition:
- Free app: personal knowledge capture
- Team workspace: collaboration
- Enterprise: search and compliance
Forcing one NSM would dilute focus.
So we defined three:
- Free app: % of users who save 10+ notes in 30 days
- Team workspace: active teams with 3+ members and 5+ shared docs
- Enterprise: % of employees using search daily
Each team aligned roadmaps to their NSM. The free app added AI summarization to reduce friction. The team product launched real-time co-editing. Enterprise improved search relevance.
Aggregate metrics improved across the board—but because each product was optimizing for real value, not a corporate KPI.
The insight? A single NSM only works if all products serve the same core outcome. If not, you need a constellation, not a star.
3. The North Star Should Be Hard to Fake
Too many teams pick metrics that can be gamed.
I saw a marketplace team use “number of listings created” as their NSM. They celebrated when it hit 100K.
But 67% of listings were duplicates, low-quality, or fake.
So we changed it to: “Bookings with confirmed payment and host response within 24 hours.”
Overnight, incentives flipped. The team deprioritized listing creation bonuses. Instead, they improved host onboarding, added booking guarantees, and launched a responsive host badge.
Listings dropped 40%. But bookings grew 3.1x.
The metric was harder. But true.
A good NSM resists gaming. It measures outcome, not output.
How to Stress-Test Your North Star—A Framework from Real Product Committees
You think you’ve found your North Star. Now prove it.
I use this framework in every product review:
1. The “So What?” Test
Ask: If this metric improves, so what? Does it actually mean users are better off?
Example: If DAU goes up, so what? Maybe they’re just getting annoying notifications.
But if “number of successful loan applications completed” goes up, so what? People are getting money they need. So what? They’ll likely return. So what? Revenue grows.
Chain the impact.
2. The “Can We Move It?” Test
Ask the engineering and product leads: Can we directly influence this with product changes?
I once reviewed a team using “customer satisfaction” as their NSM. I asked, “What feature will you build to improve CSAT?”
Silence.
CSAT is influenced by support, pricing, marketing—things product can’t control. So it failed the test.
We switched to “time to first value”—how fast a user completes a core action. Product could directly reduce it with onboarding flows, tooltips, and guided setup.
3. The “Is It Leading?” Test
Pull 12 months of data. Plot your candidate NSM against revenue, retention, or LTV.
If it moves first, it’s leading.
At a B2B analytics company, we tested “reports generated” vs. “reports shared with teammates.”
“Reports generated” correlated weakly with retention (r = 0.3).
“Reports shared” correlated at r = 0.81—and moved 6 weeks ahead of paid conversions.
So “reports shared” became the NSM.
4. The “Does It Unite Teams?” Test
Run a 15-minute workshop with product, engineering, design, marketing, and sales.
Say: “If we all focused on this one metric for the next quarter, would your priorities change?”
If everyone nods, it’s strong.
If marketing says, “We’ll still focus on leads,” you’ve got misalignment.
One company failed this test. Their NSM was “active users,” but sales was still incentivized on “demos booked.” We had to tie sales comp to product-qualified leads based on NSM behavior.
Only then did the engine turn.
FAQ: Real Questions from Product Leaders
Q: Should the North Star change over time?
Yes—but rarely. Only when the product’s core value shifts.
Example: Slack’s early NSM was “messages sent per team per day.” Later, as workflows expanded, it shifted to “huddles started + messages + app integrations used”—a composite reflecting deeper collaboration.
But don’t change it quarterly. That’s not evolution. That’s giving up.
Q: Can you have more than one North Star?
Only if you have multiple independent products. For a single product, multiple stars create confusion.
One PM argued, “We need both engagement and monetization.” I replied: “Then pick the one that drives the other. Usually, it’s engagement → monetization, not the reverse.”
Q: What if execs demand revenue as the NSM?
Push back—with data.
Show them a chart: “Here’s how our proposed NSM (e.g., high-value active accounts) predicted revenue growth over the last 8 quarters. R-squared is 0.89. Revenue itself is too volatile to guide weekly decisions.”
Execs care about outcomes. Speak their language.
Q: How do you communicate the NSM across the company?
Two rules:
- Repeat it in every all-hands. “This quarter, we win if high-value active accounts grow 25%.”
- Tie bonuses to it. No incentive, no urgency.
One company printed the NSM on mugs, Slack banners, and even the elevator screen. Corny? Maybe. But it worked.
Final Thought: The North Star Is a Compass, Not a Destination
I was mentoring a founder last month. Her app had 500K downloads. “We’re growing fast,” she said.
I asked, “What’s your North Star?”
She said, “Downloads.”
I said, “Then you’re not building a product. You’re running a download factory.”
She paused. Then: “What should it be?”
I asked, “What’s the one thing users must do to get value?”
She thought. “Complete their first budget plan.”
“So that’s your North Star. Not downloads. Not sign-ups. ‘First budget completed.’”
She shifted the roadmap that week.
Two months later, 68% of sign-ups completed a budget. Churn dropped. Investors took notice.
The North Star isn’t about vanity.
It’s about value.
And if you’re not measuring that, you’re not leading. You’re just moving.