Whenever any entrepreneur wants to prove that he has a product which people will be happy to use, he usually starts out by offering it free of charge. This could be in the form of a freemium model , or a free trial, so that he can prove that he can achieve product-market fit. The problem is that he needs to keep on making sure those numbers go up in order to prove to funders that he's getting traction. Investors want proof that his product actually solves a real life problem. 

The fallacy with this approach is that entrepreneurs end up confusing free customers with paying customers. However , they are two completely different animals ! They may both use your product, but it's only when they're willing to pay for it that you can count that user as a customer.

This is often where a lot of entrepreneurs trip up . Because they are so keen on showing that they're growing exponentially and are beating the competition - that they end up spending a lot of money, time and energy in increasing the number of downloads of their app ; or getting more people to use their product . Now they often end up managing to show a hockey stick growth curve as far as the number of users go , but I think these are just vanity metrics. How does it matter how many people download your app if they don't pay you anything for it? From a business point of view, a free customer is pointless once you have crossed the learning curve. In fact, acquiring these customers by giving away freebies in order to lure them usually comes back to haunt the start-up . We have seen this sad story play out with many food delivery start-ups , hotel aggregators , and e-commerce companies. Paying money in order to acquire free customers caused them to lose money on a continual basis - and they learned the hard way that this is a dumb way to build a profitable business which could scale up. 

The problem is that a lot of entrepreneurs are very scared to stop providing the product free of charge, because they are worried their number of users will take a tanking if they do so. Their secret fear is that people are happy to use their product for free , but they will refuse to pay for it. And they are petrified that if their numbers tank, their investors will get nervous , and will pull the plug.

However, the sooner you accept the bitter truth that if people will use your product but not pay for it, then this means that you really don't have a scalable, sustainable business , and you need to go back to the drawing board . You need to pivot and think of what else you can do in order to get people to pay.

One paying customer is worth ten free customers; and a paying customer you acquire through organic route is worth ten paying customers you get through digital marketing. Paying customers who come through organic channels are worth their weight in gold, and these are the ones you need to focus on and grow !

This is why it's so important that you track the right metrics - and the only ones which are of value are those which contribute to your bottom line ! While vanity metrics may give you a kick because you can boast about these in your next press release , or when talking to a friendly journalist , from a purely business perspective they are pointless, and just end up distracting you. Sadly, VCs are sometimes responsible for adding to this confusion, especially when they advice their start-ups to focus exclusively on growth , without worrying about revenue. Entrepreneurs needs to remember that growth without profitability will work only as long as investors keep on giving them money to burn. When this runs out, they will implode.