Waitlists, registered users, and other cumulative measures are vanity metrics.

By vanity – I mean they better measure the size of your pride than the size of your business.

First-year MBA operations courses emphasize that long lines should be avoided and certainly not optimized for.

Unless you are in fact a vanity or “prestige” product, bragging about these metrics destroys your credibility in the eyes of potential investors.

Most importantly, in paying them too much attention, you fool, distract, and mislead your most gullible stakeholder – yourself.

The first principle is that you must not fool yourself – and you are the easiest person to fool – Richard Feynman

Be kind to your potential customers, your investors, and yourself – ignore these misleading numbers.

Cumulative metrics are problematic for many reasons. The main two are:

  • They almost never decrease – by design
  • They have zero intrinsic correlation to customer value

If it can’t decline, it’s not worth your time

To have weight, a metric should be capable of moving in either direction – up or down.

An easily gamed number that can only move in one direction is problematic. Most cumulative metrics have this feature.

A measure that moves up or down with the health of the business is a valuable signal – both in terms of its level and its change (or rather rate of change).

That its level is X, instead of Y or Z, tells us something. That it grew by X% last month also tells us something. That "something" is much more informative when X can move up or down and X% can be positive or negative.

Classic examples include monthly revenue, paying users, monthly expenses per employee, or annual profits.

On the other hand, total registered users – people who’ve created an account for a website or app but don’t necessarily pay for it – never declines unless users un-register themselves. This rarely happens.

In practice, the registered user count grows and grows, with no regard to whether the business is improving. Hence, both its level and its change provide little information.

Waitlists are functionally similar. They exist to signal attractiveness to third parties but are completely manipulable.

The size of a waitlist never declines unless you want it to. The outflow is entirely in your control.

If you never want your waitlist to shorten, stop accepting new users off the waitlist. Mission complete.

As such, waitlists are mostly a rebrand of "cumulative registered users".

Having a long waitlist sounds cool, but a waitlist alone is little more than a list of opt-in email addresses saved in a CSV file on your desktop or, better yet, “in the cloud” somewhere.

A true business imposes costs on its customers and delivers value in return

The cost customers willfully bear to interact with your business implies value delivered. Those costs historically came in the form of dollars but increasingly take the form of attention or time.

If a customer isn’t giving you their money, attention, or time, they’re not a customer.

You can call them registered users, opt-ins, friendly acquaintances – it doesn’t really matter.

But they’re not customers.

Adding oneself to a digital waitlist imposes almost no cost. If anything, it’s a free option – maybe I’ll sign up once the service is available, maybe I won’t.

When a human being accepts a free option, we call that person “rational”. We don’t call them a “customer”.

Like selling dollars for 75 cents, there is no signal in handing out free options.

Flaunting the length of your waitlist is like bragging about raising $10M from investors with no plans to do anything with the money. This is why bankers subtract cash from equity value when calculating enterprise value – quite literally, how much your business is worth.

In the preceding example, your equity value might be $10M, but your enterprise value would be a flat $0. You’ve delivered zero additional value to your investors.

Adding 10,000 people to your waitlist but not doing anything with those users is similarly worthless.

How to make your waitlist valuable

I know what you’re thinking – “but what if I’m…"

  • Fundraising and want to give investors every possible reason to write a check
  • A fledgling startup without many options for measuring progress
  • Bored and just like staring at numbers (guilty as charged)

Not all is lost – paired with other metrics waitlists can in fact be a signal of business value.

  • Example: the proportion of people taken off the waitlist who subscribe or purchase the product

This provides some directional sense of future value – if we let X people off the waitlist we’ll gain Y customers. That Y/X ratio is a conversion rate.

Who knows if that conversion rate will hold across the entire waitlist – it probably won’t – but at least we know the waitlist has some value and isn’t pure vanity.

  • Another example: charge people for reserving a spot in line like Tesla did for the Model 3

That hundreds of thousands of people were willing to put down a deposit before ever touching, let alone driving, the car was a huge signal.

That spot in line was valuable to customers, and they manifested that value by forking over thousands of dollars years in advance of the launch. Investors, too, saw value, rewarding Tesla with a higher valuation.

Notice a pattern? To make waitlists useful, link them to customer value.

Don’t wait

That slide in your pitch deck where you mention how large your waitlist is? Unless you can tie it to customer value, delete it.

Heard about some hot startup with a waitlist 10X as long as yours? Ignore it.

By distancing yourself from the raucous noise of waitlists and other cumulative measures – you refocus your attention on the true signal of entrepreneurial success – delivering value to customers.

Ship them a product. Provide them a service.

But please, don’t just hand them a ticket with a number on it and call it a day – or a business.