pg explicitly wrote that active users are a proxy for revenue (in an early stage startup). In the early stages of your business, measuring revenue is hard becau

pg explicitly wrote that active users are a proxy for revenue (in an early stage startup). In the early stages of your business, measuring revenue is hard because there is not enough data points yet. But you need to measure something that approximates your potential revenue to judge impact of your actions. First, let's accept that freemium is a good honest business model that by its nature is a good fit for many Internet services. If you build freemium model similar to DropBox, conversion to paid users is typically around 1-10% from the active users. Thus, it doesn't necessarily make sense to introduce a paid plan and implement integration to payment systems (a task which was PITA before Stripe) until you have a way over 10k active users. Furthermore, something like 30k active users might mean that you need over 300k signups, which will take a while if you don't have explosive takeoff. Thus it makes sense to approximate potential revenue by measuring active users, when your actual revenue stream is still not fully in action. As I said in another comment, the same approximation philosophy works in enterprise sales too. You measure the performance of your sales pipeline, which works as a proxy for revenue even before you close your first $100k deal.