clock menu more-arrow no yes

WTF Is MRR? Tech's Most Jargony Acronyms Explained.

If talk turns to a company’s TAM, and you're, like, WTF, consider yourself DOA.

If you buy something from a Vox link, Vox Media may earn a commission. See our ethics statement.

http://hutebazile.deviantart.com

In the 1987 film “Good Morning, Vietnam,” the late Robin Williams butts heads with a grouchy lieutenant over his irritating knack for abbreviations. “Seeing as how the VP is such a VIP, shouldn’t we keep the PC on the QT?” taunts Williams. “’Cause if it leaks to the VC, he could end up MIA, and then we’d all be put on KP.”

In today’s booming technocracy — a transcontinental railroad linking Sand Hill Road to Silicon Alley — the common tongue is peppered with such initialisms. They’re pockmarked on slide decks and bandied about at cocktail parties. If talk turns to a company’s TAM, and you’re, like, WTF, consider yourself DOA.

So, without further ado, here are the acronyms you should know, use and abuse!


MVP = minimal viable product

Antonin Scalia once grumbled that he “would sooner be caught watching a rock video than referring to a ‘viable option.’” Even in a neonatal context, viability is a moving target. Vis-à-vis technology, its usage was popularized by the author Eric Ries, as the cornerstone of his “Lean Startup” approach. Ries’s point of viability — when a team can collect “validated learning” with minimal effort — is vexingly circular. And with the advent of mobile, some investors have gone a step further, abandoning the notion altogether. “MVP should be switched from minimum viable to most valuable,” says David Tisch, an investor at BoxGroup, who heads Cornell Tech’s startup studio. “You have one shot on mobile to win someone over. So it better be really good.”


UVs = unique viewers

In 1983, more than 60 percent of American homes tuned in to the series finale of “M*A*S*H.” Viewership in the golden age of television was concentrated on a single device, over a shared window of time. But today’s viewers, as Jonah Weiner writes, “slip elusively” between smartphones, consoles, streaming portals and, “if they even own them, cable boxes.” Tallying a unique viewer has become more of an art than a science — and, some say, a fool’s errand. BuzzFeed claims that traditional metrics capture only a fifth of its total reach. That said, most publishers still rely on a single authority to quantify their traffic. “You may not like their decision, but comScore is the referee,” says Bryan Goldberg, who founded Bleacher Report and Bustle. “While there may be a day in the future where UVs don’t matter, that day has not yet arrived.”


LTV: lifetime value

“Unit economics” — industry shorthand for the profit staked off a single sale — depend on not one, but two knotty acronyms. One half of this equation is the so-called “lifetime value” of a customer. I’ll never see another dollar from the stranger who bought my couch off Craigslist; he’s worth $300 minus the ding on my wall. Businesses with repeat customers, however, confront a flurry of considerations: How much does the average unit cost? How many units will a customer order? Six months ago, Sam Altman of Y Combinator issued a prescient warning against low-margin businesses promising, among other things, “infinite retention.” To do this, as Casper’s Philip Krim told me, “companies are playing creative games.” Startups, especially, have a hard time fathoming attrition; after that first liquified meal replacement, why quaff anything else? And so customer values — and, hence, company valuations — fluctuate widely on paper. “Sometimes it’s pennies,” as Krim says, “and sometimes it shows you $10,000.”


CAC = customer acquisition cost

The flip side of this equation is the cost of acquiring a customer. In 1997, when Amazon was preparing to go public, the company said it spent $8 on advertising a $20 book. But if you tacked on shipping and handling, Amazon was actually spending $25 to make the sale. “If we’re profitable within the next two years, it will be an accident,” Jeff Bezos said at the time. Oftentimes, companies report a “blended” figure, which takes into account word-of-mouth shoppers. Or they disregard supply-side expenditures, such as when Uber recruits drivers. “Unfortunately,” as investors from Andreessen Horowitz groused last year, “CAC metrics come in all shapes and sizes.” Aarthi Ramamurthy, who founded Lumoid, says underreporting is widespread. “A lot of it isn’t even intended to reduce costs,” she says. “It’s just laziness.”


MRR = monthly recurring revenue

For many businesses, the clientele isn’t you and me, but other businesses. Investors tend to evaluate these companies on how many steady contracts they’ve signed. Such “recurring revenue” — often charted by the month — sets apart technology companies from “lifestyle” businesses (what ventures capitalists call lemonade stands or law firms), whose sales are sporadic. “They don’t have recurring revenue,” says Brian Feinstein, a partner at Bessemer. “They have revenue that recurs.” While ambitious projections may wow investors, they can also imperil fledging enterprises. Last year, the human-resources startup Zenefits was touted as “the fastest-growing cloud company ever,” with a $100 million run rate. But last month the company laid off 250 workers, after its business practices and office environment came under fire. “It is no secret that Zenefits grew too fast, stretching both our culture and our controls,” the new chief executive, David Sacks, wrote to employees.


CPM = cost per mille

In the 1990s, banner advertisements began appearing on websites. Taking a page from print media, these placements were sold on a cost per mille, or by every thousand impressions. Decades later, digital media has swelled to a $66 billion industry, larger even than television. Alas, the yardstick by which online spots are measured hasn’t meaningfully evolved. Internet advertising — what Marc Andreessen calls a “rolling fiasco” — is rife with fraud and distrust. Two years ago, Google estimated that 56 percent of display ads were never seen by a human, prompting an industry-wide debate over “viewability.” Bots troll the Web, posting phony views to the tune of $18.5 billion. And ad-blocking technology is costing publishers $22 billion a year. Aniq Rahman, the president of Moat, foresees more nuanced metrics replacing the CPM. “Right now, we’re still looking at raw tonnage,” Rahman says. “But the industry is starting to transact on attention.”


OTT = over the top

If you’re the average cable TV subscriber, you get 189 channels — and watch just 17 of them. For decades, couch potatoes have been obliged to foot the bill. But, as Joe Flint writes, “pushback is building that could finally break the bundle.” Newfangled networks like Netflix and Hulu — which stream “over-the-top” of traditional cable — sell individual subscriptions through the Internet. Established players like HBO have followed suit. This great unbundling supposedly benefits consumers, who pay as they go. But as we approach “Peak TV,” there’s never been more binge-worthy programming for sale. Spread thin across a glut of channels, so many micropayments might actually exceed your old cable bill. Indeed, the only clear beneficiaries are creatives, who, with so many buyers, can chase acclaim instead of ratings. “If something’s a critical success, then it’s a success,” says “Broad City” producer Lilly Burns. “End of story.”


Surely there’s plenty more to abbreviate, but the human attention span is now shorter than a goldfish’s (which is probably why we abridge everything). And BTW, if you aren’t familiar with KP, it stands for “kitchen patrol.”


Rob Fishman is the co-founder of Niche, which was acquired by Twitter in 2015. He has written for New York Magazine, BuzzFeed, Slate and The Huffington Post, where he formerly oversaw social media. A graduate of Cornell and Columbia’s Graduate School of Journalism, he lives in New York. Reach him @rbfishman.

This article originally appeared on Recode.net.

Sign up for the newsletter Sign up for The Weeds

Get our essential policy newsletter delivered Fridays.