Your SlideShare is downloading. ×
0
Startup Unit Economics and Financial Model
Startup Unit Economics and Financial Model
Startup Unit Economics and Financial Model
Startup Unit Economics and Financial Model
Startup Unit Economics and Financial Model
Startup Unit Economics and Financial Model
Startup Unit Economics and Financial Model
Startup Unit Economics and Financial Model
Startup Unit Economics and Financial Model
Startup Unit Economics and Financial Model
Startup Unit Economics and Financial Model
Startup Unit Economics and Financial Model
Startup Unit Economics and Financial Model
Startup Unit Economics and Financial Model
Startup Unit Economics and Financial Model
Startup Unit Economics and Financial Model
Startup Unit Economics and Financial Model
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×
Saving this for later? Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime – even offline.
Text the download link to your phone
Standard text messaging rates apply

Startup Unit Economics and Financial Model

3,138

Published on

Slides for a workshop about Customer Unit Economics and basic Financial Models for early stage tech startups.

Slides for a workshop about Customer Unit Economics and basic Financial Models for early stage tech startups.

1 Comment
4 Likes
Statistics
Notes
No Downloads
Views
Total Views
3,138
On Slideshare
0
From Embeds
0
Number of Embeds
5
Actions
Shares
0
Downloads
109
Comments
1
Likes
4
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. Customer Unit Economics & Startup Financial Models Austin Neudecker for EvoStart II
  • 2. Customer Unit Economics • What is a customer worth to you? • CAC = Customer Acquisition Cost – “How much does it cost to get a paying customer” – On average across all your channels • LTV = Lifetime Value (of a customer) – “How much does a customer spend with you… – […over some reasonable amount of time”] – Depends on how long they usually stay, attrition rate, etc. but often <=3-5 years max (I recommend 3 max for super early stage ventures)
  • 3. Quick Notes: • Talking (primarily) about marginal costs • NOT fixed overhead, salaries (unless they are people associated with/required for the sale) – Exceptions: Engineering customization – Training – Etc.
  • 4. Why do people care? • Fundamental business measurement – Show that CAC < LTV – you have proven you a business – Show that you can reproduce this [at scale] and the money will flow (customers, investors, etc)! • CAC & LTV depend on each other – Know how much a customer is worth to you  know the max you can afford to pay for them – Track by channels, parts of the conversion funnel and always be optimizing
  • 5. How to Calculate CAC • Well, it depends… What is the channel?
  • 6. How do you acquire a customer? Dave McClure’s Startup Metrics for Pirates EXAMPLE CHANNELS
  • 7. How to Calculate CAC This is one entrepreneur's quantitative approach to assessing many different channels – but please just pick 1-2. Reallocate your money to the ones that work best.
  • 8. Example: Calculate CAC Classic SEM example: CPC cost / Conversion Rate $2 CPC and 5% conversion = ???
  • 9. What is your CAC & LTV? • Anyone know theirs?? • Anyone have a model? • Everyone quickly scratch up a rough estimate • Discuss publicly
  • 10. Transition between the two… • They are related: as people get deeper into your sales / conversion funnel, they are worth more to you. • I like to start backwards from the sale
  • 11. Dave McClure’s Startup Metrics for Pirates Start here, work backwards
  • 12. LTV • How much does a customer pay you? – Conversion from Freemium? – One-time or recurring payment? – Diversity in order size? • Share your mix – trying to always improve • How long do they stay a customer – How often do they come back? – Do you need to reacquire them each time? – What is the attrition rate? • Harder Stuff? – How long? – How to handle referrals • (personally – as recution in average CAC)
  • 13. LTV • What is a customer worth to you? (Each company)
  • 14. Financial Model (focus on revenue) • How many have an up to date… ? – Balance sheet – Cash flows – Income statement • Your Finance model: Focus on REVENUE • Where do you see this business going? • Investors are looking for the up-side • Some high-level costs is required • Rough margins are important • Add in your few (2-5) most important Metrics
  • 15. Attributes of a Good Financial Model • Focus on what is important • 4 key tabs – Summary • Rev vs. Costs • Graph • Table going out ~5 years – Assumptions • Can put straight into the next 2, but often preferred separate – Revenue • Focus on this part – how do you make money – How quickly do you think you can scale • I spend ~all my time analyzing this part – Cost • DON’T spend too much time on this part • Can stack under Revenue if really want to – Cap table – optional • As you use it – adjust projected to actuals
  • 16. Your Models?
  • 17. Yealthy Models (in 000s) 2012 (6m) 2013 2014 2015 2016 Rev $10 $218 $1,432 $5,163 $14,590 Cost $206 $1,646 $3,623 $4,855 $7,234

×