2. Who’s Red Granite?
(…and why should you listen to us?)
1. Founded in 2011 by Chris Arndt
2. The Entrepreneur’s Finance Team
3. Focus on financials AND key metrics
that affect the financials
4. Proud Associate Members of 1871!
11. Why Do We Care?
Investors want know!
e.g. For every $50 the investor gives you now, that will enable you
to acquire a customer and return $150 in three years.
Image Source: blog.asmartbear.com
12. Why Do We Care?
Bootstrapped? Save yourself from ramen noodles!
Working Capital Cycle
A faster PBP means more profit cycles in a shorter
13. Why Do We Care?
A faster CAC Payback let’s you keep more equity
Less money will be needed from investors so your
ownership won’t be as diluted.
15. FAQ: What’s in CAC?
A: More than you think!
▪ Paid advertising
▪ Sales people base & commission
▪ Sales manager
▪ Free trial support and hosting
▪ On-boarding costs
16. FAQ: Customer lifetime?
Q: How can I guess the number of months of my customers’
lifetime when my site has only been live for two months?
A: In month two, start looking at the churn of the customers that signed-up
in month one (i.e. Month 1 Cohort). Keep track of the churn for the
Month 1 Cohort in the third and subsequent months as well.
Then use this formula…
# Months Lifetime = 1 / (Avg. Monthly % Customer Churn)
17. FAQ: Shorten PBP?
Q: I now understand that the shorter the CAC Payback period
the better, but how can I actually improve upon my current
A: Two options: either reduce the CAC or increase the monthly profit margin
for the customer.
Continued on next slide…