How to Kick ass In the Subscription Economy

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I presented this slides during the 2nd Edition of Lean Startup Machine in São Paulo on Feb 2013. This was a great event and I'm really grateful for the opportunity.

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How to Kick ass In the Subscription Economy

  1. 1. How to kick ass in the The Subscription Economy. Lean Startup Machine, São Paulo - 2013Monday, February 4, 13
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  7. 7. Monday, February 4, 13
  8. 8. Subscription EconomyMonday, February 4, 13
  9. 9. Disclaimer. I’m not an accountant or aspiring CFO/Controller!Monday, February 4, 13
  10. 10. Subscription EconomyMonday, February 4, 13
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  13. 13. AcademiaMonday, February 4, 13
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  16. 16. Offer Something in X amount + time + value + recurring payment.Monday, February 4, 13
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  19. 19. MASSIVE GROWTHMonday, February 4, 13
  20. 20. Final&Result& !200.00!! !180.00!! !160.00!! !140.00!! !120.00!! !100.00!! Final!Result! !80.00!! !60.00!! !40.00!! !20.00!! !"!!!! 1! 27! 79! 105! 118! 131! 144! 157! 170! 183! 196! 209! 222! 235! 248! 261! 274! 287! 300! 313! 326! 339! 352! 365! 14! 40! 53! 66! 92!Monday, February 4, 13
  21. 21. 4 Main Reasons Behind Why You Sign for a SubscriptionMonday, February 4, 13
  22. 22. Convenience.Monday, February 4, 13
  23. 23. Allows you to focus. Core Services.Monday, February 4, 13
  24. 24. Discovery & Curation. Early Adoption.Monday, February 4, 13
  25. 25. Status.Monday, February 4, 13
  26. 26. BTW, you should offer all of them in some capacity.Monday, February 4, 13
  27. 27. 6 Essential Metrics for Your Subscription Business •MRR •CHURN •ARR •CAC •ACS •CLTV Chaotic Flow by Joel YorkMonday, February 4, 13
  28. 28. Example A two year subscription contract with a total contract value (TCV) of $24K ARR = $12K per year = $24K / 2 Years MRR = $1,000 per monthMonday, February 4, 13
  29. 29. Monthly Recurring Revenue MRR.Monday, February 4, 13
  30. 30. CHURN % rate of customers that cancel over a period of time.Monday, February 4, 13
  31. 31. 1 = Customer Lifetime Churn RateMonday, February 4, 13
  32. 32. 10.000 = ^ (Sua Startup) 83.3 12%Monday, February 4, 13
  33. 33. Tempo é Fundamental para calcular o Chrun.Monday, February 4, 13
  34. 34. • Calculate out on an uniform population • Measure the right interval for the customer • Separate MRR Growth from Churn Growth • Business Systems are a must to scale • Exclude New CustomersMonday, February 4, 13
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  39. 39. ARR Average Recurring Revenue Total Revenue for a Period of Time = ARR Number of Customers for the TimeMonday, February 4, 13
  40. 40. Customer Acquisition Cost (CAC) CAC = marketing & sales expenses X of New Customers Cumulative ARR x CACMonday, February 4, 13
  41. 41. Average Cost of Service (ACS) Recurring Expenses with Cost of Revenue ACS = All Customers that cost you somethingMonday, February 4, 13
  42. 42. Customer Life Time Value - CLTVMonday, February 4, 13
  43. 43. 2 Important Rules of ThumbMonday, February 4, 13
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  45. 45. You must grow it!Monday, February 4, 13
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  48. 48. MASSIVE GROWTHMonday, February 4, 13
  49. 49. 100,000+ Enterprise and SMB customers Sending 8 billion emails per monthMonday, February 4, 13
  50. 50. How are we doing it?Monday, February 4, 13
  51. 51. Company Snapshot! •  Founded July 2009 $27M venture capital raised •  TechStars graduate (Boulder, CO) •  120 employees: –  HQ: Boulder, CO –  Eng: Anaheim, CA, Romania Angel investors include: •  Scott Petry (Founder, Postini) •  Matt Mullenweg (Founder, Wordpress)Monday, February 4, 13
  52. 52. We eat our own dog food.Monday, February 4, 13
  53. 53. + Our Own Backend ToolsMonday, February 4, 13
  54. 54. Monday, February 4, 13
  55. 55. Thanks! Pedro Sorrentino @pedrosorren pedro@sendgrid.com Business Development & LatamMonday, February 4, 13

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