Cosi102

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### Logistics
* Next tuesday, presentations!
  * 3-4 minutes each
  * I will download all the presentations to my computer (from your deliverables)
  * We will go in team number order
  * We will queue so that we can get to all the teams
  * Primary goal is to have everyone see what everyone else is doing
* Quick discussion about Final Deliverables
  
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<h2 id="thinking-about-engine-of-growth">Thinking about Engine of Growth</h2>

<ul>
  <li>What is the objective?</li>
  <li>Is it sustainable?</li>
  <li>How much investment does it need?</li>
  <li>How do YOU define success?</li>
  <li>You must have a goal in terms of a metric</li>
  <li>Is it a business or a hobby?</li>
</ul>

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<h3 id="metrics-money">Metrics: Money:</h3>

<ul>
  <li>Where does the revenue come from?</li>
  <li>When does it arrive?</li>
  <li>What metrics drive it? (revenue drivers)</li>
  <li>Gazintas > Gazoutas</li>
</ul>

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<h3 id="metrics-non-money">Metrics: Non-money</h3>

<ul>
  <li>It’s not always about money</li>
  <li>But you still have to have quantitative goals (at different stages)</li>
  <li>Number of people vaccinated</li>
  <li>Number of students who get an internship</li>
  <li>Number of voters who vote</li>
  <li>Without a goal you will never know if you got there</li>
</ul>

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<h3 id="some-models-for-growth-of-the-metric">Some models for growth (of the metric)</h3>

<ul>
  <li>Sticky Engine of Growth (subscription)</li>
  <li>Viral (users invite other users)</li>
  <li>Paid (marketing to acquire new customers)</li>
  <li>Accessory (Razorblade/Razor or in-game purchases)</li>
  <li>
    <p>Two Sided Market (match making/buyer-seller)</p>
  </li>
  <li>Lets look at this <a href="https://docs.google.com/spreadsheets/d/1dLQWhfuQCiGa7nYHdHX9zI8r-X9JVPbhlLmXN4X7BZY/edit?usp=sharing">Simple Financial Forecast</a></li>
</ul>

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<h2 id="principles">Principles</h2>

<ul>
  <li>Excludes one-time campaigns and actions</li>
  <li>Systematic: built into the product’s usage</li>
  <li>Comes from actions of past and existing users or customers</li>
</ul>

<div class="callout callout-small">
  <span class="callout-badge">Keys</span>Growth models explain how actions of past customers generate new customers.
</div>

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<h3 id="how-does-use-lead-to-growth">How does use lead to growth?</h3>

<ol>
  <li>Word Of Mouth (people recommend your product to others)</li>
  <li>Side Effect of Usage (people see you using and want to use it too. Or in order to benefit you have to invite.)</li>
  <li>In-product purchases (part of the experience of the product requires you to spend money inside it.)</li>
  <li>Subscription (or need to re-buy) (access charges, periodicals, expiration or consumption.)</li>
  <li>Funded marketing (When marketing erfforts get more users, and is funded from revenue from users.)</li>
</ol>

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<h3 id="engines-of-growth">Engines of Growth</h3>

<ul>
  <li>We know that without growth we don’t have a business</li>
  <li>Engine of Growth is a way to reason and organize thinking around this</li>
  <li>It is the mechanism whereby a startup means to achieve sustainable growth</li>
  <li>The focus of the analysis is around the <em>metrics</em> that are necessary</li>
  <li>The Metrics not only tell you whether you will grow but guides to where to invest to grow</li>
</ul>

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<h3 id="sticky-engine-of-growth">“Sticky Engine of Growth”</h3>

<ul>
  <li>Concept
    <ol>
      <li>A subscription model that needs to be renewed</li>
      <li>Customers are acquired through marketing (e.g. advertising)</li>
      <li>Customers are retained by customer satisfaction and value</li>
    </ol>
  </li>
  <li>Key Metrics
    <ol>
      <li>Customer acquisition rate (new customers per unit time)</li>
      <li>Churn rate (customers lost per unit time)</li>
      <li>Customer lifetime (average time a customer stays with the service)</li>
    </ol>
  </li>
  <li>
    <p>Rule: Growth requires that the rate of new customer acquisition exceeds the churn rate</p>
  </li>
  <li>Focus
    <ol>
      <li>Attracting new customers and retaining the ones you have</li>
      <li>Understand why a customer did not renew the service and address those issues.</li>
    </ol>
  </li>
  <li>Examples
    <ol>
      <li>Home cleaning application and service</li>
      <li>Inherent in the service is that the house will need cleaning periodically
1.The service is inherently sticky</li>
    </ol>
  </li>
</ul>

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<h3 id="viral-engine-of-growth">“Viral Engine of Growth”</h3>

<ul>
  <li>Concept
    <ol>
      <li>Customers are acquired  through marketing (e.g. advertising)</li>
      <li>Simple normal use of the product leads to additional sales</li>
      <li>Powered by a “viral loop”</li>
    </ol>
  </li>
  <li>Key Metrics
    <ol>
      <li>“Viral Coefficient” - how many new customers a single customer brings in, and over what period</li>
    </ol>
  </li>
  <li>
    <p>Rule: Growth requires that the viral coefficient be greater than 1</p>
  </li>
  <li>Focus
    <ol>
      <li>Increase the viral coefficient</li>
    </ol>
  </li>
  <li>Examples
    <ol>
      <li>Dropbox: strong incentive of a new user to invite additional users</li>
      <li>Users were given an incentive to do this, more free disk space</li>
    </ol>
  </li>
</ul>

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<h3 id="paid-engine-of-growth">“Paid Engine of Growth”</h3>

<ul>
  <li>Concept
    <ol>
      <li>Simple paid product</li>
      <li>Customers are acquired primarily through marketing (e.g. advertising)</li>
      <li>Still need to pay attention to metrics</li>
    </ol>
  </li>
  <li>Key Metrics
    <ol>
      <li>Customer Lifetime Value (LTV): How much does a single customer bring in over their lifetime (as long as they use the product)</li>
      <li>Customer Acquisition Cost (CAC): How much (in sales costs, advertisting, etc.) does it cost to acquire a single customer</li>
    </ol>
  </li>
  <li>
    <p>Rule: Growth requires that customer acquisition cost is less than Lifetime Value of a customer</p>
  </li>
  <li>Focus
    <ol>
      <li>Increase Lifetime Value of a customer (LTV)</li>
      <li>Reduce the Customer Acquisition Cost (CAC)</li>
      <li>Simply add more money to customer acquisition and you get a predictable amount of earnings from that.</li>
    </ol>
  </li>
  <li>Example
    <ol>
      <li>Ad costs $100 and it predictably causes 2 customers to sign up. CPA = $50.00</li>
      <li>Average customer spends $25 per year and lasts an average of 1.5 years). LTV = $37.50</li>
      <li>If LTV > CAC the company grows, because profits can be invested in more ads or sales people</li>
    </ol>
  </li>
</ul>

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<h2 class="shadow p-3 bg-white rounded">Thank you. Questions?<img class="img-fluid w-100" src="https://picsum.photos/800/100.jpg" /> <small> (random Image from picsum.photos)</small></h2>