Building a MVP What I have learned as an entrepreneur

Daan Löning

@daan_kinderfee

daan@kinderfee.de

Startup Economics 101

Startup economics 101

Customer Acquisition Cost vs. Customer Life Time Value

vs.

$ $ $ $

CAC calculation Google CPC: 1$

Conversion rate: 3%

CAC: 33$

CLTV calculation Avg. Basket size: 250$

Avg. Orders per cust.: 1.3x

Avg revenue per cust: 325$

Avg gross margin: 40%

CLTV: 130$

Two great businesses with one small difference

Typical transaction 80$ per night 4 nights per booking = 320$ 15% fee = 48$

Typical transaction 25$ for typical event 2 participants per booking = 50$ 10% fee = 5$

Please note: this example is my estimate. The data is entirely made up.

Basket size analysis

Why build a MVP?

What is an MVP or How quick is quick?

Key questions for your test

Validating demand & economics

Key questions:

Is the CAC 10$ or 100$?

Is the CLTV 5$ or 500$?

Can I sell one item per day or 5,000?

Validating demand & economics

Rules for running your test:

1)  Never ask anyone whether they like your idea

Only hard cash means anything

2) Sell your product at least 10 times

Validating demand & economics

How can I sell my product without a product?

Fake it until you make it!

www.google.com/adwords

<!-- Google Code for Test Purchase Conversion Page --> <script type="text/javascript"> /* <![CDATA[ */ var google_conversion_id = 978000249; var google_conversion_language = "en"; var google_conversion_format = "2"; var google_conversion_color = "ffffff"; var google_conversion_label = "v_kWCNmywVYQ-bKs0gM"; var google_remarketing_only = false; /* ]]> */ </script> <script type="text/javascript" src="//www.googleadservices.com/pagead/conversion.js"> </script> <noscript> <div style="display:inline;"> <img height="1" width="1" style="border-style:none;" alt="" src="//www.googleadservices.com/pagead/conversion/978000249/?label=v_kWCNmywVYQ-bKs0gM&amp;guid=ON&amp;script=0"/> </div> </noscript>

Tool for further insight

What does the perfect flop look like?

Huge market (as defined by your ambition)

Very strong initial customer economics

It is not only possible for you to sell your product, but customers are flocking towards you

What can you use these tools for?

Create a Leanathon

Test a whole product

Test a feature

Change your mindset

Thank you!