A data driven culture isn’t necessarily devoid of creativity or imagination. Just the opposite. They’ll have to be especially patient around brand formation. Brands A brand exists in the mind of a person. It usually costs a lot of money for a brand to be impressed upon the cortex of a person. There are certain economies of scale that kick at scale, but still at a considerable cost. If that feels fuzzy, despair not. The framework below is fantastic: Brand and CAC The optimization objective of a startup is valuation. To maximize valuation, Customer Acquisition Cost has to be minimized. As previously explored, nature doesn’t cooperate to keep CAC low. The point of the brand is to reduce CAC[…]
Category: Business
Assume that you’re a founder of a tech startup. Assume that you’ve achieved product-market-solution fit. You’ve nailed it. Time to scale. Many founders are great at sales. But not all founders are great at marketing. And that’s a bit of a problem because of three letters: CAC. The Customer Acquisition Cost CAC is the ratio between dollars spent on marketing, and new customers acquired. And it is related to valuation in a very important way. Let me explain. Take a look at the chart below. This is an output from a standard model of SaaS market penetration. Market size is 333,333 customers, the product will approach saturation at 51% of that target, with a monthly churn rate of 0.20% held[…]
Consider the chart below: There are two series – the total number of cumulative customers (top curve) and the number of new customers added each month (bottom curve). The top curve is shaped like an ‘s’ and the bottom one is shaped like a bell. Each month that goes by, the rate of new customer acquisitions increases up to a point, and then declines. You can see the impact that the bottom curve has on the top, because adding up all the incremental customers yields a cumulative penetration curve. Pop-literature (Moore, Crossing The Chasm) focused on the bell shape of the new customers added curve. Strictly speaking, it’s not a distribution, but the shape causes a degree of comfort with[…]
Consider the statement: The strategies generated by data driven cultures are likely to produce sustainable competitive advantages. Data Driven Cultures Carl Anderson, 2015 (Data Scientist at Warby Parker) defines a data driven culture: Is continuously testing; Has a continuous improvement mindset; Is involved in predictive modeling and model improvement; Chooses among actions using a suite of weighted variables; Has a culture where decision makers take notice of key findings, trust them, and act upon them; Uses data to help inform and influence strategy. Strategy For the purposes of brevity, I’ll define a strategy as: An artifact; That enunciates choices selected from acknowledged tradeoffs; Which is rooted in a paradigm; That is actionable; With the intent of causing a sustainable competitive advantage in[…]
Into the trough of disillusionment with the hyped technologies! The canary in the coal mine for me, with respect to BitCoin, is this post. Look, nobody has enjoyed more popcorn around BitCoin than I have. From Coinye to Dogecoin, crypto-currencies have delivered the lulz. Do I believe there’s a slope of enlightenment for crypto-currency? Absolutely. Do I believe that’s imminent? Nope. Banks are apex ruminants. The lessons from BitCoin have to be fully digested before something really good comes out of it. Machine learning. Huge potential and the best is yet to come. The first wave around machine learning gave us Netflix and Amazon. And then the bloom came off the rose a bit. And now there’s deep learning and we’re[…]
Let’s start with a story. Daan did a traditional fast follow. He calls it Netherflix. His story was: “It’s like Netflix…for The Netherlands!”. At first, he buys rights on the cheap, pays for digital subtitling, and has a successful kickoff. He gets through to 10% household penetration, or roughly 700,000 subscribers, with an annualized gross revenue of about 60 million Euros. The strength of the Euro lets him raid the Anglosphere and he can stock 10,000 hours of content reliably [1]. He gets through the struggle of getting his stack to deliver content and minimize churn. He’s able to host and deliver 10,000 hours reliably, in spite of supporting video players across 11 different front end platforms, and the costs associated with hosting,[…]
That title, ‘morphing the lean startup’, may be technical jargon. But it is literal. And brief. I have a few thoughts to share about them both. Morphing There’s a very small sliver of research in the Marketing Science on morphing. Two papers, ‘website morphing‘, and its adtech successor, ‘morphing banner advertising‘, stand out as giants. This technology makes snap changes to a digital user experience. The ultimate reason why you’re not hearing more about morphing in adtech is because paid agencies can’t figure out how to scale the creative necessary to drive it. I’m convinced that morphing is the ultimate promise I bought into back in the mid-nineties – the perfect intersection of recsys and experience. It requires an extreme[…]
Reddit had a bruising week. If you’re out of the loop, you can read about it here. It highlights the untapped opportunities in how our collective experiences are managed and lists of recommended reading/viewing are assembled. Large areas of opportunity include regression shaving, state-management, and dog-whistle cancelling headphones. Regression Shaving In general, the bigger the audience, the smaller the media. In Regression to the Meme, I argued that a lot of redditors want high jolts per minute with easy to consume content. Why read a three paragraph joke when you can get the same amount of dopamine almost immediately with a six word image macro? Larger audiences congregate around easy-to-consume content. Go wide. Go LCD. Accept that younger people have[…]
Somebody, get this, created a fitbit…but for dogs. This is a real design pattern. Take any service that is starting to gain traction and just add “for dogs!” at the end of it. Tinder…for dogs. Airbnb…for dogs. It’s a laugh line. Facebook…for dogs. Those are all real things. Dogs do love to chase tail lights. That’s just taking the taillight/fast-follow strategy a little bit too far. Entrepreneurs are trying to reinvent things by making them smarter. This is well beyond the you know, “the data!”, style pitches you may have been subjected to. I’m really optimistic, and excited, for the 2.5% of companies that will thrive, not by slapping a dashboard on an product or attacking a niche market, but by[…]
Previously, I wrote about communication overhead in tech and the two cultures around it. Broadly, I perceive two broad camps: there are the shippers and there are the talkers. Shippers ship. Talkers talk, then ship. In this post I’ll describe three forms of written communication and how they link up with current cultural megatrends. There are those that can write instructions that a human can reliably compile and execute (management). There are those that can write instructions that an organization can reliably compile and execute (governance/policy). There are those that can write instructions that a computer can reliably compile and execute (development). There are instructions that can be typed that cause performance in people. Such parameters include the outcome, the instruction,[…]