An entrepreneur asked me the question, what is the maximum viable churn for a startup? Within that question, a few others are embedded. How should a founder think about trading off efforts to grow revenue and mitigate churn? What is the impact of account growth on net churn? Startups must walk a tight-rope to balance growth, churn and cash. Below is the framework I use for working through maximum viable churn."
Aside from a startup's internal considerations about the right time to raise money, founders should weigh the seasonality of the fund raising market when planning their raise. There's a rule of thumb batted around the valley that the worst times to raise capital are in the dog-days of summer and after Thanksgiving. As it turns out, this aphorism is only a half-truth."
Last week, I spent some time at HeavyBit, the community for developer focused companies in Soma, chatting with a few companies reaching scale. Across a handful of meetings, a recurring theme surfaced for these B2D (business-to-developer companies). How should their sales and marketing apparatuses be built? After all, most of these companies aren’t infrastructure companies nor are they software companies. Do any of those models hold lessons for B2D companies?"
When I worked as an engineer, I loved crafting code and feeling the satisfaction of having built something each day. But there was one thing about coding I never grew to love, despite its importance: forecasting my coding time. Every two weeks, I trudged into a planning meeting that exposed my incompetent forecasting. During these meetings, each person in turn would review their commitments for the last two weeks and provide an update. Inevitably, I was wildly off. Chalk it up to inexperience, exuberance or ineptitude, but I never developed the knack. In contrast, one of the companies I work with, Axial, has honed and refined their ability to forecast, promise and deliver code with remarkable consistency."
While the phrase data scientist may be [growing exponentially in its usage, and the number of data scientists job requisitions following a similar trend, the definition of the term is hard to pin down precisely. I wasn't sure I could define it well until I watched a talk by Hilary Mason, former chief scientist at Bitly, called Dirty Secrets of Data Science at a NYC meetup. During the presentation, she highlighted a chart created by the Data Community DC team that demystifies term data scientist."
As recently as six months ago, it was easy to disregard the Internet of Things (IoT) as just a theoretical market that Cisco measured in the trillions, but whose potential never seemed to materialize. That’s all changing. The past year ushered in a new era for the Internet of Things for three reasons."
Each year the National Venture Capital Association and Thomson Reuters release data characterizing the state of the startup market. I've analyzed the 2013 data and there are three important trends I observed. All in all, the startup exit market is quite healthy."
On the heels of last week's post about the Health of the Public Technology Market, Felix Salmon asked the thought-provoking question above. Despite the 68x growth in the value of technology market caps since 1980, are newer average technology companies worth less? Surprisingly, yes.
Churn is one of the most important metrics for businesses. Churn dictates customer lifetime, lifetime value (CLV), customer acquisition spend and customer success spending. In short, churn is pivotal number to evaluate a startup's business, both for founders/management teams and investors. Unfortunately, accurately measuring churn rates/lifetime value is more complex than I initially thought. I was researching the topic after Ryan Shank asked me how best to calculate an average customer's lifetime value. The more I dug into the math, the deeper the rabbit hole went."
As I've watched a few of the companies I work with grow, the pattern I see emerging from most of them is their ability to persistently face chaos and from it, create processes and then continuously improve them.