building a mvp - validating startup ideas - lean startup - google launchpad berlin
DESCRIPTION
How to build a MVP and test your startup idea using a lean startup methodoligy. Presentation originally held at Google Launchpad Berlin.TRANSCRIPT
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&guid=ON&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!