So in the last lecture, you remember the business model canvas, all the 9 components of a startup.

By now, you're intimately familiar with the business model canvass.

In customer relationships all the get keep grow metrics, some of which we talked about, some of which you'll discover, what were the customer acquistion costs?

Now we finally come to the last part of the business model canvas.

Well, remember this was to acquire a customer.

So one of the interesting equations for every startup is that

That was the customer acquisition cost, CAC, here.

They need to understand the external environment and they need to come in.

I can't emphasize enough that the business model canvas is just a start.

Who are your key partners and suppliers?

So in our last lectures we talked about value proposition, customer segments, distribution channels, customer relationships get, keeping and growing customers.

Now what's our mantra of this day and age I wonder?

How do you actually make money from your product and service being sold to customer segments?

You're all familiar with the business model canvas.

Again, your CAC declines. The idea is what can you do to make this very efficient?

Seems intuitively obvious but what you want to make sure is the amount of money you're collecting over here is bigger than the customer acquisition cost to remember the amount of money you're spending from here to here.

So archetypes really helped us understand our customers, they value prop, the revenue and some of our pricing tactics.

And again, are you getting a viral loop and referral loop from happy and satisfied customers telling others word of mouth and so this is a balancing game, and for first time entrepreneurs who are focused here, it's really important to think about customer acquisition cost and a lifetime value.

Notice by the way, while they were working on value proposition, they also had some hypothesis about the customer segments.

More than likely we'll make money from royalties and commercial licensing, etc.

One of the most important metrics to think about now that we have an end to end funnel is something called lifetime value and a lifetime value LTV is not your lifetime but your customer's lifetime.

If you have world's most perfect business model, investors would love to see this number much bigger than this number and so what you want to look for is a well balanced model that takes into account how much you need to acquire customers but how much ultimately you'll extract from them over the lifetime.

Lifetime value is the customer lifetime value from beginning to end, and just as a note, remember customer acquisition costs acquired over here, needs to be less than customer lifetime value.

The next is channels.

What's the sum of all the revenue from day 1 purchase, so you're keeping them through all the grow activities you're undertaking.

Cold calls are the primary function of the telemarketing department.

And in value proposition, the goal of this is to find out that minimum viable product.

And that can't be repeated enough.

So on day one, these were their initial hypothesis coming into the class.

Now if you remember we started here on the left. We didn't earn and paid media.

So again you could start either with customer segments or you could start with a product and value prop itself, it really doesn t matter.

So now they say, you know what?

Who do you do that for?

In Telecom, it might be something else but the key idea is you are now not just focused on the initial purchase but you're focused on the lifetime value.

Where on the other extreme, the complexity of selling toner over the web. Incredibly simple.

If you have your own direct sales people, do the math.

So as we said, understanding these 3 components of value proposition work together with understanding the 3 components of customer segments.

He's not the client.

And it's usually a technology driven play.

What you need to do is now hear this from customers who say, Here is why it's relevant.

Just as a reminder, what the teams will be starting with in Week 1 is filling out the business model canvas and getting out of the building and testing their hypotheses about the value proposition, customer segments, and channel.

So, if we take a look at the Jersey² team was worrying about, it's what most start ups worry about on day 1, is does my value prop match my customer segment, and do I have product market fit?

And by the way, we're going to ask later for who are you building it and what exactly does it solve for those people?

But, actually, it's suddenly come to me after years working in the business, that what we create in advertising, which is intangible value you might call it perceived value, you might call it badge value, subjective value, intangible value of some kind gets rather a bad rap.

Here's your client list.