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

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

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.

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

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.

Who are your key partners and suppliers?

You're all familiar with the business model canvas.

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

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.

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

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

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

So the value is going up.

This is what I called the you should be so lucky to have this problem part of the funnel, and that's how you grow the customers you have.

And they're going to make fancy computer models with some assumptions.

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.

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.

And what Christensen said is, What functional or social jobs are getting done?

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.

And that can't be repeated enough.

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.

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.

So the impact of all this has been essentially one of growing the market, because it focused on the non customer, and then by reaching the unreached, we're able to significantly grow the market.

And it's usually a technology driven play.

The next is channels.

So today, while we're talking about value proposition, value proposition works hand in hand with who your customers are, which we'll be talking about in the next lecture.

Today, we're going to be talking about customer relationships.

In an existing market, I will likely know something no one knows.

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

I mean how do they hear of our products, how do they know about you, and as we'll see later one of the interesting things is there are some customers that are users like in Google

We will take it to the potential customers.

And in this class, we're going to be talking about the first two steps, customer discovery, customer validation, the pivots that connect them, and then a few that are lucky.

They could tell you that I want bigger, faster, cheaper status quo.

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.

The only time you know that you have something that's worth investing your time and money in is if people are literally trying to force their money on you or can't use your product even in its buggy, uninitialized form enough.

Well getting customers is just like it sounds.

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.

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

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

We have recently accepted a client who is VampireAmerican.

Construct a Numeric Value