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.

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

So one of the interesting equations for every startup is that

That was the customer acquisition cost, CAC, here.

Anyway, this is, I think, just the big picture investment adds value to society.

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.

Well, remember this was to acquire a customer.

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

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It's a big idea.

This dollar would be 1.11 to the third.

You're all familiar with the business model canvas.

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

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

Hopefully we added value.

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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.

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

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

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 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.

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.

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

And that can't be repeated enough.

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

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.

And it's usually a technology driven play.

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?

And, we will be adding new features regularly in the months and years to come.

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

LOLcats is communal value.

And the way to add an element is just to use an assignment.

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