The Lean Startup: Best course on Entrepreneurship | Navdeep Yadav | Skillshare

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The Lean Startup: Best course on Entrepreneurship

teacher avatar Navdeep Yadav, Product Manager (MBA-IBS hyderabad)

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Taught by industry leaders & working professionals
Topics include illustration, design, photography, and more

Watch this class and thousands more

Get unlimited access to every class
Taught by industry leaders & working professionals
Topics include illustration, design, photography, and more

Lessons in This Class

66 Lessons (6h 38m)
    • 1. Introduction to The Lean Startup

      2:24
    • 2. Course Overview

      3:46
    • 3. 2.a.Types of Startup ?

      6:27
    • 4. Small business Vs Tech Startup

      8:28
    • 5. Introduction to lean startup

      4:25
    • 6. Design thinking with lean startup

      6:46
    • 7. Design thinking + Lean startup + Agile methodology

      7:30
    • 8. How to generate startup idea

      6:10
    • 9. 1.b.Startup Road Map

      4:52
    • 10. 1.c.Product execution road map

      4:34
    • 11. Delta four technique for idea validation

      6:39
    • 12. Characteristics of Delta four behavior

      6:31
    • 13. Solving Million dollar problem part 1

      7:49
    • 14. Solving Million dollar problem part 2

      6:17
    • 15. 1.d.Reasons Why Startup fail - Research Study

      3:57
    • 16. 2.b.Origin of a startup

      2:15
    • 17. 2.c.Sole proprietorship for Small Business

      2:31
    • 18. 2.d.Partnership firm for medium business

      2:37
    • 19. 2.e.Corporation legal Structure for the Startup

      6:33
    • 20. 2.f.Small business Vs tech startup

      6:32
    • 21. Business Model Canvas

      9:03
    • 22. Business Model Canvas Examples

      5:29
    • 23. 3.b.Billion dollar Ideas Module overview

      6:42
    • 24. Billion dollar ideas

      1:57
    • 25. 3.c.How to Think of Startup ideas

      5:29
    • 26. 3.d.Delta four theory to validate ideas

      9:03
    • 27. Idea to product Intro

      0:42
    • 28. 4.a.Idea to Product overview

      3:12
    • 29. 4.b.How to build prototype

      9:11
    • 30. 3H strategy for Building Dream Team

      4:47
    • 31. 5.a.Introduction to Platform Business

      4:18
    • 32. 5.b.Uber business model

      5:08
    • 33. 5.c.Amazon business model

      6:25
    • 34. 5.d.Google Business Model

      5:41
    • 35. 5.e.Facebook Business Model

      7:50
    • 36. 5.f.Fintech Business Model

      13:34
    • 37. Pitch deck Intro

      0:36
    • 38. Pitch-deck Overview

      5:06
    • 39. Difference Between Incubators & Accelerators

      10:46
    • 40. Solution Slide in Pitch-deck

      3:43
    • 41. Product demo in Pitch Deck

      3:13
    • 42. Market Size in Pitch deck

      10:21
    • 43. Business Model in Pitch-deck

      4:09
    • 44. Competition Slide in Pitch-deck

      5:46
    • 45. Underlying Magic Slide Pitch-deck

      6:57
    • 46. Go to Market Slide in Pitch-deck

      13:46
    • 47. Team Slide in Pitch-deck

      5:15
    • 48. Traction in Pitch-deck

      4:37
    • 49. Startup Growth Intro

      3:13
    • 50. What Makes Startup Successful

      4:16
    • 51. Customer Acquisition Cost (CAC)

      5:35
    • 52. Customer Life time Value

      6:24
    • 53. Monthly reoccurring revenue

      6:47
    • 54. Unit Economics for Startup

      12:37
    • 55. Contribution Margin for Startup

      11:26
    • 56. Retension rate for Startup

      12:44
    • 57. Churn Rate in a Startup

      6:23
    • 58. Market Size (TAM,SAM and SOM)

      9:33
    • 59. Key Takeaway for Growth

      1:46
    • 60. Startup funding stages

      5:25
    • 61. Startup funding source

      9:27
    • 62. Startup Ownership and Equity

      5:35
    • 63. Bootstrapping Your Startup

      5:28
    • 64. Inflection point

      4:26
    • 65. Incubators vs Accelerators

      5:27
    • 66. Angel Investor vs Venture capitalist

      7:27
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About This Class

The Lean Startup class will help you understand everything that you need to know about building a lean startup. It will give you insight into building prototypes, Business model canvas, building Minimum viable products, Pitch deck, and Fundraising and support your team-building and expansion strategy in a startup.

The course outline is given below:-

1. Introduction to The Lean Startup
a. Startup basics Intro
b. Startup Road Map
c. Product execution road map
d.Reasons Why Startup fail - Research Study
e.Why government supports the startup?

2. Legal Structure of Startup
a.Types of startup
b.Origin of a startup
c.Sole proprietorship for Small Business
d.Partnership firm for medium business
e.Corporation legal Structure for the Startup
f.Small business Vs tech startup

3. Startup idea generation
a. Business Model Canvas
b.Billion dollar ideas
c. How to Think of Startup ideas
d. Delta four theory to validate ideas

4. Idea to product
a.Idea to product Intro
b.How to build a prototype
c.3H strategy for Building Dream Team

5. Startup Business Model
a.Introduction to Platform Business
b.Uber business model
c.Amazon business model
d.Google Business Model
e.Facebook Business Model
f.Fintech Business Model
g.Understanding SAAS (Software as a service)


6 Startup Pitch deck for fundraising

a.Cover Page/Introduction slide in the pitch deck
b.Problem slide in the pitch deck
3. Solution slide in the pitch deck
4. Product demo slide in the pitch deck
5. Market size slide in the pitch deck
6. Business model slide in the pitch deck
7. Competition slide in the pitch deck
8. Underlying magic slide in the pitch deck
9. Go-to-Market slide in the pitch deck
10. Team slide in the pitch deck
11. Traction/Milestones slide in the pitch deck

7. Startup Growth Intro
a.What Makes Startup Successful
b.Customer Acquisition Cost (CAC)
c.Customer Lifetime Value
d.Monthly reoccurring revenue
e.Unit Economics for Startup
f.Contribution Margin for Startup
g.Retention rate for Startup
h.Churn Rate in a Startup
i.Market Size (TAM, SAM, and SOM)
j.Key Takeaway for Growth

8. Everything about Startup Funding 

Startup funding stages
Startup funding source
Startup Ownership and Equity
Bootstrapping Your Startup
Inflection point
Incubators vs Accelerators
Angel Investor vs Venture capitalist

Meet Your Teacher

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Navdeep Yadav

Product Manager (MBA-IBS hyderabad)

Teacher

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Transcripts

3. 2.a.Types of Startup ?: So hi everyone. In this video we'll understand the different types of startup or different categories of startup. So before directly jumping into fundraising or finance, you first have to understand the different types of startups we have. So you have B2C startup, P2P, B2B, and B2C. So B2C is business to customer. So if you're selling a product to customer, then it's a B2C startup. All of these food tech company like Uber Eats, AAD, B2C startup. Then you have P2P. Now P2P is Peer-to-Peer. This can be a P2P lending platform or a P2P sales flag mom like OX, then you have B2B startup, also known as business to business. So if you're building any software company or if you're dealing directly with businesses, that it's a B2B stocked up all of your online software. All these are B2B startup, your CRM software and all these things. Then you have B2C startup, which is very rare, but they really exist in the market. Now B2C even have two different categories. You have aggregators and you have marketplace. Now inside aggregators, you also have service aggregators and so social aggregators. And inside Marketplace, you also have service marketplace and e-commerce marketplace. And in B2C, you also have subscription platform like Netflix. And in B2B you also have subscription. So companies like Shopify, all these up B2B SaaS subscription business model. And you also have solvus as a B2B model. Now within SAS, you also have horizontal SAS and particle size. Now let's quickly understand all these categories of startup with the help of some example. So in B2C, you have aggregators, you have marketplace, you have P2P, which is Peer-to-Peer, and you have all those service-based B2C companies. So in aggregators, They have a common brand and they maintain the service quality. So companies like Uber, Airbnb, all these other aggregators, that means all the cab drivers, all the property owners, they do not hold that individual branding value. If you book uber, any random XYZ gar will come at your doorstep without worrying about the name of the driver or the guard agency which is running the different cars and on. Then you have social aggregators, companies like Facebook, Instagram, Snapchat, or social aggregators, and that's a B2C segment. Then you have Marketplace, Marketplace. All the products have their different identity. So if you are purchasing an iPhone or any random XYZ product for your hair care or anything. You can go to marketplace and marketplace. In marketplace, all these different brands have that distinct identity. And all these quality standards are made by all these market, where we're going to understand marketplace and Uber alerting later in this course in the business model section. Then you have P2P platform like Oil X, where all these people can sell their product each other and they can also purchase this product. And then you have your solvus, B2C companies. So companies like Postmates or Gojek, all these are super apps. And super apps are the best example of B2C service kind of business model, where you can order your food online. You can book a spouse US alone. You can also send any sort of parcel to your, to your friend. And you can do a lot of things on these super apps, from payment to food delivery to anything that you can imagine. So these super apps are B2C services. Now let's quickly have a look at the B2B segment. So in B2B you have SAS software as a service and B2B commerce. Now SAS is nothing but all the software that you use online. So if you use Canva to design all of your graphics or images, you may be using Gmail. You might be using any CRM or customer relationship management software or Google Drive, all these up SAS Software as a Service. They're selling new software in the form of service. So SAS even have two different category, horizontals and verticals as in horizontal says You have companies like Slack, HubSpot, intercom, threshold, male chain, Zoho, Salesforce, horizontal SAS can be used by any company from any domain. That means, if you are a pharmacy startup or digital agency, or let's say a manufacturing start-up. Any of the startup can use all these software or horizontal cells, so they are not domain-specific. Any company of any size in any domain can use all these product. These are the best example of horizontal says like let's say you can use intercompany, a website, no matter URLS, pharmacy start-up or a manufacturing start-up or a digital agency. But when it comes to vertical says vertical says our industry specific, like let's say is NOT. So if you are the owner of a spar or salon or any form of a barber shop, you you can only use NOT so there's generally is purely for spa, salon, barber shop. If you are from other industry, you cannot use an Audi. I mean, they have very specific features. Then you have Capillary Technology, which is spatially for reading. So if you have a retail chain, you also have a website. You can use Capillary Technology. Then you have B2B commerce, which especially for businesses. So you have Amazon business, which means if you're a business owner, you have a small retail shop and you want a basic item for your business. You can use Amazon business and you can order those same items in bulk quantity. And you can also get an extraordinary found. And I think you are already aware of Alibaba. From Alibaba, you can order your business items in bulk quantity from China, also from other countries. You can also do that from Southeast Asian countries, India and from US and UK as well. So it is basically nothing but it will allow you to purchase your product for your business in bulk quantity. 4. Small business Vs Tech Startup: Hey everyone, let's understand the difference between a small business and IT x dot dot. Now if you're planning to open a small business like a bakery shop or a car wash? Well, these are small business. On the other side, you have tech startup like your amazon, Airbnb, Stripe, Uber, slag, and Facebook. Now, obviously these are not startup anymore. All these companies, or I would say majority of the companies are public. And that's why these started as a small business, but now they are big public giant. But what is the basic difference between a bakery shop and a car wash? If you started both these companies, like maybe a bakery shop or a car wash in 2007. And any of these companies, you can understand that all these tech companies are scalable. They can go from $0 in revenue to a billion dollars in revenue within four to five years. If they have proper business model, proper technology, product, and scalable business at least. But if you started any of these small business like a bakery shop or a car wash, it's really difficult to scale the business. So that's why we will understand boo qualities of startup. Now you can start a small business. Anytime you want. Small business are successful, they can make good profits. But startups are very different from small business. Let's understand the two important qualities of startup. Small businesses have their own audience. You can start a good bakery shop. You can start a car wash, you can generate profit, you can on money. But their business model is totally different from startup. Let's understand the two important qualities of startup. The number 1 is x scalable. Now, all these tech companies have a technology product if the product is good and that product is used by a lot of people, that startup tech scalable and that start-up have high growth potential. Now, if a startup have bought these qualities, that startup can go from $0 in revenue per billion dollars in revenue. Now let's understand why I'm so bullish about these two things, scalable and high growth potential. So these are your traditional businesses, beauty shop and car wash. Now you can make these businesses profitability. You can on good amount of money, not doubt about that, but these are your tech startup which are little unique. So let's understand why your tech startup are scalable, can expand very fast, and why your traditional businesses are not scalable. And let's understand this with the help of this characteristic. So let's say you wanted to open a store front. So for a small business, you have to pay a rent anywhere between 5000 to 10000 dollar depending on the location. But for all these businesses, once you end up building a mobile application, then you do not need to beer any cost, any additional cost for opening a new store because everything is on the internet. You just have to expand into a new city. And then you can some sort of advertisement and tell people to use your mobile application to order any specific team, or do you use any of the product? Let's look at the reach. So if you wanted to have additional five people in your store, whether it's car wash or bakery shop or any small business, you have to pay somewhere between 3000 to 5000 dollar to every single person. So five-person, you have to pay them 3000 to 5000 owner to every single person. Let's say you started your e-commerce store to a specific CD and now you are expanding to a different city. And that situation, you just need to maybe hire one new person for that specific city. And that personally manage some of the operation. In terms of inventory. In all of the small business, you have to maintain a separate inventory. But for e-commerce store like Amazon, you can maintain a centralized inventory. So in short, if Amazon wanted to expand in good density, they can quickly expanded, go 50 different city by just hiding couple of people and then they can start selling their product. Why don't other side, if this business wanted to expand in good defense city, for every single store, they have to set up a storefront. They have to hire people for every single store. They have to maintain a separate inventory for every single store and their operational cost is also very high. That means because these businesses are asset heavy business assets having means, they have a lot of Lang, lot of labor. They have a lot of real asset. It is really hard for these businesses to expand into different territory or different city or different location. But for tech companies, you just have to hire additional people. Let's save slack wanting to expand into a different country. He just have to hire one or two salespeople for our different concrete let's say if all the employees walking in Slack or knows English and they wanted to expand into Germany, ordinary front. So in that situation, they just need to hire two or three additional people who can sell their product in those two different countries. That's it. That's the power of all these technology company. They are scalable and they have a low-cost scalable structure. And if you ask me about some other constraint which Amazon and these businesses when phase is the time constraint, honestly, you can open our bakery shop maybe for eight or 10 hours. But on the other side, amazon is up and running 24, 7. Now this is the scalable pipe. Let's understand the growth potential. Why these tech companies have higher growth potential and bakery shop have a log-log production. So these tech companies can go from maybe 10 percent growth rate year on year to a 100 percent growth rate year on year, which is really difficult to achieve using these bakery shop. Let's understand this with the help of an example. So a bakery shop can clock maximum of maybe one hundred, ten hundred or those ugly. And after that you will find it difficult to process more than a thousand or those again, because now you have limited staff, limited space, and limited people to process that or low. But for all these tech product, whether you saying one message or you order 20 different product, or you do whatever you want there, it doesn't have any limit. They can quickly expand their operation. So you can do as many payment is we want using stripe. You can book as many cab as you want using Uber, because all of these are technology product and no one is manually processing does stuff. And you can send as many message as you want using Slack. Then space constraint. Obviously if you wanted to maybe let's say store 60, 70, 80 SKUs, so-called stock keeping units in that specific bakery shop, then you are done. You cannot store original totally 40 or stock if you have R. So Dean, space limit. While in all these tech products, they are running on Cloud and you can maybe store as many products as you want. You just have to list on your product and couple of pictures and your product is there on your e-commerce store. In terms of capital, in the previous video, we had a description that these are asset heavy business, which means you need a lot more capital to purchase land, to setup the store, to hire people, to buy some machines like maybe sorting stuff to cook the food or something like that. For all these tech companies, you just need to hire a couple of engineers who can build the product and then you can quickly scale these product and reach a sodium revenue might strong. So obviously the growth potential for these tech companies are high. And if you personally asked me, these tech companies have the potential to increase their growth rate by five x. They also have a very large dam, dot-dot-dot adjustable market. And we'll talk about damming of ion. And then they also have technology integration to solve billions of people at once. And some were also a marginal cost because they have technology integration do not have to be extra cost to expand into a new city or maybe to expand into a new concrete. They just have to hire couple of people and they just need to deploy original solver. And then they're ready to solve additional 1 million or 10 million or 100 million customer. That's it. 5. Introduction to lean startup: Before directly jumping into the complex terminology, Let's first understand what do you mean by the lean startup? So lean startup is a metrology of developing products with the short-term product life cycle. And you can also discover your business model. So lean startup is all about loan, Build and major. So you have couple of ideas in mind. Whenever you have some ideas, you will quickly build the product. Now to build the product, obviously you have to write some code, then you have to measure the product with the help of data. And based on that specific data, you will learn about the process and the product, and then you will generate new ideas. And then you again go back to the same process, loan value and major. That's the core thesis of the Lean Startup, which means to build a successful startup, you have to focus on design thinking, Lean Startup, a Giant methodology, prototyping and designing sprint. Obviously we got a fair understanding about Lean Startup. So you quickly have to learn braille and measure the stuff that you're doing right now. Let's talk about design thinking and a giant methodology. So this is the design thinking process. You will first learn about your audience, then you will sharpen the key questions that you have in mind. So let's say if you're solving a problem of hair loss, so you first have to understand the problem really well. Once you understand the problem, then you have to ask multiple questions to all of your target audience. That what kind of problem that you're facing. How exactly you expect some other startup to solve this problem. And then you have to ask yourself how exactly you can solve this problem at scale. Because now you have to reach to at least a million or user, or maybe 10 million user, then you obviously have to ideate the process. So what will be your startup idea? How can you execute things? How will you build a prototype? Let's say if you're building an e-commerce brand or a consumer-facing brand, how will you build an e-commerce store? Then you have to quickly test that specific product by running a couple of ad campaigns on Facebook and Google. So you'll first learn about your audience that if I'm solving a problem, what is my target customer? And then you have to talk to your target customer. Then you will come across your idea, and now you will start building a prototype. Let's say if you're building a B2B product or a software product, then you can also build a prototype with the help of bubble. If you're building a B2C product, obviously you can build an e-commerce store or any website. Then you will quickly tested by running couple of ad campaigns or maybe writing about it on cholera, on medium, on Linkedin, depending on the target audience. So if your product is consumer-facing product, then majority of your audiences, they are on Instagram, Facebook. If you are for, if your product is more towards B2B, then you have to focus more on Linkedin, Guido, medium. So different types of audiences, they are on different platform. You have to figure out which platform is right for you. And then you have to build the audience. So in the empathizing state, you will understand how human needs evolve. So if you are building a product of what exactly people want in that specific segment. In the defining stage, you have to redefine the problem that if already three competitors are there in the market, what kind of product you can launch so that people perceive your brand as a different company who has a different startup, then you have to ideate this stage. So when you have many competing ideas, how exactly you can choose one idea. And then you can probably brainstorm about that specific idea and create a solution around it. Obviously, you have to create a prototype. And prototyping is not a big deal. There are so many tools out there on the Internet. You can use Webflow Shopify, WooCommerce. If you wanted to build an e-commerce store, or if you wanted to build a website, obviously you can use WordPress. And if you wanted to be just a simple landing page, you can use in stoppage. So there are so many tools out there and we'll use all of those tools may be a little later in this course. But then you have to basically test your prototype with the real user. 6. Design thinking with lean startup: Now let's combine your Lean Startup and design thinking together in one specific diagram. So this is the amalgamation of your Lean Startup and design thinking process. When the design thinking process, you have to understand the problem really Valley. And in the lean startup process, you have to understand the customer feedback and how exactly you can build the product. So lean startup is all about product building and design thinking is all about understanding the problem really well. So you wanted to understand the perspective of your customer. So you first have to understand the demand. So on y-axis you have your direction and your concept. So you first have to understand the direction of your product. Let's see. You're a coffee lover and you wanted to launch a coffee brand. When there are so many options, you can choose, you can maybe launch of coffee, which have a value proposition of cold coffee. Or maybe you can launch a coffee which have some flavor as a value proposition. And there are multiple value proposition you can create. So let's say I'm a big coffee fan, but I want a coffee which have some flavor. So I want at least a coffee with 700 different types of flavor. So someone can send me a big packet which have seven different variant of, let's say maybe 100 gram. And I can cry every new flavor every single day. Well, that's a demand. How big the market is you have to understand. Now let's say you wanted to create a coffee brand which have some flavor. So let's say flavors like Chai latte flavor or maybe what, a scotch or mint flavor, or maybe any, any other flavor that you can imagine. You first have to understand what is the customer needs. So my need is to have coffee which have so many different flavor. Then you have to understand about the market size. So you have to research and absorbed the customer. So how big is the market? Am I the only customer who is looking for flavor coffee? Or there are other people who are also looking for that. So you have to understand the commutator first. So let's say there are five competitor into the market and the doors compensator have at least, let's say 30 percent market share. So you have to understand their contribution in the flavored category. Let's say you have five competitor into the market. And these five competitor have put depots in market share. And out of this 30 percent market share, 50 cent is your flavored coffee. So different flavors like Chai latte, butterscotch, on mint, and on multiple other flavor. That means the market is evolving. The market is small, but it is evolving. And let's say the growth rate is 16%. That means after 45 years the market will become huge. So now you have your research in your hand. Then you have to prioritize the order which all flavor you can launch, which is the best flavor that you can sell in the market. Let's say chocolate is the best flavor or butterscotch is the best flavor. Or if you're selling that flavored coffee in a country like India, maybe Chai latte is the best flavor, so you have to prioritize that specific flavor. Now your concept or Navier hypothesis is ready. Now, once your hypothesis is ready, then you basically have to launch the product. So now you first define the customer need. Then you researched about that specific category. Then you prioritize the auto, and now you have a good hypothesis. Now you will quickly go and build the product. Take more feedback from customer, and then you will generate new ideas. What kind of flavor you can launch. So once you have your hypothesis in hand, now you will focus on start building the product. So obviously, we will foster a small lending page. So we'll go to in stoppage or we will go to some, a page builder like Unbounce. And we will just be a simple product where we can collect the number of customers, the mobile number of the customer, and then Nim, that's it. And we will create a couple of interesting product binders of coffee. And then we will done some Facebook ad campaigns or Google ad campaigns, or maybe you do campaigns just to let couple of people fill in the details. And then we talked with those customer and understand what kind of flavors they are looking for. And if we launch the flavor, how much they are willing to be than a normal coffee. Because obviously we have to select premium. We can't really compete with them hand in hand because obviously they are producing the normal coffee at a very large-scale. So obviously data prices are very, very less. We have to sell coffee at a premium price because of flavor. Flavor is our value proposition. You will build the product, which is your lending piece, your website, your e-commerce store. If you don't want to try out with lending page, you can build an e-commerce store with Shopify, WooCommerce with anything. And then you can maybe quickly make prototype or sketches of your product using Photoshop. And then you will run campaign, take feedback, generate some new ideas. Again, build the product. Design thinking is all about understanding human behavior and doing some qualitative research. So what kind of product people want? What is the market size? How big the market will become in the future? What is the growth rate of that specific market? So understanding human needs and maybe doing some qualitative research, then you have to think about design. Well, what kind of design you can make if you're launching a flavored coffee, what kind of background you have to have. So let's say for butterscotch, you have to look for some graphic designer or maybe some interesting photographs of maybe having, like for butterscotch, you need that mesmerizing kind of photographs for defend Shylock flavor. You also need those interesting photographs. So happy to think visually about that specific brand. Then you have to build prototype. So you can easily do that with some sort of base we'll learn or website below. Then you have to obviously build the product itself. So you have to learn about your customer and you have to build it. And then you have to measure. So you have to measure things like your conversion rate, your bounce rate. So if 100 people are coming to your website, how many of those customers are purchasing your product? How many of those customer clicking on multiple pages. So you have to measure things like a bounce rate, your conversion rate, your engagement rate, your session duration, and all these different types of parameters. You can measure all these things in Google Analytics. So if you're breathing any website, you can quickly integrate the JavaScript snippet of Google Analytics on your website. And it will start showing you all of these metrics. Not a big deal, you can always do that. 7. Design thinking + Lean startup + Agile methodology: So now we are done with design thinking and lean startup. Now, there is one more unique process which will help you to build your product super-fast. And that is your age child development. So agile is a product development process. And specifically it's a software development process which will help you to develop your product in smaller increment, so-called sprints or hydration that minimize the amount of upfront planning and design. So basically, a child development is most probably used by companies who are developing some sort of software so that they can build small feature, quickly launch it, and then focus on building other small feature in the next few weeks. So a normal sprint or iteration process last for somewhere between two to three week. So let's say in my current company, we used to have a spring of two to three week and we will list down all the feature or all the tasks that we have to close in these two to three week, then we'll have a small meeting. For simple example, let's say in our e-commerce website, we wanted to improve on three things. Number one is your payment flexibility. So you wanted to add 34 new payment gateway providers. So that is our one task that we have to close. And this specific sprint, maybe one more task is to add two new pop-ups to the website. And third task is to add some product analytics tool to our website. Now these are three small tasks that we have to close on this specific sprint by the end of this specific week. So instead of developing all the feature at once, or maybe building all the features at once in the spring. So we will divide the feature and the deadline of DOD specific feature so that you can build the product in small sprint or iteration, and then you can quickly launch it showing two different stakeholder. They can see all those feature Gail feedback to you and then you can again work on that. So agile development are these short cycle. I can quickly show you that with the help of this diagram. So you will quickly plan about a feature. Then you design it, then you build that specific feature, then you will test it, then you will review it. Then you will go to the next sprint, and then you will launch it. So there are three sprints, sprint one sprint to sprint 3. In Sprint 1, you will plan about something. So let's say you blend about three different feature that you can have in your product after two weeks, then you will design all those three feature. Then you will bury those three feature with the help of your product development team. Then you will test those feature. Then you can review those feature with all of the stake holder you have. And finally, you will launch those feature within two to three week. So this is your Sprint 1. Then you will again have a spring too with maybe two additional feature or maybe some scope of improvement which is which is required in the feature number 1 that was there in Sprint 1. And then you will again launch all of those feature. Then you will again have to do three new task in the spring number three, and that's your agility developed. So agile development process have so many iteration or sprint and these are short timeframe process that will last somewhere from one week to four beak. And this is a cross-functional process because obviously your product team have to plan about the product than your design team or your engineering team have to build the product. And then you're maybe QA team or quality analyst team have protest about that specific feature. All of your CXO people have to review that specific product and they will finally give you a green signal to launch that feature in the product. And finally, you will go to the spring number to send the first video. We had a discussion about lean start-up. Then we had some discussion about design thinking and now the agile development. Now let's club all these three process together. And this is the master plan for your startup. So you have your design thinking. You'll lean startup methodology, and your Agile process development. So once you combine all these three process, this is the master plan. And then you have to execute things properly. So you have your design thinking, the lean startup methodology, and agile product development. And once you have all these three processes together, well that's your startup masterplan. So remember, startup idea doesn't hold any value. It's all about execution. You have some idea in mind. You will quickly do all the research that you need for that specific idea. So you will understand the customer problem first. You will understand what kind of solution customer won't, how much they can be us to solve that specific problem. Then you have to understand the market share, the growth of the market. And once you have all of the research in your hand, then you can ideate. Then you can launch a specific product. So once you have a proper idea or a good idea in mind, then you will quickly launch it. You can run your experiment. You have to quickly measure it, then you have to build it. Then you have to, again, learn from the customer feedback. And this is an iterative process. You have to move so many times in the same loop. This is your Lean Startup process. You have to learn major and then you have to build. You have to again loan major and build. So this is the ongoing process. Obviously you can always some sort of pivot. So let's say you're told that you have the launch three different coffee flavor. But things turned out that this one flavor is not working. We're not getting good feedback from customers. These customers only want to flavor as of now. And maybe if you become successful in the future, then we can think about launching a new flavor of the coffee. So once your landing page, your e-commerce stories ready, then you will start selling your product or different customer. So once you launch your product, your fast 50 or a 100 customer comes from your own personal connection. So maybe those people are your family friends. And then you started running couple of ad campaigns on Facebook, on Instagram, you started building a brand. You are going to different platform like medium color on Linkedin puedo, you started writing about the product. And then you will do maybe some make some videos, some fancy videos like how to make this. All the interesting stuff you can make with coffee. And once you have a proper product ready and you're up and running and generating good amount of revenue. Well then you can look at the agile development because now you have to hire a team. You have to build a good brand. And then you have to maybe execute a new strategy planning and you have to build new product feature. And then comes your agile development. When you have a good team and they have some product backlogs, they wanted to build new feature or maybe new catalog of your product, or maybe they wanted to design a new customer experience. Then you will design a sprint for them. And then they will have some product feature. They have some sort of planning, and then they will move in this sprint review. So you will do to those people may have some product backlog, they need some sprint review. They will ship all these feature and they will execute all of these features. But remember, a successful startup, always start the process with design thinking. Then he will move to lean startup. And finally, if everything is up and running, then probably you will focus on a giant product development. 8. How to generate startup idea: Hey everyone, In this specific section we'll talk about how exactly you can think about new ideas. So whenever people ask me that, how can we generate new ideas? And we can build our own technology company based on DOD specific ideas. But my only response to those people who always focus on solving a problem and it gives you a personal problem, you can solve it much better than other people. And that's where I always recommend people saw your post on problem because you have a much deeper insight for that specific problem. If they did something that you are facing right now. And if that is a postman problem and you know that you can solve that specific postman problem with the help of a startup. Well, that's the best opportunity you can get in your life. Start working on it. There is a proper framework by which you can start that business. You can go step-by-step. You have internet. I am also there for you and you can set up your business. Now I'm going to show you how exactly you can vary the business by solving a postman problem. So always keep a problem journal. So from the time you wake up to the time you sleep, you will face more than hundreds, if not thousands of problem. So always more done those problems on a piece of paper or maybe in a small diary so that you can revise on specific problems. And maybe if you understand those problems really well, you can start solving all of those problems. Let's understand this with the help of an example. Let's say you hate scraping your windows. Well, one of the solution is that you can maybe outsource a single piece or a single unit of this cleaner from Alibaba, and then you can start selling this product on Amazon in your country. So if you are in US, you can import the specific product from China using Alibaba and then you can start selling this product on Amazon. Well, if you hate waiting for taxis, you can build a mobile app like Uber. Obviously, this market is saturated right now, so you can't really do much albedo, but there is always a new way to travel. There is always a new way to build something like Uber Berliner different segment that is always an opportunity. And if you hate her dance, you can build companies like Airbnb. The next way you can look for problems and not ideas is by finding a product gap. But you can only get product gap if you are walking for any specific industry. So if you're already working in a software company, maybe you understand the software domain much better than me, or maybe other people. If you're walking and supply chain industry, well you will have a much deeper insight than me and then other people. So when you're working for one specific industry, you understand the strength of all the products which are outdated in the market. And then you also need the strain couple of functions, which are a couple of things that those products can not do. Well. All those things that doors product cannot do is your product cap. You have to find a good product gap or are good short of problem, which is not sold by the existing product. So let's say you love using Excel, but you can't really automate. Excellent. So let's say if you're filling all the details of 10 different students, and as soon as the exam is done, just go to browser, put their enrollment number, and just try to fill all of their details in this specific Excel sheet. That's a hard problem. You can't really automate Excel sheet, and that's why you have startups like IR table. So with air table, you can quickly integrate the API. Api is your application programming interface, which will do the function that you want that specific APA to do. So it will fetch data from some other application. It will go somewhere, take the data and then compiling a specific format, also known as you'll see JSON. So it will give you a response, then you can put that responds, show it in a different format. And you can do so many different types of things. If you're working for a tech company and you're really finding it difficult to manage your team. Well, you have different products like ClickUp. So let's say you have a task where you need coordination of five different people, and that does count five different element or paths to it. Let's see the part a of that specific tasks will be done by post and wand and post and then post and three. So that specific tasks will move from one person to another person Valley for that specific purpose, you can use product left-click up if you're finding it hard to be using your credit card every single time you shop somewhere on an e-commerce store or maybe in a grocery store? Well, you can use for recollect Paytm, which will allow you to pay quickly using a smartphone. Then you have your disruptive innovation. Disruptive innovation always need massive amount of capital because now we are going after a big industry or a big problem. Obviously you can't solve this specific problem, but I'm just covering you so that you will have a good understanding about how exactly you will go around problems. So self-driving car, if you are facing this problem and you do not have time to drive your car, or if you are someone who don't really enjoy driving, or if you need someone who can help you reach to a different place automatically. That's why you have your self-driving car. Companies like Tesla, even Google and Uber Eats solving the same problem. Then maybe taking people to the Mars. This might not be a problem to a lot of people, but that's an ambition. You can also solve our ambition if people have that ambition that they wanted to travel, or maybe live on a different planet altogether? Well, that's also an ambition or a problem. Have Mr. Moscow solving this problem with SpaceX? So the main idea is you can solve any problem you want from any specific industry, but you need to have a good insight in that specific industry if you understand the problem really well. And if that problem belongs to you personally, when you will have a much deeper insight in that specific problem and you can solve it much better than other people. But remember, when you're solving any problem, just try to build a strong team. 9. 1.b.Startup Road Map: So here we want in this video, let's quickly talk about startup execution roadmap. Obviously, if you're building a startup on the answers of your startup, getting fail is very high. And that's why you have to walk really hard and make a complete roadmap so that at least you have something to achieve down the line in the future. So the first thing that will come to your roadmap is the validation stage. Obviously this is the very early stage of imagine. You only have idea in your mind and you did not have any startup or any real business at this stage, you have to make sure that you first have to validate the hypothesis that you have in your mind. Let's say you just have a startup idea. You do not know how to build products or you do not know how to even God, When you first have to build the MVP of your product, MVP is nothing but minimum version of your product, AKA minimum viable product. Now you can easily build MVP on a piece of paper or maybe in any sort of online tools like Figma or Canva. And once you have an MVP in your hand, then you can show that MVP to your founder, to your friends, to your family members, or even to some investors, just to ask about their feedback. Once you show this MVP to some co-founders are some team members, they will have a good understanding of what's, what's there in your mind because you first have to omit out the information from your brain to a piece of paper or to any online software or good, then you have to quickly validate or I3, the MVP, or maybe build a better version of MVB. Let's say if you are building the MVP on a piece of paper, transferred that MVP from a piece of paper who may be in Figma. Or maybe if you're building it and Figma transfer the Figma file into a webpage or any sort of lending page so that you have at least some form of iteration or validation. And then you will build a business model around it. How exactly you want to make money, what all bodies you have in your business. So let's say you have consumer, you have distributor, you have manufacturer, and all those people who are there in your business. And you have to bring strong all these things with your co-founders of Ethiopian members. If you have the second stages, deformation stage, which is the legal formation structure of your company. So right now you might be registered as a sole proprietorship company or an LLC, but now you have to change your legal structure in the form of corporation. If you're living in the United States, then it's a Delaware C-corporation kind of legal structure. Living in India. It's a Private Limited kind of legal structure. In UK, it's different. In Indonesia main Mar, its PTE limited. So the legal structure is very complex. You have to talk to a lawyer or to someone who can understand your requirement and it can help you, or maybe make some form of legal structure for your startup or for your company. But make sure you have all the founders, equity holders in your company. One of the reason we are doing, or we are separating you with the legal structure is the liability. So you will not be liable in the future. If something goes from, the company will be liable. Obviously, you hoard majority of the equity share, but you're still not liable for any shut off Ms. Happening or wrong thing that happens in the company. And the top stage of execution roadmap is the growth. Obviously, once you have a legal structure in place, once we are building products for your company, and once you read some amount of capital for investors, now you have two phosphine, your seed investors, that can be some form of accelerators or incubators or family members or any angel investor. So that comes under pre-seed seed category and then you have to make sure that your startup is growing and you're selling product to customers. Now that's a very short roadmap you have in front of you. But we can also go, and we can also learn a very complex toward men. So remember, you first gulf from a minus2 stage to a three-stage, which means you'll first have a problem or solution, review, or let's say a startup idea. Then basically you go from a problem or a solution startup idea to a vision and founders fit, which is choosing your co-founders, hiding some initial people in your team. And then you always look for incorporation and then you try to find a product-market fit. We will understand how will you define product market fit. And then from product market fit, you will try to go into business model or a market fit or fundraising or growth stage. That's the overall roadmap you can follow. Now that's of any shorter version of the Lord map. We're going to go in and understand the very complex roadmap in the next video. 10. 1.c.Product execution road map: Now this is the formulation of a startup and how exactly we will go from 0 to maybe Stage 1. And then you will go from stage one to Dan. So kind of 0 to one and 12, ten kind of strategy. So whenever you have an idea in your mind, you always live in the future. You will see the future trend or you will have a gut feeling inside you, which makes you feel like this is the problem and that's how someone can solve this problem. So you always think about future and you sold your problem in your brain for us, then you comment out that information on a piece of paper. Build MVP, find someone who is also really excited about the problem. And then just do a lot of prototyping, dot-dot-dot different people doing iteration and you'll finally found a, find the founder, then you register your company. Once you are done with the legal registration and all these things, then you always look for fundraising options. So in fundraising you have different incubators, you have different accelerators. Once you're done with fundraising, then you will launch your product. You will do some newsletter, e-mail sign-ups only product launch. So many different things. Let's say if you have a hardware product, you will launch in Kickstarter Indiegogo. And if you think that people are coming back, then you will try to get your foster a 100 users or let's say phos 1000 users. And then you will set a target for your team members that how can we grow anymore than 5% week on week, which will translate into around, which will translate into around 250 percent growth rate year on year. And that's the minimal growth rate you have to have in your startup if you're not growing 5% week on week, you are in a very bad situation. And then you will basically grow at the same rate for next four years to reach 25 million users. But let's say if you're not getting enough traction for your startup, if people are not really excited about your company. In that situation, you will again come back and do the same level of hydration changes. You will again do brainstorming, find a better problem for yourself, or let's say find a better solution for your startup and then reach out to people again. So that's the basic startup strategy from idea generation to prototyping, to finding a co-founder, to registering and legal entity or a structure to getting only email sign-ups, to getting your FASFA 100 users or 1000 users to maintain the growth rate. And maybe if these things are not happening, then again come back and do the same thing an hour. So that's the basic setup roadmap that you have to follow. If I give you a roadmap in the form of an arrow, that's how the arrow will bones on your screen. So you have to validate your idea. And if you want to validate your idea and you do not have any short of money in your pocket, you have to bootstrap your company. So whatever savings, whatever fun funds you have in your pocket, you have to invest in your own startup. I know it's a very risky investment, but you have to do it. In case if you want to make these things a reality, then you have your traction stage. So you will go to different incubators, different accelerators, who will incubate your startup will give you some amount of capital. Now some of these incubators and accelerators will give you capital for free. And because they are run by different state government. But majority of the incubators or accelerators always take 57, 10 percent of equity and then give you some amount of capital in your startup. We will talk about equity structure incubation and all these things are later in this course. Then I'll be going to talk about how exactly you will raise capital for your company. So once you are done with your incubation or incubators and accelerators, then you will go and Dr. different angel investors and venture capitalists to raise your pre-seed seed round. Cds ACTs be kind of rounds. And then in the end, once you grow or to a very large scale level, or you have millions of customers, then all these investors always look for either modulus and acquisition or any sort of exit. That can be IPOs, mergers and acquisition, a form of dividends. But usually all the investors favor Moses mergers and acquisition or either IPO because they willing to exit from that startup and wanting to put their money into some different companies. 11. Delta four technique for idea validation: Hey everyone. In the past couple of videos we had a discussion about idea generation on how exactly you can generate multiple ideas by solving a one specific problem. Now once you have some sort of idea and NEW started working in your startup, how will you exactly validate that specific idea? Because obviously, if you have some ideas in mind and if you feel that idea is going to work in the future, how will you know that this is the right idea? Because running a startup may need few years of your life and a lot more capital because you have to hire people. So there is a simple framework to validate any startup idea that you have in your mind. And that's the delta for framework. Now the steady DOT for framework was given by canal Shia, who is the founder and CEO of gradient free charge. And this delta for framework will simply help you understand how will you create a product which will have a delta for efficiency score. If your startup have efficiency score of more than Delta 4, you will create valid for all your employees, investor, and for yourself. Now let's quickly understand this delta for efficiency score with the help of an example. Now let's understand the stereotype for framework with the help of simple example. Let's compare two different situation. Let's compare the situation on how we order food online right now. So right now, we all are using a mobile app and with the help of that specific lab, you can quickly place our order. But if you go almost 45 years back, Then we use to order food by calling a specific restaurant, and then we use to place the order. And that specific restaurant will send one delivery boy, and then we use to paint him in cash and so many different offline process. Let's understand the basic difference. If you wanted to order using old traditional method, then we first have to find the contact number of that specific restaurant. Then we used to call them, ask about the price of the food, then how much delivery charge they're going to take for that specific food to deliver at our doorstep. So we used to wait for ours and then we will end up being them in cash. That was the old classical traditional approach of ordering food. Now let's look at the way by which we order food online. So right now I think you might be using any food tech platform like Uber Eats or DoorDash. And you're using these platforms to order your food online. But if you compare this all situation with the current situation, I think we're currently we are using any of these food tech platform like Uber Eats, DoorDash. And we just need to maybe choose between couple of products we have inside the mobile application, we use to add them inside a card and boom, will place the order and there is very little delivery fees. And only to pain gas you can pay online. Now Let's quickly compare both of the situation in terms of efficiency score. Efficiency score of ordering food online was this efficiency score of ordering food by calling a restaurant. Now let's compare their efficiency score on a scale of one to ten, where one is the rare one means the process is not efficient. And 10 means the process is very much efficient and there is no room to optimize the process. Now if you look at the efficiency score of ordering food by calling a restaurant, the efficiency score is three because the process is not efficient at all. You have to find a number, then you have to call that specific restaurant. You have to ask about the catalog, then you have to ask about the delivery fees. Let's look at the efficiency score of ordering food using on my lap, the efficiency score is around eight. And if you look at the difference between the efficiency score of ordering food by calling a restaurant versus ordering food online using any mobile app, you will find that there is a difference of more than four. Now this is your data for, so if Delta E or your efficiency score is more than four, then the new process is very efficient. That means ordering food online is very efficient. And your startup will unlock a port of call if enough people are using your product. Now when I'm saying unlock a pot of gold, that means your startup have some investor, your start-up also have some employees which hold equity in your company. Your start-up also have some CEO and CFO, or maybe let say you are the founder. In that situation, you will create wealth for everyone. Bought your investor, your employees, and your CXO people. But you need to have this efficiency score between the old process and the new process of more than four. But one of the very unique characteristic of having this efficiency score of more than four is that you will never go back to the previous behavior. Once you started ordering food online using on why lab, you will never go back and call a specific restaurant, then order food online. That's an irreversible behavior. You will always open that mobile lab and you will always order the food no matter how expensive or cheap the pool is. Now let's understand the same process with the help of one more example, booking tickets online versus booking tickets offline. So if you look at the efficiency score of booking tickets online versus offline, then obviously, let's assign efficiency score of booking tickets own lane, and efficiency score is around two or maybe three. Now let's compare this with the efficiency score of booking tickets online, somewhere between 7, 8, 9. If you're gloriously have a look at the difference between the efficiency score of booking tickets online versus offline. Well, the Delta E research on efficiency score is always more than four or maybe equal to 4. And in this situation, you will also unlock the border of God. Because if you look at the situation, when you use to book tickets offline, you have to stand on that specific counter. You have to wait for a certain period of time and then only you will get your ticket. Well, that's a very inefficient process. That's why we're going to get so online is always an efficient process. And the reason I'm covering this delta for artillery is because if you build a product in the future, you have to compare your efficient product with the previous product. What kind of experience you had by using one of your competitor. So you will always try to create some sort of differentiation which will allow your audience or your customer to love your product much better than other people. That's how you will create monopoly. I think you can understand about this specific topic about creating monopoly in the market in 0 to one by Peter Thiel. 12. Characteristics of Delta four behavior: Let's look at the behavior characteristics of this delta for product. If your product have the efficiency score of more than delta four, then your product will have these many characteristics. Number one is irreversible. This kind of behavior is always irreversible. Once you started ordering food online, it is nearly impossible to go back to the previous process by calling all the different restaurant, asking for the Prius, then you have to ask them about the delivery fees, the waiting time. That's a very inefficient process. Once you started using a product which have the efficiency score or the efficiency gap of more than four, you will never go back to the previous process. Second is your UVB is always greater than the USB. Now you first have to understand what do you mean by UVB and USB. Usb we all know is unique selling proposition. Ableist single product have some form of unique selling proposition which will differentiate them. The competitors. For your iPhone, the unique selling proposition is your product and your brand value. For Tesla, the unique selling proposition is it's electric car and it is also autonomous. That's the unique selling proposition for these delta for product. They have unique breadboard, the position. And let me explain this unique breadboard, the position with the help of one simple example. How many of you install grew color after watching an ad? Probably no one. Let me tell you how you exactly installed blue-collar. Probably one of your friend came up to you and he was saying that just tell me any number. Just tell me any number and I will exactly tell you the name of the person and that's how you get to know about true color. If you have a really nice product, people will love to brag about new and exciting product that they are using and you are not using as a common friend. So good and unique product, always have some bread with the proposition. And true color is one of the product which have a good blackbody position. If you are using this product, you will always recommend this product for your friends. Third one is high tolerance. So even if Uber app is done for, let's say ten minutes, you still don't call a specific restaurant and order your food. You will wait for XA 1015 minutes, then you will take some decision. Now if I summarize the complete video, if the delta for the efficiency score of your product is more than the previous product, then you will always open the port of goal and you will create wealth for all of your investor. You're founder and employs, which have Aesop's of your company, which is your employee stock options. Now let's understand the more powerful combination. When you combine Delta 4 with network effect. And it is so strong that it is nearly impossible to break this effect almost a year back. What surplus having some privacy controversy and a lot of people were speculating that we will start using Signal WhatsApp doesn't roll back all of their privacy policy. Now guess what? We are still using WhatsApp and rebuild still use WhatsApp, no matter what kind of changes Facebook make inside the app. Well, don't get me wrong. Let me explain why. Because privacy is a concern for only a limited person days of user, while majority of the chunk of WhatsApp user don't really care about the data. And the network effect is so powerful that it is nearly impossible to replace the app. Now, imagine a 55 year old housewife or a 50 year old vegetable rainbow living never migrate to a new platform because now they have to learn a new black foam scratch. And every single person you know, is using WhatsApp. And that's why it is super difficult to replace WhatsApp until if the government is not banning that specific app in your country. Let's understand how some companies are successful in inflating this data for concept. Let's understand this with the help of one more example, buying shirts online versus offline. If you look at the efficiency score of buying shirts online versus offline, while the efficiency score of buying source offline is eight and mine Shots Online is three. Obviously the efficiency score is less than three. But somehow companies are successful in selling all of these sharps. Online. Reason is these companies are just inflating this delta four because these companies are giving you a huge gash record discounts and they are artificially increasing the new data. Because obviously, if you're purchasing any clots online, It's really difficult to decide whether the clot is good for you or not, because you have to post knowledge, check the quality of the clot and the size of the globe. So buying clots offline is always better than online. These companies are somehow inflating the study doc or by giving you more discount or cashback or artificially increasing the new Delta. Let's see, somehow you are successful in creating some sort of product, which is really nice, which is much better than the industry product. Even if you have created an amazing product, the friction will still be there for moving to delta H4, one of the friction is an option. Now let's imagine a company's using a legacy software like SAP, or maybe sales force or daily. It's really difficult to replace all these legacy software because people are so well adopted, they are using these kind of legacy software from last 10, 15, 20 years. And everyone had to learn a new software from scratch. So the adoption cost or the switching cost is so high then those companies may not accept the new product. So if those people have learned some software from past five, 10 years and they are using it right now. It's really difficult to replace that specific product with a new product, even if the new product is much better than the existing product. Because of adoption and switching costs. Because now the company have to train every single employee for a new product. The switching cost is very high, then it's really difficult to switch all the people suddenly to a new product if everyone is using WhatsApp, that's why via using WhatsApp, because our friends are using WhatsApp. Our mom is using WhatsApp or complete families using WhatsApp. So it's really difficult to replace every single person at the same time from WhatsApp to a new app until and unless if government is not banning that specific mobile app and tarragon is obviously the brand. And brand is a very subjective concept. 13. Solving Million dollar problem part 1: Everyone in this video, we're going to talk about some $1 million ideas and how exactly you can go around with dot specific $1 million ideas. Obviously, I only understand my postman problem. And in this video, I'm going to tell you if I have one specific problem, how will I go around solving that specific problem with the startup? So from past few years I was losing a lot of here. So in the previous few months I was thinking about solving this hair loss problem. So let's say if I'm losing some here and I wanted to solve this problem, I first have to understand this hair loss market. Now if I wanted to build a startup around the sphere loss problem, I first have to understand this problem really value now to solve this problem or to build a good startup idea based on this hair loss industry, I first have to ask one simple question. How many people are facing this problem? If there are so many people who are facing this problem, this market is big enough to maybe start a business or start a startup. Then I have to go for a treatment to understand how exactly different doctors or different people are solving this specific headloss problem, then I have to understand the target market. How much I can grow if I start my startup and what is the current competitive landscape? So how many companies are solving this problem? How big is the market, how fast the market is going? And what is that unique startup that can come out of hair loss? And in the end, I have to answer how exactly I can solve this problem at scale. Because obviously if I'm starting a startup, then I have to solve a specific problem of maybe thousands of people, or maybe millions of people in one single day or maybe in one single month. That's how I will build a scalable technology business, which is the real definition of startup. Because if you're planning to raise capital, you have to scale very fast. You have to build a billion-dollar business really fast. That's the real definition of startup. You can always build a traditional business. But for that, you may not get a gourd capital from all of these investor. So I started doing research on this specific topic. And I came across to a point where I was having enough D, D2 go wrong with this specific Stata? Well, more than two people isn't. And that too, by the age of 35, is a big number. That means the market is very big and I can quickly build a solution, or maybe e-commerce store with a doctor consultation. And then people can come book a consultation and the doctor will advice than the product. And then we can ship the product with the help of some logistic partner. Well, that's the main idea behind building this brand. Then, before building a specific brand, I have to understand what are the products that those doctors are giving to all of their patient. And when I mean doctors, those are dermatologist or psychologists who are exploiting hair, skin, and all of these problems. So I went to a psychologist and I explained the problem. And now I saw a trend that almost 90 percent psychologist will giving the same product to almost 80 percent of the customer. So there were giving these three broad minoxidil 5% topical solution, ketoconazole shampoo, and finasteride tablet. Now, all these three products are proven to stop your hair loss and they will also grow your hair by almost five to 10 percent. Then I did some research and order these product from ten different brands. And then I got a specific pattern that all these three products are made by couple of manufacturers only. That means now we got a common manufacturing point. These 40 different products from different rents are made by common manufacturers. So now we've got some manufacturers, and those manufacturers were doing a private label outsourcing. That means if you wanted to start a brand and if you wanted to launch a product, you just have to visit a specific manufacturer who is manufacturing those product. And then you can tell them to piece the label of your brand on a specific bottle of the product. So let's say if you have a ketoconazole shampoo, you can tell those manufacturer that you have to paste my label on your product. And then I will sell all of these product from my marketing strategy, from my e-commerce store. And that's how you can do outsourcing, also known as your private label outsourcing. So I contacted all of these manufacturers and they gave me a minimum order quantity. So they told me that you have to order n 1000 quantity of all these three products. So now I got the solution on how to solve this problem for others. Where will I sell this product? Well, if I wanted to build an e-commerce store, I can use Shopify, WooCommerce, Magento, or maybe weeks, and then add soon as people placed the order of these three products, I can hire a couple of doctors and then those doctors will have a video call or a video conferencing call with the patient. And then they can advise all these three product to their customer or patient. And then I can ship these product with the help of some logistic partners. So in US you have FedEx, in other countries you have blue dark. So you can ship these productive customer and then you can be shipping fees of around one or $2. Now there are a couple of companies who is solving this specific problem in different market. So you have hymns and hosing us. So this is your minoxidil, this is your shampoo and decision by protein tablet so that solving this specific problem in US. Then you also have one brand in India. You have man matters who is a brand in India, and then you also have Roman. So if I summarize the video, you can scale this problem. Yes, by building an e-commerce store and buy hiding couple of doctors who can scale this problem without opening a hospital or a psychologist center or a dermatologist central, this market is growing at the rate of 9.73%. Compound annual growth rate, also known as 9.73% CAGR. Will investor would be interested? Yes, because the market is big, it is also growing and you're also solving this problem with the help of technology. So investor might be interested. Well, the dam is also very high. You have a TAM of 2.51, $1 billion by 2025. But obviously, you do not always highlight bam. You will also understand Sam and sum. And we have covered am Salmon song in the market size We during this course. So this is a good problem to solve and I think goes some investor has also invested maybe some amount of capital in these companies. So in hymns, investor, investor more than 100, $1 million companies like Man Mattos, the gourd, the funding of 10, $1 million from different investor. So there is a good investment flowing this specific market. But remember, you always solve the problem which you are facing right now. Because if I increasingly hair loss problem and if I'm using some product from past 3456 months or a year, I exactly understand what kind of products are day and from there I can get all these rhotic and how exactly can sell these four different customer. I have a much deeper insight than other people because I am personally facing the problem. That's why I always suggest people solved the problem that you are facing post-money because then you will have a much deeper insight than other people and always split a problem into multiple paths. What is the problem? How people are solving this problem right now? How can I differentiate myself in terms of solving this problem from fear? I can get this product. And once I can, once I got these product, how exactly I can sell this product for different customer using multiple channels. I have. 14. Solving Million dollar problem part 2: Hey everyone, This is the second video in solving a $1 million problem and how exactly you can build a startup by solving this specific problem. In the first video, we have solved the problem of hair loss. Let's say if I'm facing one more problem. So remember, with these videos, I'm solving my own personal problem. You guys can have a different problem. You guys can have a different understanding about solving this problem. But I, I'm having a different level of problem and they might or might not correlate with you. So you have to find your own postman problem and then you have to build a strategy around that specific problem on how exactly you console dot specific problem with the help of a. Now imagine myself as a digital marketing person. I wanted to run some ad campaigns on Facebook, on YouTube, on Instagram. And I wanted to edit some promotional videos. Now let's say a small posture where our goal is there. She's using some product or a boy is there who is using some product. And I wanted to write some sort of get 50 percent off villages this. And I want a simple transition or a simple posture. Now it's really difficult to make those promotional videos without knowing video editing. Because if you wanted to make those promotional videos, you have to use these complex video editing software like Adobe Premier Pro, iMovie after the fact, Final Cut Pro. And it's really difficult to learn all of these complex video editing software. Well, That's why can you start a startup and solve this specific problem? Well, you have to ask all of these caution and you have to ask how many people are facing this problem? Well, there are a lot more digital marketing consultant who wanted to run ad campaign for their specific brand. And they have 0 idea about video editing. Well, they can use our product if we can build a really drag-and-drop kind of product with some existing template. Well then you have to talk to those people that if I will build a product where you can quickly make a promotional video by just writing couple of text. And our system or our back-end engine will do the work for you by choosing some existing template, by choosing a model, by choosing different animation, by choosing different colors. You just have to write the text. And that's a good idea. Then you have to understand how exactly you can solve this problem early and at scale. Because if you already have competition in the market, then that competition may not allow you to acquire more number of customers and generate some revenue. So you have to understand competition, how early you can solve this problem and that do it at scale with the help of technology. So obviously these are our existing product. Now, all of these video editing software are really powerful, but they are very complex. If you wanted to make a small video for, let's say one minute using Adobe After Effects. It's gonna take almost five to six are just to make a one-minute animation video. Well, that's a big problem you have to solve the problem of making quick promotional videos. You can use all these, correct? So right now in the market you have in-video, which is the most powerful product, and I'm posting it using this product. This product is so powerful that you can quickly make a promotional video within five minutes. You just have to write couple of X and you will have some existing templates. And you just need to write some texts on those specific template and it will automatically give you a promotional video. It's really powerful. Then you have byte able render forest and can walk with you. I think a lot more people know about Canva. So can wait spatially for graphic designing or maybe designing posture. But they also have one more product, ten WTO, which is not that powerful, but involute super powerful. You can find lighting 10, 20 thousand templates, and then you can quickly make a video. So I hope you got a point that how exactly you can solve this problem by building a SaaS product. Sas is also known as your Software as a Service. So people will pay a $5 every single month to meet these interesting promotional videos using your software, which is online. Obviously, you need a person who is good at technology, who is good at building software. And for that specific problem, you can maybe build a startup. You need a good team. So if you are someone who is purely from business domain, well, you need to look for some technology guy who can write cord and who can build a product. And if you are a technology guy, if you know exactly how to write a code, then you need one person who can sell these four different customer. So you have to understand the three at strategy to build a successful startup, you need a hustler, a hacker, and the hips turn in your company. Haslett is someone who will sell the product. Hip studied someone who understand the technology, who understand the user expedience and hack that in someone, right though, God, for the product, because you also need someone who can build the product and the phosphorus. So you need these three each element in your startup, hustler, hacker and hipster. So let's check all of the points that we had in mind. So obviously, if you're building a startup, you have to understand scalability facto. So can you scale this product with the help of technology? Yes, you can build an online software and then you can scale this product to reach millions of user. Is this market growing? Yes, this market is growing really fast. And a lot of people who do not know about video editing, they can use these online tool by just writing couple of xt and they can generate the videos for them. Our investor ready to invest in this specific domain? Yes, because investors are already investing in startups like this. Is this product solving a real pain point of the customer? Yes. Because people like me who are non-technical, people who do not understand video editing, they can use these drag-and-drop product and they can maybe make a good interesting promotional video for the product to run on specific social media campaigns like on Facebook ads or Google ads, et cetera. Do I have only more advantage? Well, right now I don't have because they're already 34 products which are out there in the market. 15. 1.d.Reasons Why Startup fail - Research Study : So here we won. I think almost do we expect someone was asking me that, what is the single biggest reason why startups succeed? And my response to that question was, well, timings and this is not Midas bones. There was a research study that was conducted just to analyze more than one hundred, ten hundred startup, both successful and failed startup. And they found out that one of the most important reason why if startup succeed was timing. And I explained the situation with the help of an example. Let's say today if you wanted to start Uber Eats, DoorDash, or any sort of food tech company which deliver food to the customer's doorstep. Now I'm not saying it's impossible to succeed in that specific domain, but the market is over competitive right now. You already have players in the market. So no matter how brilliant idea you have, how good your team is, of how good business more you have, or whatever amount of capital you have read so far. You are not timing the market. Well, you cannot succeed. And that's the single most important factor behind the startup success. Today, if you start, let's say, a new search engine and you hire all the people from Google, including the CEO and CXO, you still cannot succeed. Reason being you are starting late. Timing is not correct. So even if you hire sooner PHI or all the CXO people from the Google, you still cannot succeed in the search engine market because the market is hypercompetitive. Now, you already have monopoly in the market and it's really difficult to succeed now. Now, that doesn't mean that timing is the only single biggest factor. Obviously, theme is also very important. If you do not have a very strong beam. If you do not have the 38 strategy, we're going to talk about 38 strategy a little later in this course. But you need a hustler, a hipster, and a hacker in your beam, at least in early stage of your startup. So you have to have a very good team who can execute things ready foster. Obviously idea is somewhat very important. If you do not have a good idea and your startup, you may not succeed. And the idea should be unique. It should have a scalable technology or growth or bought or a runway. You have to have a very good business model which will support you. Because if you have a business mortar which will help you on Foster and your gross margins are very high. So answers of your startup on getting successful are very high. And funding is the least effective pedometers for majority of the people they always rely on funding. Obviously funding is important, but all the successful business are not grown out of funding. The mean success factors lies in their timings that deem their idea and their execution. Funding is just a supporting factor in desktop. So remember, if you're building your startup, just make sure you have a really strong team. You are timing the market with some wartime northern your hand obviously, but you have to have very unique insight. Or you have to have an understanding of how the future is going to look like. So remember, if you wanted to start your own business, you have to have a very strong team. You need a hustler, a hacker, and a hip store in your team. Obviously you cannot time the market. It's really hard to do that. But if you are following the technology very well, if you understand the technology, you can always predict the future. Remember, startups are always built ten years ahead. So you have to think almost 10 years ahead to build a startup right now. And apart from that idea is important, business model is important and funding in the end is the least important factor. But in your mind, this can be the most important factor right now. But remember, theme is the most important factor. Timing is important, but you cannot pay in the market. 16. 2.b.Origin of a startup: Hey everyone. In this video we're going to talk about the legal structure of a startup. Now I know legal structure can be very confusing and a boring topic. And that's why to make it interesting, I'm going to take an example of two different people and I'm going to explain legal structure with the help of a interesting story. Let's say two people, not even Sophia, they wanted to start a startup and they are solving a real life problem with the help of technology. Now know the pallor good experience at seals. He's an MBA graduate, He's a hustler, but he have very less idea about coding. And that's why not deep instinct help from Sofia. Sofia is walking in IT company. Now Sophia have a good experience in IT domain, or she's walking in multiple companies. You have multiple startups, technology startups. And she had a good understanding about how to write code, how to build scalable technology product. So now if you have a hustler and hacker in your team, now you have hustler and hacker in your team. Now it's a good combination to solve a problem. So they started working on this startup and now they have five customer and $10 thousand in revenue. Now they have customers and revenue in place. Now they are planning to raise some capital, but obviously they have some problem in front of them. They have all these four option and they wanted to register themselves in these kinds of legal entities. So they are confused. We should register ourself as a sole proprietorship or a partnership phone, or as a legal liability company, or as a corporation. They do not have any idea about all these four different types of legal structure. And that's why they were talking to different lawyers, to different people to understand all these four different type of legal structure which is used by all the businesses or the startup. Let's quickly understand all these four different types of legal structure that you can use if you are starting your own business or your own startup. Let's start our journey by understanding sole proprietorship. But before that, this is not a legal advice. Please talk to your lawyer in case of any legal help. The main purpose of this course is to make you aware about all these basic terminologies that you have to understand if you're starting your own business or a startup. 17. 2.c.Sole proprietorship for Small Business: Let's start our journey by sole proprietorship. Sole proprietorship is basically our business entity, which is owned and run by a single person. That means there is no legal distinction between an owner and a business. A business and the owner are combined together in a sole proprietorship, which means tomorrow, if you take some loan for your business or some deck for your business from some bank or from someone. You have to pay the debt. Which means if you become a default are in the directory. If you are not able to pay the debt, you are personally liable for that specific type or business loan that you take. All the small businesses like your bakery shop, your car wash, your retail store. All these businesses were destroyed themself as a sole proprietorship, which means one single person on the complete business. He put all his capital, all his effort or everything in this business, and he's running this business by himself. Now let's look at the features of sole proprietorship. Obviously, this is your business. You own this business, so you will receive all the profits that you make. You do not have to share the profits with anyone because you are someone who own this business, because this is opposed to that business. Next is legal compliances because it is a sole proprietorship. You own this business completely. So there is very less legal book. You just have to submit your basic identity proof and a couple of pictures and that's it. Third one is unlimited liability because this is your personal business, because you own this business, which means tomorrow, if you take any loan for your business, you will have unlimited liabilities, which means somehow, if you're not able to pay the loan for your business, the bank will recover your personal asset to make sure that they have enough money back in their account in case if you are not able to pay the loan for your business, which means you will have unlimited liability for all the losses and debts in your business. You'll be mostly responsible for each and every small thing. Obviously, you can not have any business partner in sole proprietorship. This is a one-person business and you're the only one who own this business. If you want some business partner in your business, then you have to register yourself as a partnership from instead of sole proprietorship. So in the next video, let's quickly understand partnership fun. 18. 2.d.Partnership firm for medium business: So hi everyone. In this video we will understand the partnership firm. Now this is one of the most common legal structure, which is found if you are starting a legal business or a digital marketing agency or a consulting business. So all these small businesses, usually the district themself as a partnership firm. Obviously in partnership form you will have more than two or at least to business partner. So in partnership fund, pool parties, also known as business partner, agrees to cooperate on their mutual interest. And that's how this year profit. Let's say if you and your friend decided to start a digital marketing agency or let's say a consulting agency, you will bought, put at least let say 50, $50 thousand in that business. And that's how you will receive profits in the future. So let's say if you are putting $50 thousand and your friend is also putting $50 thousand and bought off. You are starting a partnership firm in future after one or two years, you will also receive the profit in that specific ratio. Because you own 50, 50% of the business, it will also receive your profit in 50, 50% percent way. So if you're making $10 thousand and future, both of you will receive $5 thousand every single month. That is the basic proposition of your partnership from which means you bought will decide dot profit sharing percentage index Pacific Partnership from now this can be 50, 50 or 60, 40, or 2017, depends on how much capital you have put in to setup this specific business. If you look at the features of partnership phone, obviously, this partnership farm is owned by both of you. So there's a very low cost of formation because you bought own this business and you also have unlimited liability. Because tomorrow if you and your friend will take any loan for this specific digital marketing agency or for this legal phone. You are liable for any debt or losses you make in this company. In this partnership from some countries will have a partner limit of around 22, 20 people, which means you can have a minimum of two people in the partnership phone, but you cannot go beyond 20 people in the partnership form. So if I continue this video in partnership form, you will have two different business partner who will put in some amount of capital to start this business. And they will decide their profit sharing percentage in the partnership agreement that they will make while establishing this business. And then we also have unlimited liability if the firm will make any losses and debts or in future. 19. 2.e.Corporation legal Structure for the Startup: Hey everyone, This is one of the most important type of legal entity, all legal structure, and this is exclusively for startups. So if you wanted to start a business or a scalable technology startup, you have to register yourself as a corporation. Now in different countries you have different types of corporation. If you look at companies in US or startups in US, you will have Delaware C Corp, or an S corporation. In India, you will have Private Limited for startup. In Singapore. If you wanted to start a startup, then you have to register yourself as a PT Limited. If you wanted to start up in South Africa, you have to register yourself as a PTE limited. If you wanted to start up in UK, you have to register yourself as Ltd. So in different countries you have different form of legal structure for startups. And obviously I can't really cover all these different types of startup legal structure across different countries. But for this, you have to consult your lawyer or someone in this specific domain who have good expertise in registering your legal stuff. Now let's quickly understand C cooperation, which is one of the most famous legal structure which is there in us. Us, a lot of startup register themself as Delaware C Corp. And in this kind of legal structure, which is the most prevalent kind of legal structure. The owner, which is your startup founder, the shareholder, which is your investor, our text separately from the entity, which means tomorrow if your business is making $10 thousand in profit. So you have to pay some amount of taxes where business, and if you are also pulling out the profits for yourself, you also have to pay taxes for that specific amount. Obviously, it's a double taxation problem. We're going to discuss about that soon. But normally in C Corp, which is found in US, you will have all these different features. In C corporation, your personal assets are different from your startup acid. That means if you take any loan for your startup and if you're not able to repay the loan back to the bank, then you're not personally liable for that. Your startup is liable for that specific problem. That means your personal liability is different and your startup liabilities are different. We all know that more than 95 percent startup field and they do not make any money in the future. And that's why they have to register them self as a corporation where the startup founder is very much different and do not have any shorter unlimited liability in the company. In all these different startups, you have stockholders or equity holders. So you'll found those are equity holders in your company. Your investors also hold equity in your company, and then you also have board members and all of them combined together and make board of directors. And all these board of directors will have enrolled general meeting and this end will gender meeting. They will discuss about all of their annual sales figure, all of their sales forecast, the future plans, their mission, the vision, and all these different kind of stuff for the future. And one of the most flexible thing about cooperation is board of director can decide who will be the CEO of the company, how much of spending they wanted to have it in the next financial year? What is the expansion strategy? How much they want to invest, when will they go for IPO and all these different kind of strategy. In short, the corporations are designed in such a way that the startup founders do not have any link with a company and they just hold the equity share of the company. Whatever happens in the company will be decided by board of directors. And in this board of directors, you will have startup founders, you will have investors who will have board of directors or any board members. All of these people will decide about their future forecasts, their sales, their strategy, and that's how they also pull in money from different bands, from different private equity. And if somehow the startup is not able to make money or the startup will diet, then the startup founders do not have any liability. They can shut down the company, they can file for bankruptcy, and then they can start a new business. Because obviously more than 95 percent startup somehow fail and less than 45 percent startup succeed in the Joanie. So all these 95 percent startup will have to file for bankruptcy. And that's how this is the normal structure for all of the startup. So if you wanted to start their own business or you're starting up, you have to register yourself as a corporation. And if you're in us that it's a Delaware C-corporation in India, it's Private Limited in Singapore, main Mar, Indonesia. It's PTI limited in South Africa at this PD limited. And if I summarize this complete video, you will be studying our startup by registering yourself as a corporation. If you are in US, then it's a Delaware C and S corporation. If you are living in some other part of the water, then that can be limited liability company. In India, it's Private Limited in Indonesia, main Mar, and Singapore. It's pretty limited. In Australia, it's PDE limited. And you have different types of legal structure for startup in different countries. So you can just talk to one of your lawyer or someone in this domain. So in the end, you were having four different choices with you. And finally, you end up registering your company as a corporation in your specific country. And once you are done registering your company as a corporation, you will have all these different people and a proper corporate structure. Now you have shareholders in your company. Now, obviously initially you and your founder are the only shareholder in your company. Add soon as you raise capital, you will have investors in your company. You will also have board of directors. You can also have officers. You can also have employees and all these different people. And every single person have a specific set of rules regulation to follow. And they also have someone whom they have to report. So as, as, as a startup founder, you have board of directors or your investors to report. Investor also have their liability partner or LPs are to report. Obviously your employees report to use. So you always help people who walk with each other and they also have someone above them. And that's how the normal startup or corporate structure Book. 21. Business Model Canvas: So hi everyone, My name is now deep in this video we're going to understand business model canvas. Now business model canvas is made up of these different types of boxes and it will help you give a high-level overview about your business. So no matter you're talking to, are there for the investor or one of your employees, or even do your best friend. You can show this business model canvas to them and they can easily understand about your business. And a lot of entrepreneurs make this business model canvas for different investor. Now before talking about all these different element, Let's discuss the benefits of Business Model Canvas and then we'll start filling in the data into this specific business model canvas. Let's understand why we are making this business model canvas at the Foster, please. The first reason is focus. It will strip away all the 40 plus pages that on Oracle entrepreneurs make if they wanted to show that person's mortar or their business plan to someone, uh, just a single base business model canvas, which will help you understand all most, all the different area or aspect of your business. Second reason is flexibly be. Second reason is flexibility. Because this is a single page business plan. You can quickly week something or you can change a couple of business mortar. Or you can try new things from planning perspective. And it's a single page of business plans. So it's really easy for you to Jane something or filling some additional details if you want them, then you have transparency. Now because we are not writing taught d plus page business plan or you're not making a complex PPD, just a single beach business model canvas. It's really transparent. Which means if you give this page 21 of your employees or one of your colleague or given to a different investor, they can easily understand about your business. Now let's understand this business model canvas in a much easier way. So we will audit startup business mortar from the customer segment box. Then we will move from customer segment two, value proposition. And from value proposition, then we will move to Janet's. So what are the different channels we have for our business? From channels, we will fill the customer relationship. Then you will move without revenue stream. Revenue stream we have. Then we'll go to Resources, the resources that we need. Then we will fill in all the details of all our partners. So let's say if we have some courier partners, we have some logistic partner or some contract manufacturers. We will fill all of their details in the key partners, then we have key activities. So what all major activities that we do on day-to-day basis, we fill all those details into that specific column. And then we have cost structure. Now let's quickly start filling in all these details in a simple business model canvas. And probably in the next video, I'm going to show you a couple of business model of different startups and different companies as well. So let's start our video by understanding your customer segment. So startup can target specific customer segment. Your startup can target a mass market. So let's say if you look at companies like Coca-Cola or Pepsi, or any food brand, they have a mass market because no matter what a three-year or good or a 55-year or die annually can consume Coca-Cola irrespective of your gender or age. That means Coca-Cola is targeting a mass market. That's their customer segment, then you have your niche. So there are so many companies who are selling their product to just one specific niche. So let's say if you look at all these lipstick or beauty brands, they only sell their product specifically to a customer segment of 20 years or I think 45 years older. Then you have your diversified customer segments. So if you look at companies like Amazon, amazon is targeting anyone and everyone. So you have to identify your specific customer segment. What is that customer segment you wanted to plug in? So let's say if you are starting our supplement brand of for all the people who are actively involved in fitness, then your customer segment is from 20 years or two for P here or people specially the ones who are really active. And then you can just divide that specific segment. And you can target using Facebook ads, google ads. So even when you do a campaign on a DV or any media, then we have a customer relationship. How exactly accompanies maintaining relationship with customer? So how you're acquiring your customer. So let's say if you have offline acquisition channels like retail store or do you have online acquisition channels like Facebook ads or Instagram ads or whatever, how exactly you are acquiring the customer. You will also mention that how you got retaining the customer. So let's say you can fill in the details like we will organize a thickness event every single year. That's a retention strategy. Then how you hover, you boost your seeds. One all the way by which companies can boost their sales is by tying up with different influencers, also known as influencer marketing. Then you have your Janice, what are the channels that you are using? So let's say you can fill in the details like we have 20 offline store or VR, or acquiring these many customers every single day from all these different online mediums like Facebook, Pinterest, any, any medium that you have. Then you have our value proposition. And the value proposition box, you will fill in all the details like what is something that is new to your product? What is the set special stuff that you have in your product? You can see that our Florida scored, our quality of product is scored whatever one special thing that you have good in your product. What is that value proposition? Or let's say. Now obviously that can be a performance or a design or a quantity of product that can be anything. So you have to mention about that specific detail. Let's say if you're a smartphone manufacturer, we will mention details like our smartphone are super-fast, got amazing design. Or if you're selling any B2C product, you can mention that we have high-quality or maybe let's say organic product, whatever, that unique value proposition that you have. You have to mention that in this specific box. Then we have our key partners. What all key partners who have. So if you are selling any sub-domain or any details or anything on online, then probably you have to have one logistic partner who will ship all of your products to different customer. So that's your key partner. So what are the suppliers, strategic alliances, joint venture, or acquisition channels that you have? Then you have all of your PD sources. So let's say if you have 3, 4 very smart people in the product side. So you have to mention that we have for product managers, engineers, or let's say toward the marketing or sales or whatever strength you have. You have to mention all of these details into ketone. Now that give you sources can be human, intellectual or financial TV sources. Let's say you have raised some capital. You can mention that we have a strength of 30 employees. We have raised a million dollars from these disease in restaurant. That's your key resource. Then you have your key activities. What is the one thing? Or let's say a couple of things that you do on day-to-day basis that will really decide a business. Let's say maybe shipping your product is what are the key activities that you do? Packaging those product is one, are doing marketing and sales is one. So you can mention all those details. What is the problem you're solving on day-to-day basis and how you're building your network or let's say selling the products, then you have your revenue stream. And this revenue stream will help everyone understand what is your usage. So let's say if you're building a social media app, well, then your revenue stream is based on the usage. Let's say if you're building a SaaS product or a software product, then your revenue stream comes from how many people are purchasing the product. Or let's say you're in a brokerage business. So your revenue stream will be decided by the type of business you do. So let's say if you're building a D to see your consumer brand, you have a different business. On the other side, if you are a software company or a brokerage firm, then you haven't different revenue stream. And finally, you will mention all of your cost structure. So let's say if you are manufacturing some product, you always have high fixed cost because then you have to purchase all of those machines, all of that raw material, and then you have to sell it. So if you are manufacturing something which have the high cost or high fixed cost, then you also have to mention all that details and swelling. And obviously then even also mentioned the variable cost and other details. So you have to mention all of these details or in your cost structure. 22. Business Model Canvas Examples: Now let's look at the business model canvas of one of the company, let's say Uber. So let's look at the business model canvas or Uber. Now this is a super simplified version of Business Model Canvas, which I'm showing you. But you can make it a little more complex if you want to. But this is the much more simplified version. You can maybe write few bullet points that we have these many customers, this much of revenue, these many partners you can mention their names has really, but still, it's up to you because this is the idea stage business model canvas. If your company already have some revenue, then you can make it a little more complex. Do not. I'm overlord this business model canvas with a lot of information, but just try to make a few bullet points, a few points or something. So if you look at customer segment for Uber, so they are targeting two different segment, God owner who have the car. Obviously, these are nothing but their driver or partner. And they are also looking for customer who wanted to travel from one place to another, please. Now the way they're maintaining customer relationships is by rating and review. So if a customer is giving you one start reading, obviously the experience was not good. But on the other side, if he's giving a five-star rating, the experience was amazing. Then you have channels. What are the channels that you're using to solve your customer? When one is using mobile lab, Android, iOS, and the rabbit website. Then let's look at the value proposition. Obviously they are reliable transport company. They are convenient. You can book a cabinet DHAP, and people can generate additional income. Then you have they have key activities. So they have a platform development. So they had to develop and modify the platform. They have to write code every single day. And they also have to make sure that they are solving all the support tickets that people are generating somehow because of safety or expedience. If you look at the key, your sources, they haven't backed Platform. So they also need to maintain that deck platform to make sure that it's not getting crashed because of more and more user. And then they have the news or they have to 0 meeting, and then they have brand as a key source. If you look at key partners, obviously they need a payment gateway or a payment processor to process all these payments. So anytime you've been on Uber, they might be using Stripe and they have to be, I think 0.5 to one person condition to Stripe. And that's how they settled all of their money from Stripe to their own account. Then they also have EPA providers. So let's say Google Map is one of their API provider. And they also have a couple of more providers or MI, also machine learning and AI algorithm. Then if you look at the revenue stream of Uber, they are charging or sodium commission on every single ray. And if you look at the cost structure, they have to maintain the spec platform. They have to spend some amount of money in marketing and personal. Now let's look at the Netflix business model. I'm going to speed it up because I think video is already very long. So for customer segment, all the people who are watching movies in us, obviously they started their journey from us. So that was their customer segment over here. Now this is the business model canvas of Netflix. It's a baby or business modern template. I'm not going to explain everything. You can pause the video and read through it. Iv. And this is the super simplified version of Business Model Canvas. If you want to make it complex, judge, just put a couple of more bullet points. Now I'm not going to cover this because otherwise this video will become very long. Similarly, you can have are ready like business mortar. So you have to mention what is your customer segments. So all the internet users are our customer segment. They have also named these internet users as ready doors. Then they also had advertiser because they also have to generate some revenue. In terms of customer relationship. They have self go on communities. They respect all the people and their privacy, and they collect as discreet as possible in terms of channels, they have a mobile app and a website. In terms of value proposition, people can speak whatever they want openly on the platform. And they can also create subreddit and they have a good number of 330 million users. Back then. Obviously now the number is little higher, but this is all business model canvas template. In terms of key activities, they are moderating all of their engagement. And they are maintaining and developing a platform as when in terms of good resources, they have 330 million active users and they have a platform and data about interaction. These are the key resources in terms of key partners. They also need some moderators to make sure that whatever content that is going to the platform that can then doesn't have any bad photos or bad pictures or some hate speech kind of content. So they somehow do some web scraping or some sort of filtration using their own algorithm. Then they also have all these different brands who advertise on platform and some of the news and publishers or all of those houses in terms of cost structure, if you are building a website or if you are maintaining a website, you also need solver. So they might be using AWS or Google Cloud Platform or Azur in that purpose. They also have some platform maintenance. So our staff, because they have a team of developers and other things, and they have their own stuff because they have to pay them salary. Some of them are in marketing, HR, finance, all that tough stuff. And they also have some revenue stream. And I think this business model changes over time. 30. 3H strategy for Building Dream Team: Hey everyone, my name is not VIP. And in this video we're going to talk about the 38 strategy of a startup. And one of the most important characteristic of a good startup is having a very strong team. And usually investor define that as a dream team or found a market fit. That means you must have these three most important people, hipster, hacker, and Hustler. Let's start our journey with a hacker. Now hacker is the CTO of your startup. Now CTO, it's someone who will take care of your complete tech stack. That means from your consumer app to your dashboard, to all of your product development, to all of your deployment. Cto is taking care of each and every small thing that goes inside your code or inside your technology. That means you have to have a hacker in your company or in your startup. Then comes hipster. Now hipsterness, someone who understand the customer very Valley. Hipster is a UX UI designer or disposing can be a product expedience person who have a good understanding of product, who understand the pinpoint of different users. And you have to have hipster in your company. Because obviously hacker, it's someone who can build scalable technology product, encode who can do a lot more pins, but you also need hipster because now I'm getting one person who can understand the customer demand, who can understand how exactly customer are going to use your product and so many different types of thing. And obviously, you also need one hustler. Now Haslett, it's someone who is a business savvy person, will can take care of all of your sales and marketing campaigns. How many sales representative you have to hire? What is your sales team? What is your go-to-market strategy? Now, obviously, you also need one hustler. Now hostilely is a business savvy person who will take care of all your marketing, spend all of your sales hiding, new VP of sales, hiring, business development representative, and all these different types of sales marketing and performance marketing campaigns. Now you need all these three different people in your company. You're Hacker U or hipster and you Hustler. If you are a hacker, you have to find a hipster in hospital for your startup. If you are a hustler who understand the business domain very valuable, can sell product to different people and enterprise. Then you have to find the hips, turn a hacker for your company. Now you have to make sure that you will have all these three people in your team so that you can make a perfect founder market fit kind of stop. And if you haven't looked at the most successful startup, you will find all these three different kinds of people and you will find all hacker. Let's take an example of DoorDash. You will have one hustler, Johnny x2 is the hustler AND or DoorDash. He was a Stanford graduate who was walking in multiple companies and building a very strong Muslim for sales, for business, to plan for customer expedience. And you also have Stanley Banks, who was the co-founder and DoorDash, and he was the hipster. So he was taking care of all of the o costumer experience, that different kind of dashboard that you need in a startup although, or thing that goes into design and experience, into product uses, into stickiness, and obviously a little bit of technology. And then you have a core technology person. So in DoorDash, that was AND Feng, who is the CTO of DoorDash. So he was taking care of all the technology products. So he makes sure that they are building scalable technology product which are used by millions of user within a second. So this was the perfect 3H2 him for DoorDash. Let's take one more example for companies like Airbnb. So you have brain Chomsky who was the CEO of Airbnb. You have lunch. It's hard to pronounce. I don't know how to pronounce this name, but he was the CSO or keep Strategy Officer. And then you have Joseph Gambia, who was the CEO, Chief Product Officer. So he was the hipster. Joseph caveat was the obscure of brain. Jet ski was the CEO or the hustler. And probably, I think obviously it's not mandatory to have all these three different kinds of people. But investors will always look for all people who have all the complimentary skills and who can take care of their individual domain. And that's why I feel that if you have these three different kinds of people in your startup who can take care of their own domain. Chances of your startup being successful is very, very high because now you have three people who is heading their own particular domain. And then they can aggressively recruit more and more people. They can build a very strong pipeline of very strong army of engineers, salespeople, and customer experience people. 31. 5.a.Introduction to Platform Business: Hey everyone, In this video we're gonna talk about platform business model. And I think this is used by almost all tech companies or e-commerce companies, you know. So from companies like Amazon, Uber, AirBnB, DoorDash, Tinder, almost all the companies use platform business model. So in this business model, you have consumer on one side, and then you have producer on one side. And then you have a platform who is connecting all the different parties. So let's say we look at companies like Amazon. You have customer or consumer on one side, then you have resellers on other side. Then you have a platform like Amazon app on an Amazon website, which is connecting both the customers with the reseller. And then Amazon is handling the payment, the logistic, and all these different types of things that is going on in the process. If you look at companies like Uber, you have customer or consumer on so-called writer on one side and drivers on other side. And then you have Uber as a mobile application who is connecting Bordeaux writer and the driver, or maybe a cable. And so that means your producer and consumer are connected to each other with the help of platform. And then your platform is providing value to both the consumer and the producer. Because obviously, it's really difficult for a producer to acquire customer because they have to do a lot more marketing. They have to build all these technology. And also it's very difficult for consumer to look around different options that they can have. And it's really easy for a platform to provide that technology or that option both for producer and consumer. And then the platform is adding value to both the consumer side or on the producer side. And because platform is adding value to both these party, that's why they are charging a specific fees or so-called margin. The main purpose of having a platform business is to help both of these parties in having a matchmaking process, tools and services, audience building and rules and standard. Let's start with matchmaking. Obviously, if you're using apps like Tinder board, the people can connect to each other. That's a good match making process. Not only that, let's look at Amazon. You can easily search product that you like from all different types of suppliers that Amazon have. Well, that's also imagemaking process. You can book a gap. Let's say you have three options or three varieties of gap. And you can book any gap that you want. Well, that's also imagemaking process. Now let's quickly understand tools and services. Now, all the resellers which are using Amazon, they can always look for the keyword volume, which is the arena Amazon, based on that, they can develop new product or maybe they can make new products or whatever they want. And even they can also track their sales revenue. They can also run advertisement campaign. Amazon provide all these tools and services to all of the resellers and seem to us as well. They also provide us a mobile app and a website to browse through different product catalogs and everything. Then you have audience building process. Obviously platform will help all these producer or a reseller in giving them a lot of customers and obviously increasing their sales by the end of the day. And that's why platform is charging a specific commission or a margin because they are constantly acquiring new and new customer for all these producer or reseller or cab driver so that they can also make money. Then you have rules and standards. All these black foam have very strict rules and standards. If you're violating the rules and standards of the platform, no matter you are a consumer, customer, or maybe our reseller or a driver or anyone, chances are that they're going to throw you out of the platform because you are violating the rules and standard, let's say tomorrow if a driver is misbehaving with all of the customer, or let's say salary, say selling something unethical than platform have the authority and they can be released, although resellers or all the drivers from their specific mobile app or platform. Well, that's the basic platform of overview. We're going to dig deep and understand all the specific startup and companies in a very detailed way. 32. 5.b.Uber business model: Now let's start a platform business journey by understanding Uber business model. And we're going to start with very specific business model that we have in our last video. So you have buyer on one side, a sailor on another side, and then you have a platform who is connecting these buyers and the sellers. In case of Uber, your Bible virus are your writers and your sellers are basically your driver. And then Uber is there in between and they are making 57, 10 percent of margin on every single writing. That's the business model. And obviously they create value and ended on off that they will make money from all these producer, consumer or rider or driver. Now let's quickly understand one of the most interesting and important concept in Uber business mortar and that is network effect. Now, I need a little bit off your attention to understand network effect because this concept might take a little more time to absorb. Now let's quickly understand one of the most important part or element of Uber business model, that is network effect. But before directly jumping into the network effect, let me quickly cover the growth loops. So these are the three growth loops. Let me quickly explain what these three broad group means. So if you have more number of driver in a specific area, you can have more number of writers because of waiting time is less. So let's say imagine two different scenario. In one scenario you have a driver and eight riders. In another scenario you have 16 drivers and just ate writers. In scenario number 2, the waiting time will be less because the number of drivers are more on the platform in a specific area. That means if you have more drivers, you can have more riders because the waiting time is less, not because you have more riders on the platform that drivers can meet more money. And because the drivers are making more money, Uber can always squeezed on the margin of the drivers. So if they're paying, let's say 17 percent, they can also pay 5% to those drivers. Just a hypothetical scenario. I'm not really in favor of the kind of policies all of these companies have, but I'm just giving you all these kind of strategy you can think about. So if you have more number of drivers on the platform, you can have more riders. If you have more writers on platform, you have less reading time. If you have more riders, your driver can make more money. And if you're a driver can make more money. They can squeeze down the margin of driver, and they can also charge less from customer because now network effect is there on the platform. So all these things are so well-connected that you will see something called as network effect. All these are growth loops. These are individual growth loops. Now let's combine all these individual growth loops and understanding network effect. Now this is the super powerful business strategy that you can see anywhere on the Internet. This is known as Uber virtuous cycle, and this is the perfect example of network effect. And in the middle of this growth loop there is something called as clot. Now what exactly will drive growth in your business? Well, local structure. Local structure will always give you growth. Well, if you have a local structure, you need to have low prices. Well, if you need to have a low prices, you have to have a good customer experience. Well, if you need a good customer experience, you need more and more number of people using your product or so-called riders. If you need more and more writers, obviously you need more and more drivers. If you need more and more drivers, you will have more and more number of rides. And if you have more number of rights, then you can have more growth. That means each and everything is so well connected with each other, you will see something called Les Uber virtuous cycle or network effect. This is the power of network effect. More customer, more riders, more or less cost, less reading time, and everything literally supports each other. That's the basic ideology behind network effect. And it's not daring over it's everywhere. And it's not only there in Uber. Network effect is also there in Google, it's also there in Amazon. It's also there in Tinder. Any successful startup that you can imagine, network effect is there at every single place. In Amazon. If you have more products, you will find more number of customers searching for those product. If you have more customers searching for those product, more and more third party, the seller will list their product more and more brand will come to the platform. If you have more customer purchasing, more product than you have higher transaction on your platform. If you have higher ticket volume or transaction on the platform, you can bear back the logistic services. If you can breed back the logistic services, obviously your per unit cost of shipping your product from location a to location B will come down. So every single thing will support the same way to any single company you can imagine network effect is one of the most successful element behind any startup success. 33. 5.c.Amazon business model : Now let's quickly have a look at the Amazon's network effect or Amazon's business model could be very precise. The reason I'm covering all these network effect and business mortar is to give you a perspective before you start looking for fundraising or understanding of finance. Because once you understand the basic ideology behind buttons mortar, you can make much better strategy. Now, let's quickly have a look at Amazon. So Amazon is there at the center. Obviously, you have AWS, which is one of the most successful unit of Amazon, AWS, Amazon web services. This is the Cloud computing, a product of Amazon, which have majority of the market share. So all your big websites, your server, your everything that you browse on internet have, are using AWS. So AWS's one of the market leader in cloud computing platform. And I think it is to integrating around 70 to 100 billion dollars every single year for Amazon. And this is the distribution side of Amazon. So you have Amazon and AWS, and these are very well connected with each other. Then you have businesses who are using Amazon business, and then you have customer. Some of them are prime customers, some of them are non-prime customer. And this is your demand side. This is your distribution side, and this is your demand site. Then you have obviously all these prime and non-prime members purchasing from Amazon. So obviously if you're a prime member, then you will end up giving, end up taking Amazon Prime subscription. And then you will purchase all these product. If you're a non-prime member, obviously you have to pay some amount of delivery fees and then you will be purchasing the product. So for Prime members, Amazon is making money from Amazon Prime membership plus every single product that people purchase from Amazon, from non-prime members, they are usually making money from the delivery fees and from the purchase among that those people are purchasing, then you have supply side, supply side. Amazon always tried to give you additional benefit to your Prime membership with the help of all these services. So you have Amazon Prime Video, You have Amazon music, you have ICO and Alexa. You have fire tablet five dB and Kindle books. Now, all these are bundled together in Amazon Prime membership. Saw that you will have on board more number of things when you take Amazon Prime membership, apart from purchasing product from Amazon. So this is your supply side that Amazon always tried to add value to your Prime membership and they will make you feel special with the help of supply side. Then obviously you have ads as a platform. So if you are a seller and if you're selling your product on Amazon, you can always advertise your products. So when anyone search for multivitamins, and if you're selling multivitamins, if you do a higher burden cost on Amazon platform, your product will come at the top, just like Google ads or Facebook ads. You can always bid about a specific keyword on Amazon platform so that your product will come at the top and people will purchase it. Now, Amazon ads is a very successful business model and it is really successful nowadays because a lot of B2C dense are facing a lot more capital. And that's why ozone is also getting a lot of money out of that. Then you have partners who is helping out Amazon in creating all of these content. So you have content creators who is making videos for Amazon Prime. You have content distributors, you have manufacturer who was making white label manufacturing product for Amazon. So I think you have heard of brands like Amazon basics, who is making all these electronic products and everything. So Amazon have tie-ups with some Chinese white label manufacturer who manufactured product for Amazon. And that's how Amazon makes money. So this is the complete business model of Amazon. They have demand side, they have supply side, they have partners, and they have ads as a platform. Now let's quickly understand Amazon virtuous cycle, in which we're going to cover Amazon growth loops and fly wheel concept. So obviously just like Uber, if you have more number of products on platform, you can have more number of customers because customers want a variety in a specific platform. If you have more number of products, you can have more number of retailers. Because if more and more customers are coming to your platform, if you have more products than more, retailers or resellers will come and they will list their product on Amazon. If you have more products, more retailers, more customer on a platform, you can have low prices because now if more and more people are purchasing the product, you are shipping more and more productive customer doorstep. Your part unit logistic cost will be less because knob you're operating an economy of scale. You have a lot of delivery boys. You have a very strong supply chain. You have optimized logistic. So you can always charge low prices if you shift from location one to location B or C, that means more customer. That means if you have more number of customers on the platform, you can have more resellers. More and more reseller will come and list their product on the platform. And if more resellers are coming to your platform and listing the product, you can have a very diverse portfolio of product. If you have more and more people purchasing the product from the platform, you can have less logistic cost because of economies of scale. And if you combine all these individual growth loops together, you will have a flywheel concept, which is the basic reason behind the growth. That means if you had a good customer experience on your platform, you will have more and more people purchasing your product. If you have more and more people purchasing your product, more and more resellers will come and they will list the product on the platform so that customer can have a diverse selection of the product. If they can have a diverse selection of the product, then obviously, obviously more and more people will purchase and they want a local structure which is again supported by Amazon because now more and more transactional happening, they have more delivery boy by the logistic network, better supply chain, and they can afford to charge less from customer so that they can have low prices, low cost structure loss, shipping costs, and everything works in hand, in hand. And that's the power of any business motor that you can imagine. Remember, growth loops are always individual. And when you combine all these individual growth loops, you have a half-life. 34. 5.d.Google Business Model: So hi everyone, my name is non VIP. And in this video we're going to talk about hidden revenue business. Moreover, in head-on revenue, you usually take users are of equation, saw that they did not directly pay for service or product. And this business model is usually followed by companies like Google, Facebook, and TikTok. Now all needs social media giant. Follow it done driving new business model. Now let's quickly have a look how Google is making money and how Google is following the Hadean revenue business more. So in the center you have Google, and on this side you have users. At the top, you have businesses who advertise on Google. At the bottom you help publishers will basically run Google ads on their website. So let's say if you have an offsite Ugandan Google AdSense on your website, and that's how Google will show other businesses ads on your website and you will also generate revenue. Now let's connect all these dots. The value proposition of user is they are getting a free search engine to browse through internet. The value proposition for businesses is they can generate leads and obviously they can get some on book seals on if they run Google ads on different platforms. Probably serves. If they have a website, if they're writing blogs, they can generate revenue because if people visible on their website, they will see Google AdSense ad, and that's how these publishers will make money. Obviously, Google will take a small cut. So let's say businesses up in a $100 to Google to run their ads on different websites. We will usually transfer 80, $90 to all these publishers and pick 10, 15 percent GOT own websites obviously on you doing the Harvard Defense. Split revenue more, but do not touch you give today. So let's quickly have a look. So obviously, Google is riding a free search engine to all these users. And in return of that, these users are giving a lot of data to Google. And that's how Google is training their AI and ML more, which is artificial intelligence and machine learning more rooms. So users are using free search engine of Google and in return they are getting post-mortem data of their interest, of their queries to Google. Now, based on that data, will willing showing ads to all these individual users. So wherever you can search anything on Google, all those sponsored ads that come on the first page. And that is nothing but your PPC campaigns run by different brands. Now obviously uses a typing different keywords on Google search engine. And that's how Google is able to understand what is your behavior, what is your interest area, what is the domain, what kind of product you like, how much you browse through internet. All of these data points to, yeah, your age or demographic, what kind of product you purchase age. What is your average revenue size? Just like these, they have more than 2 million data points of yours, so they fit easily via the complete profile of yours. And then they can target through ads. Now this is the user and the Google side. Now let's understand the business and the publisher side of the business model. So obviously, in written off your behavior and we will start getting you through Google ads on that comes on Google's search engine desert page, which is SERP. Now let's understand the relation of Google with businesses. So obviously, we will, is giving traffic to all these businesses using Google ads. And in written off that traffic, these businesses are paying money to Google. So let's say if you wanted to drive some traffic on your website, or if you wanted to bid on some specific keywords. So let's say you have ten different brands who are selling the same type of a protein. And all of them wanted to target keyword vapor being on Google. Obviously, all these brands have too big for that specific evil. Willing keyword at something like winning keyword is basically like creating competition between different brands so that they can pay you hire. And that's why all of these bands will always write with one another on Google or keyword bidding. Then you have publishers. All these publishers are using Google ad sense and then they're installing a small pixel on their website. Let's say they have a WordPress website or a Wix website or a manual it extract. They can always or use Google Pixel to run Google ad cents on their website. So let's say if I'm visiting my blog website, you usually are sold those big banner ads on those pop-ups that are coming in between. Those are nothing but your Google Ads. So these publishers are using Google or pixel on their website to that Google ads. And in Rodin of that Google is spin that some specific amount of money. So let's say, Which means that these businesses are running some ads on Google. Or Google will also showed those ads on different websites are based on your interest area. So let's say if I'm visiting a news website and my interests, ADA is a protein and fitness. I will definitely see some sort of ads on those websites related to fitness or anything which is, which comes under my interest area. So that's the overall business model of Google. This may look a little complex, but it's super-easy. Now, I'm only been discussing about the business model of Google, not the Gmail on the YouTube. And because we will have more than 100 products, so we have to understand the business model of each and every single product. But I thought let's repeat our Google and probably we'll cover other different products in different videos of courses. 35. 5.e.Facebook Business Model: Now let's pretty understand Facebook, he didn't very new business model. So at the top you have Facebook ad platform variable. These businesses run that ad campaign. This is also known as Facebook ad Manager. On this side you have businesses. On the right side you have users, and at the bottom you have Facebook marketplace. Now this feature might be available in your own country. So this is an optional feature which Facebook have introduced almost o in your back. So businesses use Facebook platform to run their Facebook ads. So businesses usually be to Facebook to run the specific ad on all the social media platform in during Instagram, Facebook, and some other services. I mean, they also have SDK from Noirin while games. So if you are a mobile game developer, you can run Facebook ads on within your mobile app or a mobile game whenever people are using it. So let's have a look at the media manager. Usually proposition of Facebook is that Facebook gives all of its content on social media users for free. So users will consume the content and they will give different D Donald's to users, seemed like Google. And these data nodes will help Facebook understand what kind of interest areas on these audience have, what kind of product they like. And based on that, Facebook usually start showing them ads. Now then you also have Facebook network with spread across different diversity. Yeah, one of their book is humor. While games of in-the-wild gains of developers usually use of Google AdMob, which is the monetized version in the mobile game, but they're also started using Facebook. Even more windy and EPA's run by the help of that, Facebook allows all these moiety and developers to integrate their APIs into them. Why lab? So that anytime you're playing a game, you will start seeing ads as well, Facebook ads as well. So that is one of the platform. Now let's preview jumping. All these users are consuming their time on these platforms. All these users are spending time on these platforms and be intrigued enough that they are giving entertainment to people. So we are looking at reels, watching different stories, browsing through the feeds. Now, this is basically, we are spending our time and they are getting us entertainment. It's a dopamine kick. So businesses are running their advertisement on Facebook, Instagram, and it broke. So basically, let's say our businesses are putting almost $1000 on Facebook ads manager. Obviously because businesses are paying money to Facebook. Now it's the Facebook responsibility to make sure that they are giving proper and Arabic to those people and a proper our platform. And that's why you have Facebook Ads Manager, which will help you understand that if you're burning almost $1000 on Facebook ad placement on what is the kind of revenue you can expect? How many people are clicking on your ad, how many impressions you have sold. Basically, facebook is helping you to understand all these micro metrics so that you can create your own strategy. You can do AB testing on Facebook ads. You can change landing page. You can understand the engagement and so many wide range of parameters. So that's the Facebook versus mortar on Facebook ad Manager platform or let's say Facebook ad Manager. Now, obviously, Facebook was giving you a free social media to all these users. But these users are also showing that both nucleotide Facebook, because anytime you consume any content on Facebook, facebook will pull out the keywords of that specific video. Facebook will read through all of the comments. Now let me help you understand this personal data issue. Anytime you create your account on Facebook, facebook will start creating a virtual profile of yours with more than thousands of data points. Now, let's take and watching 23 videos of a YouTuber which make funny videos. So the time you start watching those videos, facebook will understand that. Okay, this person like funny video, this person like this Celebrity, this person also like watching these videos for this much of time. So let's say after watching the funny video you started watching offered mystery, you know, feasible. Understand, okay, this guy is also interpret nice because now he's constantly watching fitness videos or workout we used from last two or three days. Probably he may have some plan of buying some fitness supplements. And then let's say if you're going out to a nearby place or maybe a gym, and they are also putting some pictures of your gym. Then Facebook will confirm those data points and validate those data points that this guy is purely in the workout gym and so many different stuff better, I should show him some ads or supplement brands and all these things. And that's how Facebook end up draining their data normal. David validate the return order, and then we also collect as much data point density room. I think this book usually collects all of our data points in thousands. So what kind of interest area they have? A warp is the preference, food choices of the celebrities they like, how much video content they consume, how often they travel, how much they travel, where they travel, how many friends they have, what is the interest of their friends? And there are millions of data points that Facebook can collect. I mean, because they have the flexibility in their AI and Machine Learning or rule out very advanced. Obviously in some countries, facebook also have a Facebook marketplace feature. I'm not sure whether this is available in all the countries, but feasible businesses can also list all of their product on Facebook marketplace. And basically then consumer can purchase all these products and Facebook and get almost two goes in transaction fees. Now, this business model is not available in all the countries. This Facebook marketplace, this is only available in selected a few countries, but I'm not sure whether your country will come into that specific category or not. Now, if I combine the Facebook and Google heat under new business more, you have these two data network effect norms. If you have more number of customer, obviously you haven't already done, which means you have to make sure that more and more number of people will use your platform and they will also engage with other people. So if you have more customer, you have more data. If you have more data, you can sell better products to your platforms. Because now you can target all those product specifically for that specific category. Let's say inside the protein, if you have some specific choice of flavors that BY percent p or p, that to chocolate or vanilla or bandana. They can also do that because now they understand your flavor choice as to whether this person is purchasing dark chocolates, talking about droplets, watching chocolate videos to answers out that this person is going up or choose a chocolate flavor protein. This is just a hypothetical example. But if they have more and more amount of data, they can understand you better. And they can also say You better product, which technically means if you have more customer, you can higher value products. What I would say, you can drive more value out of each customer. This is the basic network effect. I think we have also seen these dan of network effects walking onward for Uber, for Amazon, where we had a discussion about how exactly ovaries connecting all of those different nodes. So if you have more drivers, you have less reading time, you have less fools. People will book uber faster. And then they can also deliver food through those same over. And there are so many different data points that we had a discussion in the previous video. I think the video name was network effect and fly wheel and growth loops. So I think you can watch the video of network effect, flywheel and broke loop to understand the complete scenario. 36. 5.f.Fintech Business Model: So hi everyone, My name is now deeper in this video we learn does 10 frame pack business model on our fintech is made up of two words, financial technology, which means all these new apps, so-called super apps and banking apps, your brokerage apps. All of these are nothing but your FinTech because now they're bringing all these traditional finances with the help of technology so that everybody can use these services and they can access at their doorstep. We didn't think that you have different types of business. Moreover, foster upon you have payments. So all of these beam and gave their providers, let's try it like PayPal, these gums are the payment gateway. Then you have all these guard developers of companies like Visa, MasterCard, those vehicles on the car delivers, then you have money transfer. So a wire transfer and all these different new startups comes under this category. Then you have banking. So all your best to foster banking, your direct transfer. This is still dominated by your oral age banks. And all. Then you have lending as a product. So all of these new startups of each are given, do new businesses to purchase all of their media in advance on. Then I think that recently we also started seeing all these companies getting lending as a product to all these consumer. So if you wanted to purchase your iPhone or any BS phi for anything, you can always do that with the help of micro lending from all these white apps. And that they can also give you a professional landings like, let's say you wanted to take a small monetary or prisoners or you wanted to purchase all of your procurement and advanced and it will not have money. You can always do that. Lending me be a little expensive because now you're paying a very high interest rate than your normal banks, then you have insurance. So all of these new startups which are giving insurance like life insurance, even I have seen some microinsurance. So let's say you're traveling from destination a to destination B, you can have a migraines, urines of let's say $0.10 or $0.20. And just to make sure that you are traveling safely from destination a to destination B. And I think some of these at gathering, at Gabby. And I think some of these add aggregators like Uber, Lyft or maybe some other start-up also started giving these migraines us to be to make sure that nothing goes bad when they are traveling through calve or through any servers, then you have capital market. So all of your stock brokers, like maybe Robin Holmes wrote up all these companies, CMS or the capital market. So all your trading brokers With the help of those you're going portraits, spokes on in the stock market. So maybe let's say if you are in US, you can budget stalk of using Robinhood. So all of these kinds of the capital market. And then you have real estate, mortgages, you're lending platform, your financial platform, all these comes or the real estate. So companies like becker.com, which provide mortgages and other things. So some financial product as related, maybe lending or maybe, let's say, help you simplify your legal work and all these things. Conserver, realistic tragedy. Now let's start our journey with payment gateway provider. We know that it's really difficult for all these companies to accept payment directly from customers. Because now they have to be that complete payment infrastructure from scratch, which is difficult to do. And that's why all these companies use all these payment gateway providers to accept payment from all these customers. So you have companies like Stripe be ban recipe in US, you'd have Stripe and PayPal, two extra payment from all these customers. In India you have reasonably. So let's say all these will be money to all these companies using these beam and gave their providers. And these women gave the providers usually take almost one-two-three percent margin. So let's say for us I need a 100 donors. These women get your providers usually or $1 with them, and they usually transfer ninety-nine dollars to all these businesses. Now this margin can vary from 1% to 15 percent to 3%. It depends how big your businesses. If you have partners like a big e-commerce company, They can also negotiate to judge, may be 0.5 of the complete transaction when compared with the small business who may not have that much high GMV, which is gross merchandise for you. So that's why all these companies, they cannot directly accept payment from all of these customers individually. And that's why these companies use these beam and gateway providers. So whenever you go to checkout to be your money to these companies to purchase any product on Amazon. Any other random XYZ website, which is using Shopify as their website builder. You will usually see all these brands accepting payment from customers on behalf of companies. So that's the payment date represents modern. Let's understand insurance inside the Fintech business model. So you have your traditional banks, which provide insurance to all these different types of people. But these banks finding it very hard to collect documents to resell out their insurance, to provide them dashboard reports and analytics prediction models. And that's why all these start-ups on upcoming. They are basically resetting all of these banking products to people. And they are also building new products on the top of that. So let's say you have three different startups. And now they're simplifying though insurance industry by building of product which will help them collect data from customers. Let's say customer can upload all of their documents like their picture, their their financial information, their job credentials on their family members and other details on MRI lab. And then behind the mobile app you have a data word which is scanning through all the documents and then they are verifying it with some sharp ohmic APIs. Based on that, these apps are getting data back to frame these banks and then the infant that, okay, this guys is honest person. You can issue this specific insurance which this much of principle and this much of payout, so on and so forth. So these companies are building individual products include on-boarding data modeling verification to these banks are selling personal insurance, which is a form of life insurance. You have asset insurance. So if you have a car or a smartphone, those are nothing but your asset insurance. You can also take your education insurance. So that's if you're taking education loan and the bank is not sure whether you're going to repay the loan because let's say tomorrow or something bad happens to you. You may have some disease or something that they always tried to have an education insurance as well. So basically continuing education not they usually have these education insurance. So basically, all these startups are doing branding and marketing to sell that traditional product of all these banks to customers. And obviously these customers are not damned purchase all of these floret. So this is one of the form of insurance. All these new startups are simplifying or insurance accessibility to all these people. So they are making it easy for people to verify the documents, to collect their documents or submitted to banks or maybe reduced on the complete, I would say insurance approval cycle. So this is one of the product within the phenotype versus Mordecai degree. Then you have banking as a product. So your traditional banks are there. And all these new startups are building products on the top of their banks. So let's say consider example of a super app. Now, super app will help you provide wallet services, can also help you provide direct transfer services. So if you wanted to plans for any short of one directly to your friends, your family members, to your colleague. You can also do that with the help of Super App. And obviously you can also purchase the goods. You can also portrayed stalks. You can also sharpen got super apps. You can place an order of a food item. You can do whatever you want. And maybe you can also watch a movie. So all of these to perhaps or maybe let say super app is just an example. All these mobile application, they have a bank as a partner and then they are providing services like water services, direct transfer services. You can buy tickets, foods, your shopping list, and you can do all these different types of things. And then basically they are selling all the sources to customer. And whenever consumer purchasing all these services from all the super apps need. Super apps is also transferring some amount of benefit to these banks because now the banking partner is there. So let's say if a company like maybe Go Jack or PDM on d hat around a portfolio of 7080 different types of services like cellulose by traveling, flight, big ID, drain ticket, movie ticket, stopwatches. They have alone 70, 80 different types of sources. And they have 34 different banking partners. And they basically help you do transaction, store cash in their water, transfer money from one bank to another bank. And that's why banking is now also all had been all these startup companies to build financial product. So that's why banking is had been all these new startups or in building the financial product on the top of their platform. And that's why all these banking companies are now happy. All these individuals, startups to build their financial product because I think startups are really good at acquiring customers, building new services for the customers. And that's why these benthic bends are helping all these startups as well. This is the banking inside the fin tech business. More than you have capital market of that comes inside the Fintech business model. So let's say if you wanted to purchase stocks of Google, Facebook, Amazon, or anytime, any of you can directly do that, you have to use a broker or a stock broker or some company which will push its stock on your behalf in your own account. Now, different countries have different forms of AECOM. Lets say India, you have demat account. So these companies will purchase stocks on your behalf. The Security and Exchange Board portal epilepsy in US you have SEC. So all of these brokers like Robinhood, like zone how or like any strong broker you have in your pantry. The stock broker will Blue Jays store of all these Numpy's and then they will put those stocks into your individual account and that's how you will own money. So let's say you were at the budget stocks of Apple, google, Facebook, Amazon, any company, you can do that with the help of these players. So they reported stalks are equity or bones or mutual fund or anything you want on your behalf of all of these companies. And that's how these companies are. So this is the capital market. In US. You have Robinhood, in India, you have zeroeth law, and in different countries you have different kind of Norway apps and you can look for it. So this is the capital market insight different type business model where a single startup or a single company help you purchase equity bonds, mutual funds, insurance stalks are using the exchange board so that people didn't know directly have to do the transaction with all of this. So you have New York's store exchange, you have some high-school vaccines. You have Bombay Stock Exchange. You can purchase stocks, equity bonds from all the stock exchanges using some broke rage or using some broker. And finally, you also have lending and real estate. I would suggest you do please find out some companies in lending and realistic Eigen cover that. But I think that we'll use going to be very long. So this is an assignment for you. Please find out what our micro landings, how these lending startups are getting their money to different companies and how they're generating revenue, or I would say interest from those companies. And also please find out some companies or some startups who are also involved in real estate and how they are monetizing their business model. This is a small assignment for you. I usually do not give assignments to people, but I thought let's give these two topic as an assignment to those people. And probably you can find out some startups in lending who usually length all of their morning to small businesses. And some startups in real estate, which are there in mortgages or maybe selling and buying of properties also comes under P2P guy degree. So you can spend maybe 10, 15 minutes and you're gonna give me unless or semi assignment. I don't know how to frame data, but you can do that. 49. Startup Growth Intro : So hi everyone, My name is now VIP. And this video we're going to talk about startup marketing and growth metrics. I know you want it to start your own business. And if you reach out to any investor or anyone in the startup community, they usually ask all these questions to you. So they'll ask you what is your customer acquisition goals was to use your lifetime value. How much of revenue you are generating right now. So what is your monthly recurring revenue? How much N will the revenue you have? What is your churn? What is your retention, stickiness, retention cohorts. Now these are only five metrics. If you weren't to understand all these 2013 metrics that you have to understand if you are walking in a software company, please check out my software as a service. Sat scores in which I've explained almost totally different types of metrics that you have to understand if you're working for some software company. But this module is just an introduction. So I'm just gonna cover almost five to six most important metrics that you have to understand. That's it. And probably we'll, we'll touch upon all these advanced metrics in the SAS marketing course. So of the four that you first have to understand, there are three different types of stages in a startup. So if you have any idea in your mind, you'll probably quickly build a product around that idea, quickly launched within one or two months. I know that sounds a little crazy, but whenever I reach out to different founders or investors or incubation centers, they always say that whatever idea you have in your mind, you quickly have to launch the product within first or second month. Because the time you launch your product without all of the product is not even ready properly. That will give you a sense of understanding. That is your ideogram walkout or not, or what is your customer size? How do you target the customer? What is your customer segmentation? So you always search for product market fit. If you are lucky and if you are able to get your product market fit, then obviously you will now find for repeatable and scalable business model. So let's say you wanted to start our direct consumer brand, where you'll be providing some natural products to customers. So you always find a way to sell those products to customers. So you may list your product on Amazon Flipkart, you may end up building your own e-commerce store using Shopify. So now you've got a product market fit. Now you have to find how exactly you will sell all those products, beauty products or let's say nutritional brand or anything. Once you find that now you have to scale your business in the third stage, which require you to have omni-channel presents. So now you're selling online. You may have to tap in some sort of offline channels as well. So these are the three different streets of startup. Normally you can find a product market fit in around maybe three to four months. Then you are able to find your repeatable and scalable business model in, I think, a year or two. And then the third section which is scaling the business, that is that real hard problem. I think that's probably going to take almost goes now you have to go into the Omnichannel offline channel strip. 50. What Makes Startup Successful : Now I know we all have one question in mind that why all these investors are so crazy about startup? I mean, why they are putting so much of money in the setups. And the main reason is they are looking for a repeatable and scalable business model. Let me give you an example. Let's say if you wanted to bury a nutritional brand for people, and let's imagine you are not using Internet right now. So if you wanted to build any FMCG or any nutritional grant, you literally have to go out, sell product to all these retail stores, these distributors, these wholesalers and retailers. And then those people are going to push your product. That's the very traditional approach to build your business. But imagine the time you have internet in your hang, you can literally build a brand. You can select by running multiple campaigns on social media. By doing influencer marketing, you can literally scale your product on by selling 0 unit or day to probably 1000 today. Today we did a month just by running Facebook ads, instagram ads, tapping on influencer marketing, doing niche marketing, cross-promoting products on different platforms. So Internet really gives you the power to bear it a repeatable and scalable business model in a shorter span of time. But you still have to find a hero product. If you wanted to start a B2C brand, you have to find one single product which is really working out for you. And now you literally have to sell that product using all these different digital channels available around you. So you can ship the product to maybe one hundred, ten hundred influencers, YouTube inferences. And then those guys are going to make a YouTube video of on that specific product. Then even also shipped the same product to Instagram influencers. You can do micro affiliates, micro coupon sites. So you can do a lot more stuff. And in the end, startup is all about growth and retention. So if you want to qualify yourself in the startup guy degree, then you have to grow very fast and the New have to retain the existing customer. If you have these two conditions satisfied, then you are under the Startup getting. Because the main reason why I always feel growth and retention is the most important part is because of this diagram. If you have high growth, you have more customer. If you have more customer, you will have more revenue. If you have more revenue than your marginal cost will be less. That means the additional amount of cash costs that you will deploy in solving a new customer. That's the marginal cost. So you have more revenue, you have less marginal cost. If you have less marginal cost, you'd have more revenue and then you have more gross margin. So that's the loop that all these investors always look for. Also, if you have high retention, then you have less shown. That means if 98% of your customers are still purchasing a product, we have lecture. If you have less Joan, you have high customer lifetime value. If you have high customer lifetime value and you can easily cross-sell and up-sell your product. So if you have five Florida, you can. So the remaining four products to the same customer. If he is really liking the one product of yours, then if you have easy cross-sell and up-sell opportunity, then you can have more revenue. And if you can have more revenue, then obviously you have more gross margin. That means growth and retention are the only two important metrics in a startup. You have to grow very fast. For a startup, I think the minimum amount of growth that you should have is at least 15 to 20 percent. So if you reach out to any industrial, always ask you that not only is your growth rate more than 20 percent month on month, which technically translate into 240% year on year. And if you are in that specific category than I think they're probably going to invest a lot of capital always. They also saw us for retention, even if your growth rate is 20 percent, What's your attention? So out of ten customer, how many customers are sticking with you for next 23 months? So yeah, they always look for Business with high retention. Because once you have high retention, your network effect will kick in after a period of time. 51. Customer Acquisition Cost (CAC): So hi everyone. Now let's quickly start of two of the most important metrics that you have to understand. If you are starting your own business or if you're working for some company. I mean, these metrics are very, very important. No matter you are working as a product manager or you want it to start your own business or you reach out to any investors or mentors, they are going to ask you that, hey man, what's your customer acquisition cost and what is your customer lifetime value? So these are the two important metrics that you have to answer. So let's quickly understand how will you calculate the customer acquisition cost and customer lifetime value. So let's say your business is growing at full pace, but you're struggling with funds, then you may ask yourself that, okay, I'm growing very fast, but I still don't have money in my bank. What should I do? So you have to analyze your customer acquisition cost. Are you paying more than what you are generating in your business? So let's say if you are paying a $100 strip matter customer, are you generating more than a $100 from the same customer? Well, that's the imbalance you have. So you have to maintain a balance between customer acquisition cost and customer lifetime value. So let's really understand now in this module I'm just covering basics of deeds, startup metrics. If you wanted to understand all these startup metrics in depth, then you have to watch my startup marketing and metrics course. This is a special course which I've made. And in that specific course, I've covered all these topics like customer acquisition costs, lifetime value, vanity metrics of different types of leads you having a startup viral coefficient, monthly and annual recurring revenue churn rate, retention rates, stickiness cohorts, Nextdoor attention to get a response and resolution, NPS scores or tt, FV and more than 20 metrics. So if you wanted to understand all these startup metrics in very detail, then you can maybe search on Udemy and maybe you can directly tap on my profile. And when you tap on my profile, you can click on this course and then you can purchase it if you want. But keeping things aside, let's really understand the customer acquisition cost. Now let's start with customer acquisition goes to now customer acquisition cost is nothing but the amount of money you pay to acquire a new customer. So let's say if you wanted to start your own nutrition brand, then if you wanted to sell these gametes, let's say you are selling these gametes two different customer. So if you wanted to sell these gametes to customer, you have to acquire them. Now to acquire them, you can do digital campaigns. Let's save your running ad campaigns on Facebook and Instagram. Or you might be acquiring customer by shipping these product to different influences. Let's say you have a list of around two hundred, three hundred YouTube influencers. And you will ship this product to those people saying that, Hey man, can you make a small video for us? We'll pay you $50 or $30. And then those people will make a video on this product. And probably they'll put a small link in the description and then people will purchase this. You can calculate customer acquisition cost by dividing the total amount of budget you have in acquiring those customers to the number of customers who are acquiring from that specific campaign. And there are two different types of gag. You will first have blended gag and then you have paid back. Let's understand blended CAC and paid back with the help of an example. Let's say if you are running a marketing campaign on Facebook and Instagram, let's say a budget is $100. So technically you have to run a video campaign or aesthetic campaign on social media. And now you're spending $100. And let's say after spending $100, you are able to acquire a 100 customers. So a 100 customers will end up placing order for this specific immunity, gummy. So now your customer acquisition cost is 10 dollar. Now this is your period CAC. So whatever budget you are spending in acquiring a specific customer, this is your paycheck. That means to acquire a 100 customers who are spending almost $1000. So your pH is around $10. Let's say you also list this product on Amazon and on some other e-commerce website depending on where you live in this world. Now in that situation, you realize that you are getting so many organic orders from Amazon as well. Now if you combine your payback and organic F, that is a blended gag. Obviously blended gag will give you a very bad idea about customer acquisition cost. So I would never suggest you to calculate that. Let's say if you are getting handled orders organically and handled orders using the speed campaigns and if you are calculating overall CAC, well, your overall CAC will be $5. But that's a very bad way to look at things because you can't really conclude your overall blended back tomorrow. If you'll not get any organic order, you can't really control, control that specific thing. So you will always calculate paid cat. You'll never calculate blinded gag. You can take it as a reference. You can say to your team members that are paid CAC is $10 are blended, CAC is around $5. That means we are doing in our product, but still, your primary focus should always be on the paycheck. How exactly you can reduce down your paid CAC, making sure that your blended CAC is also very low. Now that's the basic introduction about customer acquisition cost. I can show you multiple complex metrics, but the main purpose of this video is to make ads simple as possible. Well, if you want to understand these topics and very detailed way, please go and watch says marketing course of there I've explained all these metrics in depth. 52. Customer Life time Value: Now let's quickly understand customer lifetime value. Now, customer lifetime value is nothing but the total revenue that you will generate from one specific customer over the entire period of life. Let's say if you have acquired a customer in the month of January and that customer is going to last with you for at least a year, then you're going to calculate the monthly revenue of that customer by two and that's the customer lifetime value. If you look at the formula to calculate the customer lifetime value, then you will multiply your ARPU, ARPU average revenue per user. So we'll multiply your average revenue per user with your gross margin. And then you will multiply these two metrics with your customer lifetime value. Now let's understand that with the help of a calculation. Let's say if you are generating $20 from one single customer every single month, and if your gross margin or 80 percent gross margin is not thing when you subtract COGS cost from your revenue. So if your gross margin is 80 percent, which is 0.8, if your average revenue per user is $20, and that's that customer is going to use your product for next five months, then your total customer lifetime value is $80. So $20 multiplied by 0.8 multiply by five. That is your customer lifetime value. Now once you calculate your customer lifetime value and customer acquisition cost, they will help you to understand how well your business is performing in terms of profitability and pay back at customer level. Let's understand these things. Profitability and pay back at customer level with the help of some examples. Now you can define this profitability and pay back at customer level with the help of cat to CLV ratio. Let's say if you are spending $10 and you are generating $30 from those customers. So let's say if your customer acquisition cost is $10 and if your overall customer lifetime values $40, you are acquiring a customer and $10, but you're generating $30. That means your cactus CLV is one is to three. That's a very healthy number. So let's have a look at what should be the ideal CAC, LTV ratio and weren't really makes a successful and unsuccessful business model. So all these successful business model have very high LTV. So LTV is always very high. That means they are generating so much of revenue. But the cat is low. That means if you have high LTV, CAC, your business model is successful. But on the flip side, if you have low MTV and you have very high CAC, your business model is going to be unsuccessful. We are not sure, but you will face so many problems because your CAC is very high and your LTV is very low. Now what should be the ideal LTV to CAC ratio? So if you are LTV to CAC is one, is to one. So let's say if you are spending $10 in acquiring a customer and they're also giving you $10 in that complete like thing. That means you will lose money because the more you sell, the more you will lose. Because now you are literally selling some product to a customer and they're just giving you the same amount of revenue, but you also have to pay your employees. I'll be your operational costs, your product goals, just shipping cost, whatever different types of course to have, that means you can't really generate profits, you are still in losses. That means you have to increase your LTV. Now, if your LTV to CAC is three years to one, that means you are spending $10 and acquiring a customer, but you're generating $30. Well, that's a good business model. Now you have to scale your LTV to reach her before it is to one very short five years to one ratio. If your LTV to CAC is already for us to one congratulation, you are building a good business model. You just have to scale your business model to reach millions of customer or maybe billions of customer if you can. Now, if I wanted to summarize the complete statement, that means healthy LTV to CAC ratio shows that your business is generating cash and you will not face any issue in funding your startup in the long run. That means whatever revenue generate, you can get a small profit out of it. And then you can pay your employees salary, your operation cost, and you can scale this business. Obviously, I understand in the initial stage of your company, it's really hard to have high ATV and low tech. But down the line you have to build a very strong brand. You have to have a NIC look effect that will kick seeing. People will do word of mouth. And there are so many organic growth drivers that you should have after a period of buying. But the US should look at these two metrics. Now I know some of you might have some assumption that is LoJack always a good idea or you may have a higher CAC and then you can generate much higher LTV. Let's understand that. So CAC is not entirely straightforward. So let's imagine two different scenarios. You have to focus on cac on one side, but your primary focus should always be on MTV side. So let's understand there are two companies, company a and company B. So company a have a CAC of around $150. That means they're acquiring one customer by spending 150 dollar. But their monthly recurring revenue is $1200 and the retention is six month. So if you multiply that overall tech with the MRR and detention there, LTV is 7200 dollars. Now this is the typical example of software companies. All these software companies have very high CAC, obviously because they have to acquire businesses. They acquire customers with higher ticket size. So the cat is on $150, but these businesses are using that software, so they also have to pay very higher fees. That's why these businesses are paying MRR, which is monthly recurring revenue or a ticket size of around $1200. And then they're using the product for at least six months. So if you multiply 1200 into six, so 1200 is the monthly revenue that the business is giving for six straight months, you have ADB of $7,200. On flip side, if you have low back, let's say you are a company B, you haven't very low-tech, which is $15, and you're very happy that my cat is very low. But on the same side you MRR is also when you do. That means you have a Katko $15. So you have a MRR off $20 to your customer will last with you for next three months, you have an LTV of just $60. That means CAC is important. I understand you should have very low tech, but on the flip side, you also have to balance out your CAC with ADB. 53. Monthly reoccurring revenue: So now we're done with GAAC NCLB. So in this video, let's quickly understand monthly, the agreeing revenue and n. Well, reoccurring revenue, monthly recurring revenue is also known as MIRR, envelope reoccurring revenue is also called as ARR. Now these two important metrics are related to revenue and your growth rate. So if you're reaching out to any investors, they'll ask you that, okay, you are done with CAC and LTV on tell me what is your MRR and ARR so that they can calculate the valuation. So MRR and ARR is, is purely an evaluation metrics. So you may have heard that this startup is valued one billion dollars, two billion dollars, three billion dollars. All these valuation figures out of monthly recurring revenue and annual reoccurring revenue. I'm not going to touch upon valuation because valuation is a very complex topic. We have to understand, multiply our future potential. So I'm just going to touch upon couple of very small things about MRR and ARR. If you're gonna go understand about valuation, please check out my other courses. But in this topic, let's understand MRR and ARR. So monthly recurring revenue, MRR is nothing but the amount of revenue that you will get from one single customer in a span of one month. That means if you're selling a product for $10 to one customer, how much money that customer will pay every single month, even if that customer is upgrading your product or downgrading your product. That's the basic definition of monthly revenue that you will generate from one single customer. So reoccurring revenue that you will normalize on monthly basis. Now we always calculate these two metrics, MRR and ARR for software products. But nowadays, I think all these business to customer kind of brands, B2C or B2C brand also started calculating MRR and ARR because now they also have retention. So you'll multiply your customers with the monthly subscription value and then you will have MRR. Let's say if you are purchasing Netflix and you're paying $10 every single month, and you have 20 customer, you have $200 of MRR. If you're paying $30, you will have $600 of MRR. That's a very simple example. Obviously, Netflix may not have pretty customer. Instead they have 200 million customer. So you can calculate the same MRR calculation with the help of average ticket size or their subscription plan that they have. Now you have different types of MRR. So let's say you might be acquiring new customer who is giving you some amount of revenue. But there are some customers who are also upgrading into the better plan. Let's say you have three different plans. You have basic plan, you have gold plan, and then you have plating implant. So you may have 80 percent customer using your basic plan, maybe ten person customer using your goal plan and 10 percent of splitting him plan. So if you're an existing customer, upgrade themselves from basic to go low to plutonium plan. What is the expansion MRR? So you have new MRR, which means whatever new customer that you are acquiring, what is their MRR, then you also have expansion MRR, and then you have tuned MRR. That means customers are leaving your product. They're not using your product anymore. How much of Joan MRR that you are losing. So there are multiple metrics within MRR that you have to track because obviously you are the CEO of your company. So you have to tell investors that this is my extension MRR, this is my new MRR and this much amount of customer we are choosing every single month or every single year. So you have to be very transparent within the MRR metrics. Now, obviously if you understand the definition of all these metrics within MRR. So new MRR is the monthly recurring revenue that you are generating from new customer expansion MRR, when those existing customer either upgrade their package from basic to plutonium or two gold plan, what is the extension MRR or expansion revenue that you are generating from the existing customer, then you have reactivation, MRR. So if you're old customer who stopped using a product to three months back, if they again came back to your products and use it, that is the deactivation MRR. Then you have contraction MRR. That means if you lose your existing customer ended downgraded the package. Let's say if you have ten customer using your world package, and suddenly they realized that we don't want gold package anymore. We will use the basic version. And if they downgrade themselves from gold too basic, that is the contraction MRR. And then you also have shown MRR if people don't use a product anymore and they will, they will stop using your product and then we'll check out some other product. That's the Jorn Umayyad. Now let's quickly understand with the help of an example. Let's say you might be a product manager or a growth manager at Netflix on Slack, these two are very big companies. And let's say you wanted to calculate all these MRR metrics either for your co-founding team, let's say if you're a product manager or if you're working as a Growth Manager or revenue manager. Usually I've seen a lot of Chief Revenue Officer. Your new MRR is around 400, 400 dollar. So you have an 80 percent increase in your new MRR that you can see through this diagram. Your expansion MRR is this much and down by 20 percent. That means you're not expanding. And maybe you're not allowing your customer to upgrading to better packages. So, so maybe you have to create some good pricing strategy around gold and clicking implants because now people are not upgrading your product, then you have reactivation, MRR. That means a lot more people are now reactivity in your package. Those people who left, who stopped using a product, that means they'll email marketing campaigns are working fine because now you are Providing them use cases on them. Emails that why your product is so special, that means people are still downgrading your existing package. That means you have to still work on your big golden plutonium plan because now contraction MRR is increasing. That's a very bad sign because now people are downgrading your package. Then you have churned MRR, which is down by 29 or 30 percent. That means you are selling your basic version of your product in this compound proposition, after looking at all these calculation, that one thing that you have to fix is you're fixing your goal and plutonium plant because now your basic plan is go to your growing very fast, your customer reactivating, but you still have to create a good value proposition around your golden platinum plan. This is just an example to show that what is your MRR metrics? And if you're working for either a B2C company or a business to customer like Netflix. Or if you're working for B2B company like Slack, how would you calculate these two metrics? Obviously, Slack and Netflix figures will always be in millions of dollars. And I'm just calculating a very small metrics or any small SAS company or a startup or a brand new built by yourself. 54. Unit Economics for Startup: Hey everyone. Now let's really understand what is the unit economics. If you reach out to any investor or if you are starting your own company, a lot of people may ask you that, what is your unit economics? Is it positive? Is it negative? And y unit economics matters a lot. So unit economics is the cost and the profit analysis done at a unit level of any product or service. So basically a unit economics will help you understand the success and the long-term sustainability of your business model. Let's quickly understand with the help of an example. And you can calculate unit economics for any single brand. Like, let's say if you are looking for Uber Eats, you can calculate unit economics for Uber Eats. Or maybe if you're voting for Emirates or maybe a grocery store, you can calculate unit economics across different businesses, whether it's product, service, or you can calculate unit economics in every industry irrespective of domain or the types of company or the scale of company. So for airline, you will define a one unit as single seat sold. They're in a ride-sharing apps like Uber. You will define that specific unit as one right in the week. So that's the basic power of unit economics. So let's quickly take one of the company and understand unit economics with the help of an example. Let's take Uber Eats. And as an example, let's say your average order value for Uber Eats always $20. And as a company, let's say if you are working as a Chief Revenue Officer or someone in the revenue or department, and let's say your average margin on every single order is 20 percent. So 20 dollar, your average margin is 20 percent, which is around $4. Let's say you are paying almost $3 to a delivery guide or the liver disorder. And now these are all hypothetical figures. These values may vary up and down depending on situation and area or geography. So let's say you're paying $3 as a delivery cost to the delivery person and you're giving a discount of 2%. So you may have seen a lot of these food tech giant giving you a discount on being off your delivery feast. And so many different stock which is going on in the market. So let's say your average ticket size is $20. You are owning a 20 percent margin, which is around $4, and your delivery cost is around $3. And you're also giving a discount off to Dollar. And obviously you also have to be or the packaging cost, which is an 150 St. If you calculate all these different metrics. So your margin is $4, you're paying 3.2 of discount plus 50 cent of packaging. So if you add all these costs like delivery costs, the discount and the packaging cost, and subtract that from the profit margin, which is around 20 percent on this order, you will find that you are in a unit economics of negative situation. Now that's very bad for the business. And that's why you see that Uber Eats and DoorDash all these companies are not really making profits. They still have higher valuation because the future, future potential is very high. So let's really understand how will you fix this problem and how will you make this unit economics from negative to positive? So if you ask me, negative unit economics is not really a bad thing at early stage of your company because now you're constantly acquiring more and more number of users and now you're building a network effect in your business. Once you have your flywheel concept built around your business model, then you can easily done that situation from a negative unit economics to have positive economic situation. Because we are very early stage of your business. You are acquiring more number of customers. You are expanding into different directories or maybe into smaller segments as well, then you may have this unit economics problem because now you're selling the product at the same price and you also have to be or the delivery cost, some sort of other charges as well. So if you asked me about the formula of unit economics, economics is nothing but the customer lifetime value divided by the customer acquisition cost. So normally, in the previous video we have seen that your customer lifetime value, which is CATV, should be three times as your customer acquisition cost. And if you have an ADP to CAC ratio at around three is to one or four is to one. That's a sustainable business model. And so you may ask that why unit economics is so important for a business? If you ask me, unit economics will help you forecast profits in future. So let's say if you are a unit economics positive and you're still in losses, that means tomato, you can cut down all of your losses and still generate profits. So a positive unit economics will help you do forecast profits if you are in a positive unit economic situation and maybe your other administration and operation costs might be high. You can easily slash their costs down and then event generate profits in the future. Also, unit economics will help you optimize your product. If you have a positive unit economics, you can easily cross them, upsell product. So we're going to touch upon those part as well. If you visit any food tech app or any food delivery platform, you may have seen that those guys really want to increase your ticket size. So if you're purchasing one product, they might want to add a small drain or a small desert with that Doric, just to make sure that you're purchasing overall ticket size of a high-end amount. So that's the basic proposition. So if you have a positive unit economics, you can always optimize your product by cross-selling and up-selling in the same unit. Then obviously if you have a positive unit economics, it will give you a signal to assess market sustainability. So. Agenda, eating enough profits if your cost structure is less, you will always have sustainable growth rate in that specific market. And that's why unit economics is very important. So let's quickly understand how when you exactly achieve the positive economic situation. So I'm going to quickly show you a couple of examples and then we'll discuss this specific topic. So you will always see all these companies offering your envelope pricing plan just to make sure that you will stick to one single platforms. So if you are in US, you may have seen plants like er das boss. If you are an MDI, you may have seen companies like Zomato Gold or Zomato Pro. Now the old ways to sell you a subscription plan. And the main purpose of that subscription plan is that you stick to the product. Because now anytime you are hungry, anytime you want to order something, you will either go to DoorDash or Uber Eats or Zomato. That's the basic purpose. They always try to make sure that you stick to one single delivery partner or food tech platform. And that's why you will purchase these annual subscription plan by being fueled donors or a very small amount of money so that he will stick to one single platform and they're done. They'll also give you a few discount as well. So the main purpose of offering the annual pricing plan is stickiness. You always stick to one single platform. You will not use the competitors product because normally have taken a subscription plan for this specific product. So the VAD achieved positive unit economics is by giving you or offering you or annual subscription plan and then just giving you a few more extra discount on top of that. Second way is that they always tried to cross-sell and up-sell you the product. That means ticket size is very important. So whether you order food worth $20 or $40, that delivery cost, it's somewhat the same. That means they always try to upsell and cross-sell you the product. They will be. You might have seen these kinds of options. Add one more product and then get extra 10 percent off, add one more drink, and then get extra 5% off. The basic strategy behind this is to make sure that your overall ticket size is large so that you can play around with logistic cost. Let's say if your overall ticket size of one order is around $10, you will still see that that delivery fees is around 23 dollars. On. If you increase that ticket size to $20, your your delivery fees, it's still two to $3. That's why all these companies will always try to cross-sell and up-sell you so that you can, you can buy more products or you can buy more foods and an inner done, they'll also give you 10 percent, 5% discount. So that's the second strategy to achieve a positive, an economic situation in a specific scenario. And that goes specifically in food tech. So you may have seen these kind of offers that maybe add this specific product and got this much of discount. So now let's really understand the previous example. We are our average ticket size was $20. So now let's say this food tech platform was end up cross-selling and up-selling knew all these product by giving more discounts. And let's say now your average ticket size is $30 and you are still earning 20 percent margin out of these $30, which is around $6. So if you have 20 percent margin on $30, that is around $6, your delivery cost, it's still $3 and you're giving a discount of around $2 and your packaging costs is still 50 cent. So now if you calculate, you will find yourself in a positive unit economic situation of piecing. That means if you want all these food tech platforms to be positive in economics, you have to increase that ticket size of the product. So tomorrow, if you're ordering any specific food for yourself, you will also order food for your partner or for your family members. That's how all these food tech platforms bake even after a point of time. Obviously, that's really hard as of now because now that ticket size is very small. We usually ordered one or two food items, but the time to start ordering 34 food items for your family members or your partner, for your colleague or anyone, you will find that there are gross margin will increase. Their delivery cost, will still be the same, and they are not offering any more discounts and packaging ghost because these are fixed cost. So there are different ways by which you can calculate the unit economics. So the first one is unit economics on item level. So let's say if you are sending a product and you wanted to calculate contribution margin. So let's say if you are selling a product at $20 and it is costing you don't maybe $3 to do a marketing than your contribution margin are maybe $20 minus $3, that is 17. And then you can always go backwards and calculate your COGS and then I'll calculate a unit economics at item level. You can also calculate unit economics at customer level, which is really calculated by dividing LTV to CAC. So if your customer lifetime value is around maybe $40 and if they're acquiring that customer and $5, so your AD B2C is around eight days to one. That means it's a really good business model. So customer lifetime value is the cumulative revenue that you will generate from that specific customer or when an entire period of lifespan. I think we have discussed the customer lifetime value in the last few videos where we had a discussion that if your customer lifetime value is very high, if your customer acquisition cost is no, you really have a sustainable business model. So you can always balance out GAG to ADP ratio at customer level. And if you have very high LTV, very low back, that's supposed to be in an economic situation. I mean, it's, it's really a sustainable business model. As a time of rule three is to one ratio of LTV to CAC is always great. The time you have ratio of LTV to CAC below three. It's not a good sign. At the initial stage of startup, you may have high CAC and low LTV, but you will always fix that once you have network effect and vicious cycle, apart from calculating unit economics on item level, you can always calculate unit economics and customer level. That means if you divide customer lifetime value by CAK, you will have a unit economic situation. So if your customer lifetime value is around $30 and to acquire one customer, you are paying on $20. So your customer lifetime value to CAC ratio is more than one. So you are in the unit economics of positive situation, but you should always have our LTV to CAC ratio more than three to build a sustainable business model. If I define LTV, customer lifetime value is nothing but the cumulative revenue that you will generate from one single customer over the entire lifespan. If you asked me about GAAC, DAC is nothing but the customer acquisition cost that you will be to grab that specific customer. So let's say if you are running a marketing campaign with $1000 of budget and you end up acquiring a 100 customer, then your customer acquisition cost around $10. And on the same side, you also have to make sure that if you are acquiring a customer intent dollars, you have to have at least $30 as a total revenue from that specific customer over the entire life span off maybe around three months, four months, or if the customer is using a product for one year, that's too much of customer lifetime value. So that's a really good thing I would say. 55. Contribution Margin for Startup: So hey everyone, In this video we're going to talk about contribution margin and gross margin. And if you are running a company spatially a B2C company, which is business to customer, than these two metrics are very important for you because if you reach out to anyone, they usually ask you that What is your gross margin? What is your C, M1, which is contribution margin 1. What is your cm2, cm three margins. So these things might be a little complicated, but I try to simplify these things as much as I can. So before understanding these two margins on metrics, we first have to understand different types of cost which is there in your business. So we have two different types of cost. One is the fixed cost and second one is the variable cost. Now fixed cost will always remain fixed. So if you're starting a new business, obviously you need machines, equipment, or you need a furniture. So all these are fixed cost, no matter you produce one specific product or you do not produce anything, you'll still need machines, furniture, Paypal, fan, or all the infrastructure. And we'll understand what these costs with the help of an example. Let's say you wanted to start your own shampoo manufacturing plant. So obviously if you're manufacturing shampoo in your industry, then you need machines, equipments, maybe lightings, furniture. Now, all these things that you need in your industry from day one, our fixed cost, that means no matter whether you manufacture one single bottle of shampoo or maybe 1 million bottles of shampoo, your machines or electricity, your rent, all these things will be the same. That's why you will see even if you are producing 0 as an output. Now on x-axis, this is the output. On y-axis, this is the price. So even if you're producing 0 pointer t, you still have to have some sort of fixed cost. Now that fixed cost is nothing but your machinery caused your equipment cost, your insurance, your rent, your administration cost. Now the tiniest start producing some specific type of quantity. The variable cost will go up and realize that now the time you produce more number of quantity, the price will be less. That means you will always attained profitability in this industry by producing more and more quantity because your fixed cost will be the same, you have to make sure that you are reducing down your variable cost anytime you produce any one more quantity. And let's understand the different types of fixed and variable costs. All obviously, fixed cost is your rent, your insurance or equipments, your administration, PE, and variable cost is nothing but your raw material, your hourly wages, your shipping, and your compensation. Now let's understand gross margin and profit margin, but let's start with gross margin. Now, gross margin is nothing but the admin new left behind after subtracting that dyadic production cost of that specific product, also known as COGS. Let's say you're selling this Jamboard link $20 and it will take around $3 to manufacture this specific shampoo bottles. Then these $3 is your manufacturing costs, also known as COGS, cost of goods sold. Now this $3 COGS, you are selling a $20, so your gross profit is $20. The price at which you are selling this product minus COGS cost, which is your cost of goods sold or direct cost or production cost, which is associated with this specific product. So $20 minus $3 divided by $20, that is your gross margin. That means if you subtract your production cost from revenue, that is your gross margin. Now let's understand contribution margin. Now contribution margin majors profitability after gross margin. So let's say once you calculate your gross margin, So it took you around $3 to manufacture a specific product. You are selling it at $20. So after $17, whatever cost is there as a variable cost. So you might be doing some advertisements and marketing, some branding. All these goals dot nothing but contribution margin. That means after $17, let's say you are having, so let's say you are generating $4 in profit in a $20 shampoo. Wharton's, obviously, $17 is your contribution margin. But apart from that $70, you're also paying branding piece marketing, logistic, and transactional fees. So many different goals. Now all those cost our contribution margin or contribution cost. So all these variable ghost-like, which will take to sell your products. So like administration expenses, salary, operational costs, logistic charges, transactional charges, marketing fees, blending fees. All these are nothing but contribution cost. And that's how you can click contribution margin, contribution margin, gross margin with the help of an example, let's say if you wanted to start your own business and you are manufacturing all these shampoo water by yourself. Now this is your assumption. Whenever you wanted to start your own B2C brand new, always look for contract manufacturers. Now contract manufacturers are those people who manufacture on your behalf. So all these big brand new, they do not have manufacturing plant. They all they do is contract manufacturing that reach out to some manufacturer. They give their labels to those manufacturer, and then those manufacturing put their level into that specific product. That's all. But imagine, let's calculate gross margin and contribution margin on this specific process. Let's say you are generating $20 in revenue from this shampoo bottle by selling it. And your direct cost or production cost on this specific water, which is raw materials plus labor plus machine, whatever it is there, that is $3. So you'll subtract $20 minus $3 during $20 multiplied by 100 and you will have 85 percent gross margin. That means you are generating 85 percent of gross margin on this specific product. If you do not do any sort of marketing or ads or anything, that's a good number. Let's understand contribution margin. Let's say you are generating $20 in revenue from this specific product. Obviously, you also have lots of variable cost. Now you have lot more different types of variable costs. Obviously you can calculate contribution margin, but investors now fees that you have different types of variable cost which you can control at different levels. Now let's understand contribution margin in a much deeper way. So we will break down contribution margin into three different types. Contribution margin one, contribution margin 2 and 3. And if you're building a startup, you always reach out to investors. They will not ask you for gross margin or contribution margin. Always ask you for gross margin, contribution margin 1 and 2, obviously not three and neither EBITDA, But we'll understand about Dawson contribution margin 1, 2, 3, and EBITDA. Now let's calculate contribution margin 1. So you have gross margin of $17 from here. So if you subtract $20 minus $3, you will have 17 dollar. Now, it will cost you around $6 to manage the logistic and payment gateway fees of this specific product. Now, if you're building your own brand, obviously you have to make a website. And whenever people do transaction on that specific website, you have to integrate some payment gateway provider. Now that provider can be striped or XYZ product, which will accept payment on your behalf. And then they're going to charge you around two to 3% of the overall payment, then you have logistic payment. Obviously, if you're shipping this product to customer, you have to take help from companies like FedEx or blue dark. And that's why the overall variable cost at level one is announced $6. If you subtract 17 minus 6 divided by 17, you will have 64.7% of contribution margin at level one, which is also known as axiom one. Let's understand cm2. Let's say whatever C11, which you have, you have $11 left behind. Now you have to subtract older digital marketing goals that you are that is happening to sell this product. Obviously, you might be running Facebook ads, google ads, and Tiktok ads or whatever else you are running. So if you subtract $11 minus 4 dollar divided by $11, you will have 16.633 percentage of contribution margin at level 2. Let's calculate contribution margin at level 3. That is bending ghost. So you might be making so many videos on YouTube. You might be putting all those videos on Instagram. You may have few people were putting all of these blog posts continuously doing bending contained, and so many different types of stuff. So you subtract $7 minus 20 dollar divided by $7, you will have 71% of contribution margin at level three. And then you also have Abby cabbages are earning before interest and tax. That means if you subtract cm three minus fixed cost, you will have EBITDA. Now these figures might be a little confusing, but I feel that these figures are important for you. So I thought let's quickly cover these things, but do not worry. You can calculate all these metrics with the help of Excel sheet. We do not have to calculate the way which I am doing right now. Because obviously my main purpose is to make sure that you are learning something new from this course. And obviously all these things can be done within any specific kind of SAS product. Or if you're using fresh book or any sort of accounting software, these things can be done over there. It did not have to manually calculate all these things. Now I know some of you might be confused with this topic, but they're not worried. Let's quickly understand what is the mean loaning from contribution margin. So if you are loss-making startup, gross margin will act as a proxy for future profitability. Let's say if you are selling a product which have a gross margin of more than 60, 70 percent, that's a good sign that you can somehow control your contribution margin and you can achieve profitability to model. So gross margin is a really good proxy for future profitability. What, what did we exactly loan from contribution margin? Well, if you want to increase your contribution margin, obviously you have to bundle your products to save on logistic cost. At Cn-1 level, we were paying some logistic fees and transaction fees. I always feel that if you shift one single product, it will still cause your own 2 $3. If you shift three products in the same packet, it will still goes to node three to $4. That means you have to find a strategy by which you can cross-sell and up-sell your product to customers by getting them coupon goal, by putting different types of plugins on your website that if you purchase this, get 10 percent discount when you purchase that, or get 15 percent discount when you purchase these disease combos. That's the cross-selling and up-selling strategy because you are saving a lot more on logistics. And obviously you have to introduce new product lines. So if you have one type of shampoo, let's say if you have onion shampoo tried to introduce, maybe bring that shampoo. And X1 is a new product line. Obviously, if you have one specific type of shampoo, like let's say if you have onion shampoo, tried to introduce 23 different types of other shampoos. Show that you can always introduce new product line. Or maybe let's say instead of shampoo, you can introduce a new product like hair oil or maybe a massage or anything. Not really sure what kind of product line you can introduce. Obviously, that has always done. 56. Retension rate for Startup : So hey everyone, In this video we're going to talk about retention rate. Now believe me, if you are running a business or if you are voting for someone, you understand the power of retaining customers because it's really difficult to acquire a customer on regular basis. That's why you always focus on retention that if customers leaving or stopped using your product, what is the main reason behind that? So that's why in this video we'll understand the power of retention. How exactly you can calculate the retention rate. And if you want to retain customers, what all strategy you can use. So let's say you might be working as a product manager or a person who is doing strategy in accompany. That's why retention is one of the factor you can be only focused on. So let's understand customer retention Greek. So obviously it is six to seven times more costly to attract a new customer than it is to retain an existing customer. And that's why you will always focus on building features or giving discounts to the existing customer, or strategizing yourself in such a way that you have very low John, john is exactly opposite to retention. Now, if you look at the formula, retention rate, retention rate is a measure of how many customers continue to be a customer in a subsequent year. So that is retention rate. So if you calculate number of active customers with continue using your subscription divided by total number of customer in that specific period of time. And if you multiply that by handler, you will have retention rate. So let's say if you're calculating retention rate for one specific ear and you are calculating from January to December than, let's say if you have 95 customers still using your product, then it's a 95 percent retention rate. The calculation is add simple as this, but it can also get complicated as well. We'll complicate the calculation, but do not worry. This video is not for that purpose. If you want to dig deep into all these topics, um, I mean you have to watch says marketing course for that purpose, but keeping the inside, Let's understand customer retention grade. But before that, let's quickly understand why retention is so important for the business. I mean, what's the core thesis behind retention? So let's understand this with the help of an example. Let's say you're building up B2C brand or a business to customer or a D to C, direct to customer or consumer brand. You'll be selling a product directly to customers without using the traditional retail channels. So if you look at traditional retail channels, you will have manufacturer, then you will have a wholesaler, then stockists than substance focused, then distributed than retailers, and then you have end-consumers. So you have almost four to five parties involved in between. That is a traditional retail example. But if you look at all these new age brands, obviously hadn't shoreline is not a new age brackets or traditional retail bank. But if you build a new age B2C brand, then you have to directly ship the product to customers doorstep with the help of some logistic partners, FedEx, blue dot, or any XYZ logistic company which is there in your specific country. Now if you observe the behavior of people, I have never seen a single person using one shampoo for their whole life. They own widths. We switched shampoos between different brands. And that's why if the switching cost is low, then you will have very bad attention. That means I can use any type of shampoo you want. Maybe I just need to use it once and then I throw it away. I'll try a different one that I'll try a different one. So the switching cost is so low that you have very bad retention. And that's why you will see all these business to consumer or direct to consumer brand did not have good retention, which is not really a good thing. But on the flip side, if you look at softwares, nor softwares are really hard to switch. You can't really switch from one software to another software within a day or two, because you have a lot more printing and development cost. Let's say you, your company is using Salesforce. Now if your company is using Salesforce, you might have almost maybe 1015 thousand employees using the same software. Now tomorrow if a switch from Salesforce to SAP or Oracle or to any XYZ software, you'll actually have to print those ten to 15 thousand people. And that's a very difficult task. And that's why you will find all need software companies have high retention, very low term. So these companies have amazing retention because of low switching costs. So if you have lot attention, that means your product is easily replaceable. You have to find a way by which you can create a value proposition around your product. And it's really difficult to do that in B2C case, it's not easy, It's Uganda it, but it's really difficult. Now to understand this retention, we'll be using a very important metrics, or I would say a topic called retention cohorts. Now retention cohorts, it's very famous nowadays. If you walk for any company or if you reach out to any investors, they usually look at your retention cohorts. Now let's understand their attention cohort of my website. So obviously we built this website in 2017. It is still up and running and I guess so we'll be calculating this retention cohorts. So let's quickly understand what does now let's understand retention cohorts of one specific vk. Let's understand retention cohorts of May 16 to meet 22. So obviously in day 0 you always have a 100 percent retention. Now let's say you have 100 customers who are coming to your website again and again. Now out of these 100 customers eating point 25 percent customers are again coming back on week number 1. That means you have 18 percent retention on week 1. Now, out of these 18 customers, almost 11 percent customers are again, coming back to our website in week 2. That means you have 11 percent retention of week two. Now, out of these 11.25% customers, you have 8.79 customers coming back in week 3, and same goes with Week 4, week 5, week 6. That means retention cohorts is exactly like clustering. If you are someone who have studied mathematics or statistics, you understand that you will cluster people based on their qualities, based on their dimensional parameters, and that's how you study all those feet. Now the main purpose of calculating retention is to understand whether you are turning customer, bad customers are coming back, whether you have up-selling to them or down sending to them. And you can analyze retention cohorts, both for users, both for revenue and so many different types of things. Obviously, you can always use it for users, you can always use it for revenue. So what is the retention cohorts and how much protection co-host is translating into revenue. And you can calculate so many micro factors. I'm not going to cover those details in this video because I think now if you want to calculate the exact retention cohorts, you first have to identify the right kind of metrics. Now, if you are building a blog post, obviously, right? Metrics will be number of active users, how much time they're spending on your website, reading your blog post. Let's say if you have interesting blog post where you are putting blogs, how much of your existing customers are coming back to your website and reading through the article. So that's your time spent in the app on any website. If you have a consumer-based product, let's say if you are working in Facebook or Instagram or on WhatsApp, you're right. Retention metrics is the amount of time people usually spend in the app. So that's the timespan. Obviously, if you're building a game or any XYZ stuff where you require people to purchase some stuff, then your retention cohorts will be like, how frequently these people are purchasing by-product or in-app purchase or any sort of XYZ thing. And obviously you have to find frequency of metrics, how often that specific action is happening inside the app, on the website. So maybe our retention cohorts on daily basis, weekly basis, monthly basis, yearly basis. You can calculate the retention cohorts on whatever basis you want. And you also have to measure that specific retention. So you can calculate retention cohorts for users, for revenue retention. And you can also calculate retention cohorts for behavior or attention. That means if people are clicking on one specific feature, how often they are clicking on vehicle and weak bases. So let's say if you are opening Spotify, if people adding their music in the favorite list, how often they are adding that music in the favorite list. That can be a behavioral cohorts. Obviously these things might be a little complex. You can do all these product analytics tool with the help of tools like amplitude Mixpanel, segment. And there are so many tools out there, not going to go deep into that, but that's the overall behavioral cohorts. Then you have hypothesis cohorts just to check couple of new features or initiatives that you are doing. So very defined hypothesis cohorts, Herbert, because I thought instead of all these different types of cohorts, let's walk on one different types of cohorts. Now this is the overall retention on day one day. So you have day 0, day 1, a tension day two, day three, day four, day five. Obviously, if you have consumer-facing App of air, people are consuming content where people are listening to music. You will always have to analyze the only cohorts and v can be called obviously monthly cohorts are also very important. So let's understand this with the help of a mobile app that it's Spotify. Lets say this is the retention of Spotify in a 30 days retention cohorts. Obviously this is not in the form of retention cohorts. This, this isn't the palm of chart. And let's say you are a product manager at Spotify. Obviously, if you are a product manager, you have to introduce new feature into the application. Now, if you want to introduce new feature into the application, you have to make sure that people are using the app for longer duration of time. Because the main purpose of using the product manager is to make sure that the app have more retention. So if people are using this apoptotic minutes, you have to make sure that people will use it for extra 15, 20 minutes. So let's say you have introduced a new feature where people can add their favorite song in their homepage. And they can add more than three song and then they can add callosum. So you have introduced a new feature and voila, I mean, you are able to increase the retention of those customers. And that's a very good thing. So earlier the retention on day 5 was 20 percent and you're able to increase the retention by 42 percent. Amazing book. You are doing a good job in your company and you have cracked the code that or if we introduce a favorite feature where can people can add their favorite song in the homepage. Now imagine this future wasn't the beta phase and you have removed the feature. Now the retention goes below the existing retention which was there back then. Well, that's a bad thing, but maybe after few weeks you are able to build that future completely. And now you are introducing that specific feature again in the mobile application along with the new feature where you can also join community. Well, now your retention rate is much higher. That means now you can add your three favorite music in the homepage and you can also join community. That's how you are able to increase the retention. You can see that if you can add your music, you are able to increase their attention by this line, then if you can join a community that retention rate goes even higher. That means you are doing a good job as a product manager. Now if you introduce all these two features combined together in an application, you can see this amazing retention. So if you compare the before and after situation, this is the normal situation. So the existing product manager, we're not doing their job properly. And that's why retention is very bad. But because you are someone who feel that you have to introduce new features, new sort of testing. So you were doing AB testing of different stuff. And that's how you are able to get to a conclusion where you can introduce these two new futures and you can increase the retention rate. So that's the practical example of how exactly you will look at retention. Obviously, if you wanted to do all these things you can do with the help of amplitude. So all these analytics tools like amplitude, Mixpanel, hoard jar, or segment, these tools will help you understand all these triggers, also known as events. If you look at all these product analytics tool, they have an option with an event. So you can select events and then you can track though on retention and all these different metrics. 57. Churn Rate in a Startup: So hi everyone. In this video we understand about the churn rate. Now, opposite of retention is nothing but John, That means if your customers are leaving you or they're not using your product anymore, well, that's a very bad signal. So either your product is not good or you're not doing your job, right? So that's the main purpose or the reason behind John rate. Now, John is the percentage rate at which customer are canceling their subscription. Now, obviously, Joan is directly opposite to growth and John is the percentage rate by which customer is canceling their subscription. So if they have taken a Netflix subscription or Amazon Prime subscription for B2C brands. And on the flip side, if they are using any B2B product or a SaaS product, and it's a normal CRM tool or a chalkboard tool or any XYZ product. So if that canceling their subscription, that is a typical example of churn. So basically, as in the retention topic, we had a discussion that it goes to around five x as much money to attract a new customer than to retain an existing customer. And that's why companies obsessively focused on retaining the existing customer to make sure that that John is low and the retention is high. Because even if you are acquiring new and new customer and you are turning out the existing customer, you will have a leaky bucket problem. So let's understand John and leaky bucket. Now let's quickly understand leaky bucket. So if you have a bucket which have 23 holes at the bottom, and even if you pour more and more water, you will see that you can't really feel this bucket. And that's the same problem with the john. If you can add new and new customer into your product via your existing customers are leaving your product. That means you can't really build a scalable business model or you can't really achieve that revenue figures which you have in mind. Because obviously you are adding new and new customer, but your existing customers are leaving and they're not using your product. So you're churning out the existing customer. So this is the typical leaky bucket problem with a lot of businesses have that acquiring new and new customer, but their existing customers are leaving and Del Norte using the product anymore. Now let's quickly understand how these companies are able to control their Chun by introducing new and new features. So now we discussed about practical solutions and examples by which these companies basically, they can deduce that John, they can retain higher retention rate in them awhile application or in this SAS or software product. Now let's understand with the help of an example, how Netflix is maintaining a low churn rate by keeping their existing customer engaged so that they can watch more and more web CDs or movies or whatever you call it. So Netflix have an angle Joan rate of 9%, believe me, for a B2C company business to customer company, 9% of n will join. And that too in a subscription business model is very, very low. I've seen other oddity players audit is nothing but over the top of where you have all the streaming applications. So normal oddity players have a turn of around 20 percent, but Netflix is able to maintain or Joan, of around only 9% that too, in a subscription business model. So if you look at the Jon of all these different types of oddity or services. So you have Hulu, you have Amazon Prime, you have Netflix and other online streaming services. So if you fast, obviously Netflix have a large library of original license content, which means they have their own web cities, their own movies and their own cereals and others are sort of stuff so that they can make sure that people are coming to their platform for that exclusive content. And obviously they also make seasons on regular basis so that people will make sure that if they have Netflix subscription, that subscription makes sense for them because they are watching new and new content. Our second is they have a very deep insight into the user preference. And when I'm saying deep inside, they have very deep inside leg day track each and every small metrics like your pose rate, your rewind rate, your fastforward rate. The major all lead small metrics and then they analyze the situation that what's wrong in that specific movie or web series or maybe episode, What's wrong with that episode? And then they also analyze what are you watching right now or at what time and on which date you are watching that specific episode. And an obviously, what is your Waldstein at what time you're watching? How frequently are plugging into the app. So that recommendation engine, It's so powerful that will always give you the stuff you want. Obviously, you can always build up using multiple machine learning and AI models. We are not going to go deep into that, but I've made an exclusive video for that in full MBA course, but let's not talk about that. Then also, a third way by which Netflix make sure that they have good engagement. And Lord John is by giving up push in app notifications of new season. Now let's say a new season is coming to Netflix. How will they make sure that you exactly click on the notification and the push notification which is you are sending, Well, they should send you this notification on Friday because now you're free on Friday, Saturday, and Sunday. You have three days. You can vote this season to House of Cards. So they are doing a great job in customizing and fine tuning the notification. They always make sure that based on your previous behavior of watching Netflix, what is the peak time when you watch Netflix on a longer duration of time? Obviously, it's Friday for you. It might be 238. For other people, it might be at duration of time. So they always find you and customize their notification or push notification to make sure that you are clicking on this modification and also watching the complete episode. So if you have followed season one, house of God, then only they will give you though or notification of House of Cards season do because obviously, if you haven't watched the season one, this will make no sense for you. So they always customize their push notification for the always do split testing for a certain set of user to analyze very small metrics like what should be the ideal font size, how big the image should be on the app of work will be the overall structure of the app. And so many very small. 58. Market Size (TAM,SAM and SOM): Well, hey everyone, In this video we're gonna talk about market size. So if you talk to any investors or even if you are working for some company, they usually ask you a question that human, what's your market size or what's your market size of your product or your service? And that's why understanding different types of market size and how do you calculate that is very, very important. Now, if we talk about market size, a lot of people also talk about Dam, which is total addressable market. But we usually have three different ways to calculate market size. You can give market size figures based on TAM, SAM and so on. Let's start with 10. What exactly is temp? Now Dan is total upside potential. Your product can have. That means if everything goes in a positive way and if you're able to expand yourself soul, well, that's your TAM. But TAM is not really a practical things. Let's say tomorrow if you wanted to start selling these ruby cubes, you can't really sell these Rubik's cubes. Even in US, in UK, China, India, Australia, you can sell this Rubik's cubes only in just one country. That means calculating them is not really a good thing. That's why you will always calculate Sam, that is serviceable, available market. That means if we are producing or selling these Rubik's cubes, you can only sell these will be cubes in the US, let's say if you're selling these in US, that means US is your serviceable available market. That means Sam is the portion of the market that you can acquire based on your business model. Now I'm just giving you an example. You can calculate Sam, TAM and so on using any product or service you have. But let's say even if you sell these Rubik's cubes in us, you can't really sell these Rubik's cubes everywhere, even in Walmart and Amazon, and even in any XYZ x retail shop that you can imagine. That's why you will have some widgets, serviceable, obtainable market, that means out of Sam. So let's say if the total time of this Rubik cube is $1 billion and let's say US holds almost 20 percent of that market. That means around to 100 percent market is there in us. You can't really capture to a $100 million market in US, you can only capture 1 million or 2 million or maybe 10 million. That is your sum. That means the part of Sam that you can capture with your specific product that gets formed. Obviously, you can either sell it on Amazon or you are either able to sell it on Walmart or any XYZ platforms, but you will, you can only hold a specific portion of that market. That is your song. That is why whenever you give the market size figure to anyone, you always ask them whether you wanted to know the TAM of my market, of some of my market or some of my market. And that's why you usually take either top-down or bottom-up approach. Both of them are fine. It depends where you are exactly pitching your proposition. If you're reaching out to investors, never go with them, always go with either Sam or song because that's going to give you a little bit more realistic figures. Now let's exactly understand what do we mean by top-down and bottom-up. Now, always do top-down approach instead of bottoms-up calculation when you're pitching to investors. Now what does that mean? Let's say you may tell investors that this specific industry is a $100 billion industry. We can capture 2% of it and we are a 2 billion company. Well, that's not the ideal scenario. This complete industry is a $100 billion industry, but it's avoided via a $100 billion industry. You can't really capture 2% of worldwide industry. You can capture a 2% of one specific directory or geography or a market. That's your complete possible scenario. And obviously the 2% is not going to happen in D1 on words, it's going to take you years and sometimes decades to capture 2% of even a single territory market or geography. You're not Apple and Microsoft, that you can capture 2% of $1 billion, $1 trillion market. And that's why investor never advise you to do top-down approach. Because in top-down you will basically analyzed our total market. And then you will try to a small piece of debt market share as your total revenue or as your total company. Because bottoms up calculation will help you analyze. We're all you can sell your product at what price and what all slice of market that you can capture. And that's a very practical and advisable way to calculate market size for your specific product. So always do a bottoms up approach while you are reaching out to investors or to someone in your team, did not do top-down approach because top-down approach will give you a too high figure. So always do bottoms up instead of top-down, because top-down will give you a very dark figure which will not make sense in the long run. Now you can understand, damn Solomon, same with the help of this picture. Now this is your overall TAM, which is total addressable market. So if you can capture the complete iceberg, that's your TAM iceberg, which is above water. So obviously you can only capture this specific market with song, which is serviceable, obtainable market. So what is the market share of Sam you can capture? So that's why I always suggest people to capture some which is serviceable, obtainable market. So what share of Sam you can capture which is serviceable, addressable market, because that's going to give you a very good picture. And then you can also look for Sam because obviously Sam is bigger than sum and then you have dam. Dam is the complete. Iceberg. So obviously you can't really capture bam. It's really hard. So you always try to put in your startup or your company or your services or product in the form of song. Now let's understand all these figures with the help of an example. How exactly you can look at these three industry in a very different way. Let's look at two companies Beyond Meat and Impossible Foods. Now, these are two startups in us who makes vegan meat, in short, for those people who are not from us. These companies make foods which taste like meat, but they are made up of all these plant ingredients or planned derivatives. So these will taste like meat, but they are taken from different plants. So your products and that kind of stuff. That means these two brands are only trying to create a meat substitute only and only for us. That means they can't really reach out to investors saying that this is our daughter dam. This is the total meat market. And we're going to replace this meat market with other vegan meat. That's not going to happen because they are only tapping into the US market. So they can't really focus on 10. They either have to focus on Sam or to be very skeptical, they have to highlight the figures of sum, which is serviceable, obtainable market out of the sand. Because now if we look at Sam, there might be around a 100 companies who are manufacturing these we're going to meet. And if tomorrow impossible means we'll reach out to investors. They can only see that our food holds this much of market share of sandwiches, serviceable, addressable market. So obviously they're creating you a meat substitute for us. And if you look at the US market, the word mean market is around $1.5 trillion. That means there is lot more meat that is consumed in the world. But the country captured this big market because obviously it's really hard for these companies, spatially, the product companies to expand into different parts of the world. Now, obviously us as one country out of 200 plus other countries in the world. And that's why if you look at world meat market that it's around $1.5 trillion. But obviously, you can't really capture the complete word. Meat market is practically impossible to do that, especially with product, with surveys and technology service the scattered possible. But products are really hard to scale. And that's why if you look at the current or global meat market, it is around 81, $9 billion. And by 2027, this meat market will reach to $1.5 trillion. So these companies are choosing really big problems. But the main issue is the adoption. Are people comfortable adopting from animal meat to a plant-based meat? So plant-based meat market is growing at the rate of 42 percent from the year of 2016 to 2019. That means that growth rate are really good and investors can invest in these two companies. Now, obviously the meat market is 1.5 million opportunities we're involved in next one decade. And the market size hat has a lot to do with our option because I've seen after COVID, it's a lot more people spatial in India are living more scared towards eating meat. Obviously that there's nothing wrong with that. But meat market have a lot to do with adoption. That means how quickly people are adopting into the plant-based meat in sort of consuming animal means. That's a very practical. So whenever these companies, like beyond me, Impossible Foods or any other random XYZ company, if they will reach out to investors, they will never highlight them. They will always highlight some which is serviceable, obtainable market, and that sum will be obtained from Sam. And that is why this calculation is very, very important. So if you reach out to investor, never explained TAM, always do bottoms-up approach using song. And that's the most practical way to look at your total addressable market or market size for your product or service. 59. Key Takeaway for Growth : So if I summarize the complete video, start-up growth metrics are designed to analyze the momentum of your business as a whole and your ability to grow and keep growing. That means growth is the ultimate level you have in your startup. You can go very fast, you can retain customer, you can raise as much capital as you want until unless you're growing as a company. I still remember one of the famous quote from PolyGram that startups are so hard that you cannot be pointed off to the side and hope to succeed. You have to know that growth is what you are after. The good news is, if you get growth, everything else tends to fall in place. Which means you can use growth like a compass to make almost every single decision you face. I think four words I would say startup is all about scalability. That means you have to scale very fast into multiple geographies. If you are a technology company or if you are a product company, then you have to scale up in terms of omni-channel. That means now you have online and offline presence. And that comes with growth. Obviously, you have to have a very high market growth, at least 20 percent month on month, which technically translate into two 40 percent year on year, then you have to have higher gross margins if you're building a technology company or a software product. And then you can easily have AD 85 percent gross margin. On the flip side, if you're building a product company, then you will have around 40, 50 percent gross margin. Then obviously retention is the most important factor. That means, no matter you are building a software company or a product company, you have to have retention if your product is used by people on day-to-day basis. So that's the overall proposition of startup. 60. Startup funding stages: Hey everyone. I think now once you're done with all the legal process, now you have revenue in place. You also have customers, and at this point of time you also have your legal compliances ready. Now this is the perfect time when you can start looking for fundraising. And that's why you have to start finding all the funding sources available with you. So you're bootstrapping sources, your pre-seed, seed incubators and accelerators. We're going to talk about that. But you have to find some funding sources. Then you have to find a perfect time. Then when you can bridge the gap Gou. So in startup you have different inflection point. And it's always advisable to raise gathered to when your startup reach to a specific inflection point, then you can find a funding vehicle. So normally when startup raise capital from the front and raster and they have multiple funding vehicles like your convertible notes, you're safe, you're direct equity. We learn, talk about all these three, safe convertible notes and direct equity. Then we're going to understand your funding funding target. So hey everyone, Now let's quickly have a look at the funding stage in your startup. Let's say you're at a different stage of your company. Let's say you're starting out with idea to MVP stage, where you just have an idea bubble. You are kind of a building a toy. So let's say you have some idea in mind and you wanted to solve this problem with your co-founder. Obviously that's an idea to MVP stage. And at this stage, you really find any co-founder. So you have to bootstrap your company. You have to put in whatever capital you have with you. Or maybe you can take the catheter from your family members and friends and all those people. Once you reach to a MVP do product stage. So let's say you started off with an idea. You meet some MVP on Figma on a piece of paper. And now you are making a real product hour of that simple MVP. And now you are bootstrapping your company by putting, let's say, $50 thousand each. Then obviously knob, you have to make a product and you have to find customers. Now at this stage, all are off. Incubators and accelerators will start coming in and they'll start beating you up. So let's say initially you have an idea to MVP, then you build a product out of that MVB. And now we are constantly acquiring customers for your product. At this stage when you have revenue in place, when you have everything in place, now you will start finding all these incubators and accelerators. The main purpose of these incubators and accelerators is to provide you some capital. Let's say Y Combinator will give you $125 thousand for 7% equity in your startup. And that seemed throughout, no matter your startup, have millions of dollars in revenue or it just an idea, they always skew 125 thousand dollars to all the startups that are coming through Y Combinator. And then you have customer to expansion stage. So when you acquire enough number of customers, then obviously you have to expand into different territories, different prison and him into different countries. And that's why you now have angels and small VC in place. Because all these people will now start putting in almost a million dollars to $10 million, have a small check size, but still these people can easily put up to 10 $1 million, but they will start off with 12 $1 million and then I think they will find each other and they will also connect with, connect you with some other VC and some other angels. So that you can create a complete portfolio of angels and VC, and you can raise combined capital of around eight to $10 million. Now, obviously, once you have enough expansion in your own geography, now you can expand globally. And at this stage, you will need some big VCS like your SoftBank, Tiger Global, and some private equity rounds like KKR and all these hedge fund. And because at this stage, the size of your capital will be somewhere around $50 million or a $100 million. And at this stage, I think go only the private equity and big VC can play the role. Angels and small VC did not have that much capital to finance you with these kind of ground. So this is the overall funding stage. You always start with idea to MVP stage, and then you build your product out of that specific MVP. Obviously, there are very less sciences. You can find any investors in these two stages. But as soon as you switch your hair from a product to customer, then you will have a lot of incubators, accelerators, pre-seed BBC kind of funding available to you. And obviously the primary focus or the primary piece of your product needs to be technology because all these VJ sees angels, incubators, accelerators, the old VCE, fine tech companies. Now obviously your company can be D, Deep Tech PR back partial deck, but you need to have some sort of tech integration in your startup or a new idea. These people do not really find non-tech companies because non-tech companies are not really scalable. 61. Startup funding source: So in the previous video, we had a discussion about funding stages. In this video, we're going to understand how exactly you will get your funding source. You're finding vehicles and all these things that start with funding source. Obviously initially when you do not have any capital review and you're just building a MVP or product. At this point of time, you need your family and friends. Obviously in startup, it's really hard to convince investor. So initially you have to convince your own family members. So if you have some rich uncle or some NADH member in your family, you can reach out to them and you can offer them a equity in your startup. Let's say you can be asked for a $100 thousand and you're gonna give them 10 percent equity in your company. Obviously, that person is your family member. So even if he is losing out on money, he can take a risk on you if you have the confidence. So you'll first have to reach out to your fat friends and family. You can ask for whatever they can do for you and you can give them equity in return. Then always you have some grants in some countries. So nowadays a lot of countries are running startup programs. And if you apply any of those programs, you will get some amount of grants from those government dilemma doc us for equity. They always give you equity free rent. So you have Start-Up Chile, which gives you around 35 thousand dollars. And they did not ask for any equity. So you have these equity free gangs from government. Then you have incubators and accelerators. So accelerators like 500 startup, Y Combinator, Sequoia surge. And you have so many incubators and accelerators. Now these incubators and accelerators will give you around a $100 thousand to $50 thousand. And they will all ask for around seven to 10 percent of your equity in the company. Some of these accelerators and incubators also have uncapped convertible notes on as their equity DOM. And we're going to discuss about that a little later in this video. But then once you're done with all these incubators and accelerators, then you can look for angel investor. So Indian investors are rich individuals who wanted to invest from their own pocket. Let's say I'm a rich individual and I sort my previous company to some XYZ big tech giant. And now I have a hundred, two hundred million dollars in my pocket. Now I'll become an angel investor and I will start putting my small amount of capital in different startup. Let's say I can easily put $500 thousand in 20 different startup, which is close to around $10 million in daughter. So I can always do that. So I'll become an angel investor and I will start putting my capital into small, small startups. So this is one of them. Then you have C drown. Obviously deed seed round are done by angels on mix-up, small VC and big VC don't VCs venture capitalist. Now VC also have there. Now VC2 have their LPs, which is limited partner who always asked for at least 25 percent IRR, internal rate of return. You may ask nobody puts did I tend to raise capital for your company? Obviously you can raise anytime you want. But obviously if you want better valuation for your startup, you always freeze at the inflection point of your company. So when you have product ready, when you have acquired 100 customer, when you have $1 million in revenue, when you have 30 million dollars in revenue. These are all big inflection point. When you have very high chances of getting good valuation. We're going to talk about inflection point as well it on the line in the video. Next we have the funding vehicle. Obviously you can directly dilute the equity of your company, but usually when startup raise capital, they really dilute any equity investors. But in place of equity, they always offer convertible notes or safe. We're going to talk about all of these to I think convertible notes and see both has some both the same, but there's one difference in that. So we're going to talk about convertible notes and see if down the line in other videos. But startup, but not directly offered equity with two investors, they always give them a piece of paper which will later convert into equity. Then you have funding target. Obviously, these are all your funding targets. So you can start with MBB to product, then you will product to a million dollars in revenue than 1 million to 10 million and then 10 million to maybe a hundred million, a hundred fifty million. Then you will finally end up doing IPO for your company. Then obviously when you added the MVP to product stays, you are now looking for PMF, which is product market fit. When you add a defined product to 1 million stage, now you are building a customer base for your company. When you are at 1 million to 10 million dollars in revenue, now you're scaling your company. And finally, 10 million to 100 million or to IPO is a hyperscale in process. So these are the own funding target and funding stages you can have in your company. So hey everyone. Now let's quickly start our journey by understanding funding sources, the different funding sources we can have for our startup. So these are all four different types of funding sources you can have for your STATA. Obviously, you can bootstrap your company out in that situation, you have to put in your own investment. Bootstrap is nothing but tying your own shoes or bootstrapping your shoes by yourself. Then you can also have your friends and family and you can also use some crowd sourcing platform like Indiegogo and Kickstarter. And these are all bootstrapping technique. So you have to initially put in your own character. You can also raise it from your friends and family. You can also use some crowdsourcing platform, but these are all the options you have in bootstrapping. Once you are done with bootstrapping, you can also use all these startup platforms initially if they are ready to give you some investment. But there are very less chances that all leads startup platforms will find you when you do not have revenue in place. Remember, startup should have at least some form of revenue or fraction if they wanted to raise capital from all these incubators and accelerators. But once you have your product ready, once people have shown interest in your product, and once you have at least some amount of revenue than there are very high chances that these startup platforms are going to take your startup for incubation or for acceleration of your growth. And that's why you will later apply to all these incubators and accelerators or maybe government grants. Because now you have revenue early validation in place. You have good amount of fraction and your startup have some unique source which will allow you to grow very fast and acquired customer very fast. And that's why now you have incubate those. So almost all big colleges, big campus and universities have incubators who help you formulate your idea into a stocked up on a business model or in a growth journey, incubators generally give you a very less capital like let's say $10 thousand or $30 thousand, maximum $50 thousand. Because the main purpose of incubators is to incubate your idea from an idea to a business model to, uh, early MVP to maybe a partial product stage. But accelerators are very important because accelerators will accelerate your growth and you have specific broad numbers in place. So you have accelerators like Y Combinator, 500 startup, Sequoia surge, all these are accelerators. Now they usually invest from a $100 thousand to around maybe $1 million in your company. So Y Combinator given X2, $101,525.7% equity 500 startup also have the same kind of split and then you have government grants. There's nothing more to explain. Also, you can have equity sources, but they will take some time to come. Equity shows like angel investors, venture capitalists, private equity downs. But these always happen when you have a good amount of revenue increase. So if you have less than a million dollars in revenue, usually angel can find you. If you have more than a million dollars in revenue, venture capital will be very to put in some amount of capital in your company. If you have more than $10 million in revenue than private equity will come, and then they will put in more amount of funding in your company. Then you have that sources. I don't really recommend because in that you have to pay them interest. And startups have very high chances of failure. So if you take any debt plus n pressed, it will further put boredom in your company's financial because now you have to pay them interest. And you might not be generating more amount of revenue initially because now you have to pump back the capital in your in your company. Obviously degress debt sources with NORC allows you to dilute or equity in your company. 62. Startup Ownership and Equity: Hey everyone. Now let's quickly understand how exactly you will calculate the ownership in a startup. So let's say two founders started their company, did registered this stocked up with 10 million shares. The reason why they are registering this data with a million share is because they always wanted to split down these number of share. It is really difficult to split one share into multiple robots. And that's why all these startups issue almost 10 million shares so that it is easy for them to redistribute the chairs between different investors, between different employees, between different founders. And that's why you always start with a very high number of shares. Obviously, you can start your startup with 1 million share, but usually all the startups start with N median number of initial shares. Now because as of now you don't even have employees. You don't even have any investors in your portfolio. So both of you will take 5 million shares. So you have 5 million share with one founder and five-minute share with another founder. So if you divide that by 10 million shares, both of these founders currently have 50 percent equity ownership in the company, and both of these founders hold 5 million shares. Obviously, your equity percentage is equal to the amount of profits that you will take home in the future. So let's say if you hold 20 percent equity in the company, and let's say after five years, seven years, 10 years when you start up will become successful and you will make some profit and share that dividend to different investors. Or to be specifically stake holders. In that situation, you will take 20 percent of profits or dividend that is decided by all of your board members. We're going to discuss all these confusing, don't like board members dividend, decided and regard, talk about that. But your equity potentates basically means the amount of profits that you will take that happens in the future. Obviously, startup doesn't work that way. They usually do IPO, they usually do mergers and acquisition, and they usually avoid taking any form of dividends, but instead put in their capital back to the company. So if I device back the concept, we both have 50 percent of equity in the company and 5 million shares, because the total number of shares in the startups are 10 million. And obviously, we both have 50, 50 percent equity right now. So this is our equity split and these are the number of shares we bought half. So now deep half 50 percent equity in the company and hold 5 million share. Sophia also have 50 percent equity in 5 million shares in this startup, let's say we run this data for a while and now we have hundred, ten hundred dollars in revenue. And you have such a good amount of revenue in your startup, this is the right time. You always look for investors. Let's say now we are ready to raise capital from some Renowned investors. And let's say somehow we end up convincing Peter Thiel to pour some amount of capital and Narcan, Let's say we had some conversation and now pitted, he is ready to put almost a $1 million for 20% equity in a startup based on the kind of revenue we had earlier. So in this situation, we will issue new 2.5 million shares to heal and we will give him 20 percent of equity in the company. Remember, we are not diluting our existing share. We're issuing new shares to be the T. So earlier we had five million, five million shares and 50 percent equity. So we have issued new 2.5 million shares for Peter T. And now we bought old 40, 40% equity in the company. And now Peter T hold, let say 20 percent of the company. So this is the equity structure when you have some investor in place. But if you closely have a look earlier, we had around 50 percent equity and 5 million shares, but are shared doesn't hold any value back then. But now, because we have Peter Teal with $1 million for 20 people isn't equity. So our valuation is $5 million because if $1 million is equal to 20%, then if you want to calculate a 100 percent of the company, that is equal to $5 million, because 20% is equal to 1 million, 100 percent is equal to 5 million. So now our startup valuation is $5 million. So this is the before and after situation. Let's understand this with the help of a table. So all legal bought gNodeB and Sophia have 50 percent equity in the company with 5 million share, but they have 0 investment, so they are shared doesn't hold any value. But as soon as PTT is ready to protests $1 million into the company for 2.5 million shares or let's say 20 percent equity. The complete structure is now changed because at this point of time, we bought of our co-founders have invested 0 mount of capital, but we still hold 5 million shares because now that valuation of company is $5 million because we bought or 40 percent equity of the company. So he bought half to $2 million of our network and obviously be the 311 restaurant, almost a million dollars. So his net worth is currently $1 million, which will further increase ads soon as we have new round of capital in a company. 63. Bootstrapping Your Startup: Now this is our first startup funding stage. Add soon as we have new investors joining our portfolio, we will issue new shares to those investors, which means our share count will remain the same, but our percentage equity in the company will go down because now our share value is increasing. Now before moving forward, we have to ask these questions from ourself. Now, all these questions can be very complex. So before directly answering all these questions, we will go back and revise couple of our topics. So in the previous video, we had a discussion about all the funding sources we have with us. So from bootstrapping to startup platforms, to equity sources, to debt sources we have, Let's explore bootstrapping a bit. And once we are done with all these different types of equity sources, then we'll go back and understand the startup equity at noon. So let's start our journey by understanding bootstrapping. Bootstrapping is a way by which you will start your business from scratch and building it up with minimum outside investment. And recently, I think Mail Chimp was acquired by Intuit for around $10 billion. Now MailChimp was a complete bootstrap company. And that is why if some founder always preferred bootstrapping, but remember, the different startup have different financial need. And if you are starting a business to consumer brand and that have some non-tech element, or you require a lot of operational capital, then it's not really easy task to bootstrap your company. So bootstrapping is a way by which you will put in your own capital and to the company, and then you will find your customer. You will drive organic growth for your company. Then you will take the free cashflow and reinvest that into the business. That is the basic proposition of bootstrapping. Remember from the name you can understand it. You have to strap your shoes by yourself. That means we'll pour some out of your initial capital into the business. You will find some customer but some product. And you will always, you know, somehow achieved organic growth. Obviously it's difficult to do that, but somehow let's say you have a good branding, you have got influencers. You exactly know what all organic channels out there. And you have a pure tech product, which means you do not need a lot of people do sell it. You do not need a lot of people to bury that. You have a lot of technology advantage for your product. So if you look at companies like Mailchimp, mailchimp is an email marketing tool. So obviously you have to put in a lot of effort to Barilla email marketing server and all those interface and APIs. Once you have the product ready, you can sell an email marketing tool online to businesses and you require very less people in operation. So you'll find a customer, grow your business organically, find a free cashflow, and then you will reinvest back into your business. That is the basic proposition of bootstrapping. So remember, for bootstrapping, you have to build a product, find a customer, drive organic growth free cashflow, and to investigate into the business. That is the basic bootstrapping strategy you can have. Those things also comes under bootstrapping, but you do not raise and the outside investment from some VC angel or incubators and accelerators. It's the basic team behind bootstrapping. Bootstrapping can be good or bad depending on the capital requirement of your business. Remember, all businesses are not same and they require different capital in different stages of their business. Because if you're starting a food tech company or an e-commerce company, you need millions of sometime billions of dollars for short, to invest in acquiring customers, retaining them, and expanding your offline business. Everyone, now let's have a look at all the bootstrap startup that we have. So all these startups for Bootstrap back in 2007, 2010, whenever they started. So you have enterprise SMBs and B2B startups, which were Bootstrap. And they add to your technology-based companies. So equation would started in 2002 and the current raised any basic evidence so far. And I think the con to IPO in 2015 and write down they have billions of dollars in revenue. Then you have GitHub. Github was started in 2008 as a bootstrap company until 2012, I think in 2012 they have raised almost a $100 million in the series, the funding. And later, we all know Git Hub was acquired by Microsoft in 2018. And then you have Pluralsight. Pluralsight would start in 2004 and it was a bootstrap company until 2030. And then prudence side goes for IPO in 2018. Then you have companies like squares, space, be stamp, and Meacham. I didn't meet him, was recently acquired by into it for $10 billion and Squarespace and be scammed part of still bootstrap B's campus for project management, you have to be $9 and then you can manage your team. You can manage all the projects that you want. And then you also have other companies that you iPad checkout, we're fear, Qualtrics and all these companies, all of these are bootstrap. If you look at some consumer marketplace kind of companies or a B2C companies, then you have companies like Wayfair, God gurus just eat, Shutterstock. And all these companies have B2C bootstrap companies. 64. Inflection point: Hey everyone. In this video we're going to talk about inflection point. Or obviously if you are planning to raise capital for your startup, you have to understand this important topic. Now, inflection point is an event that results in significant change in the progress of your company. Now, we will understand inflection point would be heard above this jog. So in this chart you have on your x-axis and you'll have your company value or your startup value. Not. We will understand inflection point with the help of this beautiful job. So you will have pain on. So we will understand, so we will understand inflection point with the help of this beautiful job. So you have pain on your x-axis and you have your startup or your company value on the y-axis. When you have idea about your startup, you are at the initial stage of your inflection point when you turn your idea into your product, That's your first inflection point when you've done your product into a revenue making machine, that's your second inflection point. When you cross a specific revenue milestone, that's your total inflection point, and so on and so forth. So you have different inflection point in your startup. And for that reason we obsessively focused on these inflection point is to make sure that you are raising right amount of capital into all these different inflection point. Red dots are all your inflection point. And you have to make sure that you have all these different inflection point in your mind. At least you haven't discuss with your team members. And after these inflection point, you have to expand your team and you have to read some amount of capital. Let's quickly understand this inflection point or strategy with the help of an example. Let's quickly understand this inflection point with the help of this example. So in this specific job, you have a, B, C, and D. Now ABCD is your inflection. 0.1234 are your fundraising. Now, 1234 is your round of capital that we will raise for your startup. Now let's quickly take a beautiful example. Now, when you're starting your startup, you have to build some product. Once you have built a product from your idea, That's your inflection point. Once you have your product ready, now you have to reach out to all these incubators and accelerators. And you have to raise at least fifty thousand, a hundred thousand dollars to make sure that you will have some amount of revenue and growth. So a building a product is inflection point and raising your first investment, one is your inflection point, which means once you reach your inflection point a, you have to raise the amount of capital so that you will have some amount of revenue in future. Let's say you tried your best and after six months you have good amount of revenue with you. So at inflection point B, when you have some amount of revenue, then you will raise more capital to hire more people. An inflection point B, you will raise your pre-seed round, which is your fundraising down number two. So now you will raise some pre-seed round, let's say maybe $200 thousand or $300 thousand. This is your pre-seed round that you will raise after your second inflection point. After racing, let's say $200 thousand, you will again run your company for, let's say six months or a year, then you will read a certain milestone of revenue. Let's say now you have broken a revenue of $100 thousand. Now you have reached to our inflection point of C, when you have a revenue of a 100 thousand dollars, now you'll raise capital for your startup, which is your capital round number three, raise a seed investment of $1 million because now you have a revenue of a 100 thousand dollars. Let's say you will again bone that specific amount for six months or a year, and now you have $1 million in revenue. Let's say after running your company for six months or a year, you will now have our revenue of $1 million. Now this is your inflection point B. And after your inflection point B, now you will raise your fourth round of capital. Now this can be CDC, CDC, or whatever round of funding you have in your mind. Now this simply means you have all these inflection point and you have to raise some amount of capital from all these investors at these inflection point. 65. Incubators vs Accelerators: Hey everyone, In this video we're going to talk about the startup funding platforms. Obviously. In the previous few videos, we had a discussion about bootstrapping startup. How exactly you can start your company by putting in your own investment, by raising some amount of capital from your friends and family, from crowdsourcing platform like Indiegogo. So if you're starting your own startup, obviously, initially for at least six months to a year, you have to put your own capital. You can read some amount of capital from your family members, from your friends. And you can also raise some amount of capital from all of these crowdsourcing platforms like Indiegogo or Kickstarter. But in this video, we're going to talk about the equity sources you have and also the startup platforms. So let's start with startup platforms. So whenever you start your company from an idea to MVP stage, you can bootstrap your company. Even I've seen some founder bootstrapping their company from MVP to product stage. But somehow, if you're not able to find your MVP or fund your product building process in that situation, you will look out for incubators and accelerators. Let's start our journey by understanding incubators. Now, incubators are college programs or RBD, small-scale program, where they do not give you a hell lot of capital. They don't even take a very big chunk of equity. They usually help you educate, understand the business model and the startup in general, how companies walk, how can you build better product? How can you build a business model around this? That's it. That's the basic purpose of incubators. So you have startup incubators like startup school, which is a vital combinatory incubator program, then you have your Harvard Innovation Lab. So the main aim is not to fund you or not to take a lot of equity in your company, but to take a very small equity and give you, let's say 10 thousand or $50 thousand. That's it. That's the basic purpose of incubators, but they will help you a lot in making your business mortar, helping you out in building products or understanding growth, networking. So incubators are for that purpose only. Then you have accelerators. Now, accelerators are all those places which will help you accelerate your growth. So you have accelerators like your Y Combinator, your PEC star, your Sequoia surge, and 500 startup. Not all of these are accelerators. So usually white combinator take 7% equity in your company and they usually invest around 125, $1000. That means all of these accelerators take a very big chunk of equity and they usually invest somewhere between a $100 thousand to $500 thousand. Even sequencers invest around one to $2 million in the company. But they are late-stage Accelerators, Y Combinator, x-star, and 500 startup early-stage accelerators. Then you have your guns. Now you have Thiel Fellowship and SBA are some of the grants are public grants or government grants and some of them are post fellowship and all of these things. If you want the list of incubators and accelerators, you can visit this website, incubator list.com. I think this is one of the website where you'll find all the incubator and accelerator. So if you wanted to apply in any incubator or accelerator, or you wanted to see the deadline, you can always do that. Incubators list.com. Now let's quickly understand the different types of check sizes, equity dilution and success rate of all of these incubators, accelerator and grants. Now, obviously, incubator is spatially therefore your idea generation. And at MVP stage, they usually invest somewhere around $10 thousand to $20 thousand, and they usually take around one to 5% of equity. The success rate of incubator is very less, even less than 1%. Because obviously at the idea stage or the MVP stage, chances of startup getting successful is very, very rare. Then you have your accelerator, which is there for startups who are looking for growth or who already have some product with them. Not accelerator usually invest somewhere around 50000, $1.2, $100 thousand. Even some can go up to maybe a $1 million as well. Now they usually take almost seven to 10 percent equity in your company and their success rate is around five to 7%. That means if 100 startups are joining any accelerator program, out of those 100 startup, five to 7% startup succeed and rest of them will fail. And that's the basic go normal behavior of all these startups or all these companies, then you have brands. They usually invests around $20 thousand to $30 thousand. They do not hold any equity in the company or a startup and their success rate is as close as incubator. So if you already have product and revenue in place, I would highly recommend you do joint accelerator. So this is all about incubator, accelerator and grant. If you are an early-stage startup, you can try looking for an incubator or accelerator, or I brand. All of these three choices, whatever choice you get are good for you. I'm Dan, unless they are giving you some capital and you have a good team to build these kind of products. 66. Angel Investor vs Venture capitalist : So here we want. In the last video, we had a discussion about incubators, accelerators, and grants. Obviously that is the stage one of your startup. Let's look at stage number two. When you have revenue in place, when you are growing very fast, at this stage, you have all these three people in place. You have your angel investor. So people like normal loving conduct cannot share all these are angel in restaurant. Now, angel investor always invest from their own pocket. They usually invest around maybe a $100 thousand or $2 million from their own pocket. So they are taking the most risk because they are joining the startup at a very early stage. But they also get a very high written in case if the startup gets amount of success after angels, you have your venture capital fund. So companies like Sequoia Capital, Lightspeed Venture, your dagger, drawable, Soft Bank. All these are venture capital firm. Now these venture capital firm have LPs and they usually invest somewhere around $5 million to $50 million. So startup gangrenous of capital from all of these venture capital firm as well. So they can base, let's say 10 million from 120 million from other, And let's say 5 million from other venture capital firm. And then they can also divide equity in that specific structure. So venture capitalists have LLPs, also known as limited partner. So you have all these big LPs, like you're Canadian Pension Fund, Hubbard, fine. So all these venture capitalists reach out to those LPs and they usually are big, let's say 80, 20 split and 25 percent fixed IRR, internal rate of return. So they usually have this kind of sales pitch to LPs that give us $100 million, we will return at least 25 percent IRR to you in case if some of the startup gets some amount of success, we will give you 80 percent of that success, and B will take 20 percent of that success. That's how typically all doubt venture capital firm deals with all of these NPS. If you're getting confused, you can leave this topic. That's an advanced topic, but usually venture capital firm invest 50, $50 million and all of these startups, then you have your private equity partners. So companies like Blackstone, KKR, and Apollo, not private equity partners, usually invest somewhere around $50 million to a $1 billion. Indeed startup. Now, obviously private equity partner have a very big check size. So in the next slide, let's quickly understand on the size of all these three different types of startup funding sources which come at stage number 2, their success rate and how much equity they usually acquire, all of these top-up. So you have your angels, venture capital firm and your private equity partner. Let's look at their check size. That equity, they usually taken the startup and their success rate. So usually all these angel investor invest some bitter own and then $1000 to $3 million in all of these startup, they usually take around ten to 20 percent equity in the startup. Obviously because angel investors are investing only in the start-up. So the chances of getting successful art and less, because early-stage startup always have some amount of risk. That's why the success rate in all of these startup are five to 10 percent. But these ancient investor, right, a lot of checks on day-to-day basis. That's why they somehow counterbalance their success. Because instead of writing tank when digit that you can even write 30, 40, check on you. Then you have your growth stage of Meniere's startup is growing. They usually look out for venture capital firm. And these venture capital firm usually invest somewhere around $3 million to $50 million. They usually take 10 to 20 percent equity in the company. And their success rate is around 10 to 15 percent. Because venture capitalists usually invest much more capital for a very less equity. And that's why they have very high success rate because obviously of a startup is going, if it is well established, then these venture government people can putting their money, they can take a little less equity because they know that the startup is already growing. They have a good track record. Chances of them getting successful are very, very high. Then you have your private equity partner. They usually invest when the startup is very, very successful in growing at a very fast rate, have good amount of revenue. And it is planning for an IPO or for a merger and acquisition and all these kind of exit strategy. That's why these private equity partners usually invest maybe somewhere between a $100 million to a $1 billion. They usually take five to 10 percent equity. But the success rate of all these private equity people are very, very high because obviously the businesses going for an IPO da, startup is going for important merger and acquisition. And at this stage, they can easily predict whether the startup is going to be successful or not. Now, if you wanted to know more about these angel investor or venture capital people or let say private equity. You can just go to CrunchBase and you can find the list of all the people which are there in the Internet in the interim VC space. And I think a lot of UFM already familiar with countries as well. So if we devise all of our learnings, you will find that you have your angel investor who put some amount of seed catheter, also known as angel funding. And they usually invest in the early stage of a startup. Then you have your venture capital people who usually invest in Series a, series B, and CDC, and all these series have progressive rounds of capital. So see these 0s have less amount of capital cities in cities be they usually there is more amount of capital in CDC. They usually raise much, much more complicated. It's not compulsory, but usually series means they are raising more and more rapidly. So as soon as they raise a new series or a new round of capital, they usually there is more and more typically just because they won't persist in that amount of growth. So if we summarize the complete startup fundraising video at the FAA states you have all of your angel investor who usually invest in the form of seed investment or angel investment. And at this stage you have your seed funding and angel funding. After that, you have your venture capital funding. So you can have your series a, series B and CDC kind of finding. So CDs a is usually around two to $5 million. Series B is somewhere between five to 15 $1 million, and CDC is above 15 $1 million. Obviously, there's no hard and fast rule. It depends on the kind of revenue structure and the kind of capital requirement you have for your business. Once you are done with your seed investment, you usually look out for some form of exit. So startup can do Moses and acquisition. You can do initial public offering, and you can also do management buyout. There are so many exit options available. We're going to talk about all of these exit options like your Moses and acquisition, your initial public offering, your management buyout. And we'll talk about all these things down the line in the course.