How start-ups make their economics work
What sets a start-up apart from a small business, the minimum product, measure and pivot approach, the J-shaped cash curve, funding rounds in order, dilution and the indicators that steer the money: cash, acquisition cost, customer value, churn.
- 28 cards
- 5 topics
- Free
The outline, topic by topic
Each topic is weighted the way the exam weighs it.
- Concepts
- Questions
- Sort and link
- The numbers
- The curves
A few cards from the deck
Start-up: what is it?
Show the answer
A temporary organisation searching for a repeatable, scalable business model under extreme uncertainty.
It is not age or size that defines a start-up but the search: a bakery that opens is not a start-up, because its model is known and does not extend to millions of customers.
A start-up launched a scheduling tool for restaurants. After three months nobody comes back, but several users have repurposed it to manage supplier orders. The team decides to rebuild the product around that use. What does the lean approach call this decision?
- A pivot: changing product or target while keeping what has been learned
- Persevering: holding course while improving the existing product
- Diversification: adding a second business alongside the first
- Moving upmarket: keeping the product and raising its prices
Show the answer
A pivot: changing product or target while keeping what has been learned
The lean approach sets two decisions against each other after each measurement: persevere or pivot. Here the market answered differently than expected; the team drops the intended use and reuses its technology and what it learned for another hypothesis: that is a pivot.
The runway, in months, is the … available divided by the ….
Show the answer
The runway, in months, is the cash available divided by the monthly net burn.
Monthly net burn is what the company burns each month: spending minus receipts. With 400,000 euros in the bank and 25,000 burnt a month, 16 months are left.