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Hidden Moats in Consumer Subscription
As a rough benchmark for evaluating startups at Andreessen Horowitz, I often look for a minimum baseline of 60 percent retention after day 1, 30 percent after day 7, and 15 percent at day 30, where the curve eventually levels out. It’s usually only the networked products that can exceed these numbers. That’s because networked products are unique in
... See moreAndrew Chen • The Cold Start Problem: How to Start and Scale Network Effects
"These subscription businesses have a revenue profile that is more like an annuity. This revenue profile is not like the manufacturer’s business that many people learned about from a college introduction to accounting class."
Tren Griffin • Amazon Prime and other Subscription Businesses: How do you Value a Subscriber?
you can begin to extrapolate customer lifetime value using secondary approximations (like your monthly churn rate) without having to wait the full customer lifetime: Projected customer lifetime = 1 / (monthly churn rate)3 So, for example, a product that measures a monthly churn rate of 2 percent represents 1/0.02 = 50 months, or roughly four years
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