Traction in a marketplace model is NOT the rate at which you create buyers or sellers (listings), but the rate at which you bring both sides together to conduct a transaction.

Exercise: Define Your Significant Success Milestones For each of your business models, 1. Use the 10x rule to build a traction model. 2. Test the model so the numbers make sense for your business model type.

MULTISIDED MODELS Because users pay you with a derivative currency, the key difference here is calculating the value or exchange rate of this derivative currency. In the case of a product like Facebook, for instance, we calculate this derivative currency exchange rate as the average revenue per user (ARPU). You can get to this number by estimating

Revisit your business model and create a few variants. Here are some possible variables to tweak: ■ Customer segments: Are there other types of customers who share similar problems and thus represent a different business model? ■ Problem positioning: Does leading with a different set of problems result in a different business model? ■ Pricing model

For a healthy business, you should aim for a 3x ratio between LTV and COCA. This ratio is attributed to David Skok, a five-time serial entrepreneur and partner at Matrix Partners in Boston. He regularly shares his insights on his popular blog forEntrepreneurs and has validated this ratio across many SaaS businesses.

Key Takeaways ■ Establishing repeatability in your business model is a prerequisite to pursuing growth. ■ Growth is not a continuous function but a series of steps best described as firing rockets that get you from one stable orbit to the next. ■ A staged rollout strategy works to automatically prioritize the right risks in your business model. ■ Y

People usually have no problem calculating the number of active customers needed for $10M/year revenue, which we previously calculated as 16,000-plus active customers. But the 8,000-plus new customers/year isn’t the number of active customers, but rather the number of new customers you need to make every year after you hit your minimum success crit

By purposely limiting your customer throughput batch size at the earlier stages, you can focus on finding the best early adopters for your product and on delivering the best possible high-touch experience to validate your value creation hypotheses. Your perspective on what you need to build (your solution) also changes. For instance: ■ If you are b

Building out any customer factory is no different. The first stage (Problem/Solution Fit) is where you test for sufficient customer pull to get the factory started. The other two stages (Product/Market Fit and Scale) are simply stepped-up versions of the first stage. It’s important to highlight that the goal of each stage isn’t simply to create som