Products like Facebook, Google, Twitter, and YouTube fall under this group of business models. We’ll use Facebook as an example. Facebook creates and delivers value to its users through its social network—but doesn’t charge its users directly. That said, it still captures some of this value back, albeit through a derivative currency (user

Throughput is typically defined as the rate of production or the rate at which items flowing through a system can be processed. In a traditional factory, throughput would measure the rate at which raw materials are turned into finished goods in a specified time interval—for example, 70 units/day.

For instance, a service business of one can try to approach 2x by hiring one to two more people. But 10x requires nonlinear thinking. It requires innovation, which is often hard to come by. That said, consider this: you can achieve close to 10x by 2xing three times. So rather than completely reinventing the business, can you instead find three 2x

The Customer Factory Metaphor We can make this definition of traction even more tangible by visualizing the output of a working business model as a factory. In this factory metaphor, the job of the factory is to make customers. It works by ■ taking in unaware visitors as the input on the left, ■ creating, delivering, and capturing value from these

3. A Pricing Model And finally, your offer should include an appropriate call to action. Depending on your business model type and the readiness of your solution, this may be an actual money exchange or some sort of derivative currency exchange.

How will you make money? They want to understand the intersection of your cost structure and revenue streams—your margins.

Once visitors are inside, the next battle is connecting your promise with the first user experience. This is measured as Activation. This step describes your first set of interactions with your users. Your goal should be closing the gap between your promise and the moment of first value creation (the aha moment) as quickly as possible. If, for

I often pose the same starting challenge to everyone irrespective of their business model type: “Can you find ten people who will use your product?” The rationale for this challenge is that one of them will turn into a happy customer, which is the first singularity moment in a product’s life cycle.

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