LTV Readings

Launching Technology Ventures
Course Number 1755
Senior Lecturers: Jeffrey Bussgang & Jeffrey F. Rayport
Winter, Q3: 1.5 credits

 Course Syllabus
The course materials are available online via the course platform (Canvas).
Class date
Case
Guest
1/22/2018
Plastiq
No guest
1/24/2018
Aardvark
David Hornik
1/29/2018
Shippo
No guest
1/30/2018
Classtivity
Payal Kadakia Pujji
2/5/2018
Airfox
Victor Santos
2/6/2018
Yahoo!: Stamped
Scott Friend
2/12/2018
BabbaCo
Jessica Kim
2/13/2018
Mattermark
Danielle Morrill
2/14/2018
Ovia
Paris Wallace
2/20/2018
ZappRx
Zoe Barry
2/21/2018
Lightricks
Itai Tsiddon
2/26/2018
Jibo
Matt Revis
2/27/2018
Codecademy
Zach Sims
3/5/2018
Course Wrap
No guest

 Background Reading:
Students are encouraged to review the following Case Notes that were taught during the MBA First-Year Course, "The Entrepreneurial Manager."
If you want an accessible backgrounder on coding languages and software development processes, read this:
A more detailed review of the new methodology for software development, Continuous Development, can be found here:
  • HBS Teaching Note | Continuous Development (Forthcoming)
Finally, throughout the course we will draw on Professor Bussgang's new book, Entering StartUpLand, to provide context for how startups are organized and execute on their vision. In preparation for the first class, please read:
  • Entering StartUpLand, Chapter 1

I. Monday, January 22--PLASTIQ

The young founders of a venture-backed startup needs to figure out their go-to-market strategy and the right profile for their first key sales hires. Should they develop partnerships with channels that would provide leverage or build out a direct sales force? And should the sales team be led by an experienced senior sales executive or a scrappy mid-level sales manager?
Readings:
Optional Readings: 
  1. What go-to-market strategy should the founders choose? What are the tests they can conduct to help validate their go-to-market decision? What metrics should they use to help determine if they're on the right path?
  2. How far down does the sales learning curve is the company by the end of this case? What specific metrics should they achieve before scaling more aggressively?
  3. Who should Plastiq hire to become VP of Sales and why?

II. Wednesday, January 24--AARDVARK

Aardvark is an online social search service founded by veterans from Google. This case captures the management team in the midst of searching for product-market fit. We will focus on Aardvark's early strategic decisions, experiments regarding its customer value proposition, as well as its use of a lean, user-centric product development process. Our class guest is David Hornik, general partner of August Capital and Aardvark's lead investor.
Readings:
Optional Readings: 
  1. Do you consider Aardvark a success as of January 2010? To what extent is Aardvark's success or lack of success attributable to the team's reliance on user-centric product development methods? What hypotheses were they testing?
  2. The Aardvark team refused to implement the features most requested by their users. How does this square with user-centric design? 
  3. Why isn't this social service more viral? If you were in charge of marketing for Aardvark, what would you do to stimulate growth?

III. Monday, January 29--SHIPPO

Shippo is a graduate of 500Startups trying to revolutionize e-commerce shipping and fulfillment. The company is struggling to decide the best go to market approach: API-based or application-based. Which path will position the company best for success and why?
Readings:
Optional Readings: 
  1. How would you assess the Shippo founding team's founder-market fit?
  2. How do you interpret the volume figures in exhibit 6 and the churn numbers in exhibit 7? Does the app strategy appear to be working? What are the app strategy's unit economics as compared to the API strategy?
  3. What should Behrens Wu do: continue to focus on the app, pivot to the API, or try to do both?
  4. How would you configure the sales and product organization and focus areas appropriately?

IV. Tuesday, January 30--CLASSTIVITY

Techstars graduate, Classtivity, has a vision for helping people stay fit by making local gyms more accessible but has struggled to achieve product-market fit. The founders are debating whether to persist with their new model, which is getting some traction, or contemplate launching a second major pivot. Our class guest is founder Payal Kadakia Pujji. 
Readings:
Optional Readings: 
  1. Is Passport working? What's the business model?
  2. The first pivot seemed like an obvious choice. Can you think of an MVP test they might have conducted that could have saved them 18-24 months of work building the search engine?
  3. If you were Payal, would you pivot away from Classtivity? Does it to have to be an either/or decision or can you stick with Classtivity while experimenting with the subscription offering?
  4. Evaluate Passport's unit economics and compare it with the contemplated subscription offering. Based on the data in exhibits 3, 6, and 9, how favorable are the unit economics and how would you assess the value proposition for the user and the studio? How sensitive are the unit economics to your assumptions? E.g., If you wanted a 3x LTV/CAC and assumed 20% conversion, what price would you need to charge assuming similar churn and class usage?

V. Monday, February 5--AIRFOX

Airfox is a struggling startup facing a dwindling cash runway. The company has a big vision: to enable billions of offline and pre-paid mobile subscribers in emerging markets the opportunity to have access to capital for data. But to execute that vision, it needs to overcome investor skepticism and raise a lot of capital. The founders are contemplating completing an Initial Coin Offering (ICO) in order to both raise the desired funds and develop a new, token-based model for their service. Our class guest is co-founder and CEO, Victor Santos.
Readings:
Optional Readings: 
Assignment Questions:
  1. Evaluate each of Airfox's pivots. What experiments could they run for each one to help short circuit their search and discovery process?
  2. Should the company choose to leverage the blockchain for their application?
  3. If you were Victor, would you launch the ICO? Why or why not? What are the key factors that need to be weighed in this decision?

VI. Tuesday, February 6--YAHOO!

Stamped is a consumer app that has not (yet?) taken off, despite numerous pivots and relaunches. The founders are contemplating throwing in the towel and getting acquired by a larger company, which will have many implications for them, their team and their investors. This case explores both sides of an acquisition-hire ("acqui-hire") with Yahoo! as the acquiring company and Stamped as the start-up potentially being acquired. 
Readings:
Optional Readings: 
Assignment Questions:
  1. Evaluate Yahoo's M&A "acquihire" strategy and corporate development organization at the time of the Stamped acquisition opportunity and describe what direction the corporate development group needs to take to contribute to the Yahoo turnaround.
  2. Should Jackie embark on the Stamped acquisition? What should be her main consideration in evaluating the decision?
  3. Should Robby accept the Yahoo offer? What should be his main consideration in evaluating the decision?

VII. Monday, February 12--BABBACO

Having just raised a Series B financing, the founder of BabbaCo is faced with a tough decision: should she "step on the gas" and scale the customer base, or continue to focus on fine-tuning the product and business model. The case describes the various marketing channels employed by the BabbaCo team (Search, Email, Social Media, Deal Sites, Affiliates, etc.) including the strategy and effectiveness for each. Our class guest is Jessica Kim, CEO and founder of BabbaCo.
Readings:
Optional Readings: 
Assignment Questions:
  1. Is now the right time to scale? If not, why not? If so, what areas would you invest more heavily in?
  2. Looking at exhibits 5 and 6, analyze the results from each of the various customer acquisition channels and develop a dashboard evaluating the effectiveness of each channel. Are there additional customer acquisition strategies or tests that Kim should attempt?
  3. Discuss and come up with additional approaches Kim should use to refine the product and content offering to build a successful company in the long-term. What tests would you run to validate these approaches?
  4. What strategy should Kim present at the upcoming board meeting?

VIII. Tuesday, February 13--MATTERMARK

Mattermark is a SaaS start-up that provides business information and analytics software. Having raised a successful Series A, the company's founder is faced with a dilemma--whether to invest in scaling sales and marketing or the product? Our guest will be CEO and founder, Danielle Morrill.
Readings:
Optional Readings: 
Assignment Questions:
  1. Has Mattermark achieved product-market fit? Why or why not? Looking at Exhibit 3, what are the key metrics that inform your answer to this question? Please make sure to calculate CAC and LTV and the ratio of the two. 
  2. Is it time to expand into other markets beyond venture capital?
  3. If you were Danielle, what would your presentation to the new board look like in terms of specific recommendations and courses of action?

IX. Wednesday, February 14--OVIA

Ovia is a mobile and online platform to help women and families manage fertility, pregnancy and early parenting. The company faces an enviable dilemma: a huge channel partner is at the table with a possible "make the company" deal. Should the founders leap at the opportunity or pursue a riskier, yet potentially more lucrative go to market approach? Our guest will be CEO and founder Paris Wallace.
Readings:
  • HBS Case | Ovia
  • Jeff Bussgang | Entering StartUpLand Chapter 3: The Business Development Manager
Optional Readings: 
Assignment Questions:
  1. Review the various business model experiments (paywall, native advertising, benefits plans). What are the pros and cons of each, factoring in the market data provided in exhibits 2, 7, and 8? Why do you think it took the team so long to find an attractive business model? 
  2. Review Exhibits 6a and 6b. What insights can you derive from the cohort analysis?
  3. What choice should Paris and team make? Run a summary analysis of the cost of building up an employer sales force, using some reasonable assumptions based on data provided in the case, and going direct as compared to working through a channel partner. How do the unit economics of the benefits market compare to the native advertising market?

X. Tuesday, February 20--ZAPPRX

ZappRx is a health technology startup trying to streamline the specialty pharmaceutical industry. The founder is struggling with a business model choice, one that is made even more difficult by the fact that her senior management team is expressing doubt about her leadership and vision. Our guest will be CEO and founder Zoe Barry.
Readings:
Optional Readings: 
Assignment Questions:
  1. Of the various possible "customers" for ZappRx's service, for whom is the value proposition most compelling? Who has the highest willingness to pay?
  2. What strategic path should Barry pursue and why? What experiments should she consider to inform her decision?
  3. Based on the path she chooses, what actions should she take with respect to fundraising, team and go-to-market?

XI. Wednesday, February 21--LIGHTRICKS

Without any outside capital or assistance, the Lightricks team has successfully bootstrapped their flagship app, Facetune, into a bestseller on the Apple app store. How did they do it and what comes next in terms of pricing strategy, product roadmap and financing? Our class guest is cofounder, Itai Tsiddon.
Readings:
Optional Readings: 
Assignment Questions:
  1. What do you think of their paid vs. free decision? Do you agree with it or would you have made a different decision? 
  2. Do you agree with Fred Wilson's statement that "marketing is for companies with sucky products?" Should Lightricks have focused on free acquisition early on?
  3. Reflect on the ways in which the company has bucked conventional wisdom in their decisions vs. "startup 101." Why? Has it worked?
  4. Look at Exhibits 6a, 6b, 6c, 7a, and 7b. If you were in charge of pricing at Lightricks, what price would you set and why?

XII. Monday, February 26-JIBO

The Jibo team is trying to achieve something very rare- successfully launch a new consumer electronics platform in the home that will attract third-party developers. This case explores the challenge of turning a product into a platform while creating a new category: social robots for the home. Our class guest is VP of Products, Matt Revis.
Readings:
Optional Readings: 
Assignment Questions:
  1. Should the Jibo team pursue a platform strategy at launch or should it build all of the initial applications themselves and evolve toward a platform strategy over time?
  2. When it comes time to develop a platform strategy, what approach should Jibo take--top down (with strategy partners), bottom up (developer driven) or a combination of the two? 
  3. If you were hired as head of strategy and you were now in the room with Chambers, Smith, and Breazeal, what execution plan would you recommend to attract developer investment in a platform that will not be shipping for over a year?

XIII. Tuesday, February 27--CODECADEMY

NYC-based Codecademy has seen tremendous growth and user adoption since its launch. The company is now contemplating its next move--whether to continue to drive adoption or begin to run monetization experiments. Our class guest is Zach Sims, co-Founders and CEO of Codecademy. 
Readings:
Optional Readings: 
Assignment Questions:
  1. Union Square's Andy Weissman warns against pursuing monetization strategies too soon. Do you agree with this? When is the right time to pursue monetization strategies and how do you know when the time has come?
  2. Is it time for Codecademy to pursue monetization efforts?
  3. If so, which one should they choose and why?
  4. What experiments should Codecademy run next to test out monetization strategies? Or is time to focus on, and scale up, one particular model?

XIV. Monday, March 6--WRAP UP

This final class is dedicated to reviewing and discussing the concepts learned during this course as well as stepping back and sharing a few observations about an entrepreneurial life. 
Readings:
Optional Readings: 
Assignment Questions:
  1. Please complete the Feedback Poll on LTV Cases & Sessions.
  2. Please bring your laptop to class to complete the HBS Course Evaluation

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