Podcasts about cohort analysis

Are you thinking of building or scaling a consumer product company?This week, we're joined by John Durant, a prolific investor in the health and wellness space as he reveals the proven strategies and insider insights that will catapult your business to new heights.Tune in to discover common pitfalls that both struggling and successful companies encounter, the critical role of assembling the right founding team, and strategies for scaling a business from a niche audience to a mass-market brand.Whether you're just starting out or looking to scale, this episode is a must-watch.Timestamps:00:00 Introduction00:50 John Durant's Journey into Venture Capital05:32 The Element Story: From Idea to Market09:55 Digital Products vs Physical Products12:23 Understanding Product Market Fit17:31 Scaling Beyond the Creator's Platform20:43 Common Startup Mistakes to Avoid23:02 Optimizing Your Sales Funnel24:57 The Challenge of Changing a Successful Strategy25:40 The Role of Cohort Analysis in Growth27:03 Traffic Sources and Churn Rates28:40 Kettle and Fire: A Case Study30:39 Online vs. Retail Sales Strategy35:39 Role of Subscription Models37:20 Expanding Beyond Food and Beverage42:33 Importance of Team and Execution44:46 Final ThoughtsIf you enjoyed this episode, please like and subscribe, share it with your friends, and leave us a review. We read every single one.Know more about Billion Dollar Creator: https://www.billiondollarcreator.com/Follow Nathan:Instagram: https://www.instagram.com/nathanbarry/LinkedIn: https://www.linkedin.com/in/nathanbarry/Twitter: https://twitter.com/nathanbarryWebsite: https://nathanbarry.com/Follow John:LinkedIn: https://www.linkedin.com/in/jdurant/Twitter: https://x.com/johndurantInstagram: https://www.instagram.com/_johndurant/Website: https://johndurant.net/Wild Ventures: https://wildventures.vc/Featured in this episode:Primal Kitchen: https://www.primalkitchen.com/Thrive Market: https://thrivemarket.com/Element: https://drinklmnt.com/Magic Spoon Cereal: https://magicspoon.com/Wild Ventures: https://wildventures.vc/Mark Sisson: https://www.instagram.com/marksissonprimal/Wellness Mama: https://wellnessmama.com/Food Babe: https://foodbabe.com/Blue Apron: https://www.blueapron.com/Kettle and Fire: https://www.kettleandfire.com/Rogue Fitness: https://www.roguefitness.com/ConvertKit: https://convertkit.com/SteadyMD: https://www.steadymd.com/Chili Pad: https://sleep.me/David Perlmutter: https://drperlmutter.com/Liquid IV: https://liquid-iv.co.uk/Kroger: https://www.kroger.com/Highlights:17:12 Understanding the limits of creator self-promotion25:40 The importance of cohort analysis in creator marketing27:32 Why using overall churn rate can mislead traffic source spend decisions35:45 Driving repeat purchases: Strategies for billion-dollar creators

Send us a Text Message.In dieser Ausgabe des HAINS Talk Journal Clubs geht es um eine  Arbeit zum Einfluss von Metformineinnahme auf das postoperative Delir von Paredes et al. aus der Juniausgabe von Anesthesia and Analgesia (https://doi.org/10.1213/ane.0000000000006863). Mit dabei im Studio ist dieses Mal mein Kollegin Stefan Waizenegger, wissenschaftlicher Mitarbeiter  der Klinik für Anästhesiologie am UKHD.

In this episode Brad Redding and Jon Cairo are joined Scott Zakrajsek from Power Digital to talk about blended approaches to attribution with MMM/MTA, geo-testing holdout strategies, demand creation channel measurement (ex. Youtube), customer LTV analysis and actions to take, and the current state of CDPs for eComm brands. -----We release new episodes every week that go deep into the world of tracking, analytics, and conversion optimization.-----Links Referenced:Connect with Scott on LinkedInConnect with Ben on LinkedInPower DigitalRockerboxPrescient AI-----And if you're new to Elevar, Elevar automates server-side conversion tracking for Shopify. Check us out!-----Previous episodes you might like:100K/spend day myths with Nigel ThomasSignal Loss -- what it is and how it impacts marketersDeep dive with Simo Ahava on intersection of technical marketersClient vs server-side cookies and server-side tracking 101How to double conversion rate in 100 days with Ben ZettlerHow to blend attribution + conversion tracking + data warehousing for insights with Austin Harrison from Northbeam

Active engagement in TikTok shops and the significant impact it has on e-commerce and conversion rates for their business, highlighting the importance of adapting to new trends and technologies for business success.In this episode, Jordan West and Kelley Thornton, shares valuable insights into scaling their business into multiple eight figures. Kelley's journey from a side project in 2015 to the fully launched direct-to-consumer brand has led to remarkable growth, serving over 500,000 customers in 108 countries every month. Kelly shares insights into navigating capital markets, the significance of data-driven decision-making, and the cultural shift in male grooming, reflecting on the challenges and successes in the evolving landscape of the skincare industry.Listen and learn in this episode!Key takeaways from this episode:The use of AI to predict return and revenue rates, highlighting the importance of tracking and adjusting spending based on daily intelligence for effective decision-making.The significance of hiring experts in specific disciplines to scale a business successfully.The value of trust and influence over monetary rewards, emphasizing the importance of vetting sponsors and building genuine interactions with the audience.The importance of men maintaining healthy routines, providing insights for businesses targeting male skincare and grooming products.Recommended Tools/App:Triple Whale: https://www.triplewhale.com/ North Beam: https://www.northbeam.io/ Lifetimely: https://www.lifetimely.io/ Polar Analytics: https://www.polaranalytics.com/ Tableau: https://www.tableau.com/ Fivetran: https://www.fivetran.com/ Snowflake: https://www.snowflake.com/ Today's Guest: Kelley Thornton is a serial entrepreneur with a diverse background in business. He started his first company, a successful painting business, while still in university. This experience taught him valuable lessons in management, scheduling, and payroll. Following this, he spent 18 years working in sales, splitting his time between New York City and Chicago. Kelley's varied career has given him a wealth of experience and knowledge in the business world.Connect and learn more about Kelley and Tiege Hanley:LinkedIn: https://www.linkedin.com/in/kelleythornton-ceo-tiege-hanley/ Website: https://www.tiege.com/ This episode's sponsor is Finale Inventory- the ultimate solution for accurate and efficient inventory management. Trusted by thousands of brands, Finale offers seamless integrations with over 80 sales channels and platforms. With customizable workflows and reporting features, Finale empowers you to streamline operations and scale your business with ease, preventing overselling and maximizing profitability. Whether you're juggling multiple platforms, expanding your product range or just looking for a way to reduce operational chaos, Finale has the tools you need to succeed. Step into the future of e-commerce with Finale Inventory. Learn more here: Finale Inventory

In episode #126, I address cohort analysis and when this framework is the right fit for your SaaS business. - What is cohort analysis? - Basic cohort analysis - Advanced cohort analysis - Are you high ACV or low ACV? Subscribe to Ben's SaaS metrics newsletter: https://saasmetricsschool.beehiiv.com/subscribe Subscribe to Ben's SaaS monthly newsletter: https://mailchi.mp/df1db6bf8bca/the-saas-cfo-sign-up-landing-page SaaS Metrics courses here: https://www.thesaasacademy.com/ Join Ben's SaaS community here: https://www.thesaasacademy.com/offers/ivNjwYDx/checkout Follow Ben on LinkedIn: https://www.linkedin.com/in/benrmurray

Imagine hearing the insights of a brutally honest analysis of an e-commerce business that has endured the trials of the past year and still managed to grow—sound like something you'd want to dive into?In this episode, Jordan West and Jordan Salvit, Salvit Advisors engages in a revealing conversation. They delve deep into the numbers of Little and Lively, uncovering some hard truths and incredible insights that have propelled the business forward, even amid challenging times. They peels back the layers of Little&Lively story, providing an expert analysis of the brand's performance, customer dynamics, and game-changing action steps that have the potential to drive monumental growth. Listen and learn in this episode!Key takeaways from this episode:Analyzing customer data and understanding the breakdown of existing and new customers is crucial for continued business growth.The importance of identifying and leveraging high-performing and profitable products within the brand's product lineup with a high lifetime revenue value.The significance of continuous testing and optimizing of marketing channels and strategies for customer acquisition, including considering platforms like TikTok and YouTube and refreshing ad accounts and pixels.Creating a strong referral program to capitalize on the highly engaged customer base and leverage word-of-mouth marketing.Prioritizing key focus areas, such as increasing new customer acquisition and emphasizing the first product customers purchase, to drive consistent and continuous brand growth.Recommended App/Tool:Social Snowball: https://socialsnowball.io/Google Shopping: https://shopping.google.com/?pli=1Performance Max: https://support.google.com/google-ads/answer/10724817?hl=enMillion Dollar Offer: https://upgrowthacademy.podia.com/offer-courseToday's Guest:Jordan Salvit, CEO and Founder of Salvit Advisors, embarked on a journey of self-discovery after selling a successful business. Unsure of his next move, he ventured into consulting for brands, using his expertise  in helping founders leverage a playbook to focus on key opportunities that will have a significant impact on their business growth. With his extensive background in computer science and analytics, he specializes in developing churn management systems and analyzing business data to identify priorities for exponential growth. Connect and learn more about Jordan and Salvit Advisors:Website: https://www.salvit.com/LinkedIn: https://www.linkedin.com/in/salvit/X: https://twitter.com/jordansalvitGet 5 Offers for 2 Products (10 in total) along with 10 highly engaging tried and true creatives, 30 captivating headlines, descriptions, and ad texts sent to you for only $99. Go to https://www.upgrowthcommerce.com/offer and order now - this offer is only available for a limited time.We love our podcast community and listeners so much that we have decided to offer a free eCommerce Growth Plan for your brand! To learn more and how we can help, click here: upgrowthcommerce.com/grow Join our community and connect with other eCommerce brand owners and marketers! https://www.facebook.com/groups/secretstoscalingpodcast

In episode #50, I dive into cohort analysis. This is thrown around a lot in SaaS. It doesn't apply in all situations so don't always jump on the cohort bandwagon. - What is cohort analysis? - What metrics are relevant? - When does it not apply? Download my cohort analysis template from this free course: https://www.thesaasacademy.com/offers/gmbMDsYN/checkout SaaS Metrics courses here: https://www.thesaasacademy.com/ Join Ben's SaaS community here: https://www.thesaasacademy.com/offers/ivNjwYDx/checkout Follow Ben on LinkedIn: https://www.linkedin.com/in/benrmurray Subscribe to Ben's SaaS newsletter: https://mailchi.mp/df1db6bf8bca/the-saas-cfo-sign-up-landing-page

EP309 - Instacart IPO Filing  Warning: Given the complexity and breadth of topics, this is a longer than usual episode with a runtime of 90 minutes (if we had more time, we'd produce a shorter podcast). Update: In this episode Jason mentioned that he didn't think Instacart accepted SNAP payments. It turns out that Instacart did start accepting SNAP earlier this month. On Friday, August 25th 2023 Instacart filled its S-1 IPO form with the SEC, in advance of its intention to make an initial public offering. The complete filing is almost 400 pages. In this episode we summarize all the key points, including a number of surprises, in the filing. If you want to follow along with the actual S-1, you can download it here. Scot suggests you focus on pages 101-124. Topics Covered: Cover Page and Entry Level Items Overall Growth Trends 25:50 Unit economics 42:90 Cohort Analysis 48:10 Instacart Ads 56:30 The Big Risk/Concern 1:00:11 Other observations (Instacart+, Carrot Services, Generative AI) 1:22:50 Other episodes mentioned: Episode 255 - Instacart Chief Revenue Officer Seth Dallaire and Episode 224 Customer Cohort Analysis and CLV with Dr. Daniel McCarthy. Don't forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes. Episode 309 of the Jason & Scot show was recorded on Tuesday, August 29, 2023. http://jasonandscot.com Join your hosts Jason "Retailgeek" Goldberg, Chief Commerce Strategy Officer at Publicis, and Scot Wingo, CEO of GetSpiffy and Co-Founder of ChannelAdvisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing. Jason: [0:23] Welcome to the Jason and Scot show this is episode 309 being recorded on Tuesday August 29th I'm your host Jason retailgeek Goldberg and as usual I'm here with your co-host Scot Wingo. Scot: [0:38] Hey Jason and welcome back Jason and Scot show listeners. We are going to jump into the talk tonight because one of our most popular shows as you know Jason the format is a deep dive and we have got a great Deep dive for you guys this episode. Last Friday August 25th there was a very big event not only in our favorite world's grocery which is Jason's favorite world and my favorite world of e-commerce and then Jason's favorite world of. But also in my favorite world of startups so this is this is a pretty big event and we wanted to dedicate a complete episode to it. I mean it is the filing of the S14 instacart. [1:24] And just to set it up the you know in my world of start-up land it has been very hard to get an IPO done so there's been a couple post coated and like late 2020. And then summon 21 and then there's been a dry spell there's been something called a dese back so you have this spec which is this. [1:44] Special-purpose acquisition thing and you can kind of go public through this kind of complicated convoluted thing. Tends not to go very well so there's been some of that like in My World Mobility there is one called get around and there's been a couple others and those typically have not. Gone so well they're down like 95% bird the scooter company did this as well. So it's been a very dry IPO market for startups and thus of interior backed investors. So there has been a lot of anticipation around when is that a PO when they're going to open who's going to be brave enough to kind of stick their foot out there first. And you know a lot of people have been rooming that instacart would be out there there's a couple other companies in this kind of unicorn Stratosphere stripe is another one that we cover a lot on the show from the payments world. There's also the others you can think of Jason there's this one. There's a software one that is just doing really well in AI that's been mentioned a lot not not open AI it'll come to me in a minute. So you know so this is kind of the real. Bang the Big Bang of here's a company that is being brave enough they're gonna go first and we're going to see what happens so it's going to be really interesting and we thought because it hits this Venn diagram of all of our favorite things that we would spend a fair amount of time on. [3:10] So first of all this is a 400 page document so our value add to the listeners is we have distilled it down into what we think are the most interesting little tidbits and some of the things we've learned from instacart it is nice because there's been a lot of rumors about how instacart Economics work and Jason has been tracking their ad piece which is you know cpgs have really seen some really nice results from that so we know that's been active and the areas we picked apart we thought we would cover tonight is I wanted to kind of give you a quick and dirty Scott's guide to reading an s-1 and we'll start at the cover page that's there's actually a lot that happens on the cover page so I want to spend a little time there and kind of give you a little I haven't taken a company poet behind the scenes of what's going on on there and then we're going to talk about some of the overall growth things that just kind of help you understand. [4:07] How to think about instacart how they're growing and what they do and what role they play and then unit economics one of the things that is happening more and more in these s1's is they're doing a more comprehensive cohort analysis and this is basically showing hey if if I car to a customer in a certain period how are they doing now and what are those Trends so that this this had a lot going on there of course we want to talk about the ad business and then little bit of a catch-all for other observations, Jason anything I missed before we jump into the cover page. Jason: [4:42] No I think you mostly covered it just one slight correction it's four of our five favorite things for those listeners that tuned in to hear us talk about Ahsoka we're going to do that on an upcoming episode so that Star Wars would be our fifth. Scot: [4:56] Yes sadly there was no Star Wars in this one so it's that one little part of the over the Venn diagram was left is its own little circle out in space. Jason: [5:06] That's a we call that a teaser for a future episode. Scot: [5:09] Yeah yeah we're we're Pros were 300-plus episodes into this thing and this is the kind of you know Pro level that we deliver on the pod. So you guys missed it Jason forgot to plug in his microphone earlier so that's a yeah we're still still learning every day, so when you open an s-1 the first thing you see is the cover page and it you know a lot of people just Breeze by it because it's a cover page but it has a lot of really valuable information so first of all the first thing that I noticed is I was searching for this on Edgar and I kept typing in instacart and it wouldn't show up and I was like WTH I know this s1's out there why can I not find it and then I saw an article and it said oh the company's real name is maple bear so that's the first thing you see on the cover is the company we all refer to as instacart its actual Corporation name is maple bear and it does business as instacart so I thought I did not know that prior so that was the first thing I learned right there on the cover so that's interesting so if you do go to the will put a link to the s-1 in the show notes but if you do Brave the Edgar SEC database yourself throwing a little Maple bear there and not instacart. Jason: [6:22] Not to be confused with Amazon's house brand Mama Bear. Scot: [6:26] Yeah yeah and I'm sure there's a honey bear and brown bears there's a there's a lot of a lot of bear things going on. The other thing that I was like to see is what symbol are they using I think it's fun to kind of you know as an entrepreneur to kind of think about what symbol you're going to use that best personifies your brand Channel Bowser we had ecom's so that was an exciting one so we captured e-commerce Shopify go. Jason: [6:52] The best ticker symbol of all times by the way. Scot: [6:55] Thank you thanks thanks I appreciate it. Shopify head shop and that was a good one and instacart / Maple bear is going with cart so I think that's a that's a that's a pretty nice one you know it kind of there a multi grocer chart cart and we all think about instacart I'm sure they hate being called Instagram so this kind of like really punches on the cart so maybe they get away from everyone mistakenly calm Instagram. Jason: [7:19] I think it's solid. Scot: [7:20] Yeah A-Plus on the symbol and then in the you'll notice that a lot of the evaluations and how many shares they're selling are blank and that's you know in this draft of this one which is the first kind of public one that they're dropping out there they'll they'll iterate a couple more times they'll do their Roadshow and then write one that, it prices they'll update the S12 include all that information so they'll make kind of literally a game day decision the night before IPO of how much based on the order book how much they want to sell and at what price so that, that's going to be blank through probably several more iterations as we go on then this is did you want to do something in. Jason: [8:04] No I was just I was just thinking that they I assume they left it blank because the underwriters were out of practice. Scot: [8:10] Yeah no no they they are there waiting and that's a good point because when you go public the the companies that take you public in this context they're all investment banks on Wall Street. But they they filled this role of Underwriters and basically what they're doing is they're acting as market makers they're going to cover your stock when it's public and they're also going to be basically pounding the pavement to sell your stock to buy side by side analysts and firms on Wall Street. Which there's two buckets of there's mutual funds and hedge funds there's also retail that I guess there's three buckets, retail would be you log into Schwab or Robin Hood and the diet of the IPO you try to buy some chairs that's retail and they all allocate a little bit of that for the IPO so they like retail to come in and get a little taste. [9:04] A lot of folks that if you're an accredited investor at an institution and you have a wealth manager, sometimes you can get a little bit of access to an IPO before it prices you don't get a special price or anything but you can if you're really excited and you're a retail customer you and you're in this kind of wealthy bucket then you can you can get some allocated shares I think is what they call it these call this friends and family they don't call that, that anymore that's called a allocated shares but what's important about the underwriters is there's actually a signal there several signals here and I didn't know this time went through the process. First of all they have lined up a who's who of investors so even before you get to Underwriters they have this really interesting note right before right underneath before they get in the underwriters and they say oh by the way we have lined up these investors already that have committed to buying and they have committed Asterix and then they kind of like take away the committed but. [10:05] I think that's a legality I think I think it's a pretty hard commitment is my reading of them and they basically say these guys are already these guys have lined up to buy at least 400 million in this offering. Regardless of the price and there's some big names in there there what I would call. Public-private so they have invested in instacart already as a private entity and then they have another side of there. Firm that invest in public entities and they have said that side is going to support the private side and that's nor just Bank tcv. [10:38] Sequoia and a couple others this is very unusual but I think it's an interesting play because it basically says to the market. Hey you don't have to worry about this thing you know taking on the first day because we're going to were signaling to you we're going to place a chunk of this with these folks that are long-term holders and they're going to backstop this thing I think of it as a adding a floor to the IPO basically saying we know it's been a while we know there's risk out there we're going to have a floor on this so so there's built-in demand for this IPO so that's quite unusual and this is the first time I've ever seen anything like that sometimes you'll see tiro price is a big one a big mutual fund that likes to do this or they'll have a private-public and they'll say you know they'll kind of suggests that, they're interested in buying more and they'll come out and say they don't plan to sell or they've accepted a lock up for a year or something like that I've never seen such a strong message as this one so I thought that was interesting. Okay then we move to the bottom of the cover and that's where you have the list of the underwriters and what's really interesting is the way this works is the bigger your font the bigger a role you play in the IPO so on this one the biggest font is Goldman Sachs and JP Morgan and you know they have I don't know what would you say Jason like a 40 Point font. Your. Jason: [12:03] Yeah I had to read it with my my PDF zoomed way up so I feel like I yeah but it was a big font. Scot: [12:11] Yeah yeah so those guys get like a you know they're kind of really big and then what's also interesting is where you show up on the page is important so your importance starts at the left and goes down to the right so the most important what we would call the vernacular is the lead left which is the biggest font on the left side of the cover is the lead Investment Bank and as Goldman Sachs and they're they're The Bluest of Blue Chips everyone wants Goldman Sachs if they come out. [12:37] And then usually you want either JP Morgan or Morgan Stanley now JPMorgan has increased greatly and stature over the last three years because they have weathered coded and they have basically absorbed most of Silicon Valley Bank's deposits and a lot of these other riskier Banks and their CEO is pretty famous Jamie dimon so they've this is kind of you know two blue tips on the top of the book here which is pretty interesting and then, then you kind of go down a bit and you end up with 18 more Underwriters and there's like three levels of them there's like the font gets smaller so you go from 40 point to 20 point then you go to like kind of like 15 point and you go to seven point and you know what's interesting is I have never seen this many Underwriters either so they basically have said we want everyone on Wall Street lined to go and help us sell this we will turn no Rock no Rock will be unturned looking for buyers of instacart stock with the institutional investors. There's some International Players so they've basically if you kind of said if you if you. [13:53] Few War Room doubt what are some things a company could do 2D risk an IPO they have done things I've never seen before times like three and then the last thing that's interesting is the economics each of these Banks gets kind of depends on where they are on the page so you know if it all this gets him to like, there's all this Machinery but these guys do it because they make money so Goldman will make their kind of highest percentage and then JPMorgan and so on and so on based on how much they contribute to the book and all this kind of calculus that goes on behind the scenes so I thought that was kind of a really interesting just on the cover some things that were very unusual from other IPOs I've seen Jason anything that you found on the cover that was riveting. Jason: [14:43] We'll know I did. I have a question for you though I got I guess I when I saw all of those Underwriters I kind of and perhaps erroneously assumed that part of what was going on here is, it's been a while since there were in any IPOs that went through an underwriter and that all of the underwriters are out there. Desperate for four deals and that therefore. Instacart had more more leverage to get more Underwriters like is it. Is it literally instacart just agreed to pay more for these two more Underwriters 2D risk the IPO is that. Scot: [15:23] Yeah I think. So human nature is that the lead laughed and Lead right want to absorb a lot of the deal and don't want to share too much so so typically there's some friction there right so they'll be like yeah you could add a couple and they use this tearing language I don't you know this is just kind of how I don't know who how they know what who's what dear, but tier one is Goldman Morgan and JP Morgan Morgan Stanley and then tier 2 is you get kind of Stiefel, a couple others in there then you go tier 3 and then you kind of have like an international kind of tearing as well so usually you get like two from Tier 1 Maybe two or three from tier 2 and then that's kind of it and then if you've if the company feels strongly like another consideration is when you go public one of the things that helps you long term is to have analysts that follow your stock and we've had many of these analysts on our show Mark mahaney Collin Sebastian these are and then Scott Devitt he was at stifel and he's moved on to another shop these are these are famous people in the internet marketing world so you want take Mark sets, I wasn't even as Fern was he ever green but that's not it. [16:40] Ever Quorum so so you as the company can say the Goldman hey I know you guys want to keep a lot of Economics but I want mahaney on this and we got to get ever Cora so some of those on the bottom are probably International distribution retail or something the company wanted kind of specific to add them on and you know that was all pre-negotiated with Goldman getting lead left they had they kind of had to acquiesce to having a bit of a large number of Underwriters on there so I don't yeah I don't think I'm sure they all wanted to be to your point like there certainly wasn't even saying no to being invited to this and they probably you know you just bake off in this was I came to imagine if they ended up with 18 like, mr. started with 80 I don't know it's crazy that was probably like a. Six week bake off just to hear from all the bankers so yes I think there's more around the analyst going on with with the large number on some of those. Jason: [17:39] Got it and then I want to hear your speculation about where the price might come in but I'm trying to remember the details there's been a lot of interesting things going on with the private placements before we got to this point right so I think the some of the valuations of the private placements were at some point disclosed and then I want to say instacart reset there. Their valuation at a lower number while they were still private like presumably to make the equity appealing for employees. Scot: [18:17] Yeah the sequence of events and this is all you know they don't disclose all this in this one because it's kind of like. Jason: [18:25] Sure I'm just trying to get the the Run. Scot: [18:27] The Whispers And if you read some of these you know I subscribe to a lot of things that talk about some of this kind of rumors and so take it with a grain of salt but there was some sequins like they were chugging along and then Covent hit and it was like Off to the Races vertical and I think the wheels kind of came off the bus and they started to lose money because the unit economics weren't weren't ready for for like a surge like that and then right around 21 they replace the CEO and they had to kind of emergency raise some Capital which is kind of like one of the worst times to do it because even though their revenue was surging the rest of the market was in the toilet basically so I think they had to do a Down Round And what I've heard is their bed raised money as high as 39 billion and then they took this haircut at with this new CEO in this kind of re leaning down the company at about 13 billion so. [19:19] So I think that's kind of like the watermark is kind of where they've last raised money and if you look at their revenue that's actually not that's a very reasonable Place given where you know they've grown since then but now what's the revenue like four billion ish yeah so they're like 3 billion and 22 in revs so that's like a four times Revenue which is pretty reasonable for a company growing the way they are with with good profitability so I would be I would not be surprised we don't we won't know this per share price until we see the denominator and they didn't have the denominator which is market cap divided by number of shares equals share price we don't know the number of shares so I would I would suspect. I'll guess, four billion I'm gonna guess 20 billion would be a low like I think it will price they're on the low end and it could go as high as 25 30 depends on you know. Retail and how much momentum it gets with with buyers. Jason: [20:26] And part of the art here is you don't you don't want to price it too low because that means you you have money on the table when you sold your Equity but you also don't want to price too high and have the, the stock like go down from the offering price and get below water right away right so. Scot: [20:49] Yeah it's very common we kind of had this situation at Channel visor we went public right after you know cortical right after in a longer time window of 08 09 and you know they strongly we had golden lead left and they strongly encouraged us to think long-term and not get obsessed about that pricing and leave a little bit of money on the table and yeah and then over time you could do a secondary at a higher price and you really want to you don't want to tank especially in a tepid market so I'm sure this was all part of the um you know Goldman would counter negotiate this to be lead left and say look we we need your commitment that your yep part of the pitch is they give you what they think it's worth and how it's going to price and they also discuss the strategy and that's part of the selection processes and you would think it would be. Okay whoever says they're gonna give me the highest price but you actually kind of they really stand out a lot because the Goldman people can talk about Dave, they've got like a lot of data to back up their strategy and you know there's like Watson there that that are. It would make your head spin and so they do a really good job of talking about why it makes sense to price the way they think and how how they see it over a longer Arc of time. Jason: [22:12] Gotcha so the guys with all the money have really good justification for why you shouldn't worry so much about the money. Scot: [22:18] And then the other thing to know though is what typically happens is you are not sharing you're not selling any one shares so the company so as part of this IPO the company will issue new shares so so you as the founder and the other investors you still have your shares you're not actually selling them at this moment so you know in a way now you get diluted right so the flip of that is your percent ownership goes down but you know it's kind of the would you take a little bit smaller. Of that and long term when you can sell your shares as the investor and the founder and the team and the people that bet on you now you know can you execute and deliver and then earn your way into a higher price and then that's when you can kind of like get some equipment sir. Jason: [23:08] Do you want a little bit of a grapefruit or all of a grape. Scot: [23:11] Yes exactly yep that is a good description. [23:17] Okay so here's here's the other part of the quick and dirty guide to reading the S1 you can take so that's cover is really good and then you take the literally the next let's see what is it. 100 pages and you can toss them so this is where the lawyers come in and they love to make sure you understand all the risk factors you know a meteor could hit the Earth people could stop needing groceries cybersecurity I could be no one wants to shop for them it could be they'll compete with a bunch of people Amazon is always a risk factor Google Microsoft. So all that really doesn't add value and then there's a little bit of financial stuff but it's it's pretty dry and it's kind of like from the Auditors almost so it's like super drive so it always do is you skip to the part of this one we're finally the lawyers have earned their large fees and they vomited forth 100 pages of risk you know stuff. And then you get to write your story and that's called the Management's discussion and Analysis in the industry it's called the md&a. [24:27] It's confusing I thought for a long time it was md&a because Aaron says mdna really fast and they're saying the word A and D and it sounds like an end to me and I kept saying what the heck does md&a stand for they're like what do you mean what's up what are you saying. It's like a who's I first got a thing but it's md&a so Management's discussion and Analysis and this is where you. Jason: [24:49] Because I read all 100 pages and and I'm super depressed and one of the risk factors is the way I could become sentient and take over the Earth. Scot: [25:00] Mmm yep that is a risk factor and then it will bring our groceries to us I guess as we are batteries for its consumption. Jason: [25:08] The computers won't eat. Scot: [25:10] So if you really want you know so what you can do is you can get the gist of 95% of this by printing out the s-1 pages 1012 124 that's it's only 23 pages and it's really dense but it is actually this is actually a very good read they did a very good job of making this so you know. It's very approachable and they go into a level of detail that's really handy into problem so we're going to give you some of the highlights from that but if you want to go deep on your own we will give you all you need to go to the next level just by looking at those 23 pages. Okay so what did you see and them DNA and that got your attention. Jason: [25:55] Well I mean a number of things so maybe just super high level what's exciting to me like obviously a lot of this information about the business was not, publicly available so in the process of going public in issuing S1 they suddenly reveal a lot of things and they reveal things about. Their own business but they also have to paint a pretty good picture of what they think is happening and could happen in the digital grocery business so it's kind of like getting a whole class of really smart people to sort of, write a thesis about the the digital grocery business that we get to read and interpret and you know we they reveal things that we didn't know like how valuable customers are over time and how much consumers spend on a given order at instacart and what percent share of wallet they think digital gets versus brick and mortar and all these sorts of things and we'll get into a bunch of them in the in the individual sessions but my my takeaway from the beginning of that management discussion was that it's a. [27:08] A pretty robust business that the aggregate amount of. GTV that they that they have is pretty significant its twenty eight point eight billion dollars in groceries that they sold in 2022. Scot: [27:27] Yeah and GTV is gross transaction volume so instacart it's basically a Marketplace like eBay or Amazon where parts of parts of Amazon all of you back where you have in the marketplace of product Marketplace use GMB a lot of payment systems like PayPal use tpv gross merchandising value total payment volume they have chosen to use this term for the gross figure of GTV and at first I thought it was going to be groceries to do but it's gross transaction value I thought for sure it was like grocery, I was trying to decode it without looking it up and I was like that can't be grocery because then I don't know what a TV is doing there and you know so then their revenue is a derivative of that meaning of some percentage then of that big number Falls to them as Revenue after they pay the grocer The Shopper and then instacart the business has the leftovers and which ends up, we'll go through the unique and I'll mix it ends up being being pretty small because the grocery business does not have huge merchants. Jason: [28:26] Yeah so kind of looking at those business fundamentals that you know in 2022 they sold 28.8, billion dollars worth of stuff which for them generated 2.5 billion dollars in revenue and they were profitable on that Revenue they they net 428. Million dollars which like back in the a couple years ago when there were more IPOs happening there were there were IPOs in the space they were happening with companies that still weren't profitable so so that was interesting that they they were meaningfully profitable and then the, you know you're super interested in what the growth trajectory is and. [29:13] 20:19 was a very small year so going from 2019 to 2020 you know and then the pandemic app in the middle 2020 and urban was ordering groceries from, from instacart so the growth in 2020 was astronomical like 300% or something like that. But then the growth in 2021 over 2020 was 24%. On revenue and the growth in 2022 over 2021 was 39% in Revenue so. The revenue growth is Meaningful and accelerating. Which would be exciting they were not profitable in 2020 or 2021 so 2022 is the First full year that they were profitable. The GTD is a little different though they had significant growth three hundred percent in 2020 20 percent in 20 21 and 16 percent in 2022 so, well they have a track record of growth it's the top on GTV growth is decelerating. And then of course we're halfway through 2023 so they have to disclose. [30:23] How the well they've done in the first six months of this year and they compared to that to last year and the revenue and GTV are both essentially flat in the first six months of this year. Versus last year so I don't know you'll have to tell me but I look at that and you go man there's some robust stuff here there's a great growth story. I should have mentioned that that's on an annual basis on a quarterly basis they have five consecutive quarters of profitability which also seems. Impressive him pretty favorable but it's probably a slight worry that the. A lot of that growth seems like it's it's leveling off in 2023 I don't know if. That the most recent performance gets gets over weighted or underweighted and sort of evaluating the the prospects for the company. Scot: [31:19] Yeah the buyers will you know what every everyone has a different way they value things and they they're going to build their own models and the company will give them some guidance that's some of the stuff we did it we're not going to go over and but you have to be careful because you don't want to make forward-looking statements so this is this weird dance you do of you. You try to get people excited by not saying anything about the future which is which is a little tricky so you know what I imagine instacart s' just reading the tea leaves again they talked a lot about how they don't really do much sales and marketing which I kind of read to say, look we really hunkered down on our unique economic sand we've got it dialed in right now and spoiler will get to adds a lot of a lot of that has come from this ad piece. And I think now. [32:07] Because investor and I was the bullish scenario is you know they're going to raise at least 400 million they'll probably raise a lot of money from this they could start doing some advertising and you pick up some new customers that again I'm going to kind of hope they look at the cohorts those cohorts look like with what this in the here and they have at least the same unique anomic so if not better and I'm going to look at this growth accelerating wow what Wall Street loves their favorite favorite favorite kind of the top quadrant is accelerating Revenue growth an accelerating profitability and you know I could see a scenario the light has to go their way but I could see a scenario where that works here you know if they could if they could start spending some really careful sales and marketing dollars building the brand where they've been kind of under the radar for the most part and then. That works those cohorts stick and then they can work on the economics because that's gonna bring more advertisers per order because the more average more orders and more. GTV is going to bring more cpgs in that want to advertise against that then you could argue accelerating Revenue growth accelerating profitable unit economics. So I think that's the bull case the bear case is they've hit saturation they've got all the stores. 4% is anemic and nowhere to go but down. So that's the end of it is it is going to be interesting to see there's a little bit of A Tale of Two Cities in those possible outcomes. Jason: [33:36] Yeah what else jumped out at you in the management discussion. Scot: [33:43] They made a big point of talking about they have 7.7 million monthly active users which is a good number but they point out that in the u.s. there's 330 million consumers or I guess population so they use that and this is kind of one of those hints I was talking about the basically said hey we're. We've done good to get here but these are like the early adopters we still have a long way to go there's a lot of people you know I don't think they'll get all of them and I'll talk about that in a second but there's a lot more people that you should be using our service that aren't is so they kind of paint that 7.7 million and say that's teeny tiny compared to where we should be. And then you know the other thing they talked about that I thought was interesting I wanted to get your opinion on is they talk about, per user per month they get three hundred and Seventeen dollars and I was wondering I know you probably know this off the top of your head. What is if you look at the average US consumer and you probably look at the. Population of the convenience store that's like a kind of probably like that 100K and up household you know what is their monthly and is this like half of it a quarter what is your spidey sense tells you on that. Jason: [35:00] Yeah so real rough numbers the average American family and you know people shop for groceries in households versus people so it's almost better to talk in household so there's like 131 million households in the US and sin they've got. Seven million of them as customers the average household shops for groceries 1.6 times a week and they spend a hundred dollars per visit so you kind of you know rough that up and you get. Get what is that I'll have the intern do in turn do the math one point six times. 100 times, 4.5 is 720 total grocery spin which I don't have the census numbers in front of me but but that passes the smell test that so. Households are spending six seven hundred bucks a month and instacart saying that they're getting less than half of that. Scot: [36:12] Yeah and I saw some people speculate on this that, what their inferring is Davin they have an average order of 110 so this is like 2.6 instacart some month instacart orders per user per month that's another kind of interesting metric and then people are speculating in the saying the pattern is probably people are doing a big shop once a month and they're kind of going and getting you know, a lot of like maybe canned goods and things like that and then they supplement it with two or three instacart has to bring maybe a refresh of the the replenishable is like the cheese the milk the veggies and the fruits kind of thing. Again this is everyone just kind of like taking data and kind of going out for data point so the cone of uncertainty is pretty big out there but it kind of passed my sniff test that's how we've used it before, at our house with exception of wizard a lot at work to fill our snack area at work and we're probably like we're probably like top one quartile of this whole thing that's the number of snacks we get from Instagram. There's a deep does that that analysis of the one big shop yourself and then supplement does that. Jason: [37:26] No exact yeah I mean I think the Grocer's talk and I hesitate to bring this up because I don't think I remember I'll for off the top my head but there's like four typical types of shopping missions right so there is that like Pantry stocking shop there's like a weekly shop there's a. Occasion Bay shop where your your it's date night or it's Christmas or whatever and you make a special shop and then there's those, top off shops and I think it's generally agreed like there's not a big cohort of consumers that have just said I'm never using a grocery store again then I'm exclusive we gonna, I have all of my my calories show up at my doorstep so digital grocery ends up being one of the tools in the family's tool kit for, procuring their their calories and so it makes. Total sense that they would have a share that one of the ways they could grow is to increase that share presumably by. Being the best choice for more of those different kinds of missions. Scot: [38:34] Yeah and then the md&a they talk a lot about how they have these new offerings where you can get a weekly Monday thing and they're definitely poking around at this experimenting on how to grow the sand again they're kind of signaling we think we've got some room to go on this we can get that. [38:51] Bridge order up and we can get the ma use way up the second thing I noticed was you know they use this they use this phrase, several times you can tell it's kind of like must be tied to company values and they talk about we believe people want selection quality value and convenience if that sounds familiar to you the this is infamously brought up in the Amazon Jeff Bezos first shareholder letter in 1997 where he talks about the mark you know what Amazon believes and they believe that a multi-decade trend is people will not get tired of selection quality value and when value he uses kind of free shipping like versus product value is pretty specific on it and then convenience and then what got me thinking about this is. [39:38] Value inconvenience her you know they're often in conflict and this is the whole point of we've had, Casey on the show from the Lloyd there bifurcation kind of model which shows this was this I think a lot about this because this is the whole one of the whole reasons I started spiffy and we decided early on if we're going to be convenient we can't be the cheapest and I don't think people look at instacart as the cheapest you know whenever we use it it's kind of like, holy cow this is this is a pretty expensive treat in you know I really kind of need to be able to justify this to myself that I can't just pop over the grocery store and do this myself it needs to be yeah some some reason I'm going to miss a kid event or something that I'm getting a really good bang for the buck here so I thought that was interesting that at some point I wonder do they value part kind of struggle with you know how. Jason: [40:31] I think they have to have a. A more liberal definition of value because I think you're exactly right right and obviously you know value means different things to different people like they disclosed later in the S1 that they not surprisingly that they skew disproportionately to households that make over 100,000 a year compared to a traditional retail and particularly a traditional grocer like give I've no idea what it looked like when they actually did it but when Kroger went public or certainly when Walmart went public they would have talked about the top of their tree that we think the consumer really values price and and Walmart probably said price not value and you know they built a business around very aggressively maintaining those low prices because they thought that was the beginning of their flywheel and and you know Amazon talked about value but they when they said value a lot of what they meant was and we're going to you know have the very competitive or the lowest price on a lot of these goods and, the the business model of instacart makes it unlikely that that can be their positioning so they have to kind of, find a a valid but alternative definition of value to hang their hat on. Scot: [41:50] Yeah and I thought was interesting they put convenience a lot you know last you may say oh you're reading too much into it but you know I've been in rooms you spend so much time on every word there's a purpose to this order of selection quality value and convenience and and they mentioned this exact phrase like several times so this is a this seems to be an yeah a pretty important phrase in their their world to I just thought that was I want to get your take on you know at some point they may cross this road where they have to pick a lane and it'll be if it ain't going to be the value late you know I don't see a path there but you know maybe they think they can and you know they also talked about selling to the grocer some software so maybe that's kind of like how they're squeaking that in I don't know. Jason: [42:36] Yeah yeah and there's I think we'll talk about this and in our final conclusion but the there's multiple ways you could see this going over time and depending on which path it took like value could mean something different. So what will come back to that. I heard you like dissected all of the the disclose data and put together unit economic model for for instacart. Scot: [43:07] Yeah so it starts at the top so the GTV per order so every order that comes in they get the GTV as $110 and then there here's how they slice the onion so the biggest chunk goes to the grocer for the groceries and they get 83 percent which is $91 so right off the top we're left with $19 but now the grocer they have to go make all their money so instacart is that's what you would basically get I think if you and I went to the grocery store you know maybe they're getting a little bit of a discount but they're they're taking that $91 and they're adding $19 on top of it and this is all X tip there's a there's there is a delivery fee and what not so then the Shopper gets 8.2% or nine dollars in order and that's in that delivery fee and then they get the tips. Jason: [43:58] Clarification on shopper because like in most contact Shopper would mean the consumer that's buying the goods The Shopper in this case is is a instacart gig worker that goes to the store and gets Aggregates the order for the customer. Scot: [44:14] Exactly the gig worker is the Shopper so they get nine dollars and they get 100% of the tip so whenever you you know whenever you what what they don't say some of these gay places in this bothers me because we fell out on this they say the gig worker gets 100% but then they take a transaction fee of 3%, now I can't find they say 100% I can't see any little asterisks that says there's going to skim 3% or something so. [44:44] So to the hopefully they're being super up front and they the gig worker does get 100% of the tips but the tips aren't in the economic the kind of sit over on the side to go to kind of bypass instacart all together and they go straight to the shopper. Who also gets nine dollars from instacart so if you gave a 20 dollar tip the the Shoppers going to get 20 plus 9 or 22, then at this point we are finally at instacart Revenue which is ten dollars and that's into pieces seven dollars is the transaction revenue and three is ads. So almost half their margin you know so 30% I guess yeah. I say half because the line is going so fast it will become half probably by 2024 you know half the. Profit the margin the revenue that they get and probably disproportionate part of margin is from the ad piece which we're going to talk about in detail so that is. That's pretty important to this whole enchilada and until they figure that out this didn't really work I do. [45:48] So they get so 110 dollar order $91 goes the grocer that leaves us with 19 Shopper gets nine we're left with 10 7 of that, is the transaction Revenue three is ADS then their costs come out they have three dollars of cost per order. And this is this is things like you know their entire some allocation of all their website hosting the engineering team developed the app. I don't know if they would put sales and marketing in there and they weren't very specific about what they do and don't put in cogs so that was a question mark. And they're left with seven dollars of gross profit for that order. My bet is marketing is not in there and they kind of take that up later but again the didn't really. Disclose that I saw what all was and not in Cox so basically that 110 boils down to seven dollars a profit from them and if we looked at it you know. I bet that three of that seven is basically from the ads and you know because there's almost no cost to serve an ad and so so I thought that was pretty interesting that like you know around half of the Prophet basically is from the ad system. Jason: [47:00] Yeah I think I think it's for sure interesting and like you know two possibilities there there there, average value of an order is 110 bucks traditional brick-and-mortar grocer is a hundred bucks and so one question like did instacart wasn't totally clear I mean they tried to take credit for having a higher order value but it wasn't clear like do we think. There's something unique about our experience that causes people to spend more or. Is our service just more expensive and so therefore you know if I got the same 60 items from from Walmart it would cost me $100 but if I got it from instacart Cassandra and ten dollars. But if it's the latter and I'm sure the real answer somewhere in between but but if it's the latter then you go you know all of the, The Profit that instacart is potentially taking is kind of from the. The convenient spread where they're you know getting consumers to pay more for the extra convenience of this grocery delivery. Scot: [48:08] So that was the unique nanak's what did you discover from the cohorts. Jason: [48:12] Yeah well I think we both we both noticed that they had a pretty detailed cohort analysis in the s-1 and by cohort analysis what we mean is they. They break down all the revenue they get from every. Group of customers on the first year they acquire those customers and then they track the spending for that group of customers in each, subsequent year and so you have a cohort that you acquired in 2017 you have a cohort you acquired in 2018, so on and so forth through this 20:22 cohort and there's. Other dimensions you could do Court analysis on but this this tenure cohort is most common and loyal listeners of the show will know we've certainly talked about it before no most notably with a guest Professor Dan McCarthy. From Emory University who spends a lot of time. [49:13] Talking about and thinking about cohort analysis so I my first thought when I saw this cohort analysis is I'll bet you Dan McCarthy's really happy right now and is probably. Deep deep into these numbers and he has a phrase that he calls a super annuities which is for the circumstances. The older cohorts get more valuable over time and keep contributing more Revenue to your business which is, you know that if you think about it that's that's the ideal state right you want those kind of six-year-old cohorts to be. [49:51] Growing and be your most valuable and if they're you know significantly tailing off over time then like you know you start to question the core value proposition of the business like maybe customers get fatigued with your business or decide it's not a good value in the long run or something else so um the the big takeaway for me of the cohort analysis is the cohorts grow over time the if you look at like the year one value of this cohort it averages $226 and then it goes up 33 percent in year two to three hundred dollars and then up 16%, to 350 dollars in year three and then another up another 16% to 4:00 in your for and then up 10% $445 in year 5 and up another 8% to 480 dollars in year 6 and so like fundamentally. That is a very good picture of. The value of the cohorts and I'm certain why they chose to include the cohort analysis in there as one because I don't believe there's any. Any filing requirement to do that and certainly lots of companies don't include any cohort cohort analysis but then my kind of secondary take is. [51:12] You know not every year is the same and so some of those cohorts like started before Cove it and then they're their behavior, was slightly impacted by their maturity but also impacted by covet and some of these cohorts started after Cove ID and so one of the things you would look for in that cohort analysis is did these guys just get a big spike from Cova da, when people are afraid to go to grocery stores and you know has that worn off right and that's kind of a comment common narrative out there like I argue. [51:45] It's mostly misunderstood when people give that narrative about digital but it's. It's even more likely that is misunderstood if you have that narrative and grocery because grocery appears like on the surface to be the one category where hey we're at three percent e-commerce penetration before covet and now we're 12% e-commerce penetration and so this, these cohort analysis if if there was a spike that dip back down you would expect to see some of the later cohorts underperforming versus the the precoded cohorts and we don't see that right that like all the cohorts grow and they grow over time the rate of growth slows down over time which is like I think pretty pretty typical and not surprising um so all that was super favorable the one thing and one will have to have Dan on the show but the one thing that I think wasn't in here that you'd really want to understand how valuable the customer bases and and again guys like Dan kind of pioneered this idea of how you value a company based on their customer base. [52:53] And kind of set the price based on on this type of data but I think they would also want to see some churn data and understand. How many people are each in each of these cohorts and whether there's the same people or lots of defectors and new people coming and all those sorts of things and none of that was was disclosed and assess. Scot: [53:22] Yeah you're right the I think they're making the argument that the swamps turn but because they don't disclose it you kind of. You have to trust him and he would he would want that data because you know the whole Begin Again the the bull case here is all right if you got super annuities than spending ad dollars to bring super annuities in this smart right because everyone you bring in the door is going to follow this cohort and start of it you know you and I looking at a table that the says you're one they start at 2:26 and then by year 60 at 500 bucks so they they double over their life cycle in their GTV so over six years so if you know if you can go buy them for a hundred bucks a pop then you would just go and, and spend all that money in it should be we have a super annuity on one side you can spend a lot of money acquiring customers on the other. Jason: [54:15] For sure true what. Scot: [54:17] You turn there's something that they could hide in there. Jason: [54:19] Yeah so you have to worry about that you also side note like a thing that drives CFOs crazy about marketers is you also have to have this argument about correlation and causation right that like if I went out and bought a bunch of customers would they maintain this the same level of performance or with those those. Purchase customers through higher advertising and through greater sales and marketing a activities be less oil less valuable customers by. The answer varies depending on the business. Scot: [54:53] Yeah that's where I this kind of come back to that bifurcation thinks I think would you say 120 million households. Jason: [54:59] Yeah 131. Scot: [55:00] Yeah so there's probably I think it's probably a pretty evenly split between convenience and value so call it 60 and they've got 7.7 so there's actually good I think they've got a 10% share of, what does the actual dress for Market because I don't think they're going to get any of the value or in a consumers because yeah the valuing consumer does not pay for convenience they'll just go to grocery store. Jason: [55:23] Yeah and again in the bottom quartile a lot of people are shopping for for groceries with government assistance and I don't actually think instacart should double-check this but I don't believe instacart has a way to accept Snap payments. Scot: [55:36] Yeah I don't think the government is going to subsidize the food delivered. Jason: [55:39] Well they just you know they do in other great white white guy like you can order groceries online from Walmart and pay with SNAP but I don't think you can with instacart. Scot: [55:49] Yes that's another factor and then at some point yeah I'm sure you'll bring this up but the. The if you're if you're a grocer you know a lot of ours opt out of the sand to themselves and they like we have a Harris Teeter that they don't accept instacart yeah they're not on there and they want to do their own they want to own the customer themselves. Jason: [56:12] Yeah I save that discussion for other but I think that's a super important one. Scot: [56:16] Forget I said that that's a teaser that's it's a teaser was what we call a tease. Jason: [56:19] Excellent teaser yeah because I feel like we've gone to the add segment of the breakdown of is there anything else you wanted to cover before that Scott. Scot: [56:28] No I'm on the edge of my seat to hear what you thought about that specific. Jason: [56:31] Yeah so it turns out instacart sanad Essence and probably shouldn't surprise anyone you know Scott you alluded to the change in CEO the the current CEO for this IPO is fidge Asuma Seema who formerly was VP of advertising at Facebook so they brought in a Facebook. Exact to run this business and shoot I should have looked up what episode he was on but Seth Dallaire was a past guest on this show when he was the chief Revenue officer. For instacart which was right around the time that that fidget joined. [57:19] Instacart so we actually had a discussion about their aspirations to become an advertising business and spoiler alert, it worked at instacart which we're going to break into and that guess set the layer subsequently was hired as the chief Revenue officer at Walmart where he's. Building Walmart connect which is also working so turns out ads are becoming an increasingly important part of the ecosystem for retailers but the basic ad math at instacart is that in 2022 the last full year of data instacart generated 470 million dollars in ads so 470 million on 28 billion in GTV, means that that's about 2.6 percent of the spin. That went to ads it's thirty percent of their revenue today and. [58:20] It's growing at 29 percent so it went up 29% from 2022 to from 21 to 20 22. Um it's grown another twenty four percent in the first months of six months of 2023 so, a lot of the unit economics of their transactions have kind of stabilized and are flat the one thing that's still growing at a very fast double-digit pace, is the ad business and at seven and twenty million dollars it's already reasonably robust and they don't. Ads are not a line item on the income statement that they included like you know and presumably like it's not. You could argue it's not Material against the three billion in in Revenue. But the so we don't we don't really know exactly how profitable, Those ads are but in general we would call these ads or retail media Network and the you know people argue about how profitable these retail media networks are people particularly argue about Amazon's but kind of the middle of the range when people estimate how what how profitable these things are is that they're about 75 percent gross right so in theory they should be near 99% gross margin because like you don't have to make anything to sell an ad. [59:46] You know you do need some technology you need an ad server you need Administration and salespeople you need brand safety people you know there is. Some infrastructure some of which has to scale with the ad business and so the the kind of. Most common estimate that that I see out there is like 75% of that revenue from ad business is profit. So that implies that the ad business contributed seven 555 million to the. To the income statement for 2022. Um and they were only profitable 428 million in 2022 so that the ad business contribute like by that sort of slice the ad business contributed. [1:00:33] You know covered all of their losses and and was essentially all of their their profit. In in 2022 and it's growing faster than anything else so it's very clear that the ad business is a key. Tenant of this instacart model and they in the management can section they it was kind of funny working for a big, advertising agency because they had to spend a fair amount of time like justifying that ads are valuable good thing and that people are spending money on ads so they kind of you know paint paint this picture that consumer packaged Goods companies which are you know most of the goods that instacart cells that. [1:01:20] Cpgs in the u.s. spend about 200 billion dollars a year on advertising and currently about a quarter of that is digital. And so the. The you know a typical cpg spends like about thirty percent of their gross sales on advertising and you know at the moment instacart is collecting about less than three percent of its sales in advertising so I think they're saying like hey. Advertising is super effective it's an important part of our economic model and there's a ton of. Of potential growth for us in this market and that cpgs need us and they amongst their claims about the size of their business, there are 50 500 brands that are advertising on instacart today and those are. At the moment all brands that sell. [1:02:18] Whose Goods get sold on instacart so we call that endemic advertisers right so it's it's Mondelez selling cookies and folks like that a lot of advertising companies. Sell ads to people that aren't necessarily selling through the. The the platform we call those non-endemic advertisers and we I don't think there are any non-endemic advertisers on instacart as of yet. But so at the Top Line like these are these are solid fundamentals for an ad business you like. [1:02:54] From my perspective retail media networks are super important evolution in the space they are very important I actually think for a lot of smaller retailers they get overhyped and that there's a problem with scale with a lot of these but instacart appears to be one of the companies. That has enough scale to build a real. A real business around this there is a unique problem that instacart has with ads that you know I think they've only been partially able to remediate so far who's paying for the ads. [1:03:25] Right so they talked about the brands paying for the ad right it's Procter & Gamble about the ad but there's a lot of stakeholders with budgets at Procter & Gamble, there's Mark Pritchard that buys Super Bowl ads and tries to build the brand and make people love tied but there are also account teams, that are trying to Goose the sales at their account so there's a Walmart account team and a Kroger account team and an Albertsons account team and all of those guys have an ad budget, that they want to use to sell more stuff at Walmart Kroger and Albertsons respectively. And so the big problem you have with instacart is you spend that ad dollar with instacart and you don't actually know. Which retailer it's going to impact. Right and so it's kind of like it has to come out of the top of funnel ad budget but it's bottom of the funnel Performance Marketing, type ads mostly search ads and so not saying that model can't work but it's. [1:04:33] The the guys with budgets that are used to buying ads are used to a slightly different structure so I will say that at the moment instacart causes a lot of consternation because it's a it's an unusual Beast that people don't exactly know how to budget for or how to spend their money on and you know I would assume if instacart wants to grow a lot they have to make that, easier for for the brands to do. Scot: [1:05:00] Yeah so what do you think. They're so this is a relatively good chunk of Revenue where do you think they're getting it from is it online going offline I mean offline going online are they taking it from Google are they taking it from couponing or. Two Brands even do like newspaper inserts are still a thing like I know that back in the day. Jason: [1:05:22] So I know I yeah I think. Brands are pretty pretty rapidly shifting their their dollars to digital vehicles and so two things like there's you know traditional kind of, newspaper magazine advertising that's atrophying and and the brands are replacing that with digital there's a slight misnomer the whole privacy thing and Facebook is a real thing but you know who wasn't buying a huge amounts of Facebook ads are like National cpgs with huge brand recall so so you know those tended to be smaller Brands and longer tail things so it's less like oh. [1:06:05] The these guys are shifting from Facebook it's more they're shifting from old-school marketing and over are television to to these digital vehicles but a big chunk of it is still coming out of these trade budgets right and so there may have been a pool of money that was allocated to spend at Kroger and it used to get spend on newspaper circulars that were like Kroger ads that fell out of the newspaper and that's an increasingly ineffective vehicle or maybe they even got spent on floor decals in the aisle at Kroger right you know like Shopper marketing tactics or trade tactics and so increasingly the retail media networks are getting a chunk of those trade dollars and I do think instacart is getting some of those even though it's trickier to do because you know it's not allocated exactly 21 specific retailer at the moment. Scot: [1:07:07] Yeah the so what did the ad formats I've seen is I always get this one that's like you through some Quaker Oats granola bars in there if you add these six things will give you a five bucks or something I've seen a coupon and I've seen a you know an upsell hey you've previously bought this or you may like this are there those are the three main add units or am I missing something. Jason: [1:07:33] Yeah so I am not going to speak specifically about the variation in ad units but as a general rule like probably I'm assuming the most predominant ads on the platform are search ads right so people search for products like always and you know above all the organic results are a bunch of sponsored ads right and so off very often those don't have a special offer in them they're just premium. [1:08:00] And so a big chunk is probably those those search ads you know then they're there are like Banner type ads that that land either on like the homepage of a particular retailer or on a category page or subcategory page and more often those are likely to have some call-to-action offer in them so they might have a promotion or a discount of some kind and then in the digital space um there's a lot of what we call like top off and impulse ads which are what you were just talking about right and you know one of the big problems we have with digital grocery is when you go shopping at the grocery store your wife sends you to the store with a list of 10 items and you buy all those 10 items but then you walk by the ice cream aisle on your way to the cash wrap and you add ice cream even though you didn't plan to buy ice cream and then when you're standing in the cash wrap, you're sneering at that Snickers bar or that Wrigley gum and you add that to the car and maybe a cold Coke to drink on the way home from the grocery store so a big chunk of a traditional grocer sales are all these unplanned impulse purchases and that. [1:09:16] By default happens a lot less in digital Grocery and so a lot of these ad formats are kind of are, our Industries early efforts to try to reinvent digital impulse and I would I would call it pretty imperfect at the moment. Scot: [1:09:35] Don't you get a nursing inside about gum or something like because self-checkout smelled the gum that serendipity. Jason: [1:09:42] Yeah the the that that cash wrap used to be the most valuable real estate in a grocery store like the most Revenue per square foot was that what we call the cash wrap which is the. The conveyor belt that you stand in line and actually the first thing that killed the cash wrap was not any of this digital shopping or any of these things it was. Facebook and the mobile phone and simply because you now had something else to do when you are standing

If you want your business to be successful and sustainable (and let's face it—we all do), you need a strong sales process. But how do you gauge how efficient your sales process actually is? For starters, you can conduct a CAC cohort analysis. This method of analyzing data can provide valuable insights that you can apply to your efforts moving forward.  Let's dive in… Read this blog: https://viralsolutions.net/cac-cohort-analysis/

Dr. Michael Lanspa chats with Dr. Yahya Shehabi about his article, "Dexmedetomidine and Propofol Sedation in Critically Ill Patients and Dose Associated 90-day Mortality: A Secondary Cohort Analysis of a Randomized Controlled Trial (SPICE-III)."

If you find yourself asking questions like: Are our marketing campaigns getting better? Are we acquiring the right customers? Which products bring in the best customers? Then meet your new best friend, cohort analysis, the secret to understanding which marketing activities are winners and losers, which products to promote, and which customers are your most valuable. Here's what we'll be covering: 1. What is cohort analysis? 2. Why is cohort analysis so important? 3. How to perform cohort analysis 4. How to use cohort analysis What is cohort analysis? A ‘cohort' is a way of grouping users by their behavior and common characteristics. Cohort analysis is a method of analyzing groups of users over time to find out which subsets are the most valuable and why. A customer cohort analysis is presented as a visualization of a data set, which uses different colors and metrics to show the breakdown of each cohort by the metrics in question. ‍We can put that into practice and say at college, each new class can be thought of as a cohort. The class of 2021 has many differences from the class of 2022 – start and finish dates, the economies they graduate into, the jobs they're offered and the income they earn over their careers. A cohort analysis report can be used to identify how students in 2021 differ from those in 2022 over a specific time period, and what the difference in outcomes is as a result. Although cohort analysis is well-known in the SaaS industry. It's fast becoming an important metric for ecommerce businesses too. An online store could create the following cohorts: All customers who bought a particular product All customers from a specific country All customers who were acquired through a specific marketing channel It's important to note that customers can be part of several cohorts at the same time – a Canadian customer who buys a sweater in January is part of a country cohort, product cohort, and date cohort. The two types of cohorts There are two types of customer cohorts: behavioral and acquisition. Behavioral cohorts can be grouped together by the specific actions of users over a defined time-span. An example would be a cohort who subscribed to an email newsletter or followed an account on social media. Behavioral analytics help you to understand how users engage with your business, which campaigns create your best customers, how to increase your customer retention rate, and reduce churn rate. Acquisition cohorts are focused on when and how a visitor first became a customer. This cohort type creates a specific group of users from factors like: Acquisition date Campaign type Discounts used Marketing channel Products purchased Acquisition cohorts are useful for establishing at which part of the customer lifecycle your users drop off. Why is cohort analysis so important? Cohort analysis reports are one of the most useful, but under-used business analytics methods in the ecommerce world. They help you understand how changes to your marketing campaigns impact your KPIs. Ecommerce brands that don't use measurement techniques like cohort analysis tend to judge their marketing campaigns using short-term metrics. For example, campaigns that don't hit their Return On Ad Spend (ROAS) goals are considered failures and turned off. However, this approach fails to account for the Customer Lifetime Value (CLV) of each customer acquired. On the surface, spending $50 to acquire a customer who makes a purchase of $25 looks unprofitable. But if that customer has a CLV of $200 because of future purchases, that's a profitable Customer Acquisition Cost (CAC.) Cohort analysis is so valuable because it helps us to understand the impact of marketing campaigns after the first purchase. Using the example above, the same marketer could take two completely opposite actions: Based on ROAS, they pause the campaign, Based on what cohort analysis tells them about CLV, they increase their media spend. Cohort analysis allows ecommerce brands to move from...

The contemporary business world depends on in-depth and high-quality data analysis. But it seems like many departments don't have adequate time or tools to focus on data.In a study conducted by Mosaic, only 14% of surveyed finance leaders said they used cohort analysis. Therefore, it is critical to determine the reasons behind this small percentage and offer solutions.In this episode of The Role Forward, host Joe Michalowski welcomes Steve Groccia, the Head of Customer Operation at Mosaic. Steve and Joe discuss the reasons finance leaders don't use cohort analysis. Steve also explains the difference between segment-based and time-based cohort analysis and the steps in the process. Guest-at-a-Glance

After achieving product-market fit and starting to gain users, how do startups then avoid the "leaky bucket" problem of losing users as quickly as they gained them? By focusing on user engagement and retention, startups can not only keep their hard-won customers but also ensure that each new cohort of users gets more and more value out of their product.This episode is part two in a two-part series on the basics of growth. Featuring a16z general partners Andrew Chen (formerly of Uber and author of the book, The Cold Start Problem) and Jeff Jordan (formerly of OpenTable, eBay, Disney, and more), in conversation with Sonal Chokshi, the conversation goes deep on many aspects and nuances of engaging and retaining users: from how network effects come into play and if there is really a magic number or "aha" moment for a product to who are the power users and the power user curve for measuring, finding, and retaining those users.For a deeper discussion on user acquisition, check out last week's episode, the first part of this series. 

Drs. Ken Noonan of U. Wisconsin and Aristides "JR" Cruz of Brown join the podcast for a special JPOSNA episode. They serve as Editor-in-chief and Deputy Editor of the journal, respectively, and they have exciting news to share about JPOSNA. We also discuss some of our favorite JPOSNA content from 2021. Your hosts are Carter Clement from Children's Hospital of New Orleans and Josh Holt from University of Iowa. Music by A. A. Alto.   JPOSNA Publications Discussed:   "Effectiveness of Various Cast Covers in the Pediatric Population." https://www.jposna.org/ojs/index.php/jposna/article/view/302   "Operative Versus Nonoperative Treatment of Z-Type Comminuted Clavicle Fractures in Adolescents: A Sub-stratified Cohort Analysis." https://www.jposna.org/ojs/index.php/jposna/article/view/301   "What are the Causes and Consequences of Delayed Surgery for Pediatric Tibial Spine Fractures?" https://www.jposna.org/ojs/index.php/jposna/article/view/297   Video: "Tibial Spine/Eminence Fracture – Suture Fixation." https://www.jposna.org/ojs/index.php/jposna/article/view/298   "Nonoperative Management of Femoroacetabular Impingement: Clinical Outcomes at 5-years – A Prospective Study." https://www.jposna.org/ojs/index.php/jposna/article/view/299   "Activation of a Central Immunosuppressive Cascade Prevents Ischemia Reperfusion Injury After Acute Compartment Syndrome in a Murine Model." https://www.jposna.org/ojs/index.php/jposna/article/view/300    

On today's episode, Kunle is joined by Eden Amirav, Founder & CEO of BeProfit, a Profit Optimization and Analytics platform helping eCommerce businesses grow by leveraging the power of their own data. BeProfit is top-rated on Shopify app store and is also available on Wix stores.We often hear merchants complain of rising costs and reducing margins. But most of those aren't able to really quantify their claims about costs, margin and profits. The eCommerce landscape is soo dynamic that keeping tabs of costs and margins has become a real challenge. Making key buying and selling decisions without truly knowing your numbers can backfire in a hurry! On the other hand, knowing your numbers well not only helps you make sound decisions, but also helps you uncover opportunities you may not have known about.In this episode, Kunle and Eden talk about profit calculation for fast growing eCommerce merchants. You will get to hear about why many businesses struggle to calculate their true profit, what is Cohort Analysis and what is the ideal look back window.  This is a great episode for business owners and operators.-----------SPONSORS:This episode is brought to you by:Klaviyo This episode is brought to you by Klaviyo – a growth marketing platform that powers over 25,000 online businesses. Direct-to-Consumer brands like ColourPop, Huckberry, and Custom Ink rely on Klaviyo.Klaviyo helps you own customer experience and grow high-value customer relationships right from a shopper's first impression through to each subsequent purchase, Klaviyo understands every single customer interaction and empowers brands to create more personalized marketing moments.Find out more on klaviyo.com/2x.  RewindThis episode is brought to you by Rewind - the #1 Backup and Recovery App for Shopify and BigCommerce stores that powers over 80,000 online businesses.Direct-to-Consumer brands like Gymshark and MVMT Watches rely on Rewind.Cloud based ecommerce platforms like Shopify and BigCommerce do not have automatic backup features. Rewind protects your store against human error, misbehaving apps, or collaborators gone bad with Automatic backups!For a free 30-day trial, Go to Rewind Backups, reach out to the Rewind team via chat or email and mention '2x ecommerce'GorgiasThis episode is brought to you by Gorgias, the leading helpdesk for Shopify, Magento and BigCommerce merchants. Gorgias combines all your communication channels including email, SMS, social media, livechat, and phone, into one platform.This saves your team hours per day & makes managing customer orders a breeze. It also integrates seamlessly with your existing tech stack, so you can access customer information and even edit, return, refund or create an order, right from your helpdesk.Go to Gorgias.com and mention 2x ecommerce podcast for two months free.CloudwaysCloudways is the hosting platform of choice for thousands of ecommerce merchants, SMBs, and agencies all around the globe. They offer a high-performing custom stack, top-notch security, the choice between 5 cloud solution providers, ease of scalability, affordable pricing plans, and so much more.Cloudways also offers support for all PHP-based applications like Magento, WooCommerce, WordPress, Laravel, and others.Experience an unbeatable managed cloud hosting experience with Cloudways today. For a $20 Free Hosting Credit use the Coupon code: **BOOSTMAG**

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing. Deal flow is the lifeblood of the startup investor. It's important to assess the deals in short order to prioritize follow-up. One way to help this process is to apply a rating to each deal. Here are some key factors and how to calculate them to use in your rating: Revenue run rate - take your current monthly revenue and multiply by 12 to annualize it. Gross Margin - take your Cost of Goods Sold, divide by the revenue, and subtract 1.  Burn Rate - monthly cash expenses minus monthly revenue. Cohort Analysis - take the number of users who join the program and track the outcome of each.  Cost of customer acquisition - monthly sales and marketing expenses divided by revenue from the customers signing up that month. Payback - number of months of recurring revenue to cover the cost of customer acquisition. Magic Number - revenue over two months multiplied by four and divided by sales and marketing costs over the same timeframe. Sales Cycle - average number of days from first contact to customer signing up. Lifetime Value - the total amount of revenue generated from a customer. Total Available Market - the total amount of money spent in a target market. Give each factor a score, say 1 to 10 with 10 being the best.   Add up the factors to give the deal a score on a scale of 1 to 100. Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.Let's go startup something today. ___________________________________ For more episodes from Investor Connect, please visit the site at:   Check out our other podcasts here:   For Investors check out:   For Startups check out:   For eGuides check out:   For upcoming Events, check out   For Feedback please contact info@tencapital.group   Music courtesy of

Diariamente descomplicando o tecniquês do mundo digital, em apenas 5 minutinhos, com conteúdos gravados por profissionais especializados em cada assunto.   Temporada 03 | Episódio: 16 João Carvalho CEO e Fundador da Hands e do Morse https://www.linkedin.com/in/joaotcarvalho/ -------------- *Gostou do Podcast?* Não deixe de assinar para receber diariamente os conteúdos na sua playlist. Deixe também sua classificação! Quanto mais estrelinhas, mais chances deste conteúdo encontrar novas pessoas. *Achou o aprendizado relevante?* Compartilhe com amigos ou grupos que você acredita estarem em busca do mesmo conhecimento. *Já é faixa preta no assunto?* Venha fazer parte do projeto. Seja um LearningCaster: https://bit.ly/LearningCasters

Diariamente descomplicando o tecniquês do mundo digital, em apenas 5 minutinhos, com conteúdos gravados por profissionais especializados em cada assunto. Temporada 03 | Episódio: 16 João Carvalho CEO e Fundador da Hands e do Morse https://www.linkedin.com/in/joaotcarvalho/ -------------- *Gostou do Podcast?* Não deixe de assinar para receber diariamente os conteúdos na sua playlist. Deixe também sua classificação! Quanto mais estrelinhas, mais chances deste conteúdo encontrar novas pessoas. *Achou o aprendizado relevante?* Compartilhe com amigos ou grupos que você acredita estarem em busca do mesmo conhecimento. *Já é faixa preta no assunto?* Venha fazer parte do projeto. Seja um LearningCaster: https://bit.ly/LearningCasters

Carl is a former Wall Street Quant turned data scientist who is leading the battle against churn, using data as his weapon. A data scientist, he uses a variety of tools and techniques to analyze data around online systems, and his expertise has led to the creation of the Subscription Economy Index. Currently, he's the Chief Data Scientist at Zuora - a comprehensive subscription management platform and newly public Silicon Valley “unicorn” with more than 1,000 customers worldwide. FIND CARL ONLINE Website: https://fightchurnwithdata.com/ LinkedIn: https://www.linkedin.com/in/carlgold/ Twitter: https://twitter.com/carl24k GitHub: https://github.com/carl24k WHAT YOU'LL LEARN [00:16:01] What is churn? [00:21:48] Metrics for understanding churn [00:24:01] Feature engineering for churn [00:27:22] Why ratio metrics are the best best in your battle against churn [00:33:09] Dealing with outliers [00:39:34] More feature engineering tips QUOTES [09:06] "When I started out, of course, people thought machine learning was trash...No one was that interested in machine learning back in the early 2000s. It wasn't until after Google essentially had showed how much they could do with machine learning in a production environment with big data." [12:22] "It should enable better decisions, too. Not just faster decisions by getting the right data to the right people and giving them the right tools. We really should see companies making more optimal decisions." [13:30] "There should be like a Hippocratic Oath for Data scientists, which means that goes beyond just you don't want to make mistakes. It means that you shouldn't be working on those, you know, on those dangerous applications. " [22:04] "the features that you choose in my mind are really the main part of solving any data science problem and not the algorithm. I show actually in my book that if you do a good job on your feature engineering, the algorithm that you choose is not that important for your accuracy. So feature engineering always has number one importance in Data science" SHOW NOTES [00:01:31] Introduction for our guest [00:02:54] Carl's path into data science [00:04:30] The fascination with churn [00:08:04] How much more hyped do you think the field has become since you first broke into it? [00:09:41] Where do you see the field headed in the next two to five years? [00:11:20] What do you think would be the biggest positive impact that Data science will have on society in the next two to five years? [00:12:36] What do you think would be the scariest application of machine learning and data science in the next two to five years? [00:13:17] As practitioners of machine learning, what do you think would be some of our biggest concerns when we're out there doing our work? [00:16:01] What is Churn? Is that what we do we make butter. [00:17:27] So why is churn so hard to fight? [00:21:48] The importance of metrics in our battle against churn [00:24:01] How do we go from raw event data to metrics? [00:24:45] How do cohorts help us analyze, predict, and understand churn? [00:27:22] What are ratio metrics and why are they so powerful? [00:33:09] Why are outliers so problematic to deal with? model and get information from them, but without them ruining your numbers. [00:34:57] What are some common mistakes that you've seen Data scientists make when it comes to dealing with outliers? [00:39:14] How to be more thoughtful when it comes to feature engineering? [00:42:31] Debunking the common misconception that the choice of algorithm is the most important thing that contributes to model performance. [00:43:56] Your features don't need to be the most creative [00:45:28] Your job isn't over once you deploy the model [00:49:05] What are some things that we need to monitor and track - the context of churn - to make sure that our model is doing what it should be, that is performing as we've designed it? [00:50:26] How COVID is messing up everyone's churn models [00:53:14] Is data science an art or science? [00:55:24] What are some soft skills that Data scientists are missing that are really going to help them take their careers to the next level? [00:56:51] How could a data scientist develop their business acumen and their product sense [00:57:44] What to do with these crazy job descriptions [00:59:27] What's the one thing you want people to learn from your story? [01:00:39] The lightning round Special Guest: Carl Gold, Phd.

Today, I explain cohort analysis and how this can be used for conversion metrics and tracking the customer journey. Additional materials: www.superdatascience.com/386

EP224 - Cohort Analysis and CLV with Daniel McCarthy  Daniel McCarthy (@d_mccar) is an Assistant Professor of Marketing at Emory University – Goizueta Business School, he’s one of the industries top thought leaders in the field of customer lifetime value (CLV). In this episode we discuss how CLV and customer cohort analysis can be be used operationally within e-commerce companies, as well as how customer data can be used to calculate a companies true enterprise value, customer-based corporate valuation (CBCV). Dan co-founded a predictive analytics company, Zodiac, which was later acquired by Nike. He’d made news several times by applying his CBCV to popular public companies using their public disclosures. Listen to this episode just to hear Scot say “Goizueta.” Dan’s personal website Theta Equity Partners – Dan’s current firm, focused on CBCV McCarthy, Daniel; Fader, Peter (2018). “Customer-Based Corporate Valuation for Publicly Traded Non-Contractual Firms”. Journal of Marketing Research, 55(5), 617-635. Link (download) McCarthy, Daniel; Fader, Peter; Hardie, Bruce (2017). “Valuing Subscription-Based Businesses Using Publicly Disclosed Customer Data”. Journal of Marketing, 81(1), 17-35. Link (download). McCarthy, Daniel; Fader, Peter (2020). “How to Value a Company by Analyzing Its Customers”. Harvard Business Review, 98 (1), 51-55. Link Don’t forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes. Episode 224 of the Jason & Scot show was recorded live on Thursday, June 25th, 2020. http://jasonandscot.com Join your hosts Jason "Retailgeek" Goldberg, Chief Commerce Strategy Officer at Publicis, and Scot Wingo, CEO of GetSpiffy and Co-Founder of ChannelAdvisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing. Transcript Jason: [0:24] Welcome to the Jason and Scott show this is episode 224 being recorded on Thursday June 25th 2020 I’m your host Jason retailgeek Goldberg and as usual I’m here with your co-host Scott Wingo. Scot: [0:39] Hey Jason and welcome back Jason Scott show listeners well folks we have a really awesome treat for you today it’s so good that I want you go ahead and pause the show here and leave us a five star review and then come back. All right welcome back, today on the show Jason I have to admit we are kind of fanboying here so we’re going to try not to giggle too much during this interview we are excited to welcome one of the brightest Minds not only in e-commerce and Retail marketing but just marketing overall so please welcome Us in bringing Daniel McCarthy to the Jason Scott show Dan is the assistant professor of marketing at Emery’s Gazeta business school Dan welcome to the show. Dan: [1:24] Thank you for having me Jason and Scott. Scot: [1:26] Did I say that right. Dan: [1:29] Pretty much. Scot: [1:30] Glue is that a little bit more of a quiz that kind of thing in there. Dan: [1:34] It’s like sweater but boy sweater. Scot: [1:37] We sweater okay I got it all right thank you. Jason: [1:40] That that is actually part of the screening process to get into the school there’s you have to be. Scot: [1:45] Yes this is why I’m not a professor of marketing at that school whose name I’m not great at pronouncing. Dan: [1:51] Let’s check number one for us. Jason: [1:55] I think in Dan’s case there might also be a math requirement that you may not like. Scot: [1:59] Yeah I saw you had some stats at his background there. Jason: [2:02] Exactly so Dan before we jump into what we do like to give the listeners a little taste of how you came to your your current professorship in your your case can you tell us a little bit about your background. Dan: [2:17] Yes I’d spent about 60 years working at a value-based hedge fund before coming back actually for a PhD in statistics at the Wharton School, and in the middle of the Ph.D program I made a pivot into marketing and so I actually I finish the PHD in statistics but half my committee when marketing people and half works this six feet below, and I ended up becoming an assistant professor of marketing at Emory University along the way I also was bitten by the entrepreneurial bug so in the, leave us in a third year of the PHD myself and my adviser had co-founded a company called zodiac which was a predictive analytic software as a service firm you basically, predictable customers we do and use that to help marketers it can acquisitions. [3:08] We grew that and then sold that in March of 2018 to Nike and then the following month we had also, co-founded a company called Theta Equity Partners which pretty much does nothing but what was the topic of my dissertation which we now in the early call customer base corporate valuation or CP CV for short so yes I kind of. Straddle Both Worlds and say 100%, you’re kind of a Quant marketing academic but definitely we appreciate. You know things that work in practice and and even participating in that myself. Jason: [3:50] Very cool and I did want to touch on a couple of things in your bio super quick hey I love the fact that PhD in statistics wasn’t challenging enough so you you pivoted to the the super complicated world of marketing. Dan: [4:04] Yeah it was a it was a tricky transition I would say on the plus side, you basically is doing the same predictive modeling that I was as of you know I’m just going to get a stat PhD and become a stack Professor sort of thing but now it’s just predicting what customers will do instead of predicting you know. Anything pretty much in stock prices or. Various things about sports teams or whatever else it was that we were doing pre-marketing pivot. Jason: [4:38] And I for sure want to compliment you I feel like you’re in the small percentage of people that did a dissertation on something that you could totally commercialize so I think that’s super smart and savvy. Dan: [4:50] Yeah it was weird how it kind of ended up that way but I really think it was yeah I kind of view customer base corporate valuation is really being at the intersection of, marketing finance and statistics like you really can’t crack that topic without going pretty deep into all three I think, and I think one of the things that Drew me to it was the fact that it allowed me to kind of do everything that, I just find it be fun so you had the buy-side hedge fund experience I could bring that in the statistics I can bring that in and then, obviously pretty King with customers will do bring in the marketing to. Scot: [5:27] Oh dear so why did you make that marketing pivot to was there you were in stats and you kind of like started to do something connected to marketing or what what was the connective tissue there. Dan: [5:38] I blame Pete fader yeah he is that a name that comes up a lot with the sort of things that I do but someone who actually had worked out of the stats Department, he said you know I think that you really get along with this to be fair guy and he’s a marketer but let’s not hold it against me. So yeah I basically went up to the seventh floor which is where the marketing department is and Warden and yeah we really just kicked it off I just really enjoyed the problems that he was working on and yeah I like them enough that I just said I want to do this, you know I want to do this all the time. Scot: [6:16] Yeah, very cool well you kind of raised us let’s jump into this so I’ve enjoyed your your analysis your analyses that you do on Twitter and your papers but let’s talk about CBC TV, let’s talk about the origin of it and how you are applying it to think about valuations. Dan: [6:38] Yes really yeah a lot of the early work that I had done was to use these marketing models to predict what customers will do in the future and use that to compute customer lifetime value and other related measures. And, typically in marketing that’s where the exercise ends you say alright you know we predicted well they are completely I’m done and, basically because of my work in valuation I was like we could take this a step further and use this to actually inform view as to how companies doing his whole and obviously I won’t say that I’m the first one thing about this you Pete had done some work in this area and, yes even some work going back to 2004 but it was mostly kind of proof of concept not super well validated models. And it was really. Yes saying let’s kind of peel back the onion a bit further with this and I think that’s really kind of one thing led to another and you know I now have, three academic Publications and other two along the way on the topic and basically there’s just so many different facets of the problem that I designed to be completely fascinating. Scot: [7:50] Well in my world of startups we think about valuations at a pretty simple kind of you know kind of multiples right so you have a revenue kind of calculation you have an ibadah kind of a calculation then it’s I’ve gotten into Wall Street analyst you know they’ll do a variety of discounted cash flow projections and these kinds of things how is this different like what what do you what is this take into consideration that those those kind of mechanisms don’t. Dan: [8:16] Yeah that’s the beauty of it it can really be all of the above it can be used to do an enlightened version of to come up with an enlightened Revenue multiple ebitda multiple, you know kind of straight up discounted cash flow valuation because ultimately if I were to kind of just summarized with cdcd is is it’s a way to, make a more accurate Revenue projection by really exploiting the fact that all the revenue has to come from customers who have to be acquired, retained make purchases and have spend associated with those practices and so a typical Wall Street analyst will, look at historical revenues the bring in macro variables and use that to help inform of view as to what revenues will be in the future and ultimately that revenue forecast will drive the DCF model or the ebitda forecast. And over saying is. If the company has a lot or even even a little customer data that they’ve disclosed let’s bring that into and in marketing, we spent so much time and energy building these predictive models for customers will do and it’s just basically saying it’s use those predictive models that are super well validated from within marketing. You do that Revenue projection just a bit better and do it from the bottoms up instead of doing it purely from the top down. Scot: [9:40] So you’re essentially bringing customers into the valuation discussion crazy, it’s amazing sometimes don’t you wonder like why no one’s done this before no offense but like so he sings seems so obvious in hindsight but no one you know it just like not a common thing. Dan: [9:55] Yeah that and this is video clip that will sometimes show of Jim Cramer talking about this work yet, he brought up and spent a bunch of time on our way Fair analysis and he’s like what’s so special about this you know academic research where these academics doing well they they try to put a value on the customer, and they compare how much you spend to acquire the customer to how much he get after the customers require you like. Duh seems kind of sensible to me but but it hadn’t been done before and I think I think that was the real opportunity. Scot: [10:30] Yeah I think the first time it hit my radar is you wrote a really good article about Blue Apron so they were one of the you know they have this huge valuation they had filed their S1 and then you put out you know I’ll use the word scathing but I think it was like, that that may imply something that’s not there a surprising analysis around their unit economics is that kind of the first time that that that really hit the the radar. For you. Dan: [10:56] That’s the first time it really got mainstream attention. Scot: [11:00] Yeah so for listeners that didn’t see that maybe give a brief summary of what you discovered when you kind of peeled onion on the customer metrics that were in this one. Dan: [11:09] Yeah basically the company was growing really quickly and it’s something like a hundred percent Revenue growth you know year-on-year and, they didn’t disclose a whole lot about customer churn and I was like huh that’s interesting for a subscription business you think they would put something about that in the filing and so, the interesting what thing was that even though they didn’t put anything about customer churn they didn’t disclose a number of other scraps and so, basically what I did was use the methodology that I just published and use that to kind of triangulate my way back into what the company’s retention curve Wise from all those different scraps that they put into their, cipo prospectus and and you’re right near the conclusion was kind of damning that something like seventy percent of the customers churn after six months. And you know obviously the implication being that they were acquiring a lot of customers I think on promotion and. [12:08] And they just weren’t staying and and the other kind of, even more damaging data point was that even though they were growing really quickly their marketing spend was growing even more quickly. Then that and so essentially what I had inferred from the model was that their acquisition cost used to be something on the order of 60 dollars, and it’s something like doubled you know in the run-up to the IPO. So yeah they were buying Revenue growth so they showed strong top-line growth but the underlying fundamentals of the business that gotten significantly worse that they were actually, reasonably profitable at you call it a $60 CAC but if you double that you know it just makes things a lot worse on a per customer profitability basis. Scot: [12:58] Yep losing money to acquire the customer and then making it up and scale is never you know I think we always call that the pets.com business model but somehow chewy got out of that we’ll talk about that later so I think the finish the story I think I think everyone said that you were crazy your analysis was dumb this is again me as a third party watching this from afar you know they had a huge IPO and then suddenly I don’t know how many quarters it took but suddenly the Dynamics you had anticipated came true and that must have been kind of self must have been interesting to be proven right by that. Dan: [13:35] Yeah it was kind of a surreal experience the most surreal was we were going on a vacation and I just remember looking at my phone you know we just were having lunch outside of a grocery store. And that post had just gone viral it ended up getting like. I don’t know we broadcasted whatever the term is unlike a hundred different websites and and, of all of the bases all sorts of like LinkedIn comments and all sorts of other engagement measures they were all kind of hitting at the same time and I had never experienced anything like that before. [14:16] Yeah so. Scot: [14:18] You’re like maybe yeah awesome so so I’ll kick it over to Jason I’m sure you have some follow-ups on this. Jason: [14:29] Yeah I’m always saying this tongue-in-cheek but like it turns out that the one flaw in your whole model is you didn’t factor covid into the blue apron. Dan: [14:40] Yeah I know I always say if we were in January there’s nothing that we would have not predicted covid so it’s no Magic Bullet. Jason: [14:53] But I do feel like they are one of those companies that has at least had a tertiary benefit from from the current climate. Dan: [15:03] Yeah I think that one other fish related point is there’s a distinction between the predictions and the framework, and I think at the end of the day no one can argue the framework has to be true. And even the covid Boost that they’re getting I think the framework can be super helpful in thinking about that is it coming from repeaters who are just repeating more or is it coming from a whole bunch of new people that are going to stay. So so the framework always has to be true it just provides this additional Dimension but our predictions that’s a function of the model of the data that’s available and obviously of, things like covid happening. Scot: [15:45] The thing that must be surreal is I got the like you I have a weird Hobby and that I love to read us once so I think I think the three of us kind of are probably only, people that have that hobby but so I was reading to stitch fix that’s why I was like you know I wonder what kind of churn they’re going to give and then they had all this cohort analysis detailed turn now since I was like wow the Blue Apron dude like totally has changed the disclosures around this stuff you know I don’t know if you viewed it positively or negative but it was like really fascinating where you can tell that people are like all right people are going to look at these, there’s no way for us to hide what’s going on in here so we might as well reveal at least what we think are the good aspects of these underlying metrics I thought it was pretty interesting that it felt like you had some role in kind of making that happen so I was pretty cool. Dan: [16:33] Yeah they put a lot more in instead of definitely hats off to them I would have wished and so after they had filed their ass when I have acid was Point through that thing very carefully to I wish that they had something like cohorted revenues over time if they put something in like that then, for sure you would have seen an analysis from for me / just the reason we didn’t do one was because they there, they’re non-subscription enough that I wouldn’t feel comfortable modeling them as a subscription business and and it wasn’t quite enough data, to fully immuno account for all the facets of there being a non-subscription business. Scot: [17:15] It’s probably funny so on the other side that’s probably what they’re going for they’re like how do we how do we do this so that Dan doesn’t write a paper on, not not that would be negative or positive but you know there’s the the Blue Apron case study was not a on the other side of the table you probably wouldn’t want you know that happens. Dan: [17:33] I flip it around and paper number three so you know it is paper number one was all right let’s lay out the framework for subscription businesses so this nails down to telcos the Jim’s the blue aprons of the world the second one was all right let’s lay out the framework for non-subscription so these are all the e-commerce retailers, and then the third one was let’s lay out a model for. Businesses where we’re not only incorporating SEC disclosures like whatever we find in S1 but also, credit card panel data which the hedge funds are all buying consuming voraciously and now that that their credit card panel data is wonderful for Stitch fix in particular its. The panel seems to be quite representative of their customer base and in so, I think that that’s kind of one of the emerging Frontiers for this whole area is it can we be able to incorporate other data sources to, to be able to kind of do this exercise for more companies or you just have more confidence in the results because we have more data at our disposal. Scot: [18:36] Yet the thing I found so I did an IPO of Channel advisor in the thing I found really weird is you go public and you know you’re going to be doing all this transparency but all your advisers are telling you to be really careful with what you disclose because you know if you just there’s this feeling that all the stuff you disclosed and that’s one you’re going to have to disclose forever and there may be some reason where you want to wind down a business line or pandemic hits and some of these metrics kind of Swing different ways so so in the operation side everyone’s giving you this advice to minimize what you disclose which I found as a you know, as a private company it was oddly kind of the opposite of what I thought being public would be like so it’s interesting to be on the other side of the table from of that stuff. Dan: [19:26] Yeah we’re starting here bit more of that too and certainly we’ve heard the same thing like anything can and will be used against you and so so there’s kind of this risk-reward asymmetry that incentivizes companies to try and discuss as little as possible, so and certainly I think that there’s kind of a fine balance to be drawn where you know I’ll be the first to say this is a certain line past which it is competitively sensitive and you don’t want to necessarily open up the kimono so all your competitors know exactly what you’re doing but I think there is kind of a middle ground where there are measures that companies can put in that. They’re very not competitively sensitive but super informative they tell investors a whole heck of a lot of information about you know how the companies doing. And and there’s small in number so we’re not asking for you know a dozen different things you were just asking for like three things, I think that hopefully is how we can help kind of move the conversation forward that that. We put something out there but we make sure that it’s reasonable and it’s not overly costly to to the disclosure. Jason: [20:38] And I do want to double click on that just a little bit like it does seem like so there’s a, a fundamental part of your framework the customer cohort chart this III and it do I have this right like it does seem like some companies are starting to include C 3s in their disclosures. Dan: [20:56] It shows up a lot more than I thought that it either it’s that it shows up a lot more than I thought that it did or that, yeah maybe if you know we’ve had some small influence that more companies are disclosing because we’re yelling so loud maybe some combination of the two. Actually Scott I think it goes back to one of the other points you raised I would love to see more companies disclosing that data and non S1 filings I feel like, there is now at least a couple dozen companies that have put that in the S1, as soon as they go public and they start filing the case in the queues OR investor presentations I stop seeing it it’s like two companies I know of it still disclose it. Scot: [21:40] Yes so the advisors that give you all these case studies of where it has been companies in the but so classic ones Twitter right so so Facebook got out first and they started talking about it may use monthly active users so then Twitter launched and they just kind of went with that kpi and then that kpi slow down on them very quickly whereas Facebook’s accelerated and everyone always uses that as you know if they hadn’t disclosed that and then what happens is the other thing that I see that super surprise me first time going public was all the short hedge funds and some of the nasty tricks they do so they’ll take any of these metrics you put out there that could be cast in a bad light and they’ll use them against you to create a short trap kind of a thing so so there’s all these case studies of that and then you know we’ve fallen into, over the years you’re just shocked by the behavior that goes on with with some of these these crazy firms I guess I was super naive that I thought it was more like VCS but at this whole super high level where everyone’s going to be like you know I’m Fidelity and I’m really on board with your company for the next 10 years there is that but it you know right now it seems like it’s the minority versus the majority is a lot of these kind of long-short hedge funds that do all kinds of wacky stuff. Dan: [22:50] Yeah yeah it’s nice. Scot: [22:52] Yeah yeah. Jason: [22:54] But so Dan you know what would be helpful for some of our listeners that may not be as familiar with clv analysis and some of your work can you like, this is hard on a podcast can you paint us a word picture of what a cohort analysis is and what that C3 looks like. Dan: [23:13] Yes of course the first Steve this may be the easier one is the C3 that’s simply saying you know if you if you open up a 10K, it’s going to show annual sales year by year you know so 2015 16 17 18 19. [23:30] This would be the same except it’s in a chart format where the height of the bar is the amount of total revenue. But it’s tax that so you kind of brace it down by acquisition cohort so you know for a company that, imagine it company was the first went public in 2016 and now we’re here in 2020, they’re at here’s our sales in 2020, here’s how much came from customers that were acquired in 2016 here’s how much came from customers and required 2017 2018 2019 and so on. So it’s basically chopping up that Revenue bar into acquisition cohorts and showing that over time and what it allows investors to see is. When a company acquires a group of users. How much revenue is that company getting from those users in future years as it going up is it going down and if it’s a b2c business you kind of expect it to move move down. And hope that is that doesn’t move down very much in other sectors like software as a service businesses typically if you’re seeing a C3 chart, you probably seeing expansion over time they acquire a bunch of customers and then in future years to getting more revenue from those same customers than they did in the previous year. So yes it is a whole lot of information you can get from a C3 in conjunction with everything else that does companies tend to provide. [24:59] And it goes back to that I think to the first question of what is a proper cohort analysis and it really is just that it’s saying let’s look at let’s not just look at everything that happened in 2020. Let’s look at things by acquisition cohort you know let’s eundel together all the people who are first acquired in 2016 and say, how good were they and then let’s compare it to all the people that were required in 2017 you have good with a and if you repeat that exercise across all these years. This whole new level of understanding of how healthy a businesses. Scot: [25:37] So for like an e-commerce business where you’re not going to have a huge let’s take subscription e-commerce businesses out of it like let’s say a Macy’s or someone like that that has you know just kind of a more transactional model what are you expecting that for your to look like like what’s a really good looking at wind what’s a terrible one. Dan: [25:56] Yeah General generally in transactional business like Macy’s or any other you know B to C typically customers were melting Ice Cube and. And so you’d be pretty happy if you know four years out you’re still getting, twenty percent of the revenue that you had gotten when you first acquired those users. But they’ll drop off pretty quick so you know so certainly. My general Pryor is is that Revenue retention tends to be on the very low side unless you’re truly one of the exceptional retailers. Scot: [26:38] Have you ever done it for Amazon. Dan: [26:42] We have not because they have really Rain back there disclosures unfortunately. The other yeah the other issue with them yeah so they disclose like active users but they disclosed nothing about the number of customers they’ve acquired in different years. Obviously if we even if we did have the information probably right now it’s like zero because everyone’s been acquired but the other wrinkle with them is I think you many people would argue they’re making most of their cash flow from there, from the cloud computing business and so. Retail business is certainly it’s an important piece I think you know a lot of people short change it because they don’t take into account the you know- working Financial working capital position that they have. But still there’s so much else to their business that it is a little bit tricky. Jason: [27:39] And I like I do like obviously we’ve been focused on company valuations which is a super interesting use case and obviously quite important but. Company valuation is far from the only reason you’d want to be doing a cohort analysis if your acquisition cohort analysis if you’re a company right like isn’t it, even if you’re getting if you’re a private company and you’re not going to disclose anything it seems like there’s huge benefits to understanding the value you’re getting out of those Acquisitions and. Helps you plan future Investments no. Dan: [28:15] Oh tremendously so yeah and actually said for example the the marketing use cases I think are at least is compelling to marketers as yes it is from a valuation perspective to the CFO yes I kind of I think of this way of looking at the world is kind of like the the translator that allows marketers to speak with the finance people and have a common language between, and I think it can allow marketers to communicate the value that they’re creating, in a way that Finance people would would respect and understand. And in Reverse yes I think you finance people can then you communicate that on to their investors which increasingly they’re having to so so suddenly I think, as these ideas take hold a bit more it’s as if the CMO becomes a lot more powerful because they’re kind of the trusted advisor they can actually really explain. What the heck is going on with the customer base in a way that the CFO is just not going to be able to but at the same time they’re going to be a lot more accountable because suddenly, everyone is really obsessing over things like the retention curve which are probably a little high level for your typical CMO and they typically are thinking about. More tactical measures. Jason: [29:42] Yeah and I if you don’t mind I would like to double click on that a little bit just a side note for listeners it’s funny we often call those the visual cohort analysis we caught a wedding cake. Um which I think is like a good mental image right like because you you see all these new new colored layers of. Different acquisition cohort stacked on top of each other and if things are going well the layers get like thicker in the in the middle over time. Is that is that an industry term or did I make that up. Dan: [30:18] You know I had never heard of the term before. Jason: [30:21] All right well I we use it with multiple clients so I don’t know yeah so you. Dan: [30:26] I like it though. Jason: [30:27] Dan you can have it for free but in exchange you can settle an age-old question for me customer lifetime value clv lifetime value LTV, I hear people use those acronyms interchangeably like are they different and is there one that you officially prefer. Dan: [30:47] I yeah I think that there is a lot of questions about you know what should be defined as what I’ve traditionally defined those is being equivalent to each other. But distinction that I draw actually is one that I’ve I haven’t really heard other people draw which is COV or LTV versus the post acquisition value of a customer so. To me I think the to two key components of a customer’s value or how much you spent to bring them in the door and that’s the CAC. And then all the value that you get after the required and to me I call that the post acquisition value of the customer, and so if you take the P AV and you subtract off the CAC. That gets me the customer lifetime value but there’s just so many people who actually would say that clv is p AV and and they’ll have no definition for clv. So so I think you have one of the first things that I’m really hoping that we can do it’s almost the simplest thing it’s just, let’s agree on some common common definitions for these terms you know I think that everyone would benefit and to be a lot less confusion when we’re all talking about, these terms and and potentially having different ideas in our heads as to what they actually mean. Jason: [32:08] Yeah no I think that would be super helpful because that it is, I you know in the virtue of my job I go into a lot of different clients in the vernacular is totally different and this you met your eyes may roll in the back of your head but I would even say like a monk my client base. Dan: [32:29] Yeah one also clv I’ve so frequently see people Computing it just off of sales they’ll not even factor in causing. Jason: [32:37] Yeah it’s Revenue it’s like customer lifetime Revenue not customer lifetime value right there. Dan: [32:42] Yeah you know finite Horizon forecast and you know just the list goes on and still all the different ways you can kind of screw it up in my view. Jason: [32:52] So I have this kind of simple mental picture of how this whole discipline involved and I’d love for you to confirm that I have it right or correct me if I’m wrong, um but I sort of imagined that in the early days of thinking about COV that it was primarily a marketing kpi, and then it feels to me like it evolved into being in really good mature companies it evolved into being a corporate kpi, and then you know largely because of your your paper and and blue not Blue Apron going viral. Now it’s become a corporate valuation tool like is that is that the matriculation then it sort of food through our time I’m making that up. Dan: [33:34] I think it’s definitely the case that COV has been born and raised a marketing marketing kpi. Yeah and I think now we are seeing a gradual progression that it’s showing up more in investor decks which has been super heartening to see. [33:52] In terms of the link to cut the corporate valuation so our work will very frequently talk about customer lifetime value. But usually it’s kind of a summarization of like the unit economic health of the firm it’s obviously a really important one. But but actually we kind of focus on on this other thing that, I think some people will call it customer Equity you know I’ll call it customer base corporate valuation was really drawn this distinction between, you kind of a per customer measure of profitability and the overall value that’s being created and. In Canada the example that I often give is if you wanted to maximize the clv of your business. You should go after this super tiny Market where this is like a few super good customers in it and and they’ll all be great you know but there’s so few of them that you leaving money on the table you know so, it’s kind of what we want to maximize this kind of like P times Q you know like the quality times the quantity and. And so I’ll actually kind of have this notion of the five Horsemen of CBC TV. And that’s actually you know what would companies should be striving to optimize. Jason: [35:15] I love that and I I’m a big fan of those sort of false of using a metric as a kpi because per your point like you can just manipulate one of the variables and make it awesome. I frequently help clients in Pre increase their conversion by just dramatically reducing their traffic to their best customers for example. The so I and I do have a bone to pick with you and I’ve been really good about trying not to bring it up until now but I just can’t resist. I primarily work with marketers and in my world like even LTV is a metric is. A vastly superior metric to what a lot of my clients tend to live in like sadly like I have a lot of clients that. You have tpi’s around things like Awards and return on ad spend which. Find abhorrent right and so often we’re trying to move people towards more financial base, measure right rui measurable quantifiable metrics and you mentioned in the intro that you you started this previous company zodiac, which actually provided both tools and services that help companies, make that progression and you don’t know this but I actually prescribed zodiac to a bunch of clients and then you went ahead and sold the company to Nike and they promptly fired all of my clients. Dan: [36:39] Yeah that that was the most difficult part of the sale was honestly we. We’re academics you know so we we almost feel like this semi-religious you no desire to get people to use customer lifetime value to be using these models and benefiting from them, instead of kind of get these companies to buy in and then kind of you know have to we didn’t fire them we were forced to. Jason: [37:08] Sure sure no I’m mostly nobody blames you for doing, in your own best economic intro I’m teasing you but it was like it, useful tool and I am curious and it’s fine if you want to pass on the question but there are some other companies that have emerged. I wouldn’t say have the exact same offering that zodiac had but. Some sort of overlapping value prop and so I think if companies like ambition data or dynamic action and I’m just curious if you’ve ever looked at them or or even better review you’ve come across any other companies that you think are doing a good job and that’s. Dan: [37:45] Yeah thankfully a lot of them are friends of ours so so ambition data Allison heart cells the good friend they do some good work there certainly I think they’re more tactically oriented and zodiac was but I think their philosophies are you’re very consistent so both Peter fader and myself we’ve been on under podcast as well, retina that AI is another one that I like with the what they do they basically have a version of a probabilistic model for how customers behave and, and they’ll use that to help you know oftentimes marketing analytics departments you make acquisition retention decisions but I wouldn’t also leave out Theta so you clearly I’m not here to, that’s a pitch the company but I’d say about half of our revenue is actually coming from corporates directly and in while we’re not helping the marketing department make those tactical acquisition retention decisions, we do provide kind of the, a lot of the Machinery that we use to make the predictions is very similar or even better than Zodiacs we use it to obviously summarize how the business is doing in terms of. [39:02] Clv in CAC over time, but then also slice that by you know things like acquisition Channel and so to the extent that you want those very highly validated predictions to, to see where you’re getting the highest return on investment you say by acquisition Channel this would would give you that so. Jason: [39:23] Very cool okay, so and Scott’s chomping at the bit to get back into the conversation but I did want to I feel like I haven’t this limited window to learn some stuff. Eight sometimes a knock on the like so one of the things about the customer base valuation is it, it’s a very bottom of the funnel monetizing the customer and therefore this is how valuable that acquisition channel was or how they both companies or whatever else and, the old-school CMOS I work with like when we start talking about those kinds of processes, they quickly go to yeah Jason but that doesn’t really capture my long-term brand Equity like I’m building this value that doesn’t show up in that number, and I’m imagining you you have to heard that before and debunk. Dan: [40:15] Yeah I love that question because in general and this is where I will get a little bit controversial again all the revenue has to come from customers making purchases and so if you believe in that, accounting identity which hopefully that’s completely uncontroversial then, then you have to kind of buy into the notion that it all comes down to acquisition retention ordering and spend and then variable profits and so so sick to kind of flip it back on on the old-school CFO yeah I’d say. If they’re spending on things that aren’t generating any measurable effect on those five Horsemen if CV CV, then it’s worthless completely worthless but to then give you know a little hat tip to the old school or I think what what they may be trying to say is that. I can make an investment today and I may not necessarily see the long term effect of that until three four years from now and that you know. That the long-term retention of those customers will be better because of the investment that I’m making. I think that’s a very important distinction because it’s saying that you can look at and just focus a hundred percent of your attention on the CB CB framework. It’s just an empirical question of how we can be able to measure its effects rather than saying you know actually we need to focus on brand Equity to. Jason: [41:44] Yeah and ironically like that cohort analysis is, is validating like when you know when it’s done well it’s validating the Investments made in that long-term brand Equity right because they they show up in like subsequent years value for those cohorts. Dan: [42:02] Exactly yep. Jason: [42:03] The Indian one more totally wonky one so so again old school seeing those like me and where should we put our marketing dollars and in particularly like that we all have this debate. What’s what should we be putting above the line IE what should we be spending to build brand Equity versus what you know should we be spending to drive actual activation. Things got and I talked about all the time like e-commerce and those sort of things and like historically like I mean from the 1970s, marketers use this media mix modeling which is pretty archaic and lately like as I work with all these ad agencies, the the academics that come up constantly are these guys and I’ve never met them less Bennett and Peter feel they’ve are you even Vaguely Familiar with him. They ever. Dan: [42:56] No you’re not. Jason: [42:58] Well then we’ll skip it but suffice it to say they did a quantitative analysis of a bunch of companies in found that in general the best like, mix of investment was 60% brand 40% activation and therefore there are a ton of like quite large. Marketing Enterprises with very large budgets that Loosely follow that parameter and it just seems, too simple to be true to me so I was just curious but I’ll let you take a pass on that and I’ll let Scott jump back in. Scot: [43:35] Yeah this is so just kind of apply this to an interesting argument so two of my favorite followers on Twitter are web he’s been on the show and then this guy digitally native I forget his name he’s in Austin, they’re constantly going back and forth over well first of all they really focus on the realm of digitally native vertical Brands so I don’t know if you’ve dug into that there and fortunately haven’t been a lot of, IPOs in there so there may be a lack of data on it but the kind of go in the circular argument I’ll try to do my best of kind of figuring it out so digitally native dude will say the one metric you should focus on as a digitally native or co-brand is gross margin and then now then web comes in and says Nope it’s got to be so first of all he doesn’t like it when companies raise Capital so it’s like it’s got to be bootstrapped and the only way to bootstrap it is cackle TV and then they then the kind of wheel spins around and goes back and forth back and forth do you have a point of view on that. Dan: [44:39] Yeah I kind of go back to to me the ultimate goal is customer base corporate valuation now I would say that does kind of lean more towards cackle TV, but I’m not sure that the distinction needs to be that you know that big because ultimately you know a higher gross margin is going to drive. Higher lifetime value all else being equal so certainly. But even their gross margin is not the only, component of variable margin yeah I think that if you really binds the notion that lifetime value is important well the profit margin that you use in that calculation should be the effect of The fully-loaded effective variable, profit margin and so you should be factoring in, this is going to be probably very common knowledge to you both but you things like fulfillment expenses and merchant processing fees which often times they’re not included in cost of goods sold they’re included in. In an operating expenses, so we want to put those in as well but I’d also include effectively variable indirect expenses to so even things like. This is going to sound totally brutal and conservative but even things like accounting expense. [46:01] New companies as they grow they need to hire more accountants and even companies like Microsoft spend ten percent of their sales. On expenses like that and so so what I want is I want that lifetime value figure to represent. If it’s positive that means there’s a path to profitability and if it’s negative there is not a pilot at the profitability and you won’t get that if you’re using gross margin as your margin. So Scot: [46:29] So then so tactically how do I allocate that like I just divide by the number of customers acquired over that period and all my costs and that period. Dan: [46:38] Yeah there’s a few different ways you could do it yeah let’s say the kludgy is simplest way would be take all of the expenses that are not direct expenses. And in regress them against sales, and with that can help you get a sense for is the relationship between those expenses and how they grow as you Revenue grows obviously if you’re inside the company though oftentimes companies especially if they’re young, they’ll kind of pre build and so you may see operating expenses grow quickly then but it’s not because those expenses are variable they’re just kind of building for the future so that’s really where I think if, if you’re an inside operator you have a much better view of that, as an outsider I think conservatively most any company can simply at least at the very start just knock off five percent of sales and just say, you know probably at least that much is going to be effectively variable indirect expense and. And then just you know kind of continue to run the analysis is you may otherwise have done. Scot: [47:47] Got it so sokak is easy to get your head around and then LTV you’re essentially saying LTV should almost be like cash flow. Dan: [47:54] High LTV should be the net present value of all the future variable profits after a customer’s acquired yeah so yeah as having to kind of peel that one back but I know. Scot: [48:08] I don’t think anyone’s calculating it that way that’s why it’s funny. Jason: [48:11] This this is why I like Theta is b or zodiac is because they do it for you they provide the mathematical. Dan: [48:19] And will you know we’re totally an open book you know will show you the academic papers so hopefully I’ve been kind of by into exactly how we’re going about the you know the calculations that were going about but, yeah I mean at some point I think the math it’s a very hard prediction problem yes a to be able to have someone. We’ve now done probably 250 different you know paid engagements on behalf of 250 different firms. So you kind of develop that dirt under the fingernails that could be hard if you’re just a really smart operator who’s building a business and don’t don’t even have the budget necessarily for you know much or any data science team. Scot: [49:02] Yeah I’m a big study of Amazon if you haven’t figured that out yet and it’s always funny because, people always ask Jeff Bezos these things he always comes back to cash flow and I almost wonder if he kind of like intuitively got to a similar place where you have where you know one of his answers will be customers you know I can’t take a gross margin to the bank you know I can’t take fifty percent to the bank when in the early days when people accused him of being a super low margin business and or like with Amazon Prime they thought he was crazy and I think he was thinking I think he was way ahead of the thinking here, what do you think about do you agree with that. Dan: [49:46] Yeah I think a lot of people they’ll look at these highly free cash flow negative digital companies often times, and I’ll say well you know yeah but but Amazon and if you look back carefully at Amazon, typically those comparisons are very bad you know that I think it was in the Amazon second year you know maybe it’s there that it was operating cash flow positive and, it’s the even the even though it took them a while longer to become Gap profitable. Who cares about Gap if you’re bringing in the cash flow you know that that’s ultimately what what drives the value of the firm and keeps the lights on so, so I think they did a lot of things right that are still under appreciated and have still led to a lot of confusion with this emerging crop of, fast-growing money-losing companies. Scot: [50:42] That one random observation is you so I think you said in your bio you were at like a hedge fund doing analysis of things but Jeff Bezos was to write wasn’t that where you kind of started is there is there something that you think cut came out of that where you both kind of saw this this kind of light bulb moment that you know this is the ultimate metric for for these kind of businesses. Dan: [51:05] You know that I think it was a de Shaw and I forget what role he he was at the firm butt, I would say there is something that actually this goes back to zodiac Theta, Finance people we’ve often done in the questions that you find the comparison yet selling to a marketing person versus selling to a finance person and I’ll often say selling to the finance person is easier actually, even though you’re presenting them with this Mark ostensibly marketing way of looking at the world ultimately its Net Present Value, and they just live and breathe that you know they’ve been doing that for probably since they were an undergrad you know whereas marketing people sometimes have sometimes happen. And it’s to a finance person I think they will get a lot of this and they’ll immediately see the analogy to project finance that project financing the you spend money on a project you’ve got this, you know you think about payback periods you think about the net present value of the project you think about the internal rate of return, that’s just how they think about their project and so if you just replace project with customer Suddenly It’s like a light bulb goes off and they say oh you know that that totally makes sense the customer is my project. Yes I think that to them this is all quite natural, to marketing people there could be more of an education that that’s required to kind of get them where they need to be. Jason: [52:31] I will totally buy that I do have to point out early in the show I complimented you on monetizing your academic background but now that Scott’s comparing you to Jeff Bezos you probably have a little ground to make up. Dan: [52:43] Definitely a loser there to him. Scot: [52:47] Jason builds you up I tear you down it’s part of its are good cop bad company. Jason: [52:52] Pivoting a little bit I’m curious like if you so a bunch of the company is in our space we talk about all the time, and you know where there is some debate about how sound the unit economics are we talk a lot about companies like Shopify and, Peloton and chewy why do you like look any of those companies do any of them provide enough data that you kind of formed an opinion. Dan: [53:21] Yeah actually all three I haven’t done a formal customer base corporate valuation of Shopify but I’d love to and, and they’re actually one of the firm’s where I’ve seen a customer cohort chart outside of the s-1 filing and as you can imagine. As you were alluding to Scott when companies disclose these things it’s probably because it looks good and and I definitely was the case with Shopify that there there C3 looks amazing, and in there an interesting case because you know they’re kind of a business in a box whatever the, terminology is now they’ll have a lot of companies that, yeah they go kaput they go out of business but they get so much incremental business from those who survived that they see very strong Revenue retention over time. So you know I haven’t I’ll be the first to say I haven’t been out the math is to say what their marketing Roi is but but it must be quite good. Jason: [54:31] You know I don’t know how like how close you father but like their CAC is actually quite low so that helps too. Scot: [54:38] I don’t think they do any marketing that’s another thing that they’ve always said that they let the product do the marketing and yeah. Dan: [54:44] Yeah so even better you know it’s really it’s it so I think you then it does become a question of valuation but even the valuation question you become some really hard I was actually just tweeting about this a couple days ago that. If you have very strong Revenue retention presumably you’re earning a very high return on your marketing investment and, and is a very strong analogy between marketing Roi and the return on invest the marginal return on invested Capital to business. So for business like Shopify I be astounded if their marginal return on investment wasn’t, at least an order of magnitude higher than their weighted average cost of capital like the required rate of return that investors demand of them to supply them with the capital that they have. And in theory if you are if your return on invested capital, is permanently above your whack there’s no you would deserve an infinite valuation. Scot: [55:51] I think they’re getting there. Dan: [55:52] Yeah it’s so so I’ll be the first to say that but I would say for Shopify there is a valuation question that we all know mean reversion is is a reality and so when, you know when those economic start to kind of go back to levels that are more in line with competition. You know that is that on that out and so I think that’s kind of the open question there so yeah valuation it’s. It’s not purely a function of current period clv you know I wish it was that easy but but it’s not. Jason: [56:33] It was super easy everyone would be doing it so where would the fun in that be. Have you up to Peloton at all maybe free covid or assume post covid there now like the next trillion dollar. Dan: [56:47] Yes I again yeah I’m kind of an s-1 geek like you both so when they drop the S one I looked at that one really carefully and especially because there was a lot of controversy I know if you are following this the time, that that their churn rate was just about to spike and, and they were timing the IPO it just at the point where a whole bunch of these, prepaid you know customers are locked in for two three years boom you know now they IPL all those things are going to move to month-to-month contracts and a whole bunch of people are going to turn in there you know. Average turn rates going to quadruple or even more and. [57:32] Yes I felt obligated to kind of jump in to see what the heck was going on and it’s I posted this analysis on LinkedIn hints and fully transparent not even provided the spreadsheet showing all of the calculations just so that people could, see or point out if I’m wrong and, in the main conclusion that I came to was now you know they’re their turn seems pretty low and there’s no Smoking Gun it should probably stay low and. And I would say even pre covid thankfully that seem to Bear out as being true. So we didn’t go all the way to I didn’t go all the way to valuation but it certainly you have I’d run like hardcore statistical models on them. Jason: [58:18] Gotcha and then I’m assuming about 400 billion dollars in value transferred from Jim’s to them as a result of the shelter in place orders. Dan: [58:26] Yeah they definitely benefited so. Scot: [58:28] It’s just a bike with an iPad strapped to it who would have thought. Dan: [58:32] Yeah there’s still it’s amazing in this thing again it goes back to Blue Apron there they’re always the haters. And and for Peloton there was still a whole bunch of people who argued that you know because of the economic contraction unemployment 15%. Is this super expensive bike are people that are pay two thousand three hundred bucks for a bike you know. And in that has I was on the opposite side of that trade yeah I was openly in webinar saying. Don’t be surprised at how many how many wealthy people are retaining their jobs and buying peloton’s now and and yeah it seems like that that’s that’s played out as well. Jason: [59:18] Oh yeah and and now they all those wealthy people have the capex invested in that bike and they’re presumably less likely to renew their gym membership when they’re able. Dan: [59:29] Yeah yep and I think that’s one of the arguments for why why their turn should remain generally quite low you know is that people are paying $2,300 for a bike, you know are they willing to Pony up the 30 bucks or whatever it is a month for the you know for the subscription. Definitely you know they’ve huge sunk cost fallacy but you know still people fall for that that’s the oldest trick in the book. Jason: [59:58] Yeah yeah I think that’s going to be our next podcast is all about those cognitive biases so that’ll be a perfect transition there and then chewy have you acted chewy at all. Dan: [1:00:08] I have not looked at you we personally so I have it’s been nice to see they’re now more and more people are kind of doing their own cbcb analyses and so there was one super smart person who had. Done some interesting analysis on them it ended up his conclusion was bearish that. Things did not look good and I also I do agree that the way that they Define the proportion of people who are unlike auto-ship or whatever they call that program is is is very aggressive but. But I actually I haven’t done a CBC analysis. Jason: [1:00:48] Okay mildly interesting like they had their their first earnings call Post. Covid and you know of course reminder like, their revenue growth has been wildly awesome and they’re one of the few direct to Consumer companies that you know his vastly exceeded a billion dollars in sales they’re really struggling to be profitable, the covid quarter was their first quarter where they had a profitable ibadah but earnings was still negative but which is why I was curious if you see, like you know are they just on this Wayfarer style treadmill where they can never make money or or you know is there a model where they scale out of that but one of the things that was interesting they mentioned is, me and 1.6 million new pet owners adopted a pet in covid and we think the covid cohort for us is worth 90 million dollars this quarter like I just that was it like it wasn’t so much I mean it was, they were they didn’t provide data but they had a narrative around an acquisition based cohort in there there. Dan: [1:01:54] Wow yeah I was about to say that they’re going to argue with all the pets parts of the world shut down that all that business is now increasingly going to the chewy but. Jason: [1:02:05] Yeah well I think there’s some there is some data there right like pre covid 22% of, of pet spending was e-commerce and you know in covid it’s like 35% so like all those new pet owners who I clearly you know were born digital, you know suppliers for their pet food and all that stuff. Dan: [1:02:25] Yeah that’s like a free gift that covid has given to these companies. Jason: [1:02:28] Oh my gosh yeah there’s a lot of free gifts and a lot of free I don’t know what the right. Dan: [1:02:34] Fold in the air colder in the star. Jason: [1:02:36] Yeah exactly that have been like disproportionately handed out its kind of kind of brutal with the winners and losers. Dan: [1:02:44] Not just disproportionate but in some sense random, is that a lot of otherwise great companies and you know just so happens well you were a mobile gaming company so you will be a winner you were you were an underwear Stellar you will be a loser but you. Jason: [1:03:01] Except if your underwear seller that also sells lettuce in which case you’re you’re a winner. Like that those are the weird distinctions right like. Dan: [1:03:10] Yeah the milk is to go back to Blue Apron. Jason: [1:03:14] Yeah I feel like I saw you on one of the new shows talking about Wayfarer and covid did you like you want to recap your your thought process there. Dan: [1:03:25] Yeah yes it’s obviously I’ve been falling Wayfarer for a while now and, you know I’ve been probably as much press on them as with blue apron and. And they had first finally it was as if the writing was finally on the wall they said they. The CEO had even said we were growing too quickly and we’re going to now lay off a bunch of people and move to more you know sustainable growth. [1:03:54] And then covid and basically you know I was speaking with someone from CNBC it’s ended up being featured in her article but it’s something like 86 percent of all home good sales, had been brick and mortar and so suddenly covid you shut all that down and you know this little slice you know the other 14%. Sunny they’re the only game in town and not only that. Wayfarers biggest competitor with in HomeGoods had been Amazon and Amazon now is prioritizing essential Goods so there are not focusing a lot on HomeGoods. So they’re not only kind of the only game in town when you compare them to the brick-and-mortar players but they’re also one of the only games in town even on online so so they’ve seen their growth go from something like. 20% or 25% to 90% And presumably that’s all, I would imagine it’s quite profitable growth that there’s just a lot of people now who are organically coming to Wayfair and making the purchases are because they they want that new chair to put in their work from home office, so yes they really they benefited on all sides from from covid which you know hats off to them I’m happy that it’s been. It’s been good for them. Jason: [1:05:20] Yeah it’s going to be in a mean I obviously we all wish all these companies the best it’s going to be interesting like, hey they’ve got to be able to be get profitable on that on that revenue or like certainly it’s going to be scary and hopefully they can they can leverage all those new customers into a long-term viable. Dan: [1:05:38] I think the long game is the big question that I have and still to me now it’s just an open question I feel like you thankfully. Yeah I feel like our thesis was validated the stock actually fell to within our valuation range before you know things went crazy with covid so I feel like I don’t have a whole lot of skin in the game right now, but I do still wonder those stores will eventually come back online some of them are closed permanently like Pier One is not a company called Tuesday they are liquidating you know so so that Supply is not coming back on the market but, you know we will still see a lot of you know home goods stores reopening and then Amazon is going to reprioritize furniture and so, I think there is a question of how much of the growth that we’re seeing Wayfarer how much if it’s going to stick. And how much of it will go back to what we had seen before. Yeah I kind of think it’s a question of how severe covid it’s going to be yeah they did a certain variables that I just don’t have a good sense for right now but I think that that will be a big part of the valuation story. Jason: [1:06:46] No I think you’re right like I you know it’s going to be interesting because I feel like a lot more competition than we realize right now is going to go away like of the traditional competition because. There’s a bunch of Independence that you know have become insolvent and we just don’t hear about them but I mean aggregate their 25% of the furniture market there’s a lot of regional chains that. You know just haven’t bothered to file bankruptcy yet because they can’t run a liquidation sale right now it’s kind of hard to declare bankruptcy at the moment so that’s going to happen but then for your point, Amazon and you know the most healthy well resource of the surviving retailers as you know are all going to want to grab that share nobody’s going to want to just advocated. The Wayfarer so it’s going to be a, interesting battle to watch play out but Dan that’s going to have to be a good place to leave it because we have slightly exceeded our allotted time but we were enjoying our conversation so much that. You thought it was well worth it so we really appreciate you taking the time and really enjoy the. Dan: [1:07:47] Yeah thanks thanks again so much for thinking of me and having me on the show this is this is a stuff I stay up to talk about this to anyone who’ll listen so so so thank you it’s been a lot of fun for me too. Scot: [1:07:59] Thanks and we really appreciate it and I think you know my goal is to learn a couple things everyday I think I’ve filled up at least the rest of the month and maybe July so really appreciate it. Dan: [1:08:11] Being too kind but thank you. Jason: [1:08:12] And until next time happy commercing.

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The Daily Marketer is a podcast about pushing through the noise, swimming through the water, and breaking through the surface. Marketing is about compounding breakthroughs; not about customers, but about human nature & what gets us to make a move. Figure out your LTV, uncover your most valuable customer segments, and so much more with this handy, little marketing tool. If you need one that is the perfect combo of powerful & quick, the cohort analysis is the ticket. Get the gist in today's episode. Show Notes Joseph Campbell's Hero With A Thousand Faces: https://www.amazon.com/Thousand-Faces-Collected-Joseph-Campbell/dp/1577315936 Bizible on Cohort Analysis in B2B businesses: https://www.bizible.com/blog/how-to-cohort-analysis-b2b-marketing Randomizec Controlled Test defined by MedicineNet: https://www.medicinenet.com/script/main/art.asp?articlekey=39532 Neil Patel goes deep on LTV (defined): https://neilpatel.com/blog/how-to-calculate-lifetime-value/ Episode in blog format: https://jakubkubicka.com/cohort/

In todays episode of the Startup Diary we're following up from a previous Fridays episode and covering a topic Harry didn't choose. Hold on tight, we're talking about cohort analysis. --- This episode is sponsored by · Anchor: The easiest way to make a podcast. https://anchor.fm/app

Marketing Strategies Revealed in this episode: How to use Cohort analysis to optimize your eCommerce Conversion funnel optimization How to understand your customers  

The post Season 1 – The Harvard Cohort appeared first on RecoveryArc.

This week, the Bowery Capital team hosted Allison Metcalfe, VP of Customer Success at LiveRamp, to discuss “Cohort Analysis for Customer Success.” LiveRamp is a marketing data company that unifies customer data across disparate sources. Large brands use LiveRamp’s identify resolution capabilities to drive true omnichannel marketing at new levels of accuracy and efficacy. At LiveRamp, as well as in previous roles, Allison has explored the full spectrum of analyses a customer success leader can use to track the health of a customer base to increase retention, upsells, referrals, and healthy customer-product engagement overall. Today, she joins us to discuss the importance of cohort analysis as it applies to the customer success function. Cohort analysis is a quantitative exercise that companies can use to understand how metrics trends differ between various comparable groupings. It can be used across various functions within an organization, such as sales and finance. Sales analysts, for example, commonly use a form of cohort analysis to measure close rates (or other conversion rates through the sales funnel) and sales cycles (time-to-close). By breaking up deals into groups or “cohorts” consisting of the opportunities created in a particular month, we can see how the effectiveness of our sales team is changing over time. Cohort analysis is equally critical for customer success: not only for proper measurement of churn, but also for other customer health metrics. We’ll learn how Allison has used cohort analysis and similar exercise to optimize CS performance at LiveRamp, and how any startup stakeholder can do the same. Allison Metcalfe is the VP of Customer Success at LiveRamp, where she has worked over over 3 years. LiveRamp is based in San Francisco and employs over 300 FTEs. The company is a subsidiary of Acxiom, which acquired the business in 2014 for a reported $310MM. Prior to that, she served as the Senior Director of Customer Success at Demandbase, where she spent two years. She also brings experience from earlier customer success roles at Jigsaw (now Data.com, acquired by SalesForce) and Equilar. She also serves as a customer success advisor to Entelo. Allison holds a BA from the University of St. Thomas.  

This week, the Bowery Capital team hosted Allison Metcalfe, VP of Customer Success at LiveRamp, to discuss “Cohort Analysis for Customer Success.” LiveRamp is a marketing data company that unifies customer data across disparate sources. Large brands use LiveRamp’s identify resolution capabilities to drive true omnichannel marketing at new levels of accuracy and efficacy. At LiveRamp, as well as in previous roles, Allison has explored the full spectrum of analyses a customer success leader can use to track the health of a customer base to increase retention, upsells, referrals, and healthy customer-product engagement overall. Today, she joins us to discuss the importance of cohort analysis as it applies to the customer success function. Cohort analysis is a quantitative exercise that companies can use to understand how metrics trends differ between various comparable groupings. It can be used across various functions within an organization, such as sales and finance. Sales analysts, for example, commonly use a form of cohort analysis to measure close rates (or other conversion rates through the sales funnel) and sales cycles (time-to-close). By breaking up deals into groups or “cohorts” consisting of the opportunities created in a particular month, we can see how the effectiveness of our sales team is changing over time. Cohort analysis is equally critical for customer success: not only for proper measurement of churn, but also for other customer health metrics. We’ll learn how Allison has used cohort analysis and similar exercise to optimize CS performance at LiveRamp, and how any startup stakeholder can do the same. Allison Metcalfe is the VP of Customer Success at LiveRamp, where she has worked over over 3 years. LiveRamp is based in San Francisco and employs over 300 FTEs. The company is a subsidiary of Acxiom, which acquired the business in 2014 for a reported $310MM. Prior to that, she served as the Senior Director of Customer Success at Demandbase, where she spent two years. She also brings experience from earlier customer success roles at Jigsaw (now Data.com, acquired by SalesForce) and Equilar. She also serves as a customer success advisor to Entelo. Allison holds a BA from the University of St. Thomas.  

Today I'm joined by an experienced trainer and conference speaker who specialises in providing Google Analytics consultancy and services. Welcome to DMR, Dara Fitzgerald. [You can find Dara over at MeasureLab.co.uk.] On this episode of Digital Marketing Radio we discuss "How effectively are you using Google Analytics?", with topics including: Is Google Analytics the right analytics software for the majority of businesses? How many businesses don’t even have their GA scripts installed correctly? Is it always best to use Google Tag Manager to install the script? What other things need to be done in the set-up process to take full advantage of all the reports that Google Analytics can offer? Is it / why is it important to set up Search Console data sharing? If you haven’t got a lot of time, what are some of the reports that you need to be aware of? Is it important to set up email reports? If so, what should be included in that? The first thing that you see in the menu is Intelligence Events - how does that differ to Goals? Something else I see in the Audience section is ‘Cohort Analysis’ - what’s that about? What useful features do people tend not to use? [Tweet ""Don't just rely on the out-of-the-box solution for #GoogleAnalytics." @darafitzgerald"] Software I couldn't live without What software do you currently use in your business that if someone took away from you, it would significantly impact your marketing success? Slack [Internal team chat] MyMeasureLab [Internal tool] GoSquared [Live chat for business] What software don't you use, but you've heard good things about, and you've intended to try at some point in the near future? Audience Centre 360 & Attribution 360 [Google Analytics 360 Suite] My number 1 takeaway What's the single most important step from our discussion that our listeners need to take away and implement in their businesses? A lot of businesses aren't using the full functionality in the very powerful free version of Google Analytics. Push Google Analytics harder for your business. Don't just rely on the out-of-the-box solution. Make sure that you're fully aware of all of the features that are available. Pick the ones that are most relevant to your business. And make sure that you've got them implemented correctly. And that you're actually using the data effectively as well. There's no point in adding extra data if you can't use it. Focus in on whatever reports are right for your business, then make sure that you have somebody or some people who can effectively use that data and actually drive improvement - because that's what it's all about.

Today we get into Google Analytics' new cohort analysis feature. We're going to cover: - What cohort analysis is and why we should care. - What kind of insights to expect from engaging in cohort analysis. - A look at companies that offer cohort analysis on their platform. Enjoy! Download our Digital Edition of the February Issue for free on your mobile device at: http://wsm.co/1C8iMsh Like us on Facebook: http://wsm.co/1AZvKat Follow us on Twitter: http://wsm.co/1E7LWHs Heart us on Instagram: http://wsm.co/1E7M49V Visit our daily blog for the latest news, trends, and analysis' in the industry: http://wsm.co/NetFeatures

Shane and Maria discuss advanced tracking with analytics expert Feras Alhlou. Learn all about goal types, event tracking, assigning a conversion value to goals, reconciling data between analytics platforms, analytics hacks, upgrading to Universal Analytics, cohort analysis and analytics for live chat software.In case you missed it, listen to Episode 5 for a basic understanding of Google Analytics and how to link Adwords to Google Analytics for better reporting. Visit the PPC Professionals AdWords Best Practices Tutorial to learn more about AdWords Tracking and Conversions.