Summary of “Nine Business Models and the Metrics Investors Want”

Photo by Adeolu Eletu on Unsplash

This is my personal summary/notes from a talk by Anu Hariharan, Y Combinator

These are 9 common business models for startup along with their common growth metrics:

1. Enterprise: selling software/service for big companies. Eg. Docker, Cloudera
   • Number of bookings
   • Number of unique users
   • Revenue
2. SaaS: software as a service. Eg. Google Suite, Sales Force
   • Monthly Recurring Revenue (MRR)
   • Annual Recurring Revenue (ARR)
   • MRR Churn
   • Paid Customer Acquisition Cost (CAC)
3. Subscription: similar to SaaS but usually has lower revenue per customer. Eg. Linkedin, Netflix
   • Monthly Recurring Revenue (MRR)
   • MMR Compound Monthly Growth Rate (CMGR): because usually subscription revenue is smaller
   • MRR Churn
   • Paid CAC
4. Transactional: charges a fee for each transaction. Eg. Paypal, Stripe
   • Gross Transaction Volume
   • Net revenue
   • User Retention: cohort metric
   • Paid CAC
5. Marketplace: similar to transactional but usually C2C. Eg. AirBnB, eBay
   • Gross Merchandise Value (GMV)
   • Net Revenue
   • Net Revenue CMGR: similar reason as subscription’s
   • User Retention
   • Paid CAC
6. E-commerce: sell products online with own brand (unlike marketplace). Eg. Amazon Store
   • Monthly Revenue
   • Revenue CMGR
   • Gross Margin
   • Paid CAC
7. Advertising: offer free services to customer and get revenue from advertisers. Eg. Snapchat, Twitter, Reddit
   • Daily Active Users (DAU)
   • Monthly Active Users (MAU)
   • Percent logged-in
8. Hardware: similar to e-commerce but specifically selling hardwares. Eg. Fitbit, GoPro, Xiaomi
   • Monthly Revenue
   • Revenue CMGR
   • Gross Margin
   • Paid CAC
9. Usage-based: not explained/skipped. But most likely similar to Transactional