The logic behind it is that if you record a churn of 50% on 2 customers, then it means that 1 out of 2 churned, while if you record a churn of 10% on 500 customers it has a whole different meaning. If you were to make a simple avg, you’d have 30% churn. With a weighted average, it would be ~10.16%, where the weights are 2/502 and 500/502.
Hope it helps :-)
Hey Mark. I’m a big fan of your blog and of your thinking, but I think this post is failing to address how this type of business has an intrinsic moat that will stand an equally well-funded competitor. You mention that first-mover advantage, data, and hardware will be key for (in this case) Bird to secure dominance in a certain area, i.e. city…
A reader and friend also flagged this article featuring a Chinese company which breeds cockroaches with food waste from restaurants and canteens. Worth reading!
Hi Louis! I’m a big fan of these intellectual exercises so let me try to thinking along with you.
The first thing I noticed is that you refer to platforms as a general term but, based on the Helpling example as well as your reasoning, I think your model refers exclusively to workers in the dubbed “sharing economy”, or where…
Hi Geoff! Thanks for your question.
My formula is the sum of:
[Total M2 * CR M2 / Sum(Totals)] + [ Total M3 …]
[ 67 * 38.46% / Sum(67 + 228 + 433 + 787) ] + [ 228 *46.27% / Sum(67 + 228 + 433 + 787) ] + [ … ]
Another classic cheat is calculating your metrics only on a portion of your users/customers, while actually spending money and FTE’s on ALL the users/ customer. Or purposely confusing “actual” revenues with run-rate revenues.
Stefano, I’m a big fan of your newsletter and your view of the world of (crypto)tech, but I happen to disagree on a couple of points here (while agreeing with others).
1/ I think coinbase is proving to remain one of the few trustworthy outlets for crypto-to-fiat, and vice versa. They did experience a hiccup over BCH, but it…
That’s a great story from an amazing, inspiring entrepreneur. Very interesting to see how the more your company grows the more your founder role becomes “holding things” together and, more specifically, people. I loved it when he said that he has not a typical work-day and that thinking is what he’s expected to do and that one can’t simply force it…