Any business has to get customers. In paid marketing, you have to pay for each customer. This is the Customer Acquisition Cost (CAC). Then, each customer gives you a certain amount of value over time, or the Lifetime Value (LTV)
How do you calculate the LTV and CAC? How is it important that these two numbers related to each other? Learn in our guide from Lean Startup.
Does your startup need to pivot? Is it at the brink of failure, and you need to find a new business model or customer segment?
Figure out how to pivot your startup correctly in this guide from Lean Startup.
In lean management, what does Genchi Genbutsu mean? Why is it so important for your business? Learn the principles of “go and see” to better meet your customers’ needs and build a winning product.
Literally, Genchi Genbutsu means “go and see” in Japanese. It came from the famous Toyota Production System to figure out the reality of what’s happening. But how does it work in general, outside of manufacturing, and what does it mean for Lean Startup?
Change is inevitable, but it can be addressed successfully. Here’s a guide on what to do, and what not to do.
No matter what environment we operate in — whether a town, city, family, relationship, workplace, or other setting — change is inevitable. “Who Moved My Cheese” by Spencer Johnson is a parable about a place that changed, and how its inhabitants reacted. Through the characters’ triumphs and travails, the story offers lessons and tips for coping successfully with change in our lives by changing our attitudes and behavior.
Freakonomics: A Rogue Economist Explores the Hidden Side of Everything applies the tools of economics to explain real-world phenomena that are not conventionally thought of as “economic.”
Authored by Steven D. Levitt and Stephen J. Dubner, Freakonomics argues that data analysis and incentives can explain a lot about human behavior, and that a great deal of what experts and conventional wisdom tell us is wrong. As they explore these themes, the authors give us some powerful—and highly counterintuitive—insights into why the world is the way it is.
The Early Childhood Longitudinal Study (ECLS), launched by the US. Department of Education in the 1990s, measured the academic progress of over 20,000 students as they progressed from kindergarten to the fifth grade, interviewing parents and educators and asking a broad range of questions about the children’s home environment. The study provided an ample resource of data that researchers could use to identify more statistically meaningful relationships between specific parenting tactics and children’s academic outcomes.
Economics is not an easy field in which to conduct randomized controlled experiments. Since much of economics focuses on quantities that are very large (national GDP, effects of fiscal policy on employment) and involves the study of individual decisions made by billions of people, it’s rare for economists to be able to test their hypotheses in a lab.
For this reason, economists must observe events in the real world that happen create “variable” and “control” groups that can substitute for the classical design of a laboratory experiment. These real world events are called natural experiments.
The Myth of the “Crack Millionaires” Let’s set the stage. The 1980’s were marked by a tide of rising crime in The United States. A great deal of the violence in the inner cities was driven by crack-cocaine. According to one study, crack accounted for a shocking 25 percent of homicides in New York City in 1988. It was in this context that the conventional wisdom of “crack millionaires” was born. The myth was largely propagated by police officers, criminologists, and others in the law enforcement community. They argued that dealers were making money hand-over-fist and living extravagant, luxurious lifestyles.
When two things happen together, it’s tempting to believe that one caused the other. For example, in the previous chapter, we saw that the economy improved while crime rates dropped. This seems like a satisfying explanation, until the data show the economy couldn’t have had a large effect.
In reality, many correlated phenomena are correlated purely by chance. This gives rise to the well-known saying, “correlation does not imply causation.”