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Entrepreneurship in Entertainment Technology

Entrepreneurship in Entertainment Technology. Welcome!. Today’s Agenda. Financial Statements Review from Tuesday Financial Modeling Examples. Financial Statements. Main Types. Income Statement (P&L) Balance Sheet Cash Flow. Financial Models: Drivers, Assumptions and Metrics.

zachery-holden
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Entrepreneurship in Entertainment Technology

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  1. Entrepreneurship in Entertainment Technology Welcome!

  2. Today’s Agenda • Financial Statements • Review from Tuesday • Financial Modeling • Examples

  3. Financial Statements

  4. Main Types • Income Statement (P&L) • Balance Sheet • Cash Flow

  5. Financial Models:Drivers, Assumptions and Metrics

  6. Financial Models

  7. Financial Models • What • When • How • Why • Who

  8. Financial Models • Simulation • Rules + Assumptions + Initial Values

  9. Why? • Test Scenarios • Sustainable? • Sensitivity Analysis • Find Toxic Events • Find Metrics

  10. How? • Hypothesize • Test • Iterate • Try Different Models

  11. Drivers and metrics • Drivers • Key factors that drive revenue and expenses • Ratio • Assumptions • Numbers you plug into drivers • Metrics • A measurement of a Driver’s performance • Ratio

  12. Example 1 – Subscription • Drivers • Revenue per Customer per Month • Cost per Sales Lead • Conversion Rate • Churn Rate • Metrics • LCV/CAC • Conversion rate (% leads who pay) • Retention or churn (% repeat customers) • Growth

  13. Example 2 – Freemium Games • Driver • Conversion Rate • Revenue per Paying User • Churn Rate • Hosting Cost per MAU • Metrics • LVC/CAC • Growth • Gross Profit Margin

  14. Sample Financial models • techcrunch.com/2010/10/10/teardown-13-ways-10-million-revenues/

  15. Example 3 – Ad supported • Driver • Revenue per Click • Metrics • Unique visitors • Page views per visitor • Conversion rate (% visitors who click)

  16. Example 4 – Marketplace • Driver • Listings Closed • Metrics • New listings • Conversion rate (% listings that close)

  17. Expense Examples • Number of servers ← Pages served per minute • Pages served ← Number of visitors • Acquisition cost = Marketing cost per new customer • R&D cost ← Number of products • Customer support ← Number of customers

  18. Teardowns

  19. Zynga • Source: • Public Filings

  20. Analytics • http://www.google.com/intl/en/analytics/features/multichannel-funnels.html

  21. WhiteboardExercise

  22. whiteboard • Revenue streams • Costs of revenue (variable costs) • Key drivers • Key metrics • Assumptions you’ll have to make • Other important aspects of your model

  23. Next Class

  24. homework • Read • techcrunch.com/2010/10/10/teardown-13-ways-10-million-revenues/ • Financial Model for your market opportunity • Meet with me to determine goal • Excel spreadsheet • Explicit detail on assumptions • No company intro – just get straight to the data • Due date: email to Carl by Monday 2/25, 7pm

  25. Resources

  26. Resources • Teardowns • techcrunch.com/2010/10/10/teardown-13-ways-10-million-revenues/ • techcrunch.com/2010/05/13/zynga-teardown/ • techcrunch.com/2010/05/02/teardown-groupon/

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