Basic unit economics of a business

Basic unit economics of a business

Every startup or business ultimately aims to turn a profit by providing a product or service with a higher value than the costs to deliver it. Whether you are planning to start a new venture or currently running one, it's important to understand the unit economics of your business.

Unit economics is defined as the direct revenues and costs associated with a particular business model expressed on a per unit basis. 

Understanding the unit economics of your business provide a way to measure its profitability. So let's start by identify the unit for your business. If you are selling a product like a glass of lemonade 🍋, that would be the unit. For those providing a service, the unit would be the customer or client.

If you want to grow your business, be a pirate! AARRR!

If you want to grow your business, be a pirate! AARRR!

The one question that every entrepreneur and business owner keep asking themselves, every single night before they go to bed is how do I grow my business?

You may want to increase your sales and revenue to improve the bottom-line. Or you may want to unlock the economies of scale by ramping up your production output.

Whatever the reason, you can only grow your business if you have a clear understanding on how it is performing right now. That means you have to track and measure all the different parts of your business. You simply can’t improve something you are not measuring.

There and back again

There and back again

This is an email written for my team to remind them of the values & principles that brought us to where we are now

It has been more than three years since we embarked on this unexpected journey together and for some reason, we tend to find ourselves back to similar situations again and again.

When John and I first join Mindvalley, we were tasked to build Omvana Online. Then soon after that, we started working on Elula while growing the team. And recently, we started a new quest to develop the greatest personal growth learning platform the world have ever seen.

Personally, I think we are amazingly lucky to have the trust of the company to be the go-to team to build the next big thing. All of us should be thankful for the opportunities given to us and we should never take it for granted.

Why I Love Carebears

Why I Love Carebears

I'll admit I may have seen more than 1 episode of Carebears when I was younger. I don't remember what it was about except that they are colourful bears with different icons on their tummy.

But I like Carebears. Not so much the cartoon but rather people who are caring and are willing to sacrifice themselves toward things that matter to them. If you ask me what type of people I would hire, I'll choose a Carebear any day, any time.

Successful entrepreneurs are great at capturing value

Successful entrepreneurs are great at capturing value

Most would say entrepreneurs are job creators. Businesses and companies they build, employ workers and drive the economy. You could also say entrepreneurs are value creators. Their ventures create and deliver value to their customers.

In my mind, an entrepreneur is someone who is exceptionally good at identifying gaps in the market, fills it and captures the resulting value of this exchange.

My toothbrush is better than yours

My toothbrush is better than yours

Even if your toothbrush is newer, cleaner, fancier, more colorful, electrically powered or emits ultrasonic wave, I still prefer mine. After all, why would I want to use someone else’s toothbrush. Yuck!

This is fine if we are just talking about toothbrushes but in reality, we have the same concept towards other peoples’ ideas. We tend to prefer ideas we came up with rather than those from others. This is known as the Not-Invented-Here bias or the Toothbrush Theory.

10 Actions Points to build your Minimum Viable Product

Andrew Warner of Mixergy interviewed KISSMetrics CEO, Hiten Shah on his experience launching products and some action points on how to create a minimum viable product to test your ideas. 

Here are the 10 Actions Points by Hiten:

  1. First write down your assumptions.
  2. Then survey and interview potential customers.
  3. Look for patterns in their responses.
  4. Build your Minimum Viable Product.
  5. Don’t worry about the ghetto launch.
  6. Look for early adopters who would accept flaws.
  7. Get feedback on your launch.
  8. Pivot, if you need to.
  9. Don’t worry about the competition.
  10. Discover your mistakes early.

Go to this page to grab a copy of the PDF containing the entire interview. Trust me, it's worth your time.

5 lessons for entrepreneurs

For those of you who are addicted to self-employment and solving problems to make a living, here are some interesting lessons and tips.

  1. Passion - We all know how important passion is as a driving force for anything you do. But your passion can also be your business greatest weapon. Jonathan Betz makes an interesting point where the founder's passion can make a huge difference.
  2. Find (and solve) problems that others have ignored - Quote from Intuit's co-founder Scott Cook in an interview about how they built Quicken and Quickbooks.  This should be obvious but it's worth reminding that unless your product solves a real problem, it's not a business.
  3. Test your idea first - It's very common for you to want to jump in and start working on your idea right away but you should test it out first. Test if there's a market and if anyone would pay for it. What Buffer app did to test their idea is something we should all learn from.
  4. Advertising isn't a business model for everyone - The idea of starting a site and slapping Google Adsense to make a quick buck sounds easy and attractive but it isn't viable for everyone. Advertising is only valuable when a user arrives at your site with an intent to buy/search for something. Read this post on how the position of your product/site in the customer's decision process makes a big difference. Ideally, you'll want to be first in the process like Google/Facebook/Twitter.
  5. Patient for growth, impatient for profit - Clayton Christensen said in his book, Innovator's Solution that there are good money and bad money. Businesses should become profitable before they become big. Raising money to grow and scale before finding a solid foundation for profit can be very dangerous. This is exactly what's happening with Groupon.
Personally, I've been trying to apply these lessons but hardest thing is to identify a problem that's worth solving. But when I do find it, I'm going to test it out by building a minimal viable product first.

Kung Fu Masters and Entrepreneurs

I'm a big fan of Kung Fu movies. Both the more realistic ones (Ip Man, Fearless) and those with supernatural powers like Storm Riders. (only the first!) Kung Fu Masters are basically the Asian version of superheroes. Like how we learned from Spiderman that with great power comes great responsibility, there's plenty of values and lessons entrepreneurs can learn from Kung Fu Masters.

  1. Motivation and Drive - It takes a lot to get up every morning and go through the same process over and over again. At some point, you are going to get bored hitting a wooden dummy but Kung Fu Masters never give up. They know that the path to success takes a lot of commitment and focus.
  2. Practice, practice, practice - Even after they master a technique, formed their own school and defeated the villain, Kung Fu Masters never stopped practicing. Practice is the only way to maintain your skill and focus. Life is a constant learning process and practicing is one way to learn.
  3. Many paths up the mountain - Kung Fu Masters understand that there aren't just one way to reach the summit of awesomeness. There are multiple routes you can take. Similarly, the journey to success for an entrepreneur isn't predefined in anyway. Part of entrepreneurship is to discover a whole new way to success.
  4. Experiment - It's always extremely cool when a Kung Fu Master reveals his new technique that will blow his enemies away. But how did he come up with it? He experimented! What do you think he was doing hiding inside a cave? Entrepreneurs should never stop trying and testing things to see what works. Eventually, you'll come up with your own special home-brewed technique to defeat your competitors.
  5. Calm & Wise - A Kung Fu Master is always calm and wise. They don't rush into things and always seem to have the wisdom to get everyone out of trouble. An entrepreneur is a leader for his/her employees. Similarly, an entrepreneur have to be a calm and collected figure for the employees and use his/her wisdom to guide the company. You don't have to be smarter than your employees but at least be smart enough to realize that.
  6. Everyone has a weakness - No matter how powerful a Kung Fu master is, there's always a weakness to exploit. An entrepreneur must realize that no matter how big or well-established a competitor is, there will be a weakness somewhere to take advantage of. Just remember that you too have a weakness.
  7. Marketing - A Kung Fu Master knows the importance of marketing. This is why they are so eager to show-off their strengths to others. You must however maintain a good reputation and standing among your peers. Make business not enemies.
  8. Disciples - When you are passionate about something, you'll want to share it with others. This is why Kung Fu Masters start schools/guilds and recruit disciples. Similarly, an entrepreneur must have the passion and willingness to share. You have to inspire others to follow your lead.
  9. Competition - This is a fact of life. There's always someone better out there but Kung Fu Masters use it as the drive to push the limits. Let the competition be your fuel for your journey.
  10. Lonely at the top - There are always sacrifices to be made in order to reach greater heights. Kung Fu Masters know that as you move up the ladder, things around you will change and people will start treating you differently. But no worries, there are 6 billion of us, so surely there will be a few great ones up there to welcome you.

This is by no means all that you can learn from Kung Fu Masters. I'm sure there are many more insights and teachings that can help you in your journey. Now where did I put my Ip Man DVD...