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Entrepreneurship in Entertainment Technology

Entrepreneurship in Entertainment Technology. Welcome!. Today’s Agenda. Financial Statements Review from Thursday Financial Modeling Teardowns Class Exercise. Financial Statements. Main Types. Income Statement (P&L) Balance Sheet Cash Flow.

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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 Thursday • Financial Modeling • Teardowns • Class Exercise

  3. Financial Statements

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

  5. Modeling:Drivers, Metrics,and assumptions

  6. Drivers and metrics • Drivers • Key factors that drive revenue and expenses • Usually a “unit” • Revenue per “X” • Metrics • A measurement of a Driver’s performance • Usually a ratio or percentage

  7. Example 1 – Subscription • Driver • Revenue per Customer per Month • Metrics • Cost per sales lead • Conversion rate (% leads who pay) • Retention or churn (% repeat customers)

  8. Example 2 – Ad supported • Driver • Revenue per Click • Metrics • Unique visitors • Page views per visitor • Conversion rate (% visitors who click)

  9. Example 3 – Marketplace • Driver • Listings Closed • Metrics • New listings • Conversion rate (% listings that close)

  10. Assumptions • How other numbers are related to Drivers or Metrics • Often are ratios

  11. 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

  12. Teardowns

  13. Consumer internet business models • techcrunch.com/2010/10/10/teardown-13-ways-10-million-revenues/

  14. examples • techcrunch.com/2010/10/10/teardown-13-ways-10-million-revenues/

  15. Zynga • Source: • Public Filings

  16. WhiteboardExercise

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

  18. Next Class

  19. homework • Read • techcrunch.com/2010/10/10/teardown-13-ways-10-million-revenues/ • Financial Model for FYE with $10M in Revenue • Excel spreadsheet • Explicit detail on assumptions • No company intro – just get straight to the data • Due date: email to Carl by Monday 10/1, 7pm

  20. Resources

  21. 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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