All MHR Quiz Questions
Calculate CoCA given the following information Total Sales & Marketing budget: $1000 Sales & Marketing associated with bringing in new customers: $500 Number of New customers Acquired: 5
$100 CoCA = Total Cost /# of Customers Acquired ($500/5) = $100
Calculate LTV based on the following information Price/Month: $500 Cost/Month to the co-working management company: $100 Average tenant use: 25 months
$10000 (Average value of a sale) X (Number of repeat transactions) X (Average retention time in months or years for a typical customer) Average monthly revenue per month = (Price/month) - (Cost/month to the co-working company) 500-100 = $400 $400 X 25 = $10000
Look at Picture for Question
$40 1000 x (5%) = 50 50 x (60%) = 30 customers acquired $200 + (50 x $20) = $1200 to acquire customers $1200/30 = $40
What is the equation for LTV (lifetime value)?
(Average value of a sale) X (Number of repeat transactions) X (Average retention time in months or years for a typical customer)
Which of the following best describes the key point in the 'fake it-Chapter 13' reading from "Sprint" by Knapp, Zeratsky, & Kowitz 1. Build just enough to learn, but not more 2. Investors will only give funding to confident entrepreneurs 3. The first-mover advantage is key to success 4. Entrepreneurs need to move fast and break things
1. Build just enough to learn, but not more
In Connie Chan's talk, "When Advertising Isn't Enough", she talks about the different business models used in China to sell e-books. Which of the following was NOT mentioned 1. Customers bid on a limited number of e-books 2. Free books with a tipping option 3. Purchasing books 1000 characters at a time 4. Free books that you pay to unlock the ending
1. Customers bid on a limited number of e-books
After your beachhead market, follow-on markets include: 1. Selling new versions of your product to the same customers and selling your initial product to markets that are similar to your beachhead 2. Selling add-on services associated with your product to the same customers and selling your initial product to markets that are similar to your beachhead 3. Selling more of your initial products to the same customers and selling your initial product to markets that are similar to your beachhead
1. Selling new versions of your product to the same customers and selling your initial product to markets that are similar to your beachhead
When developing your Product plan, you seek to: 1. Serve a different Persona with a different set of product or service features 2. Identify the closet geographical markets to keep your CoCA low 3. Systematize the process of generating new product or service features so that you can "lock-in" low advertising costs in advance 4. Leverage online sales whenever possible
1. Serve a different Persona with a different set of product or service features
A business loan is substantively no different than other types of debt such as student loans or a home mortgage. 1. True 2. False
1. True
A business model is a framework by which you capture value from customers based on the product or service you sell 1. True 2. False
1. True
Calculating the total addressable market size for follow-on markets helps you stay aware of the long-term potential of your business 1. True 2. False
1. True
For most new ventures, the cost of customer acquisition will start very high and should decrease over time. 1. True 2. False
1. True
Generally speaking, angels tend to invest less than venture capital firms 1. True 2. False
1. True
In the 'Fake It - Chapter 13' reading from "Sprint," creating a facade of a product can quickly get you 90% of the way to something that you can test with customers 1. True 2. False
1. True
In the Lean startup methodology, building a sustainable business is the outcome of a series of evolving product experiments 1. True 2. False
1. True
It is important to carefully consider your venture's business model because you may have options to choose from and it is difficult to change your business model later 1. True 2. False
1. True
Mapping the process to acquire a paying customer can help you identify hidden obstacles that inhibit your ability to sell your product. 1. True 2. False
1. True
The best way to figure out the decision-making unit is to talk to your potential customers 1. True 2. False
1. True
The cost of customer acquisition (COCA) analysis begins with mapping the process to acquire a paying customer 1. True 2. False
1. True
When a company uses equity financing, it gives up partial ownership of the company in exchange for investor capital 1. True 2. False
1. True
When considering key assumptions about your venture, you should specifically look at gross margin 1. True 2. False
1. True
When mapping the process to acquire a paying customer, you should note whether payment will come from the customer's yearly operating budget or from the customer's long-term capital budget. 1. True 2. False
1. True
When testing assumptions, the initial price of the product is not as important as showing that target customers will pay to acquire the product. 1. True 2. False
1. True
Which part of the Business Model Canvas describes how a company communicates with and reaches its customer segments to deliver a value proposition? 1. Key activities 2. Channels 3. Value proposition 4. Revenue Streams
2. Channels
In the "Build, Measure, Learn" (Lean startup) framework, the key lesson is: 1. Preserverance, creative genius, and hard work are the key to success 2. Create something to show customers and get their feedback as quickly as possible 3. The first critical step towards success is to build a working prototype of the fully functional product 4. It's good to have construction toys, like LEGO, around for people to use at a startup company to encourage creativity
2. Create something to show customers and get their feedback as quickly as possible
Which part of the Business model canvas describes the types of relationships a company establishes with specific customer segments? 1. Value proposition 2. Customer relationships 3. Channels 4. Revenue Streams
2. Customer relationships
A debt investor cannot lose the entire value of the investment. 1. True 2. False
2. False
According to the art of startups by Bhide, most new ventures in the U.S. raise money from venture capital firms 1. True 2. False
2. False
An asset-based business loan requires that the company identify a specific asset that the company will utilize to generate funds in the event that the company cannot make interest or principal payments on the loan. 1. True 2. False
2. False
An equity investor cannot lose the entire value of the investment. 1. True 2. False
2. False
Banks are the primary source of initial investment dollars for startup companies in the software industry 1. True 2. False
2. False
The MVBP should balance simplicity with the features that customers will pay the most money to acquire 1. True 2. False
2. False
Venture capital firms are generally investing their own money 1. True 2. False
2. False
An example of a 'consumables' business model would be a free website that sells your information to advertisers 1. True 2. False
2. False Pretty sure the correct term is crowdsourcing
According to the Art of Startups by Bhide, successful bootstrappers should grow the venture: 1. Based on a complex formula that matches interest rates to the venture's accounts receivables ratio 2. Only as fast as they can afford and control 3. Faster than competitors to ensure that it continuously increases market share 4. As fast as possible to attract outside capital investors
2. Only as fast as they can afford and control
According to the Mullins article on customer cash, companies that charge customers a predictable monthly fee in advance are using a: 1. Value pricing model 2. Subscription model 3. Scarcity model 4. Deposit model
2. Subscription model
In her video on bootstrapping, Rebecca Lynn points out that when venture capitalists give you investment capital, they are expecting 1. That your technology will prove out to be better than anything else out ther 2. That you will scale the business incredibly fast 3. That once they make the investment, theyll get out of your way unless you ask for help 4. That you'll pay the money back when you can
2. That you will scale the business incredibly fast
The Primary Economic Buyer Is: 1. The Person or department who handles the logistics of the purchase 2. The decision-maker who will sign off on spending money 3. The person who will actually use the product 4. The person with depth of experience who can influence the rest of the decision-making unit
2. The decision maker who will sign off on spending money
In the Commanding Heights video, the Polish egg market was an example of 1. The lack of price controls caused the prices to initially climb and then stay at that high level 2. The lack of price controls caused the prices to initially climb and then decline 3. The continuation of price controls allowed for a steady supply 4. The lack of price controls had no impact on the market
2. The lack of price controls caused the prices to initially climb and then decline
In the decision-making unit, a champion is: 1. The decision-maker who will sign off on spending money 2. The person who wants the customer to purchase the product 3. The person who will actually use the product 4. The person with depth of experience whose opinion can affect the rest of the decision-making unit
2. The person who wants the customer to purchase the product
In the decision-making unit, an influencer is 1. An individual or organization with the ability to reject a purchase for any reason 2. The person with depth of experience whose opinion can affect the rest of the decision-making unit 3. The person or department who handles the logistics of the purchase 4. The person who wants the customer to purchase the product
2. The person with depth of experience whose opinion can affect the rest of the decision-making unit
The lifetime value of a customer (LTV) is: 1. The total revenue associated with a customer 2. The total profit associated with a customer 3. The value a customer receives from using your product during the product lifetime 4. The value a customer receives from using your product during the customer's lifetime
2. The total profit associated with a customer
You run a t-shirt printing store. You estimate the cost of a single blank shirt + ink to be $12, and your selling price will be $18. The cost in time and materials to set up the printer for a new design is $60. What is your break-even quantity on a specific design? 1. $6 2. 3.33 shirts 3. 10 shirts 4. 5 shirts
3. 10 shirts $18 x 10 shirts = $180 $60 + $12 x 10 shirts = $180 This means that producing a quantity <10 will cause you to lose money
According to the Art of Startups by Bhide, a good bootstrapping strategy is to focus on: 1. Projects that target a very large market 2. Multiple types of projects so that the venture can be confident at least one will be 3. Cash-generating projects that get to break-even quickly 4. Projects where one team member can focus to ensure efficient implementation
3. Cash-generating projects that get to break-even quickly
The best types of experiments to run as you prepare to launch your venture are: 1. The ones that give you the answer you want to hear 2. Validated by industry experts or other companies 3. Cheap, quick, and easy 4. Detailed and thorough
3. Cheap, quick, and easy
In the video "Principles of Lean," Steve Blank argues that a business plan is good for: 1. Startups that are facing especially high risks or uncertain markets 2. Any company, including startups 3. Established companies with successful products that are developing new products 4. Serving as paperweight; no one should use them
3. Established companies with successful products that are developing new products
Price is important in the functioning of an economy because it 1. Is the main driver of stock value 2. Is used to determine the taxes we owe to the government 3. Helps transmit information regarding supply and demand across the entire market 4. Helps venture capitalists raise investment capital
3. Helps transmit information regarding supply and demand across the entire market
In "build, measure, learn" Eric ries tells the story of their instant messaging startup IMVU. They spent 6 grueling months developing the product, and when they released it: 1. It went viral 2. It had a rough launch but evenutally caught on 3. No one even tried it 4. It didn't work
3. No one even tried it
If a company that does not have assets that can be claimed if the venture fails, a bank or financial institution is likely to provide debt financing only if: 1. The company expects to grow extremely quickly 2. The company is led by a team of experienced executives 3. The company has had stable cash flow for a while and conservative expectations 4. The company has an extremely exciting and/or disruptive technology
3. The company has had stable cash flow for a while and conservative expectations
Which part of the Business Model Canvas describes the bundle of products and services that create value for a specific customer segment 1. Revenue Streams 2. Products and Services 3. Value proposition 4. Key Partnership
3. Value proposition
You have invented a new treatment for sick cows that will save farmers $1000/treatment. The cost of producing each treatment is $20. Assume you are following a 'value-based pricing' strategy. Which of the following is your best pricing option for maximizing your profits? 1. $1100 2. $30 3. $19.99 4. $300
4. $300 $300 is the closest value to the value of the buyer ($1000) but does not exceed it.
All of the following are considered additional or secondary roles in the decision-making unit EXCEPT: 1. People (or organizations) with veto power 2. Purchasing department 3. Influencers 4. Champion
4. Champion
Think about a McDonald's Happy Meal. Which of the following customer types is the most accurate for a parent? 1. Champion 2. Influencer 3. End-User 4. Economic Buyer
4. Economic Buyer
In the video "Principles of Lean," Steve Blank presents a three-step process for the Lean Startup, including each of the following stages EXCEPT: 1. Build incrementally and iteratively 2. Test hypotheses 3. Frame hypotheses 4. Establish clear goals
4. Establish clear goals
All of the following are good ways to reduce CoCA (cost of customer acquisition) EXCEPT: 1. Improve conversion rates in the selling process 2. Use word of mouth 3. Stay focused on the target market 4. Target the largest customer segments first to reduce the effective cost on a per customer basis
4. Target the largest customer segments first to reduce the effective cost on a per customer basis
Which of the following is the best definition of a business model? 1. A short narrative that tells the story of the organization, including why it was founded 2. A Program or calculation that estimates the value the company generates based on a set of inputs 3. A map of the activities of the organization 4. The rationale of how an organization creates, delivers, and captures value
4. The rationale of how an organization creates, delivers, and captures value
Cost of Customer Acquisition (CoCA), also known as Customer Acquisition Cost (CAC), is best defined as: 1. The total profit generated by a customer 2. How much a customer is willing to pay in order to acquire the products or services you sell 3. The total cost to acquire and keep a customer for a given period of time 4. The total sales and marketing cost required to earn a new customer
4. The total sales and marketing cost required to earn a new customer
Which business model relies on the customer providing their credit card or billing information in advance and then being charged for small purchases, usually of digital goods with no physical value 1. Advertising 2. Franchise 3. Reselling the data collected 4. Operating and maintenance 5. Microtransactions
5. Microtransactions
Additional Module 6 Companies engage in prototyping and experimentation in order to:
Assess the viability of new products and serves quickly
Additional Module 6 Which of the following tools would be the most useful for identifying key assumptions about your business idea that should be tested:
Business model canvas/lean canvas
What is the formula for CoCA (Cost of Customer Acquisition)?
CoCA = Total Cost of acquiring new customers/# of Customers Acquired
Additional Module 6 What is the best example of A/B testing
Comparing two versions of a webpage against each other by seeing which one gets more click or views
Additional Module 5 To develop effective map for acquiring a paying customer:
Figure out whether the various decision making units have the budgeting authority to make purchases
Additional Module 5 Which business model rewards short term activity:
Hourly Rates
Additional Module 6 Lifetime value is important because it tells you
How much total profit you can expect from a particular customer, which tells you how much you can spend to acquire that customer
Additional Module 6 In build measure learn, eric ries tells the story of their instant messaging startup IMVU eric and his co founder learned how their target customers used IM systems by
Inviting them to their office to try the technology
In Geoffrey Moore's "Crossing the Chasm" framework, the customers who make conservative decisions requiring well-defined and proven information are the 1. Late majority 2. Laggards (skeptics) 3. Technological enthusiasts 4. Early adopters 5. Early majority
NOT #2 (Laggards (skeptics)) Do not know
The primary tradeoff in determining how much money to raise is: 1. Having the money you need to succeed despite potential mistakes along the way vs. how much ownership you give up 2. How much time it will take to pay the money back vs. how much ownership you give up 3. Having the money you need to succeed despite potential mistakes along the way vs. the time it will take to pay the money back 4. How much of the capital you raise should be equity vs. debt
NOT #3 (Having the money you need to succeed despite potential mistakes along the way vs. the time it will take to pay the money back) Do not know answer
Additional Module 5 All of the following are primary roles in the decision making unit except
Purchasing agent
Additional Module 5 A Broken Place problem
The car produced was lower end than planned with less travel range at a higher price
Additional Module 6 A Better Place Summary:
There are limits of innovation and its difficult for consumers to embrace new technology
Additional Module 6 (T/F) Different types of customers will pay different amounts for the same products or services depending on how early or late they are buying compared to other customers:
True
Additional Module 6 (T/f) Once a new venture starts to see demand that it did not directly generate, it can switch to medium-term selling processes such as distributors or value-added resellers:
True
Additional Module 6 A top-down perspective on calculation COCA requires totaling all sales and marketing expenses for a given time period and dividing it by customers acquired
True
Additional Module 6 Hayek argued that the knowledge of time and place is more important than scientific knowledge:
True
Additional Module 5 Which business model charges customer for the products used or consumed:
Usage Based
