# Every Startup Can Be Dis...  ## Metadata - Author: [[@lennysan on Twitter]] - Full Title: Every Startup Can Be Dis... - Category: #tweets - URL: https://twitter.com/lennysan/status/1747304157084848344 ## Highlights - Every startup can be distilled into a simple equation. And until you can express yours as one, you don’t fully understand your business. Having this equation gives you a map for understanding your biggest growth drivers, your key inputs and output, and once your teams are aligned behind it, and the equations operationalized, you’ll experience a huge force multiplier—because every team will be focusing their energy on the same (high-leverage) levers. I teamed up with [danhockenmaier](https://twitter.com/danhockenmaier) to collect the detailed equations for the eight most common tech business models: 1. Bottom-up B2B SaaS with seat-based pricing 2. Bottom-up B2B SaaS with usage-based pricing 3. Top-down B2B SaaS 4. B2C subscription 5. B2C free (ads) 6. B2C marketplaces 7. B2B marketplaces 8. DTC/e-commerce 👇🧵  ([View Tweet](https://twitter.com/lennysan/status/1747304157084848344)) - (Keep reading for a summary, or bookmark this post for later) https://t.co/ioDedguYhA ([View Tweet](https://twitter.com/lennysan/status/1747304159274209554)) - 1. Bottom-up B2B SaaS with seat-based pricing Examples: [Figma](https://twitter.com/Figma), [SlackHQ](https://twitter.com/SlackHQ), [Zoom](https://twitter.com/Zoom), [Adobe](https://twitter.com/Adobe) Creative Cloud, [Asana](https://twitter.com/Asana), [Jira](https://twitter.com/Jira) ARR = New ARR + Expansion ARR + Reactivation ARR – Churned ARR – Contraction ARR  ([View Tweet](https://twitter.com/lennysan/status/1747304161157492763)) - Detailed equation:   ([View Tweet](https://twitter.com/lennysan/status/1747304163732762650)) - 2. Bottom-up B2B SaaS with usage-based pricing Examples: [awscloud](https://twitter.com/awscloud), [datadoghq](https://twitter.com/datadoghq), [twilio](https://twitter.com/twilio) ARR = New ARR + Expansion ARR + Reactivation ARR – Churned ARR – Contraction ARR  ([View Tweet](https://twitter.com/lennysan/status/1747304166127702268)) - Detailed equation:   ([View Tweet](https://twitter.com/lennysan/status/1747304168132608158)) - 3. Top-down (sales-led) B2B SaaS Examples: [Box](https://twitter.com/Box), [Salesforce](https://twitter.com/Salesforce), [Workday](https://twitter.com/Workday), [SnowflakeDB](https://twitter.com/SnowflakeDB) ARR = New ARR + Expansion ARR + Reactivation ARR – Churned ARR – Contraction ARR  ([View Tweet](https://twitter.com/lennysan/status/1747304170406002992)) - Detailed equation:   ([View Tweet](https://twitter.com/lennysan/status/1747304172503060934)) - 4. B2C with subscription-based pricing (trial or freemium) Examples: [Duolingo](https://twitter.com/Duolingo), [Spotify](https://twitter.com/Spotify), [Tinder](https://twitter.com/Tinder), [Calm](https://twitter.com/Calm), [Strava](https://twitter.com/Strava), [MyFitnessPal](https://twitter.com/MyFitnessPal) ARR = MRR x 12 = (New subs + Retained subs + Reactivated subs) * Average monthly revenue per sub * 12  ([View Tweet](https://twitter.com/lennysan/status/1747304175082627174)) - Detailed equation:  ([View Tweet](https://twitter.com/lennysan/status/1747304177322369527)) - 5. B2C with ads (i.e. free for the user) Examples: [Instagram](https://twitter.com/Instagram), [Google](https://twitter.com/Google), [TikTok_us](https://twitter.com/TikTok_us), [Meta](https://twitter.com/Meta), [Snap](https://twitter.com/Snap), [Twitter](https://twitter.com/Twitter) Revenue = Active users * Impressions per user * CPM/CPC/CPA  ([View Tweet](https://twitter.com/lennysan/status/1747304179952226690)) - Detailed equation:   ([View Tweet](https://twitter.com/lennysan/status/1747304182129074274)) - 6. B2C marketplaces Examples: [Airbnb](https://twitter.com/Airbnb), [Uber](https://twitter.com/Uber), [DoorDash](https://twitter.com/DoorDash), [Etsy](https://twitter.com/Etsy), [eBay](https://twitter.com/eBay) Revenue = Transactions * AOV * Take rate  ([View Tweet](https://twitter.com/lennysan/status/1747304184737882587)) - Detailed equation:  ([View Tweet](https://twitter.com/lennysan/status/1747304186952499361)) - 7. B2B marketplaces Examples: [faire_wholesale](https://twitter.com/faire_wholesale), [AmazonBusiness](https://twitter.com/AmazonBusiness), [PachamaInc](https://twitter.com/PachamaInc), [NoviConnect](https://twitter.com/NoviConnect) Revenue = Transactions * AOV * Take rate  ([View Tweet](https://twitter.com/lennysan/status/1747304191302005018)) - Detailed equation:   ([View Tweet](https://twitter.com/lennysan/status/1747304194128871534)) - 8. DTC/e-commerce equation Examples: [WarbyParker](https://twitter.com/WarbyParker), [Casper](https://twitter.com/Casper), [glossier](https://twitter.com/glossier), and [DollarShaveClub](https://twitter.com/DollarShaveClub) Revenue = Transactions * AOV  ([View Tweet](https://twitter.com/lennysan/status/1747304197954122022)) - Detailed equation:  ([View Tweet](https://twitter.com/lennysan/status/1747304201200496747)) - How to make the most of this post: 1. Create your own business’s math formula, with inspiration from a formula below 2. Have a discussion with your team about how your business grows through the lens of this formula 3. Identify the highest-leverage lever(s) within your formula, and put more resources behind it 4. Identify one new lever you haven’t invested in, and experiment with it 5. Turn the formula into a full-fledged growth model (something we’ll explore in a future post) ([View Tweet](https://twitter.com/lennysan/status/1747304203679322581)) - For much more, including how to add contribution margin to your equation, and how to calculate your payback period, check out the full post https://t.co/ioDedguYhA ([View Tweet](https://twitter.com/lennysan/status/1747304205235392810)) - We had a lot of help refining these equations. A huge thank-you to: [abinoda](https://twitter.com/abinoda) [abilmes](https://twitter.com/abilmes) [alexa_grabell](https://twitter.com/alexa_grabell) [barrald](https://twitter.com/barrald) [borisjabes](https://twitter.com/borisjabes) [colin_dunn](https://twitter.com/colin_dunn) [domwong_](https://twitter.com/domwong_) [emilykramer](https://twitter.com/emilykramer) [jjeremycai](https://twitter.com/jjeremycai) [may_habib](https://twitter.com/may_habib) [merci](https://twitter.com/merci) [Kazanjy](https://twitter.com/Kazanjy) [McStempel](https://twitter.com/McStempel) [rujulz](https://twitter.com/rujulz) [whitneydsteele](https://twitter.com/whitneydsteele) [w_c_hicks](https://twitter.com/w_c_hicks) [zgrannis](https://twitter.com/zgrannis) + Nels Gilbreth ([View Tweet](https://twitter.com/lennysan/status/1747307569952203208)) - I knew I forgot someone: [christinacaci](https://twitter.com/christinacaci) of [TrustVanta](https://twitter.com/TrustVanta)! She was an incredible help on helping us think through these equations, and I'm so kicking myself for not including her here. Thanks Christina 🧡 ([View Tweet](https://twitter.com/lennysan/status/1747330214236242095))