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Business & Strategy Exercises

Fill in the blanks to test your knowledge.

1

MRR stands for Monthly ___ Revenue — the normalized monthly income from all active subscriptions

// MRR calculation
const monthlySubscriptions = [
{ plan: "starter", price: 29, customers: 120 },
{ plan: "pro", price: 99, customers: 45 },
{ plan: "teams", price: 299, customers: 8 },
];
const MRR = monthlySubscriptions.reduce((sum, s) => sum + s.price * s.customers, 0);
// Monthly Revenue = $7,375
2

CAC stands for Customer ___ Cost — the total spend required to acquire one new paying customer

// CAC calculation

const salesAndMarketingSpend = 15000; // monthly

const newCustomersAcquired = 25; // this month

const CAC = salesAndMarketingSpend / newCustomersAcquired;

// Customer Cost = $600 per customer

3

In the LTV:CAC ratio, a healthy SaaS benchmark is ___ or higher (LTV is at least 3x the cost to acquire)

// LTV:CAC health check

const LTV = 1800; // average revenue per customer over their lifetime

const CAC = 600; // cost to acquire one customer

const ltvCacRatio = LTV / CAC; // =

const isHealthy = ltvCacRatio >= 3; // true

console.log(isHealthy ? "Healthy unit economics" : "CAC too high or LTV too low");

4

Churn rate is the percentage of customers who ___ in a given period — high churn destroys growth

// Monthly churn rate

const startingCustomers = 500;

const customersLost = 25;

const churnRate = (customersLost / startingCustomers) * 100;

// rate = 5% monthly = 46% annual — unsustainably high

// Healthy SaaS churn: < 1-2% monthly (< 12-24% annual)

5

PLG stands for Product-___ Growth — a go-to-market strategy where the product itself drives acquisition and expansion

// PLG vs SLG comparison
const growthMotions = {
PLG: {
fullName: "Product- Growth",
acquisition: "Users discover via freemium or free trial",
expansion: "Users upgrade when they hit limits",
examples: ["Slack", "Notion", "Figma"],
},
SLG: {
fullName: "Sales-Led Growth",
acquisition: "Outbound sales + demos",
expansion: "Account management + upsell calls",
examples: ["Salesforce", "SAP"],
},
};
6

The Lean ___ is a 1-page business model framework with 9 blocks: Problem, Solution, UVP, Unfair Advantage, Customer Segments, Key Metrics, Channels, Cost Structure, and Revenue Streams

// Lean blocks
const leanCanvas = {
problem: ["Manual data entry wastes 3h/day for ops teams"],
solution: ["AI-powered data extraction from any file format"],
uvp: "10x faster data entry — guaranteed or refund",
unfairAdvantage: "Proprietary OCR model trained on 50M documents",
customerSegments: ["Operations managers at 50-500 person companies"],
keyMetrics: ["MRR", "activation rate", "time-to-first-extraction"],
channels: ["SEO", "Product Hunt", "LinkedIn outbound"],
costStructure: ["API costs", "engineering salaries", "hosting"],
revenueStreams: ["$99/mo starter", "$299/mo pro", "$999/mo teams"],
};
7

NRR stands for Net Revenue ___ — an NRR above 100% means existing customers are growing faster than they are churning

// NRR (Net Revenue Retention) formula

const startMRR = 50000;

const expansionMRR = 8000; // upgrades + seat additions

const contractionMRR = 2000; // downgrades

const churnMRR = 3000; // cancellations

const NRR = ((startMRR + expansionMRR - contractionMRR - churnMRR) / startMRR) * 100;

// NRR = 106% — is positive (growing without new customers)

8

A SAFE note (Simple Agreement for Future ___) is the most common early-stage fundraising instrument in Y Combinator-backed startups

// SAFE note key terms
const safeNote = {
instrument: "Simple Agreement for Future ",
valuationCap: 5000000, // max valuation at which SAFE converts
discount: 0.20, // 20% discount to next round price
proRataRights: true, // right to invest in future rounds
conversionTrigger: "Priced equity round or liquidity event",
advantage: "No interest, no maturity date, no debt",
};
9

TAM stands for Total ___ Market — the maximum addressable revenue opportunity if you captured 100% of the market

// Market sizing (TAM → SAM → SOM)
const marketSizing = {
TAM: {
name: "Total Market",
description: "Everyone who could ever buy this",
example: "$50B — all U.S. businesses that manage invoices",
},
SAM: {
name: "Serviceable Addressable Market",
description: "The segment you can realistically serve",
example: "$4B — SMBs under 100 employees with cloud accounting",
},
SOM: {
name: "Serviceable Obtainable Market",
description: "What you can capture in 3-5 years",
example: "$40M — 1% SOM = realistic first-phase target",
},
};
10

The AARRR framework (Pirate Metrics) tracks five stages: Acquisition, ___, Retention, Revenue, and Referral

// AARRR Pirate Metrics
const aarrr = {
acquisition: { metric: "Visitors from all channels", example: "10,000 visits/mo" },
: { metric: "Users who experience core value", example: "2,000 activated (20%)" },
retention: { metric: "Users who return after day 1", example: "800 return in week 1 (40%)" },
revenue: { metric: "Paying customers", example: "200 paying (25% of retained)" },
referral: { metric: "Users who refer others", example: "40 referrals (20% of paying)" },
};