Tiger Sisters - Everything we learned in 29 minutes at Harvard Business School
Episode Date: April 7, 2025Grab your notebooks (and maybe a matcha latte), because Cherie and Jean are cramming an entire Harvard MBA into one crash course! In this Season 4 opener, we zoom through classic frameworks – like P...orter’s Five Forces and STP (segmentation, targeting, positioning) – and walk through real-world examples (Starbucks, Warby Parker, Netflix) to illustrate how these theories actually work in a known entity. From must-know finance terms to breaking down how to build a product people actually want, we’ve got you covered. Whether you’re launching a startup, side-hustling on DTC, or just refreshing your business IQ, this episode is well worth the 29 minutes – no six-figure tuition required. ------------------------------------------------------------------ 🐯👯♀️ Tiger Sisters Podcast | Career, Entrepreneurship, and LifeWelcome to Tiger Sisters, your go-to podcast for career mentorship and life guidance! Hosted by Cherie Brooke Luo and Jean Luo, we’re your internet big sisters here to demystify the ups and downs of navigating careers, tech, and entrepreneurship— all while staying healthy, stylish, and joyful along the way.Cherie is an influencer who has broken down the complexities of big tech, finance, and MBA programs for millions of viewers, with over 100M+ views across platforms. Jean is a tech product executive and investor, holding over 50 AI patents, who has built an impressive career in product management and institutional investment at companies like Goldman Sachs and Snapchat.Between the two of us, we’ve survived stints at top investment banks and big tech firms, founded startups, and earned four Ivy League degrees—if we’re counting Stanford! Yet, we still find time to focus on wellness, friendships, fashion, and skincare, always sharing the lessons we've learned along the way.Whether you’re here for career advice, stories about balancing life’s challenges, or just to hear our honest takes on what it means to pursue fun, wealth, and joy in all areas of life, we’ve got you covered.💛 LET'S CONNECT: ~ CHERIE ~🤳🏻 Instagram – https://www.instagram.com/cherie.brooke 📱 TikTok – https://www.tiktok.com/@cherie.brooke ✍🏻 My Substack – https://cherieluo.substack.com/ 👩🏻💻 LinkedIn – https://www.linkedin.com/in/cherie-luo/ ~ JEAN ~🤳🏻 Instagram – https://www.instagram.com/jeanluo_/👩🏻💻 LinkedIn – https://www.linkedin.com/in/jeanluo 🎵 Music produced by Sammy Signal https://open.spotify.com/artist/2HsyknHuxhT8RoZfn5rqMS🛍️ Items Referenced:🍵Sisters Matcha & SISTERS Merch: www.sistersmatcha.com♠️ Everything else: https://amzn.to/3z0dx5b⏰ Timestamps00:00:00 Intro: Everything We Learned at HBS…in 29 Minutes! ⚡️ 00:00:21 Meet the Tiger Sisters: Jean (Harvard MBA) & Cherie (Stanford MBA) 🏆 00:02:22 Strategy 101: Porter’s Five Forces 💥 00:03:10 Starbucks Case Study: brand power, real estate, supply chain ☕ 00:08:09 Cost Leadership vs. Differentiation: You can’t win on both, so choose wisely ⚖️ 00:10:30 Sisters Matcha: premium cultivar, premium pricing 🍵 00:12:32 Marketing 101: STP in Warby Parker Case Study 00:16:20 Positioning: Stand out or get lost – define your brand 🏹 00:19:47 Product Development 101: Netflix Case Study 🔧 00:20:46 Know your audience, A/B test, iterate 🔄 00:22:46 Finance 101: Decision making as the CEO 💸 00:24:06 Revenue vs. profit (Netflix’s hidden costs) 00:24:50 Cash flow, unit economics, runway & burn rate 🏃♀️ 00:27:44 P/E, EBITDA, and more: don’t fear the acronyms ⚙️ 00:28:43 Soft Skills, Hard Requirement: leadership & networking up next 🌱 00:28:55 You just got a mini MBA! Part 2 coming soon ⭐️⭐️⭐️⭐️⭐️
Transcript
Discussion (0)
This is everything we learned at Harvard Business School in 30 minutes.
I'm Sherey, I'm Gene, and we're the Tiger Sisters.
Welcome to season four of the Tiger Sisters podcast.
So if you're new to this channel, Jean is my older sister.
She went to Harvard Business School.
She's my role model, best friend.
We have this podcast together.
And just a little bit more background of who she is.
She's an absolute badass, badass.
Badass Biaj.
she started her career out at Goldman Sachs working in finance and then she's pivoted to working in tech as a product manager at Zinga the gaming company and most recently at Snapchat as head of product for augmented reality monetization and Gene went to Harvard Business School. She graduated in 2017. She has over 50 patents in AI and I'm able to talk about this because she won't brag about herself and I have to brag about her. So as you know, we're talking about Harvard Business School. Everything.
she learned there. I went to Stanford's Business School and I just graduated a few months ago,
so this is fresh on our minds. And we want to give you a crash course in the next 30 minutes.
We're going to race through all these concepts. So buckle up. We're going to go through four
main concepts, strategy, marketing, product development, and finance. So what we're going to do
throughout this episode is we're actually going to bring in examples for each of these sections
so that we can talk through the company and you can really understand how these frameworks apply.
we would in business school. I learned best through examples, so I'm really glad we're going to
put this to the test. And by the end of this episode, you're going to have a mini Harvard MBA
basically saving you $250,000. That's right. We both spent $500,000 collectively on our MBAs,
and you're going to get this for free, not including the travel expenses.
Fun and extraneous travel expenses. So we're going to dive right in right after this break.
Hey guys, quick break to let you know that we now have merch on sisters matcha.com.
We have sweatshirts and t-shirts that we designed yourselves.
Go check it out.
And please rate us five stars on Spotify and Apple Podcasts.
These ratings are so important for the distribution and survival of Tiger Sisters Podcast.
Thank you for your support.
So let's get started with strategy.
So strategy is where Harvard Business School really, I think, differentiates themselves,
or at least where they strive to differentiate themselves.
And where they shine.
Yeah.
So at HBS, strategy is not just a buzzword.
It's a roadmap for where to compete and how to win in a complex marketplace.
And without a clear strategy, even the best products or the best companies will not be able to succeed.
A classic HBS tool is Michael Porter's Five Forces, which analyzes the five components of strategy.
Porter's Five Forces was actually invented at HBS, so we bring it up all this time.
Porter's Five Forces are as follows.
threat of new entrance, bargaining power of suppliers, bargaining power of buyers, threat of substitutes,
and rivalry among existing competitors. So let's say we are going to use Starbucks as the example.
Everyone knows Starbucks and that's actually kind of like a classic business school company example.
So let's start with Starbucks and thread of new entrance. So the way to think about the threat of new
entrance is that from Starbucks perspective, one of the reasons why they're super successful is because
it's really hard to start your own coffee company and go against big people like Starbucks.
Starbucks already is a pretty massive company. So they spend a lot of money on brand awareness,
supply chain efficiency, and they have a lot of money to spend on having the best real estate so they can
have the best stores and the best locations. You might be able to open up a small coffee shop,
but going against Starbucks for these reasons can be pretty hard.
So then I would say threat of new entrance for Starbucks is actually pretty low.
Yes.
So the second is bargaining power of suppliers.
Yeah.
I feel like this is a pretty easy one because the scale of Starbucks is so massive and obvious that they have incredible bargaining power with suppliers.
They buy in a huge bulk volumes.
So because of that, they can really control and push down the prices.
Yeah.
That's kind of similar to Walmart as a classic example that has incredible bargaining power.
wins and buyers also Costco those are some of the other ones that get brought up a lot yeah the big names okay shrew what
about the bargaining power of buyers so the way to think about this is from the customer perspective the customer can go to other brands out there of coffee places like you could go to duncan donuts you go to phills or pete's but honestly like there is pretty high brand affinity for the customers Starbucks has loyalty programs they have like cool seasonal drinks customers want to buy Starbucks
Starbucks has also invested a lot in this area through their technology investments.
So creating the app where you deposit money into your Starbucks account ahead of time.
Yeah.
Kind of locks in the customer and sort of decreases the buyer bargaining power in some ways because they literally have a ledger with you.
Yeah.
And I guess the last part about Starbucks is that it was one of the bigger names to create a third space.
And now there's like so many other third spaces.
But Starbucks is really known for being like that place away from home where you can hang out.
You bring a laptop, meet up with people.
So in the customer's mind, like it's still like, let's meet up at Starbucks.
Yeah, it's ingrained after having been in your sort of routine and your go-to third place for so many years.
Ever since for us, since high school or middle school even.
Middle school.
Not my caramel macchi-my, my ice caramel macchiato.
Oh my gosh.
It was the ultimate treat.
It was so good.
The ultimate sweet treat.
Yes.
Before we knew about calories.
before I cared about calories and the effects of caffeine on stunting my height as a 13-year-old in middle school,
but I love that ice caramel macchiato. I felt like a queen drinking that.
But we digress.
Back to the lesson.
Back to the lesson.
Okay.
So the fourth force to talk about is the threat of substitutes.
Yes.
So if you think about coffee as a category, there are a lot of substitutes.
You can make coffee at home.
You can get coffee in the office, et cetera.
But I think what Starbucks has done a really good job of is,
expanding into adjacent categories so that they sort of diversify their holdings and then
decrease the threat of substitutes. So Starbucks also makes those little pods, right, coffee pods.
They make coffee beans that you can buy. Yeah. They make ground coffee. So they're not just a
retailer of coffee in their retail locations only. They've done a really good job of sort of mitigating
the risk of substitutes. The risk of substitutes. So I would say their risk of substitutes,
is moderate. Yeah. The last of Portes Five Forces is rivalry among competitors. So how does Starbucks
line up here? So, I mean, there's a bunch of different competitors in the coffee space, but Starbucks
stands out because they're consistently delivering on the customer experience in store and setting
itself apart with its premium pricing. There was an HBR piece recently on how Starbucks has gone
above and beyond on customer service.
And also, I know in the most recent years, there have been kind of some bad press that Starbucks
has had recently, especially over the last like three years.
But they've like completely jumped on top of that and tried to mitigate any of the bad press
that they had recently.
The Starbucks like CEO slash president has gotten ahead of that.
And so they're just really trying to put the customer service at the forefront.
A Starbucks employee called police on these two men who were like these two black men sitting
in Starbucks.
I vaguely remember.
And then they were arrested, even though they didn't do anything wrong.
But then Starbucks really put a forward an apology and we're just like, how do we make this right?
Yeah.
So that is the framework of Porter's Five Forces.
Anytime that you're thinking about a company, evaluating a company, you want to ask yourself these questions and go through this framework.
And then that way you can understand their landscape and where they sit amongst all of their competitors.
Another key HBS principle is choosing basically how you'll compete.
So competitive positioning.
Porter's generic strategies basically say that companies pursue one of two approaches,
either cost leadership or differentiation.
So cost leadership means being the low cost producer.
So again, the leader in the space is Walmart.
They are all about getting the lowest price possible for you and doing anything they can.
And then also scaling back on other amenities so that they can always get you the lowest price.
And that works for Walmart because that plays into like they're all.
offering people go to Walmart for the cheapest.
Like their logo is like everyday savings, right?
That's their core value.
Yeah, exactly.
Versus differentiation means offering something that is valuable to the customer that might be at a premium.
So thinking about cost leadership and differentiation, which one do you think Starbucks falls into?
Answer in three, two, one.
Differentiation.
Differentiation.
So Starbucks offers more premium priced coffee and also because of the
the things that we just named before, like their focus on third spaces, their focus on customer
service, they try to differentiate by giving you a better experience than just, you know, the lowest,
cheetahs experience.
Yeah, the example that comes to mind for me is the writing the names on the cups, right?
That is one extra step in their, yeah, it's like an extra step in their operations that
honestly is not really necessary for a generic experience, but it's caused so many.
It means a lot to people, I think, to feel personalized and also it causes some funny memes.
Yeah.
It's actually paid off in space for them, I think.
They've stopped, like, writing.
I don't know if you've been to a Starbucks recently, but now they're, like, printing it out.
Like, the names, yeah.
Oh, sometimes they still write it.
Maybe in my online orders, they just print it out.
But then I think recently there's been a mandate.
I saw this online.
There's an article where, like, the employees of Starbucks were asked to, like, write more
personalized messages.
Yes, yes.
On the cups recently.
Exactly.
I saw someone, someone I know wrote like, I love you so macha.
Oh.
Someone or someone received a cup that said, I love you so much.
And she actually posted it on her Instagram.
She's like, oh, this totally made my day.
Yeah.
I mean, that's just one example of differentiation.
Yeah.
A high, high touch.
So the one thing you can take away from this lesson is that you can't be the cheapest, the best,
and the highest quality all at the same time, just like Starbucks.
They chose to be higher quality and more expensive.
And one example that comes to mind for,
us is Sister's Macha, right? Sisters Macha, which is our company, is a ultra-premium
matcha brand and it's ultra-premium product. So even if we wanted to offer it for less,
we just couldn't because of our supplier costs. And the fact that the matcha that we provide
is the cultivar is called a kumidori, which only makes up 2% of all of the matcha produced in
Japan. So by definition, it is very rare. It's very hard to cultivate. It has to be handpicked. Like,
all of these different reasons contribute to the fact that it's a premium product. So for us,
we went the way of differentiation as opposed to cost. Yeah, which makes sense for like the stuff,
like who we are as well. Yeah. We enjoy nicer stuff. And we also like macha, like when we're
drinking ceremonial grade first harvest macha, like you want it to be the good stuff that you're
putting into your body like exactly so for us it wouldn't make sense to start a brand that is oriented
on cost leadership because that doesn't align with our own personal brand or our own values for
something that you are basically consuming every day and putting into your body and that's meant to
help you and improve your health very true and also it's just beautiful and it tastes so freaking good
but yeah so these are things that like this is just another example for you guys to see like
Starbucks is obviously a huge behemoth, but these are things that we've thought about when creating
our own company, which is very, very small and is kind of a start. Yeah. And also just like breaking
into the macho world, like we were asking these questions of ourselves to each other, of our brand,
and where do we want to sit and making these very intentional decisions so that, you know,
we can be successful. So that concludes our mini lesson on Porter's Five Forces. Next, we're going to be
talking about marketing. One of the first big concepts for marketing at HBS is STP, segmenting, targeting,
and positioning. STP is all about identifying specific customer groups, choosing the right customer
group for you, and then crafting a message for that customer group specifically, and then making
sure it sticks. So I think that all sounds pretty straightforward and simple, but it's the backbone
of essentially any marketing campaign and any marketing go-to-market force. Okay, love that. One of the
examples that we're going to use in our discussion and our mini case study is Warby Parker,
which is one of the most recent big, big successes in the direct-to-consumer D-C world.
Yeah, so Warby Parker actually is a really good example of a company that came in and disrupted
a massive marketplace that was run by one behemoth, essentially Luxottica.
So Luxottica was accounting for like 80 plus almost 90% of the eyewear market, the optical
eyewear market glasses.
And they basically, any brand you could think of was produced by Luxottica.
So they were essentially a monopoly.
Which is crazy.
By the way, if you guys don't know Luxottica, like look it up.
Like they own like Raybans.
They own like all the big names.
You're like, oh, I thought Rayban was itself.
Nope.
It's owned by this like one company.
And if you guys remember buying glasses, optical glasses in the 90s or the 2000s, it was a really
big deal.
Like you would pick out a pair of glasses.
You would get them made.
And it was always 300 plus dollars.
if you wanted anything that was remotely cute.
Yeah.
It's a really expensive.
And so Warby Parker came in.
They like completely shook up the model.
Their deed to see and mostly like started online.
So they started with their like try on phase.
You can try on a bunch of glasses.
They would mail it to you.
It was also much cheaper than what you would get originally with the other model.
Okay.
So good summary.
So let's talk about how they used STP to break into this market.
So the first part is segmenting.
So what they did was they would.
looked at the market and they said, okay, they're actually multiple different types of buyers for
glasses, right? There are people who are super high-end and they want really, really fancy glasses.
Maybe that's not really us because they just want brand names. They want Prada.
Gucci.
Versace.
I want Gucci. I want Prada. Anyway. And then there's another market, which is cost-conscious.
So people who just want the lowest possible price, right? Kind of like what we talked about before.
And then they identified a third market, which was essentially millennials, people who wanted something that was trendy and still looked good.
Cute.
But not necessarily, didn't necessarily have to be the specific brand name.
Right.
So the T in STP is targeting.
So after they identified these different segments, they decided which segment to actually target.
You can't do all of them really well.
In fact, if you try that, you're probably going to do a pretty bad job.
you should be very focused on which segment you target.
And so then they ended up choosing the third segment,
which is the cost-conscious millennials who want something cute,
but something not too expensive.
And so then Warby Parker, after they chose their segment,
they basically created their company around this target segment.
And basically, what does this target segment care about
and how can they cater to their needs?
And so the first thing is that this target segment is online first.
Like millennials are very comfortable buying things online.
online, having things shipped to their house, then like previous generations. The second thing we just
mentioned is price and fashion. Warby Parker started around like 95 to $100 and this is a very
affordable price range that millennials are willing to opt into. And the last is like social impact.
Millennials are more conscious about the impact that they're leaving in this world.
And Warby Parker like created a program knowing this where they like, you know, it's buy a pair of
glasses, give a pair of glasses, and so they were able to tap into these three sentiments that this
segment really cares about. Great description. So the last part of STP is P, which is positioning,
which is essentially Warvi Parker asking the question and answering it. How do we want customers
to see our brand? So the answer to this was one, they wanted people to see their brand as
modern, chic and accessible. Two, they wanted customers to see their brand as digital first. So
everything basically started with the website and then from the website you could pick which glasses
you wanted to try on they would mail it to your house and then you can select your glasses from there and then
three they also leaned very heavily on this sort of sustainability and helping other people in the
world narrative so that they really tied that into pretty much all of their branding and all of their
marketing yeah another company that I think about that fell into this category although it's like
not really popular anymore but it's like catered towards millennials was tom's if you remember
those shoes, like 10, 15 years ago, they were all the rage. When they first started out,
everyone wanted a pair of tombs, which is a pair of flats, a pair of canvas cloth flats. But the biggest
part of their campaign that's seared into my mind is that you buy a pair of shoes, they give a pair of
shoes to a child in need in a developing country. And so it was just like really interesting that like
10, 15 years ago, I think that's also when Warby Parker also started to, like there was such a
huge focus on these companies to have a sustainability bend. Yeah, and it was also a very novel concept
that... Doing good in the world. Sort of, that your company would be, have that as part of its
company ethos. True. And so then that also, I think, elicited a lot of people who became brand loyalists
for that reason, because they wanted to feel like, hey, this brand represents my morals, represents
how I move in this world. Yeah. Conscious consumerism, actually. Yeah. That's so interesting. That was new
at the time. Yeah, I think also coming out of that where companies were like uh, Rothies,
another shoe company that, you know, it was like conscious eco. They don't have like a give and get
program, but like they try to do recycled water bottle shoes. Sustainability. Sustainability,
Blueland. Sustainability Bend. So it's really interesting. I'm sure there's another case study out
there about like the trickle effects of these giant companies establishing themselves and how people
follow that trend. Yeah. Maybe it's kind of more, it's almost like taken for granted now.
that that's sort of part of a lot of the DNA of a lot of companies.
Yeah. So now Warby Parker is valued at more than a billion dollars. They have so many
cute little boutiques in like basically every major city and they're doing super well. And
the main conclusion from this discussion from STP is that you should choose a target segment
and be hyper focused on the population, the community that you want to serve. Because if you're
trying to serve everyone, you're really serving no one and you're not going to be.
be doing a good job. You really need to be focused on your target segment. So if you're launching
your own brand, you want to ask who specifically do I want to serve? And then what you do is
you actually think about these people and then you build your entire brand and your strategy
around their hopes, their dreams, their frustrations, and their values. The best products
that I've ever used are the ones that are like hyper focused on their customers and understanding
them super deeply. All right, that concludes this section. We're moving on. Okay, so the next section
we're going to talk about is product innovation. So for product development and innovation,
between the two of us, we've worked on this for almost 20 years. Crazy. Put together. So we can
probably talk about this for a thousand hours. So we'll just go really, really quickly into the main
takeaway. The number one thing to know about product development that we learned at HBS is that
you can't just guess at what a person's problem is. You have to really very specifically identify
the customer's problem and work to solve specifically that. And the example we're going to use
is Netflix. There's actually a lot of business school cases written about Netflix. Yeah. Actually,
I met Reed Hastings because he came to Stanford GSB last year when I was a student and he gave a speech.
Oh, nice. Yeah. And I read his book and I've done like a book report on on him. So a book report.
I literally did a book report.
How old were you?
This was last year when I was a student at Stanford.
So you're obsessed with him.
Kind of.
So I'm really excited to talk about this.
Oh, good.
The main takeaway here, and it's kind of related to our previous section,
but it's getting to know your audience and your customers super deeply.
And we're just going to give you two specific tactics on how to do that.
And the first is user feedback and iteration.
One way to do this is AB testing.
Famously, Netflix ran a bunch of AB tests, meaning they ran like,
two different types of products with their customers to see which ones they liked better.
All of this is in service of getting to know their customers and what their customers prefer.
Yeah, Netflix is infamously known for always A-B testing every single little thing.
So one example that you may or may not notice is if you compare your Netflix account with your
friend's Netflix account and you look at the same title that's being presented to you,
you may have a different photo for the title.
You may have a different thumbnail.
So, for example, one thing I noticed is that I think Netflix has identified that I like handsome Asian men.
Who doesn't, though?
Because for shows that, for example, if there's like a movie with Henry Golding in it,
they'll always show Henry Golding as the thumbnail versus for someone else.
They'll show the other main character who's actually the main character.
who's actually the main character when Henry Golding is more like a secondary character.
I want to see Henry Golding in every thumbnail.
So they know that I'm more likely to click into the movie when they're showing me Henry
Golding versus the actual main character who's not him.
This is my cue to promote our dating episode podcast.
So if you guys are new to our podcast, here are Tiger Sisters.
We also talk about lots of other things outside of Henry Golding.
So check out our dating podcasts.
So the main takeaway from this section is to really understand the problem that you're trying to solve.
iterate like crazy and don't be afraid to pivot when you get new data and information.
And test, test, test, test, test.
And our last and final section in this episode is on finance.
Here are some terms that you should know.
And also like how to not feel dumb in these conversations.
Yeah.
And the HBS approach to finance that they would always tell us over and over is not that every single
student at HBS is supposed to graduate as some sort of financial genius and be able to actually
run DCF models on your own all the time. It's actually more so that you want to graduate with
the ability to run your own company or be a CEO somewhere and have conversations with the CFO and
with the board where they talk about finance and you understand everything that they're saying.
So that's really the goal. I actually like that approach because I don't personally enjoy being in
the weeds of finance and actually putting together all the models myself. But,
I love to talk with my counterparts in the financial group about how things are going and
like adjusting the projections and getting more money.
I mean, but also it goes to say like if you are a CEO or a leader of a company, like it's
not your job to be the expert.
Like that's the CFO.
That's like your right hand man or woman who is supposed to better understand it as the expert
and like help you make decisions with that information.
Right.
But you need to understand what they're presenting to you so that you can make those decisions
with confidence.
And then also represent all those decisions to the board.
True that.
So we're going to go really quickly through five concepts.
The first one is revenue versus profit.
Shri, can you start us off with revenue versus profit?
Okay, guys, this is the first concept you really need to know.
You've heard of revenue.
You've heard of profit.
How are they different?
And we're going to use the example of Netflix.
Revenue is how much money is coming through the door.
And with Netflix, it's basically like their subscription fees.
Profit is what's left after all the bills are paid.
So Netflix is a tech company.
They probably have a lot of servers.
They have employees.
They need to pay all those costs.
Profit is after all those costs are covered.
This is really important because you can have billions of dollars of revenue.
Like you can bring in a lot of cash.
But if you have really high costs, you might still not be a profitable company.
The next concept we're going to talk about is cash flow.
Gene, can you explain this?
Sure.
So cash flow is essentially the closest item to, I think, your bank account.
So if you think about Netflix, what they do is they invest billions of dollars up front to actually
produce the shows that they produce in-house.
So those shows are actually marked as a asset.
So it can seem like you actually have that money on hand in terms of your balance sheet,
but you don't actually have the cash on hand.
So that's why it's really important to differentiate between cash flow and revenue versus profit.
Yeah.
And something they say in business school when they're like evaluating businesses,
some businesses might be cash poor. They might just not have a lot of cash on them. Yeah, and then some
businesses seem very, very boring, but they actually throw off cash in a very recurring manner.
And then the third concept to talk about is unit economics. This is a really important term to know
and to understand because whenever you're evaluating a company, like it will always inevitably come up.
People will ask about the unit economics. So the unit economics actually just refers to the cost per unit.
And in this case of Netflix, it's the cost per subscriber.
For Netflix, it's like the margin that you get per subscriber.
So for example, each subscription cost $10.
You get that money in.
But then for Netflix, they have to like create movies and TV shows.
And if they're able to like figure out each subscriber actually cost them $12, then
they're like losing money.
Yeah, it makes sense.
I think also in terms of marketing, a lot of times people look at the cost for marketing.
versus your lifetime value of the subscriber.
So you need to make sure that the amount you're spending
to get each incremental subscriber or per each unit economics
makes sense in terms of how much you think that they're worth.
So that's actually a lot of times companies such as Netflix,
I know for sure actually Netflix spends a ton of time doing this analysis
with their hordes of data scientists.
Yeah.
And I guess for us for sisters matcha, for our matcha brand,
something we think about is unit economics.
So basically for our brand, the example is like breaking it down per customer.
If they're ostensibly, if they're a first time customer, they're buying one.
How much does it cost for us to, you know, make the can per can?
What is it if we're shipping all these cans, just bringing it down to the most basic unit of just one can.
Well, per can.
Per can.
Exactly.
Yeah.
So the fourth finance term you should know is forecast and runway.
Yeah.
So this one's pretty simple.
Runway is basically how much money.
do you have left if you continue to spend at your existing burn right? So if you're spending,
for example, $100,000 per year, how much money do you have? If you only have $200,000 a year,
your runway is two years. After that, you will run out of money. So as the CEO, you have to always be
looking out for your run rate to make sure that you can stay afloat. And the last group of finance
terms you need to know are valuation metrics. These are terms that you've probably heard about or
read about somewhere, maybe the Wall Street Journal. For example, price to earnings ratio or
EV to EBDA, that's enterprise value to EBDA. These are all things that essentially are projecting
what the worth or value of your company is. Don't be afraid of these acronyms because it's just a way for
investors who express the value of your company. And the actual number itself doesn't really mean
anything unless you look at it within the context of what your category is. So if you look at a
company and you say, oh, they have a price to earnings of 20. That can mean that they're doing amazingly,
or can actually mean that they're really below the bar, depending on what category they're in.
So it's like tech versus, you know, industrials, for example.
So we can talk about this for way, way, way more, but we're not going to.
We're just going to leave it at that.
And let us know if you have any questions in the comments.
And if you want us to do a longer episode on this.
Yeah.
So that wraps up the HBS hard skills you need to know.
There's so much more we can talk about the soft skills on leadership and networking,
which is honestly what HBS and business school is known for.
Thank you guys so much for tuning into this episode.
Please leave comments about what you want to learn more about and we'll create a follow-up episode on that.
And please remember to like, comment and subscribe.
And please leave five-star reviews on Spotify and also Apple Podcasts.
It helps us so much and it keeps our podcast alive.
If you enjoy this podcast episode, please share it with someone who might find it helpful and leave any questions you guys have in the comments.
This is honestly one of our first like explainer episodes.
And if you want to see more stuff like this, please let us know and give us suggestions.
We read every single comment.
Thanks for tuning in.
Bye.
Hey, everyone.
Quick break to share something special, Sisters Macha.
We've launched limited batches of ceremonial grade, single estate, single cultivar,
Macha, straight from the family farm Shari worked on in Japan.
It's pure, authentic, and crafted with intention.
Head to SistersMacha.com to grab yours before it sells out.
Make Macha your daily ritual for lasting energy and focus.
