rate at which a business model captures monetizable value from its users
- Created value > captured value. That is, the value a customer receives is greater than the value the company receives (the customer pays).
- Captured value ≥ cost (delivering solution). This is simplistically understanding revenue is greater than (or equal to) cost.
- Created value ≥≥ cost.
This is a pretty simple to understand. For companies looking for investment (well, any company looking to be successful), it’s important to understand traction and all the drivers thereof. As an early-stage startup wiggles and fights its way towards product-market fit (or service-market fit), traction will likely be near-flat. But as the company reaches product-market fit, that traction curve starts to climb fast. Here, focus turns towards customer acquisition, and thus, the sales and marketing machine commences.