On what basis do you typically value a company and reward its executives? Executives know the criteria: Profit. Assets and liabilities. Brand. People. Customers. But that’s how executives approach valuation in the traditional supply chain economy. Are those criteria sufficient in the new subscription economy? Consider a growing company like subscription car-sharing service Car2Go. They claim hundreds of thousands of customers, but their revenue is based on the actual car usage of those customers. The valuation question then quickly becomes how often and how much do their customers use the cars? Is car usage going up or down, and how quickly? It’s the car usage by customers—not the raw customer count—that is the primary driver to revenue, profit, and hence, […]
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