Talk One (6:00pm-6:50pm): Customer-Based Corporate Valuation: An Overview and Real-World Applications

There is growing interest among practitioners and academics alike in “customer-based corporate valuation” (CBCV), an award-winning methodology that explicitly links the overall fair valuation of a firm to the underlying acquisition, retention, and spending behaviors of the firm’s current and future customers. This “bottoms up” way of approaching valuation is increasingly being adopted by a variety of financial professionals at private equity firms, hedge funds, venture capital firms, consulting firms and more, as a complementary perspective to the standard “top down” methodologies that dominate current valuation practice. After providing an overview of the CBCV valuation framework and previous applications that have received widespread media attention, we will discuss a number of never-before-seen case studies across different industries, business types, and data structures to better understand the generalizability and alpha-generating potential of the methodology.

Talk Two (7:00pm-7:50pm): Enhancing Public Company Customer-Based Corporate Valuation with Credit Card Panel Data

While customer-based corporate valuation (CBCV) has gained increasing interest and adoption in valuation settings, a limitation of all current public company CBCV models is that they can only be trained upon publicly disclosed customer data, whereas most firms do not publicly share key customer metrics on a regular basis. Large-scale credit card panel data is an important yet understudied new data source that can close this gap. We propose a scalable data fusion methodology to combine both sources of data—complete yet aggregated disclosure data and incomplete yet granular credit card panel data—to obtain richer, more robust results for subscription-based firms. We apply our methodology using credit card panel data from Second Measure, a leading alternative data firm, to model customer acquisition and churn at Spotify, a music streaming service. We find that the incorporation of third-party panel data improves predictive accuracy, often dramatically so, over simpler methods, which in turn translates into deeper insights on the company’s unit economics and more accurate valuation.

Note: while the first talk is intended for a broad audience, the second talk will be technical in nature. We will keep the second talk as approachable as possible, but will discuss the statistical underpinnings of the modeling approach in some detail.

The Speakers

Daniel McCarthy is an Assistant Professor of Marketing at Emory University’s Goizueta School of Business. His research specialty is the application of leading-edge statistical methodology to contemporary empirical marketing problems. His work has been featured in major media outlets such as the Harvard Business Review, Wall Street Journal, FT, Fortune, Barron’s, Inc Magazine, the Economist, and CNBC. His research has been accepted and published in top-tier academic journals and has won numerous research awards. In addition to his roles and responsibilities at Emory, Dan co-founded and was Chief Statistician for Zodiac, a predictive customer analytics SaaS firm. Nike acquired Zodiac in March 2018. Dan has since co-founded Theta Equity Partners to revolutionize how firms (e.g., private equity, venture capital, and operating companies directly) value companies through CBCV. 

Peter S. Fader is the Frances and Pei-Yuan Chia Professor of Marketing at The Wharton School of the University of Pennsylvania. His expertise centers around the analysis of behavioral data to understand and forecast customer shopping/purchasing activities. Much of his research highlights the consistent (but often surprising) behavioral patterns that exist across these industries and other seemingly different domains. Professor Fader co-founded Zodiac and Theta Equity Partners with Daniel McCarthy. Fader is the author of “Customer Centricity: Focus on the Right Customers for Strategic Advantage” and co-author with Sarah E. Toms of the book “The Customer Centricity Playbook.” He has been quoted or featured in The New York Times, The Wall Street Journal, The Economist, The Washington Post, and on NPR, among other media. In 2017, Professor Fader was named by Advertising Age as one of its inaugural “25 Marketing Technology Trailblazers,” and was the only academic on the list.