PortGen Accelerator Program Seminar
0 likes63 views
The document outlines essential aspects of monetizing startups, focusing on business models like fee-for-service, subscription, commerce, and more. It emphasizes the importance of a great team, product, and market alignment for achieving success and includes insights into marketing strategies, unit economics, and revenue models. Additionally, it provides actionable frameworks for capturing value and understanding customer acquisition metrics.
PortGen Accelerator Program Seminar
- 1. Copyright, DKParker, LLC 2020 How Your Startup Makes $$ Dave Parker @DaveParkerSEA @DaveParkerSEA https://www.dkparker.com/portgen-accelerator/
- 2. Copyright, DKParker, LLC 2020 Agenda ¤ Outcomes for this presentation: ¤ Business model breakdown ¤ Identify Key Inputs ¤ Identify Unit Economics ¤ Choose primary/secondary revenue models ¤ Go-to-Market – Marketing and Sales choices
- 3. Copyright, DKParker, LLC 2020 About Dave ¤ 5X founder, raised $12M, exited $85M ¤ Former SVP Programs at UP Global (Startup Weekend) ¤ Startup Next creator, Startup Week ¤ Author – ”Trajectory: Startup – Ideation to Product Market Fit” shipping 3/2021 ¤ 2X VC and random Angel ¤ 10 transactions – 8 sell side, 2 buy side now with NextPath Advisors
- 4. Copyright, DKParker, LLC 2020 Ignore the Memes!
- 5. Copyright, DKParker, LLC 2020 So, It All Matters! ¤ Great Team in Bad Market = Failure or meh result ¤ OK team + Great Market = could be great result ¤ Great Product + no path to revenue = failure ¤ OK product + great monetization = make $$ ¤ Great market + great team + great product + solid monetization + great execution = monster result
- 6. Copyright, DKParker, LLC 2020 Creating Value: Product or Service, Market, Team Delivering Value: Pricing, Marketing & Sales, Rev Model Capturing Value Reasonable to Exceptional Returns Business Model Breakdown
- 7. Copyright, DKParker, LLC 2020 Creating Value ¤ Product or Service ¤ Cost to Build – Team ¤ Engineering ¤ Design ¤ Hosting ¤ Manufacturing ¤ Cost of Delivery & Support
- 8. Copyright, DKParker, LLC 2020 Delivering Value ¤ Pricing ¤ Revenue Model ¤ Cost of Selling ¤ Marketing Methods and Spend ¤ Sales Models
- 9. Copyright, DKParker, LLC 2020 Capturing Value ¤ Topline Revenue ¤ Gross Margins ¤ Net Profit
- 10. Copyright, DKParker, LLC 2020 How to Monetize Your Startup: Revenue Models
- 11. Copyright, DKParker, LLC 2020 The Data ¤ 2654 companies from Crunchbase ¤ 5+ year tracking ¤ Creates massive impact on valuation ¤ Surprises ¤ Seed 1-10 ¤ Combinations models ¤ * on short time from Seed to A ¤ Failures ¤ Wayback Machine ¤ >80% lacked clear CTA and Value Prop
- 12. Copyright, DKParker, LLC 2020
- 13. Copyright, DKParker, LLC 2020 1. Fee for Service ¤ Example: Consulting Services company ¤ Use: B2B & B2C ¤ Key Metrics ¤ Project Revenue ¤ Cost of delivering (usually time) ¤ Gross Margin ¤ Services are hard to scale because they require people to deliver including Restaurant, Contractors, etc. ¤ Services include markup on cost of goods sold
- 14. Copyright, DKParker, LLC 2020 2. Commerce ¤ Example: Amazon, AmazonSupply ¤ Use: B2C & B2B ¤ Key Metrics: ¤ Wholesale or cost of goods sold ¤ Average Margin % ¤ Average Basket ¤ Commerce – Physical Goods- Wholesale, cost of goods, retail, average margin, physical good ¤ Notes: Can mature into marketplace
- 15. Copyright, DKParker, LLC 2020 3. Subscription ¤ Example: Salesforce , Box, Spotify ¤ Use: B2C & B2B ¤ Key Metrics ¤ Average Revenue Per User (ARPU) ¤ Conversion ratio – e.g. trial to purchase ¤ Churn ¤ Challenges: MVP won’t be enough to be Kick Ass Product ¤ Notes: Highest multiple, forecastable revenue
- 16. Copyright, DKParker, LLC 2020 4. Metered Servcie ¤ Example: AWS, Splunk, Azure ¤ Use: Favors B2B ¤ Key Metrics ¤ Average Revenue Per User (ARPU) ¤ Usage growth over time ¤ Churn ¤ Challenges: infrastructure required at launch ¤ Notes: Highest multiple, forecastable revenue
- 17. Copyright, DKParker, LLC 2020 5. Transaction Fees/Rental ¤ Example: 99Designs, KickStarter, Elance, Chugg ¤ Use: B2C & B2B ¤ Key Metrics ¤ Average transaction revenue ¤ Fee % per transaction ¤ Number of transactions ¤ Challenges: Margins are small (15%), need efficiency ¤ Notes: Don’t start too low
- 18. Copyright, DKParker, LLC 2020 6. Productize a Service ¤ Your offerings is generally complex and requires services to deploy ¤ Gross margin on Services >35% ¤ Product development comes with services ¤ Use: B2C & B2B ¤ Examples: Moz, service company convert to tools. ¤ Challenges – difficult to make the transition away from services
- 19. Copyright, DKParker, LLC 2020 7. Combinations ¤ Combinations business models happen for two reasons ¤ You don’t know which model is right ¤ At scale you can expand revenue sources ¤ Examples: Hardware sensors + software services to create data analytics ¤ Challenges – most require scale or at least traction ¤ Mature faster
- 20. Copyright, DKParker, LLC 2020 8. Marketplaces ¤ Example: eBay, Alibaba ¤ Use: B2C & B2B ¤ Key Metrics ¤ Average Transaction Amount ¤ Number of Monthly Transactions ¤ Commission % ¤ Challenges: two sided market places require you start with one side, value to seller & Product market fit (x2) ¤ Notes: critical mass or marketplace required
- 21. Copyright, DKParker, LLC 2020 9. Lead Generation ¤ Example: Mint.com, AllStarDirectories, NetQuote ¤ Use: B2C & B2B ¤ Key Metrics ¤ Cost to generate traffic ¤ % conversion of form data ¤ Price per lead ¤ Challenges: Highly competitive, barrier of entry is low ¤ Notes: Conversion rates average 0.06%
- 22. Copyright, DKParker, LLC 2020 10. Gaming ¤ Example: King.com/Candy Crush ¤ Use: B2C Only ¤ Key Metrics: ¤ Downloads ¤ % play ¤ Average in app purchase ¤ Challenges – tends to be “hit driven business” ¤ Notes: use in first 21 days is a predictor of success
- 23. Copyright, DKParker, LLC 2020 11. Advertising/Search ¤ Example: Google, Facebook ¤ Use: B2B – advertisers pay, users are free ¤ Key Metrics ¤ Traffic ¤ Click ¤ Avg. revenue/click ¤ Challenges – Scale, need >1M uniques/month to consider the option
- 24. Copyright, DKParker, LLC 2020 12. New Media ¤ Example: SnapChat, WhatsApp ¤ Use: B2C only ¤ Key Metrics: ¤ K-Factor (Viral Co-efficient) ¤ Network effect of inviting others to join ¤ Challenges – K-Factor is hard. Little revenue until scale ¤ Notes: Everyone wants to! Not happening in B2B ¤ No revenue acutally required
- 25. Copyright, DKParker, LLC 2020 13. Big Data ¤ Examples: PatientsLikeMe ¤ Use: B2B ¤ Key Metrics: ¤ Per API Call ¤ Per record pricing ¤ Frequency/recency ¤ To monetize data, you need to have the data in advance or massive cash
- 26. Copyright, DKParker, LLC 2020 14. Licensing ¤ Example: Think Microsoft office license or server license – before subscription. Content Licensing ¤ Use: B2B ¤ Key Metrics: ¤ Duration of license ¤ Upgrades & maintenance (20-25% annually) ¤ Use can be based on vertical market or geography
- 27. Copyright, DKParker, LLC 2020 Revenue Models– Primary/Secondary 1. Fee for Service 2. Commerce 3. Subscription 4. Metered Service 5. Transaction Fee/Rental 6. Productize a Service 7. Combinations 8. Marketplace 9. Lead Generation 10.Gaming 11.Advertising/Search 12.New Media 13.Big Data 14.Licensing
- 28. Copyright, DKParker, LLC 2020 Marketing – Finding the right customers
- 29. Copyright, DKParker, LLC 2020 Marketing – Finding Customers ¤ Messaging/Value Proposition ¤ Does it resonate with the target customer segment ¤ They are the hero of the story ¤ Is it repeatable? ¤ Strategy ¤ Outbound first ¤ Inbound second
- 30. Copyright, DKParker, LLC 2020 Unit Economic Terms ¤ State your hypothesis ¤ CAC – customer acquisition cost ¤ LTV – lifetime value ¤ ARPU – average revenue per user ¤ ACV – annual contract value ¤ Churn – customers that leave monthly ¤ Net Negative Churn – increase in annual contract value ¤ Time to Close – in days ¤ Customer engagement – time on site, in app
- 31. Copyright, DKParker, LLC 2020 Organic Search Paid Search Word of Mouth Sales Calls PR Miracles! Time to Close Month 1 Month 2 Month 3 Month 4 $ Spen d # Conv # Conv # MRR Time
- 32. Copyright, DKParker, LLC 2020 Marketing Channels ¤ Paid Search ¤ Organic Search ¤ Word of mouth ¤ Sales calls ¤ Public Relations ¤ Affiliate ¤ Email marketing ¤ Social
- 33. Copyright, DKParker, LLC 2020 Marketing Qualified Leads ¤ Define qualified vs list ¤ Suspects ¤ Prospects ¤ Qualified Prospects
- 34. Copyright, DKParker, LLC 2020 Sales Qualified Leads ¤ Hand off to Sales ¤ Identify steps to close ¤ Number of calls
- 35. Copyright, DKParker, LLC 2020 Time to Close ¤ Lead attribution ¤ Source time ¤ Compressing or Expanding ¤ Trend by source
- 36. Copyright, DKParker, LLC 2020 Tracking ¤ Data allows you to know where to double down and where to hold back ¤ Conversion ratios
- 37. Copyright, DKParker, LLC 2020 Sales – capturing value creation
- 38. Copyright, DKParker, LLC 2020 How will they buy? ¤ Web Direct – place the order to buy on the web ¤ Direct – outbound sales, inside/outside ¤ Indirect/Channel – fulfills demand, doesn’t generate ¤ Retail – BestBuy, etc
- 39. Copyright, DKParker, LLC 2020 Sales Model Hypothesis Known Market Unknown Market Low Price Point High Price Point Known Search Words Unknown Search words Web Direct ✔ ✔ ✔ Direct ✔ ✔ ✔ ✔ ✔ Indirect ✔ ✔ ✔ Retail
- 40. Copyright, DKParker, LLC 2020 Q&A Available at Amazon.com