5. Quick review of prior material
Hosting
Server Advanced Deployment tools
Data Center Release planning
Hosting Options Firefox example of staggered releases
Dedicated Hosting Project Management
Shared Hosting Gantt Chart
Virtual Private Server (VPS) Agile Development
Colocation Project Management tools
Cloud Hosting Budgeting
Buying hosting Ninety-ninety rule
Cheap options
Deployments on closed platforms
Rackspace, Softlayer
Hiring Developers
Deployment
Managing developers
FTP = File Transfer Protocol
Extreme Programming
Filezilla
Code Reviews
Multiple environments
Outsourcing
Dev > QA > Staging > Production
Build Process
6.
7. Positioning and Targeting
Once sentence description of what your product is and who
the customer is
In-class exercise, go around the room, everyone say your
one-sentence description.
Position
Differentiation from Competitors
Value Proposition = what’s special about your product
Targeting
Who is your target audience
Demographics, psychographics
Segmenting
8. Differentiation
Positioning and Targeting
USP = Unique Selling Proposition
What do you offer that no one else does?
What do you offer better than competitors?
Examples
Newest, coolest, best?
Cheapest, Best value?
Most convenient?
Most prestigious?
Most features?
Unique features?
9. Competitors
There will be competitors
They could have VC funding
Their team is equally or more passionate than you
As soon as an opportunity is recognized, competitors
pop up everywhere.
Usually not exact clones, but have some differentiation
Generally, only one big winner will emerge.
Network-effect startups are in winner-take-all markets
10. Handling Competitors
What are your competitors doing right?
What are they doing wrong?
Use their mistakes to differentiate and push them out
Portable music existed before iPods
Search existed before Google
Social networks existed before Facebook
11. First Mover Advantage is a myth
Why?
Finding the product-market fit is much harder
Market may not be ready for your product, even if it is better
Product is much costlier to build
Make all the “first timer” learning mistakes
Investors are wary of first-to-market
Highest risk among the high risk
If there are no competitors, maybe there is no opportunity
(other entrepreneurs tried and failed)
Requires high capital to “land grab”
If there is an opportunity, competitors will appear quickly
12. Focusing on Niche
Niche = small section of the total market
E.g. Facebook Policy Year
Harvard Feb, 2004
Why? Stanford, Mar, 2004
Better product for the niche Columbia, Yale
Focused marketing message Ivy league schools 2004
Easier to reach critical mass All universities 2004
Brand recognition
Universities Oct-Dec 2005
Exclusivity effect internationally
High schools Sep 2005
After success, expand Anyone Sep 2006
13. Critical Mass
Is the minimum number of users you need for your
service to be useful for a new user.
Reaching “traction”
Mostly relevant to startups with strong network effects
Social Networks
Facebook
Crowdsourcing sites
Yelp
Anything requiring concurrency
Real time gaming
Two sided markets
14. Two-sided markets
Most commonly buyers and sellers
Ebay
Airbnb
elance.com
Which side are you making free or cheap?
Which side are you charging?
20. Options for a Web Startup
Online marketing
SEO
PPC
Social Media
PR
Offline Marketing
“on-the-ground” campaigns
Events
Traditional marketing
TV, radio, magazines, etc.
21. SEO = Search Engine Optimization
aka “organic” listings
“I want to be on the top of Google!”
For small businesses, target “long-tail” keywords. E.g.
“San Francisco flood repair”, not “flood repair”
Very complex algorithms, constant changes
Can be very challenging, depending on market
saturation
“Guaranteed rankings” are “blackhat”! Google will ban
the site!
Trust is very important, fraud/cheating is pervasive
22. SEO Implementation
Search engine friendly website design and code
URLs
HTML tags
Keyword research and keyword targeting
Content
Create meaningful content, bring people to your site
Blog
Links
Learn more
SEOmoz.com
23. SEM = Search Engine Marketing
aka Keyword advertising
Google Adwords, Bing, Yahoo
Pay per click, $0.50-$20,
depending on keywords
Much more stable source leads
Must be set up correctly, or else
could be wasting money
Many factors still at play, such
as quality score
25. What about Social Media?
What is Social Media?
Blogs (Wordpress, Blogger)
Social Networks (Facebook, LinkedIn)
Microblogs (Twitter)
Location-based (Foursquare)
Events (meetup.com, Eventbrite)
News and Bookmarking (Digg,
Delicious)
Much, much more
Free or very cheap, but massive time
investment without obvious ROI
Very common, almost necessary, for
startups
26. Public Relations
Hiring PR too early is a
common mistake for startups
Newsworthy?
First Launch
Launch or feature or offer
Current events, like
partnerships
What’s the message?
Message for the startup
Target a specific writer
Someone who already writes
about the topics
27. Launch Strategy
Do a hot launch, not a cold launch (Launch page)
Optimize SEO and blog
Advertise if necessary
Use social media
List the company on startup sites (e.g. Crunchbase)
Target specific PR journalists
Learn more here:
http://www.quora.com/Whats-the-best-launch-strategy-for-a-web-startup
28. Analytics
Track everything!
Usage statistics
User sources
Referrals
Errors
Etc.
Google Analytics
HubSpot
SEOMoz
29. Virality
K-factor
On average, how many
new users will one user
refer
>1 … sustained growth
<1 … sustained loss
must be covered with
advertising
All those sharing buttons
32. Money…
Profit (or pursuit of profit)
is the difference between a hobby and a business
You need revenue to make a profit. Lots of revenue.
33. Importance of a Revenue Model?
How high are you aiming?
IPO / acquisition / lifestyle business
The higher you aim, the less important revenue is at the
beginning
But without revenue… need venture capital
34. Different Business Models
Business to consumer
Fastest, highly analytics driven
Business to SMB
Medium, sales cycle with analytics
Business to enterprise
Slowest, long sales cycle
36. Advertising
If you’re not paying for it, you’re not the customer;
you are the product being sold
Significantly Detracts from user experience
Requires broad reach and massive scale to generate large revenues
Easier for lifestyle business, much more difficult for IPO/Acquisition
Revenue depends on conversion rate, which depends on many factors
RPM (revenue per mille) How much to make $1000/month
General: $1 RPM 1 million pageviews/month
Demographic targeting $5 RPM 200,000 pageviews/month
Endemic advertising $20 RPM 50,000 pageviews/month
37. Subscription based
Freemium = Free + Premium
Free plan to get registered users
Free plan is limited, must pay monthly for more
Metrics
Conversion rate
Churn rate
CLTV
Customer lifetime value
CPA
Cost per acquisiton
38. Conversion Funnel
Starts at all visitors
Loss at each step
Eventually, a small number
Free Paid conversion rate tends to be around 1-3%
Those few paying users must cover the expenses of free
users
39. Churn Rate
= the rate of people unsubscribing
Example
500 monthly subscribers at $10/month
each $5,000/m
8% monthly subscribers leave each
month 40 leave
Just to stay steady, you need 40 new paid
subscriptions monthly
To grow, you need more than 40 per month
Conversion rate applied (in reverse)
40 new subscriptions
2,000 (2% CR) total subscriptions
10,000 (20% CR) total new visitors
40. Other Revenue Models
(for websites)
These models are less common
Selling data to data miners
In-app sales
Virtual items in games
Patenting technology and Licensing it
Donations / pay-what-you-want
41. Product Market Fit
Achieving “Product Market Fit” means success
How to do it?
Customer development
Release early
Listen to feedback
Sell it to customers
Learn and iterate
42. The Pivot
Back to disruptive innovation
Never been tried before
No one knows if it will be successful
It’s like an experiment
If it fails, change your hypothesis, try again
Change a core section of your business model
Product-market fit
Examples
Online game “Game Neverending” → Web photo sharing (Flickr)
PDA payments → Email/web payments (Paypal)
Animation equipment → Animated movies (Pixar)
43.
44. Homework
Individual, read the following:
10 business models that rocked
http://www.slideshare.net/boardofinnovation/10-business-models-that-rocked-2010-6434921
Browse this: The noob guide to online marketing
http://www.seomoz.org/blog/the-noob-guide-to-online-marketing-with-giant-infographic-11928
Browse this: How to get Media Coverage for your Startup
http://onstartups.com/tabid/3339/bid/80121/How-To-Get-Media-Coverage-For-Your-Startup-A-
Complete-Guide.aspx
(Team) Prepare your Final Presentation
Use the pitch deck from class 2 as a basis
Product Demo should be max 5 min of your 10-15 min presentation
(Team) Keep Going!!
Keep programming
Keep working on the pitch deck
Keep marketing your new startup
Occasionally review the market research data (Google Analytics, etc.)