Flat6 Labs Bahrain Cycle 5 Bootcamp Day 3
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The document outlines a bootcamp agenda focused on startup essentials, including how to monetize a startup, market strategy, and metrics that matter. Key components discussed include required pitch slides, various revenue models, product-market fit, and strategies for customer acquisition and sales. Emphasis is placed on actionable steps such as customer development and defining metrics for success.
![Copyright
DKParker, LLC
2019
PMF Scorecard
¤ How would you feel if you could no longer use [product]?
¤ The answers are the following:
¤ Very disappointed
¤ Somewhat disappointed
¤ Not disappointed
¤ I no longer use [product]](https://image.slidesharecdn.com/flat6labs-bahraincycle5bootcampday3-200413104813/85/Flat6-Labs-Bahrain-Cycle-5-Bootcamp-Day-3-50-320.jpg)
Flat6 Labs Bahrain Cycle 5 Bootcamp Day 3
- 1. Copyright DKParker, LLC 2019 Flat6 Labs Bahrain Bootcamp – Day 3 Dave Parker @DaveParkerSEA www.dkparker.com/blog [email protected] @DaveParkerSEA
- 2. Copyright DKParker, LLC 2019 10 Required Slides 1. Problem/Market Opportunity 2. Solution/Product/What are you building (demo) 3. How are you making money 4. Competitive Landscape 5. Basic Financials 6. Achievements so far (Traction) 7. Market Strategy: Why Bahrain 8. Vision for Scaling 9. What’s missing (your needs)? Why Flat6 Labs 10. Team
- 3. Copyright DKParker, LLC 2019 Day 3 Agenda ¤ How Startups Make Money ¤ Marketing Sales ¤ Business Development Revenue Models ¤ Product Market Fit ¤ Metrics that Matter ¤ Financial Model Templates
- 4. Copyright DKParker, LLC 2019 How Startups Make Money
- 5. Copyright DKParker, LLC 2019 Do you know? ¤ Cost to Build Known Unknown ¤ Cost to Sell Known Unknown ¤ Price Known Unknown ¤ Profit Known Unknown
- 6. Copyright DKParker, LLC 2019 Should You Build It? ¤ Creating Value ¤ You’ve identified a problem ¤ Can you build a solution? ¤ Delivering Value ¤ Ship it! ¤ Capturing Value for what you created ¤ Cost to build – last month (and next month) ¤ Cost to Sell ¤ Make a Profit
- 7. Copyright DKParker, LLC 2019 How not to make money? ¤ Small transaction values are bad ¤ Small percentages are bad ¤ Not being able to capture value is bad ¤ Lumpy sales cycles are bad ¤ Long sales cycles are bad ¤ Pricing too low could kill your idea before you start
- 8. Copyright DKParker, LLC 2019 Marketing – Finding the right customers
- 9. Copyright DKParker, LLC 2019 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
- 10. Copyright DKParker, LLC 2019 Key Metric Terms ¤ State your hypothesis ¤ CAC ¤ LTV ¤ ARPU ¤ Churn ¤ Time to Close ¤ Customer engagement ¤ Time on Site
- 12. Copyright DKParker, LLC 2019 Marketing Channels ¤ Paid Search ¤ Organic Search ¤ Word of mouth ¤ Sales calls ¤ Public Relations ¤ Affiliate ¤ Email marketing ¤ Social
- 13. Copyright DKParker, LLC 2019 Marketing Qualified Leads ¤ Define qualified vs list ¤ Suspects ¤ Prospects ¤ Qualified Prospects
- 14. Copyright DKParker, LLC 2019 Sales Qualified Leads ¤ Hand off to Sales ¤ Identify steps to close ¤ Number of calls
- 15. Copyright DKParker, LLC 2019 Time to Close ¤ Lead attribution ¤ Source time ¤ Compressing or Expanding ¤ Trend by source
- 16. Copyright DKParker, LLC 2019 Tracking ¤ Data allows you to know where to double down and where to hold back ¤ Conversion ratios
- 17. Copyright DKParker, LLC 2019 Sales – capturing value creation
- 18. Copyright DKParker, LLC 2019 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
- 19. Copyright DKParker, LLC 2019 Sales Model Hypothesis Known Market Unknown Market Low Price Point High Price Point Known Search Words Unknown Search words Web Direct Direct Indirect Retail
- 20. Copyright DKParker, LLC 2019 Sales ¤ Model – Pick one, why? ¤ Strategy ¤ Who ¤ Tactics ¤ How ¤ Tools ¤ Sales tools
- 22. Copyright DKParker, LLC 2019 Business Development ¤ Strategic relationships ¤ Who has the list you want ¤ How do you get the partnership
- 23. Copyright DKParker, LLC 2019 Business Development ¤ Strategy ¤ Who should you get as a partner ¤ How will you build the relationship? ¤ What channels ¤ Tactics ¤ Messaging/Value proposition ¤ Tools ¤ CRM
- 24. Copyright DKParker, LLC 2019 Dave’s Madlibs Pitch Hi, I’m <your name here>, and my company <your Company name here> the problem I’m solving is <insert problem here>. Our product <insert product info here> is designed for our target customer of <insert target customer here>. We make money by <insert method here> and our team is the right team because <insert why you’re awesome here>. I need help with <insert help needed here>.
- 25. Copyright DKParker, LLC 2019 BREAK – 15 Minutes
- 26. Copyright DKParker, LLC 2019 How to Monetize Your Startup: Revenue Models
- 27. Copyright DKParker, LLC 2019 Business and Revenue Models ¤ Business Models – abstract framework of Creating, Delivering and Capturing Value ¤ Revenue Models (part of business model) is the framework of revenue, pricing, who pay ¤ Models Lean toward Tech and Product
- 28. Copyright DKParker, LLC 2019 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
- 29. Copyright DKParker, LLC 2019 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
- 30. Copyright DKParker, LLC 2019 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
- 31. Copyright DKParker, LLC 2019 4. Metered Servcie ¤ Example: AWS, Splunk, Azure ¤ Use: Favors 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
- 32. Copyright DKParker, LLC 2019 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
- 33. Copyright DKParker, LLC 2019 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
- 34. Copyright DKParker, LLC 2019 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
- 35. Copyright DKParker, LLC 2019 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
- 36. Copyright DKParker, LLC 2019 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%
- 37. Copyright DKParker, LLC 2019 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
- 38. Copyright DKParker, LLC 2019 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
- 39. Copyright DKParker, LLC 2019 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
- 40. Copyright DKParker, LLC 2019 13. Coin/Tokens ¤ Bitcoin and Blockchain have burst onto the scene over the last couple of years ¤ Blockchain is a technology ¤ Bitcoin is a token, ICOs have been very succesful but aren’t a security.
- 41. Copyright DKParker, LLC 2019 14. 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
- 42. Copyright DKParker, LLC 2019 15. 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
- 43. Copyright DKParker, LLC 2019 Revenue Models– Pick Two 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. Coins & Tokens 14. Big Data 15. Licensing
- 44. Copyright DKParker, LLC 2019 Dave’s Madlibs Pitch Hi, I’m <your name here>, and my company <your Company name here> the problem I’m solving is <insert problem here>. Our product <insert product info here> is designed for our target customer of <insert target customer here>. We make money by <insert method here> and our team is the right team because <insert why you’re awesome here>. I need help with <insert help needed here>.
- 45. Copyright DKParker, LLC 2019 Lunch – 60 Minutes
- 46. Copyright DKParker, LLC 2019 Product Market Fit – PMF
- 47. Copyright DKParker, LLC 2019 Product Market Fit Two Epoch’s of every startup ¤ Pre - Product Market Fit ¤ The only thing that matters is getting there ¤ Post – Product Market Fit ¤ A whole new set of questions – Scale, Culture and People
- 48. Copyright DKParker, LLC 2019 Pre – PMF ¤ Some Revenue ¤ Some Customers ¤ Some Marketing ¤ A lot Hypothesis
- 49. Copyright DKParker, LLC 2019 Post – PMF ¤ Predictable & Scalable Revenue ¤ Customer profiles ¤ Cohort analysis ¤ Churn ¤ Scalable marketing ¤ Hypothesis + Data
- 50. Copyright DKParker, LLC 2019 PMF Scorecard ¤ How would you feel if you could no longer use [product]? ¤ The answers are the following: ¤ Very disappointed ¤ Somewhat disappointed ¤ Not disappointed ¤ I no longer use [product]
- 51. Copyright DKParker, LLC 2019 Tracking Over Time ¤ Churn Rate ¤ Net Negative Churn ¤ NPS vs CSAT ¤ Product usage level ¤ Frequency ¤ Recency ¤ Growth Rate
- 52. Copyright DKParker, LLC 2019 What is “Traction?”
- 53. Copyright DKParker, LLC 2019 Predictable/Forecastable Revenue ¤ De-risking your <time> investment ¤ Predictable revenue moves you from valuations based on trailing 12 to future 12 ¤ Target customer ¤ Sales Cycle ¤ Tools trail Strategy and Tactics
- 54. Copyright DKParker, LLC 2019 Customer Acquisition Hypothesis ¤ Cost of Customer Acquisition (CAC) ¤ Lifetime value of Customer (LTV) ¤ 36 month calculation in a mature business, 12 months for you ¤ Time to close sale ¤ How does this change with product/market maturity? ¤ Churn/Retention ¤ Average Revenue/measure (User, Account, etc) ¤ Word of mouth vs. Virality
- 55. Copyright DKParker, LLC 2019 Dave’s Madlibs Pitch Hi, I’m <your name here>, and my company <your Company name here> the problem I’m solving is <insert problem here>. Our product <insert product info here> is designed for our target customer of <insert target customer here>. We make money by <insert method here> and our team is the right team because <insert why you’re awesome here>. I need help with <insert help needed here>.
- 56. Copyright DKParker, LLC 2019 Metrics that Matter
- 57. Copyright DKParker, LLC 2019 What to track – best practices ¤ Marketing Metrics – “Marketing Motion” ¤ Ad Spend ¤ Traffic ¤ Marketing Qualified Leads (MQLs) ¤ Sales Metrics “Sales Motion” ¤ Outbound/Inbound ¤ MQL to SQL Conversion ¤ Business Development – Partnerships ¤ What’s in it for them? ¤ Pricing
- 59. Copyright DKParker, LLC 2019 Templates ¤ Do this after you get in the program – not highest and best use today ¤ Four Templates ¤ Marketplace ¤ Subscription ¤ Transaction Fee (works for commerce) ¤ Productize a service ¤ www.venturereadymodels.com Promo “Cairo2019”
- 60. Copyright DKParker, LLC 2019 10 Required Slides 1. Problem/Market Opportunity 2. Solution/Product/What are you building (demo) 3. How are you making money 4. Competitive Landscape 5. Basic Financials 6. Achievements so far (Traction) 7. Market Strategy: Why Bahrain 8. Vision for Scaling 9. What’s missing (your needs)? Why Flat6 Labs 10. Team
- 61. Copyright DKParker, LLC 2019 Day 3 Deliverables ¤ Write out your Value Prop ¤ Customer Development ¤ Write your questions ¤ Build your forms ¤ Get first 20+ interviews scheduled ¤ Review your results ¤ Metrics ¤ What are you tracking today? ¤ What should you be tracking ¤ Product Market Fit ¤ Forecast/predictable revenue ¤ Write out your Product Roadmap ¤ Pick a: ¤ Marketing Method ¤ Sales Model ¤ Revenue Model ¤ Price
- 62. Copyright DKParker, LLC 2019 Day 3 Deliverables ¤ Pick your primary and secondary revenue models ¤ Define Product Market Fit for your startup ¤ What are your metrics that matter? ¤ Pick a financial model template – hold for later