jay jamison business model presentation -- founders institute 2009
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RevenueJay Jamison
Co-Founder & President, MoonshootFounder’s Institute – June 23, 2009
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Microsoft 1973
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My Thoughts on Revenue
Its Nice!
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Keep It Simple
“Invest in businesses that an
idiot could run, because at some
point, an idiot will.”
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Know What To Look For
1. Understandable business
2. Strong, passionate team
3. Defensible moats
4. Models that generate cash
Tonight’s Scope
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Moats & Models
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Moats (in 1559)
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Moats (in 2009)Deliver users
something they want.
Build share & leadership.
Attract second stakeholder group to
reinforce value to users.
Improve value to users & repeat.
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Users want PCs that are cheap, lots of
apps.
Developers need audience for their
products
WinTel gains share.
Developers build for
Windows.
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Apple builds Iphone.
Apple offers developers a
platform.
Users drool & buy.
Developers build for Iphone.
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Advertisers need to spend most effectively.
Google offers outstanding
search product.
Google grabs share.
Ad revenue funds
improvements in search.
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Large user base & commissions draw
best teachers.
Users are drawn to
service with best teachers
20% royalty to teachers.
Teachers create and market
great classesMegastudy
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Collect data on children & learning, reinforce value to
parents, educators, and children.
Build something
children love, parents value
Grow share & credibility
Reinforce core value with more
fun content, better results to
parents
Moonshoot
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Attract another stakeholder to build
on your value.
Build something users love
Grow shareReinforce core value Your Company
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Models—Part I
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Types of Business Models
• Figure it out later / Ads
• Market maker
• Freemium & Subscription
• Virtual goods
• Price for product or service
• Others
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Figure it out later / Ads
Examples Google; TwitterLots of others
Pros Focuses team on building awesome product
Cons Requires awesome user traction & retention.
AssessmentWorks well if you are “the future of x,” where ‘x’ equals something universal—e.g., communication, television, etc.
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Market Maker
Examples PayPal; Ebay
Pros Your users make money through your serviceVery powerful
Cons Need excellent positioning & differentiation
Assessment Great work if you can find a scalable opportunity
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Freemium & Subscription
Examples World of Warcraft, Club Penguin, Dropbox, Animoto, Salesforce.com
Pros Puts value on your service. Very crisp.
Cons Conversion, pricing may lack scale.
Assessment Think very hard about whether you have a good trip wire for value. (Animoto & Club Penguin)
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Virtual goods
Examples Facebook apps, Habbo
Pros Shockingly profitable, can always add stuff
Cons Fickle
Assessment Cool to start, but have a strategy to extend.
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Price per user or copy
Examples Microsoft Office, Enterprise apps, Iphone Premium Apps
Pros Crisp pricing and licensing model
Cons Not free for users, discounting
Assessment Works well for the right kinds of things.
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Models—Part II
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“Know Your Numbers”
• Ask tons of questions, do the analysis
• Connect with customers & market
• Build conviction that model works
• Close to pin works
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Recent ExampleEntrepreneur’s Estimate to VC:
“Microsoft Small Business Server
has an Installed Base of 30M”
--Unsourced analyst
Jay’s EstimateM units
Total Server shipments 8.0
X86 share @ 90% 7.2
Windows Server share 70% 5.0
33% to small business 1.6
50% is Small Biz Server 800K
5 year avg lifespan 4m
VC emails me. Microsoft Small Business Server has an Installed Base of around
4M
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Closing
Moats • ABC: Always Be Constructing
Business Models• Draft model should be in place ASAP• Monetization can be later
Industry Model• Always be hungry to learn more • But work to stay grounded in reality