revenue: of moats & models by jay jamison
DESCRIPTION
These are the slides that I presented on 10 January 2010 at the Founder Showcase in Santa Clara, CA.TRANSCRIPT
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Revenue: Of Moats & Models
Jay JamisonCo-Founder & President,
Moonshoot
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Co-Founder & President English learning for children
everywhere Launching 2010
About Me
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The Borat Rule of Revenue:It is Nice!
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The Beavis & Butthead Rule:Everything matters
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The Warren Buffett Rule 1:Keep It Simple
“Invest in businesses that
an idiot could run,
because at some point,
an idiot will.”
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1. Understandable business
2. Strong, passionate team
3. Defensible moats
4. Models that generate cash
Tonight’s Scope
The Warren Buffett Rule 2:Build & stick with a concrete method
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Moats & Models
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Moats (in 1610)
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Moats (in 2010)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 classes
Megastudy
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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 IBusiness Models
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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.
Assessment
Works 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
ProsYour users make money through your serviceVery powerful
Cons Need excellent positioning & differentiation
AssessmentGreat work if you can find a scalable opportunity
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Freemium & SubscriptionExamples
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, e.g.)
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Virtual goods
Examples Facebook apps, Habbo
ProsShockingly 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
ConsNot free for users, slows distribution & uptakeDiscounting
Assessment
Can work extremely well, esp. in B2B.
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Models—Part IIIndustry Models
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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 Example
Entrepreneur’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 Have a plan. You can always change it later. Monetize when it makes sense.
Industry Models Always be hungry to learn more Work to stay grounded in reality