Web 2.0 Goes Mainstream

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  • 1. Web 2.0 Startup Kit Professor Amy Shuen, CEIBS www.amyshuen.com Author, Web 2.0: A Strategy Guide
  • 2. Do I need a Web 2.0 business plan?
    • No, because ROI and time-to-money isn’t key in hard times.
    • No, because late-comers like Google rarely use network effects to win their competitive races
    • No, because Flickr’s first business plan for a game company ended with photo-sharing
    • No, because VCs like Sequoia will call you if you have 30M users in 12 weeks like Meebo
    • Yes, because I want to start a profitable and sustainable business quickly while preserving cash, sweat equity & reducing risk.
    Web 2.0: A Strategy Guide by Amy Shuen
  • 3. Web 2.0: A Strategy Guide by Amy Shuen
  • 4. What is Web 2.0? Web 2.0: A Strategy Guide by Amy Shuen
  • 5. Why Web 2.0, Enterprise 2.0 or e-Government 2.0?
    • HUGE--available Web 2.0 market size & demographics of web & mobile users
    • BETTER, CHEAPER, FASTER—products, services, experiences--Web 2.0 ROI & cash flow curve compared to Web 1.0 & offline
    • GLOBAL REACH— engaging & monetizing the long-tail online
    • SOCIAL INFLUENCE —1-3 percenters rule, not 80/20
    • ONLINE NETWORK EFFECTS—new business models capture 5 kinds of network effects to win competitive races
    • OR
    • ALL OF THE ABOVE
    Web 2.0: A Strategy Guide by Amy Shuen
  • 6. HUGE--available Web 2.0 market size Est. 2015 using 200% growth/5 years What about mobile broadband? Users=combinations (customers, public, private sector knowledge workers) Web 2.0: A Strategy Guide by Amy Shuen
  • 7. Entrepreneurship 101: ROI and the Start-up Cash Flow Curve Web 2.0: A Strategy Guide by Amy Shuen
  • 8. Which ROI and cash flow curve would you choose? Web 2.0: A Strategy Guide by Amy Shuen
  • 9. Some “hard” numbers: Jotspot, Excite & CDRom S/W $$3 Million $100K Web 2.0: A Strategy Guide by Amy Shuen
  • 10. Flickr, Shutterfly & Photo Store $$30 Million $100K Web 2.0: A Strategy Guide by Amy Shuen
  • 11. ROI: Barack Obama’s campaign? Web 2.0: A Strategy Guide by Amy Shuen
  • 12. ROI: Collective User Value Multiplied Web 2.0: A Strategy Guide by Amy Shuen
  • 13. ROI: Multiple Revenue Streams, APIs, Knowledge & Content Shared Web 2.0: A Strategy Guide by Amy Shuen
  • 14. ROI: Multiple revenue streams & why sharing can be profitable…
    • Flickr Revenue Model
      • Subscription and per user time-based economics
      • Ad-based and per eyeballs/clicks/impression economics
      • Transaction fee and per transaction economics
      • Volume and price per unit-based economics
      • Licensing and syndication fees and royalties—site-based economics
    • Single stream, multiple stream , interdependent stream, loss leader
    • Freemium and n-sided markets
    Web 2.0: A Strategy Guide by Amy Shuen
  • 15. ROI: Six Interactive User Strategies that impact the cost structure
    • Open up digital content to global user interaction
    • Create better search through user-generated information and tags
    • Discover and explore through online groups, crossing boundaries
    • Catalyze and amplify group social network effects
    • DIY self-service syndication
    • Digital ecosystem—third party developers
    Web 2.0: A Strategy Guide by Amy Shuen
  • 16. ROI: Reducing Investment by changing the Flickr cost structure What are the new cost economics of SaaS, SOA, mashups, cloud computing? Web 2.0: A Strategy Guide by Amy Shuen Direct Payroll Support Payroll Inventory IT and Developmt Mkt/Ad/ CRM Open Self-service DIY tagging filtering group syndication
  • 17. ROI: Return on Social Influence of active 1-3 percenters online
  • 18. ROI: Return on Collaborative Innovation If you’re not a web or digital company? Goldcorp & the ROI of Collaborative Innovation… Web 2.0: A Strategy Guide by Amy Shuen
  • 19. Disaster Relief—instantly 100x more users, 100x more partners/volunteers*
    • Some speedy idea-sharing & crowd-sourcing…
    • Red Cross Iowa mashup
    • InSTEDD Google.org Burma Disaster Relief
    • BlogHer Hurricane Katrina Relief
    • ObamaCycle.com—recycle campaign gear
    • Kiva.org—p2p micro-lending
    • *But maybe no power, logistics or communication
    Web 2.0: A Strategy Guide by Amy Shuen
  • 20. Seeing Network Effects Everywhere Web 2.0: A Strategy Guide by Amy Shuen Network Effect Definition Examples Direct network effects Value of good, service, network increases as more people use it Telephone, fax system Indirect (system) network effects More users of goods, service, network A increases the number of complementary goods B, C, D; indirectly making A more valuable CPU & peripheral, ATMs &bankcards, VCRs & videotapes, Lego Mindstorms Cross-network, (platform) network effects Increased usage by one distinct group of users increases the value of goods, services, network to another distinct group of users. Credit card holders & merchants, Videogame developers & users, Search engine users & advertisers Demand-Side network effects Value of goods, service, network increases with the perceived value and willingness-to-pay of more users Auctions, Beanie Babies, Pokemon cards, Google AdWords Social (local) network effects The value of goods, services, (social) network, increases with the usage of a typically small or local subset of users Wikipedia contributors, Linux app developers, Facebook, LinkedIn superconnectors
  • 21. Webkinz: Stuffed toys+$$+virtual world
    • Parent buys $15 stuffed animal, kid gets free code to website for stuffed animal “pet”.
    • Kids can buy extra stuff & set up house for stuffed animal “pets” online with points earned at games.
    • Kids can learn, interact, game & shop w. friends and other players.
    • Certain items are available to stuffed animal-”pet” owners of 15 pets or more.
    • Limits on play-time online per day.
    • Trading cards available.
    Web 2.0: A Strategy Guide by Amy Shuen
  • 22. What’s new about Web 2.0 business models?
    • Up to 5 kinds of network effects
    • Multiple per-user revenue streams, new ways to monetize & combine network effects
    • 2-sided markets and collaborative innovation
    • Social Influence: Exponential customer and partner acquisition at low cost with viral marketing & web distribution of apps
    • All of the above
    Web 2.0: A Strategy Guide by Amy Shuen
  • 23. Q: What is Web 2.0 Strategy? A. Thinking Exponentially [email_address] ROI-Invest, Influence, Innovation
  • 24. Where to put Web 2.0 in your business plan?
    • Concept, business model, funding requirements—Slide 21 & cashflow curve
    • Marketing—Slide 5 & 6, Slide 18-20
    • Competitive & Collaborative positioning—Comparative ROI & Slide 17
    • Products, Services, Partners—Slides 12-15
    • Milestones—See Web 2.0 Cashflow Curve
    • Financials—See Web 2.0 Cashflow Curve
    Web 2.0: A Strategy Guide by Amy Shuen
  • 25. Web 2.0 Cashflow Curve: What will your ROI look like? Web 2.0: A Strategy Guide by Amy Shuen
  • 26. What will you do with Web 2.0?
    • What are 3 things you could tell/sell the nation’s first Chief Technology Officer about the “right infrastructure, policies and services for the 21 st century”?
    • How has your thinking changed about measuring the ROI of Web 2.0? About your business and business plan?
    Web 2.0: A Strategy Guide by Amy Shuen