Evaluating a Startup's business model by "10x" technique

Bryan Starbuck, CEO, [email_address]
One Philosophy for running a Startup Company

Company Direction
Funding
Marketing
Philosophy for Running a Startup Company “ 10x ”

achieving it will…
Easier to hire
Easier to receive funding
…
Define a High Bar for your Startup

Your Grandma lives off of $1mil savings now in the Stock Market
Pick your Friend’s Startup
Would you advise her to invest $50k in your friends startup?
The “ Grandma Test ”

10x Philosophy is:
10x Pain
10x Solution
Financial Transaction
Scale Transactions
Definition of “ 10x ”: Ten Times Better

10x Pain What is the large customer pain? Problem: Resumes are NOT ranked Only time to read 200 of 40,000 Job Boards return 40,000+ unranked resumes resumes

10x Solution How is the problem Solved? Fixed: Resumes are ranked Immediate access to BEST from millions

Financial Transaction Show one financial transaction Customer Acquisition Cost: $x Price: $y Cost to Service: $z

Scale Transactions How Many Transactions until Max? Market Size 78 mil Transactions My Market Size 10% of market Total Revenue: $x mil

AoA Slides : Angel Check List With 10x, the other areas of your company need to be solid

The Marketing Beast

Conversion Rates Drop off rates RADICALLY drive up Customer-Acquisition-Costs Conversion Rate $1 per click (CPC) Create Account Create Account Free Account Create Account Task 2 Paid Account Landing Page $1.00 $4.00 Task 1 $8.00 $4.00 $20.00 $25.00

Not a Final Marketing Solution
Great for Beta 1
Iterate before you are perfected
WATCH OUT for VC Traction paradox
Full Solution if…
You can take 5+ years to grow & burn rate ~= $0
First to market in new segment
Organic Growth

Organic Growth is being hopeful… … Hope is Not a Strategy … founder, “ I need Marketing for Customers ” Reply, “ Your problem is upstream ” Famous Quote: -vs- -Tony Wright or Mark Mauder (?)

Total Customer Acquisition Costs: $20/2 = $10 CAC Organic vs Paid Traffic $1 per click (CPC) Conversion Rate results in $20 CAC Organic Traffic 1-to-1 Word of Mouth

Creating Businesses Key Steps 10x Pain 10x Solution

Creating Businesses Key Steps 10x Pain 10x Solution Conversion Rates are Brutal Customer Acquisition Costs are often $20 to $100 Don’t under estimate this impact in your business model

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Evaluating a Startup's business model by "10x" technique

by Bryan Starbuck on Oct 23, 2009

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Evaluating a Startup’s business model by "10x" technique — Presentation Transcript