How To Convert Underpants Into Profits

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A presentation to the founders at TheFort.VC

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How To Convert Underpants Into Profits

  1. 1. How ToConvert Underpants Into Profits by Alex Calic
  2. 2. Who Am I?• Chief Revenue Officer @ The Media Trust• 10+ years in tech (internet/software) – adtech, social, video, ecommerce, mobile• Previously @: – Clearspring: Bus Dev, Sales, Finance – InPhonic: Corp Dev, Bus Dev, Product – Coremetrics: Bus Dev – InTouchPOS: Strategy• Wharton MBA
  3. 3. South Park Season 2: http://www.southparkstudios.com/clips/151040/the-underpants-business
  4. 4. Option #1Selling To Your Users
  5. 5. Selling To Your Users Transaction SubscriptionConsumerEnterprise
  6. 6. Option #2Selling To Your Users
  7. 7. Selling Your Users• Attention• Data (email, behavior, personal information)
  8. 8. Best of Both Worlds• Monthly subscription fees• In-program advertising
  9. 9. Figure Out Thanks!Your Unitized TESTEconomics
  10. 10. Income Statement Basics PER USER Revenues - Cost of Sales Gross Margin - Marketing Expense Operating Margin
  11. 11. Business Levers
  12. 12. Matching Revenues to Cost • Fixed vs. variable cost structure Seat License Project Based Pay Per UseCost Time
  13. 13. Some Thoughts on Freemium Reallocating cost of sales & marketing expenses Paying UsersTotal users x avg. cost per user per period Total Cost Supported% of total users that pay = By Each Paying User
  14. 14. User Acquisition Costs• Inbound (free) Free and cheaper – Organic acquisition cost – Referral channels can drive – Search (free/paid) down revenue• Outbound (paid) requirements and enhance the user – Email acquisition loop. – Display – Sponsorship
  15. 15. Cash Flow Considerations• Sales cycle – Consumer vs. enterprise (short vs. long)• Payment cycle – Upfront vs. arrears (fixed vs. usage pricing)• Churn – Monthly billing vs. contracts (variable vs. fixed costs)
  16. 16. Advertising Model• First leveraging standards (ad units/ sellers)• Native advertising requires scale – 10MM active users as a starting point – 100MM for audience targeting• What you’re up against
  17. 17. TEST
  18. 18. Ways to Find the Right Pricing• Competitors• Comparable business models/industries• A/B testing• Step-up pricing• Just ask!• Most importantly: KISS
  19. 19. Thanks For Having Me!• alex@themediatrust.com TEST• @alexcalic• www.alexcalic.com

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