Michael Arrington @ FOWA Feb 07

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Michael Arrington of TechCrunch speaking at Future of Web Apps in London, February 2007.

Michael Arrington of TechCrunch speaking at Future of Web Apps in London, February 2007.

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Transcript

  • 1. The Magic Formula Michael Arrington February 2007
  • 2. Topics • Market Timing • Key Factors • Areas of Opportunity
  • 3. Looking Back At 2006 Was 2006 a “healthy” year for the web, or was it the beginning of Bubble 2.0?
  • 4. $600 million in venture capital was invested in “Web 2.0” startups in 2006. …Bubble?
  • 5. Not Yet However, a single acquisition was completed for $1.65 billion, paid for in cold, hard Google stock. Nearly 3x the total amount invested by venture capitalists
  • 6. Facebook was almost acquired by Yahoo for $1.62 billion.
  • 7. MySpace generates $25 million per month in advertising revenue.
  • 8. My Point Is… We’re just getting started.There is no bubble. And the best Internet apps are still to come.
  • 9. What To Focus On 1. Have a good idea! • Invent a market • Destroy a market • Remove Friction 2. Have a business plan 3. Have a revenue model 4. Build it cheap, test the waters 5. Avoid high burn rate
  • 10. However 1. Threw away their original business plan and one founder bailed out. 2. Flaunted international copyright law. 3. Had no revenue stream. 4. Was spending $1m/month in bandwidth.
  • 11. It worked because… 1. They removed friction by providing a much needed service - IPTV (not user generated video clips). 2. First to market. 3. So much growth that money poured in to cover burn rate.
  • 12. Case Study: MyBlogLog 1. Launched October 19, 2006 2. Acquired January 8, 2007 3. Never raised a venture round
  • 13. Case Study: Amie Street 1. Launched mid 2006 2. Three university students 3. No capital raised 4. Can do to music industry what Digg did to news industry
  • 14. Case Study: Jingle Networks 1. Free business information (411) 2. Has taken 3+% of U.S. market 3. Forced AT&T to compete 4. UK opportunity?
  • 15. Shared Attributes of Winners • Passion for what they are doing • Doing Something Extraordinary • Removing Serious Friction • Great Founder Dynamics • Never Raised Big Money, or Raised It After They Won • Perfect Revenue Model Not Required • Had a lot of buzz about their product early on (free marketing)
  • 16. Shared Attributes of Losers • Poor Founder/Team Choices • Lifestyle/Ego Entrepreneurs • Raised Too Much Money • Spent Too Much Money • Over Business-Planned • Forgot About Scaling (Don’t be Friendster) • Had to try too hard at marketing
  • 17. The Buzz Factor To be successful you must create buzz about your product: • Solve a real problem • Do not be the 200th video sharing platform – Instead, be Aniboom • If you don’t have a blog, start one now • If buzz isn’t happening, seriously rethink your product (not your marketing)
  • 18. Areas of Opportunity 1. Offline/Online • Apollo • Firefox 3.0 • File system + html/flash/ajax 2. DRM and Music/Movies/TV 3. Data and service portability (teqlo, ning, pipes) 4. Mobile
  • 19. Discussion