Internet Business Models for Startups

Internet Business Models Founder Institute Singapore Launch April 26, 2010 David Teten, Partner, ff Venture Capital ffventure.com blog: teten.com @dteten New York, NY info@teten.com2011 David Teten. More at ffventure.com and teten.com http://www.flickr.com/photos/zetotal/3841245048/

Intro Models Tells Network Next Steps • Introduction • Business Models • Tells of People and Companies You Want to Know • Growing Your "Network 2.0" • Next Steps2011 David Teten. More at ffventure.com and teten.com

Intro Models Tells Network Next Steps ff Venture Capital (ffventure.com) • Early-stage technology venture capital fund based in New York • Founded 1999, with over 100 investments in over 40 companies • Focus on early stage web-based services companies with disruptive models, including SaaS, video gaming, digital media, social, mobile and VoIP • First investments typically $50-$250K at valuations of <$5m pre-money • 50% of fund reserved for follow-on investments • Prominent angel investments include: Cornerstone OnDemand (IPO); Quigo Technologies (sold to AOL for reported $340m); Klout, Hashable, Voxy, Phone.com • Two partners: John Frankel (21 years Goldman Sachs) and David Teten; one Venture Partner (Michael Yavonditte, CEO, Hashable)2011 David Teten. More at ffventure.com and teten.com

Intro Models Tells Network Next Steps David Teten (teten.com) • Partner, ff Venture Capital, early-stage technology venture capital fund • Founder and Chairman, Harvard Business School Angels of New York • Founder and Chairman, Navon Partners, research and analytics focused on private companies • Managing Director, Evalueserve, through September 2008. 2,500-person finance-focused research and analytics firm. • Founder and CEO, Circle of Experts (investment research firm), sold to Evalueserve • Founder and CEO, Teten Executive Recruiting, sold to Accolo, #42 on 2007 Inc. 500 • Founder and CEO, GoldNames, domain name investment bank, based in Israel • Technology/Defense Investment Banking, Bear Stearns (#1 group at Bear investment banking by revenues) • Lead author, The Virtual Handshake: Opening Doors and Closing Deals Online (TheVirtualHandshake.com) • Harvard MBA 1998, Yale BA, both with honors. • Contact: info@teten.com2011 David Teten. More at ffventure.com and teten.com

Intro Models Tells Network Next Steps • Introduction • Business Models • Tells of People and Companies You Want to Know • Growing Your "Network 2.0" • Next Steps2011 David Teten. More at ffventure.com and teten.com http://siteboat.com/what-is-an-internet-business/

Intro Models Tells Network Next Steps Symmetric vs. Asymmetric Business Models Symmetric models Asymmetric models are ones where the are ones where the user of a product user is different from and the person the person paying paying for it are the the company for the same product Munjal Shah, “Revenues”, presentation to Founder Institute; http://www.flickr.com/photos/andre-batista/2697697617;2011 David Teten. More at ffventure.com and teten.com http://www.flickr.com/photos/gustty/286033333/

Intro Models Tells Network Next Steps Symmetric vs. Asymmetric Business Models Amazon.com Facebook Sales force.com Google Yahoo Mail (old) Gmail iTunes Store Yahoo (mostly) All virtual goods eBay Hyatt.com Twitter iphone games Like.com Munjal Shah, “Revenues”, presentation to Founder Institute; http://www.flickr.com/photos/andre-batista/2697697617;2011 David Teten. More at ffventure.com and teten.com http://www.flickr.com/photos/gustty/286033333/

Intro Models Tells Network Next Steps Symmetric Business Models • Are easiest because your team only has to focus on one type of customer • No push and pull within internal teams on “selling out the UI to advertisers” • Revenues end up a very accurate proxy for user interest / satisfaction, so you only have to focus on one variable, but there is huge friction to distribution • Unfortunately for B2C companies, usually asymmetric models dominate • ~80% of the market cap of internet companies is asymmetric Munjal Shah, “Revenues”, presentation to Founder Institute2011 David Teten. More at ffventure.com and teten.com http://upload.wikimedia.org/wikipedia/commons/thumb/f/f1/Esplanade_by_slivester_for_wiki.jpg/800px-Esplanade_by_slivester_for_wiki.jpg

Intro Models Tells Network Next Steps Why Are So Many Success on the Web Asymmetric? Because the cost of distribution is almost zero: so very easy to make it free for customers ∞ Supply ∞ Price Price E P P Supply Demand Demand 0 0 Quantity ∞ Quantity ∞ http://laserlike.com/2009/04/18/microeconomics, cited in Munjal Shah, “Revenues”, presentation to Founder Institute2011 David Teten. More at ffventure.com and teten.com

Intro Models Tells Network Next Steps Don’t Be Low Traffic and Low Commercial Intent Consumer Intent to Do Commercial Transaction Lead Gen Nirvana High Intent Billshrink Only Google Like.com Search Twitter? Death Valley Top 20 sites Low Intent Most Web 2.0 Facebook companies Twitter? Online Games Low Traffic High Traffic Scale in Terms of Number of Users2011 David Teten. More at ffventure.com and teten.com Munjal Shah, “Revenues”, presentation to Founder Institute

Intro Models Tells Network Next Steps Corollary: Relevancy Doesn’t Equal Intent Consumer Intent to Do Commercial Transaction Any ads with Budweiser Girls on Botox ads on dating issues a Mommy blog High Intent Geriatric shoes on a MMORPG Dogfood ads next to photos of gaming site dogs Low Intent Low Relevancy High Relevancy Relevancy of the Ads Placed Munjal Shah, “Revenues”, presentation to Founder Institute; http://www.flickr.com/photos/the_airrunner/174915900/; http://www.flickr.com/photos/cobblucas/3225553226/; http://www.flickr.com/photos/seiu/374542734/; http://www.flickr.com/photos/playerx/3574370486/; http://www.flickr.com/photos/defrostca/3491557470/2011 David Teten. More at ffventure.com and teten.com

Intro Models Tells Network Next Steps Virtuous Circles Google offers outstanding search product. Ad revenue funds improvements in Google grabs search. share. Advertisers need to spend most effectively.2011 David Teten. More at ffventure.com and teten.com Jay Jamison, “Revenues”, presentation to Founder Institute

Intro Models Tells Network Next Steps Price per user or copy Examples: Microsoft Office, Enterprise apps, Iphone Premium Apps2011 David Teten. More at ffventure.com and teten.com http://helpahoy.com/images/ms-office-logo.jpg; http://www.inflecto.co.uk/Inflecto-Blog/image.axd?picture=2009%2F12%2Fiphone_apps_500_apple.jpg

Intro Models Tells Network Next Steps Ecommerce Products Examples: Amazon, Lands’ End, iTunes, Dell http://www.mediabistro.com/galleycat/original/amazon_crave.jpg; http://www.seeklogo.com/images/L/Lands__End-logo-34CCF7E9A7-seeklogo.com.gif;2011 David Teten. More at ffventure.com and teten.com http://mysterymanpodcast.files.wordpress.com/2009/07/itunes-logo1.png?w=150&h=163; http://www.mlf.lu/mlf/material/divers/dell-logo-jan09.jpg

Intro Models Tells Network Next Steps Ecommerce Services: Move the Offline Online Examples: Circle of Experts, Gerson Lehrman Group, LegalZoom2011 David Teten. More at ffventure.com and teten.com http://circleofexperts.com/images/evs_logo.gif; http://linksatelliteconnections.com/irwincom/images/clients/glg.gif; http://www.legalzoom.com/img/legalzoom-logo.gif

Intro Models Tells Network Next Steps Advertising + Affiliate Model / Figure it out later Examples: Google, Yahoo, Twitter, Facebook, NYTimes Lots of others http://www.google.com; http://www.yahoo.com; http://www.twitter.com; http://www.stetson.edu/administration/communityservice/media/images/facebook-logo.jpg;2011 David Teten. More at ffventure.com and teten.com http://graphics8.nytimes.com/images/misc/nytlogo379x64.gif

Intro Models Tells Network Next Steps Freemium & Subscription Examples: World of Warcraft, Club Penguin, Dropbox, Animoto, Salesforce.com http://webpages.scu.edu/ftp/jhhoward/images/world-of-warcraft-logo.jpg; http://snowdobbyjey009.files.wordpress.com/2008/04/new-cp-logo.png?w=520&h=2742011 David Teten. More at ffventure.com and teten.com http:www.dropbox.com; http://istockalypse.com/Istanbul/img/sponsor_animoto_lg.gif; http://www.brandsoftheworld.com/brands/0021/4399/brand.gif

Intro Models Tells Network Next Steps Brokerage Examples: Ebay, Orbitz, CarsDirect2011 David Teten. More at ffventure.com and teten.com http://pics.ebaystatic.com/aw/pics/logos/logoEbay_x45.gif; http://www.orbitz.com/site/img/chrome/nav/logo.png; http://cdc-img.ibsrv.net/common/navigation/images/nav_cdc_logo.gif

Intro Models Tells Network Next Steps Infomediary Examples: Advertising networks (LinkShare, Commission Junction), Audience measurement (Nielsen) http://www.insightempire.com/linkshare_logo.png ; http://www.cj.com/images/common/commission_junction.gif;2011 David Teten. More at ffventure.com and teten.com http://www.nielsen.com/etc/content/nielsen_dotcom/global/site_navigation/site_nav_set2/header.portlets.11331.LinkList.6133.ImageSrc.gif

Intro Models Tells Network Next Steps Virtual goods Examples: Facebook apps, Zynga, Habbo2011 David Teten. More at ffventure.com and teten.com http://blog.taragana.com/wp-content/uploads/2009/07/facebook.jpg ; http://www.zynga.com/img/logo.png; http://www.habbid.com.br/guias/heth08_Habbo-logo.jpg

Intro Models Tells Network Next Steps Growing Companies2011 David Teten. More at ffventure.com and teten.com http://flickr.com/photos/laserstars/908946494/sizes/o/

Intro Models Tells Network Next Steps Companies that Hired People/Firms Like You2011 David Teten. More at ffventure.com and teten.com http://www.flickr.com/photos/foundphotoslj/1134148114/

Intro Models Tells Network Next Steps Databases2011 David Teten. More at ffventure.com and teten.com

Intro Models Tells Network Next Steps Character – Competence – Relevance – Strength – Information – Number – Diversity • Introduction • Business Models • Tells of People and Companies You Want to Know • Growing Your "Network 2.0" • Next Steps2011 David Teten. More at ffventure.com and teten.com

Intro Models Tells Network Next Steps Character – Competence – Relevance – Strength – Information – Number – Diversity Network Valuation Formula Ch = Character Co = Your Firm’s Competence R = Relevance of the contact S = Strength of your relationship I = Information N = Number of people D = Diversity N = D * ∑ (Chn*Con *Rn* Sn*In) n=12011 David Teten. More at ffventure.com and teten.com David Teten and Scott Allen, The Virtual Handshake: Opening Doors and Closing Deals Online (www.TheVirtualHandshake.com)

Intro Models Tells Network Next Steps Any questions ? Slides at www.teten.com More resources at ffventure.com and teten.com Contact: info@teten.com2011 David Teten. More at ffventure.com and teten.com

Intro Models Tells Network Next Steps Acknowledgments to… • Manjul Shah, CEO, Like.com • Jay Jamison, Co-Founder & President, Moonshoot • Jed Chen, SmithStreetSolutions, for help in research and graphics • Darren Luo • Michael Rappa, http://digitalenterprise.org/models/models.html2011 David Teten. More at ffventure.com and teten.com

http://www.teten.com	103
http://www.thevirtualhandshake.com	38
http://ffvc.com	27
http://www.slideshare.net	20
http://blog.nextny.org	17
http://ffventure.com	4
http://dreams2act.co.cc	2
https://webcampus.fdu.edu	1
http://adgib.com	1

Internet Business Models for Startups

by David Teten on Apr 11, 2010

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Internet Business Models for Startups — Presentation Transcript