Internet Business Models for Startups

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Internet Business Models for Startups

David Teten

Founder Institute

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  • Don’t understand: There is no butterfly model of focusing users and customers
  • Review public information about investors in funds with the specified focus Look for public records of ultra-high-net-worth individuals who have made their money in the targeted industry or geography
  • Review public information about investors in funds with the specified focus Look for public records of ultra-high-net-worth individuals who have made their money in the targeted industry or geography
  • D = D iversity = heterogeneity of people in your network C = C redibility and reliability = strength of your sales proposition in eyes of people in your network = “I trust what she says about... I can trust her to….” R = R elevance of person = credibility, reliability and seniority of the person in your network S = Strength = mutual link strength and degree of orientation to the person = “I feel comfortable with him; he cares about me.”
  • “ Email Groups” file. Master file with short email lists of friends, sorted by area of interest Chinese New Year Valuable data, but… Privacy issues
  • Build new relationships Benefits: insight, access, and influence Improve close rates, deal velocity, revenue per customer Privacy
  • Rules of the Road Customize standard intro Lurk before you leap Dive in, but do not splash
  • Formally and sincerely thank people Introduce single friends.
  • Source of Lead Result Success Rate business directories, company listings, company websites Ice Cold Call Low response rate All of the methods above, plus virtual communities, blogs, job networks, email lists, biography analysis, etc. Warm Cold Call Higher response rate
  • Coordinates Category (1 through 6) Spouse Children Birthday Background Education Connections Affiliations Interests Mini-resume Holiday greeting
  • Coordinates Category (1 through 6) Spouse Children Birthday Background Education Connections Affiliations Interests Mini-resume Holiday greeting
  • Coordinates Category (1 through 6) Spouse Children Birthday Background Education Connections Affiliations Interests Mini-resume Holiday greeting
  • SIC codes, industry directories, trade groups Network in VCs. Business press, VentureWire, VCBuzz, etc.
  • Most important is Google.
  • Internet Business Models for Startups

    1. 1. 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/
    2. 2. 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
    3. 3. 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
    4. 4. 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
    5. 5. 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/
    6. 6. 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/
    7. 7. 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/
    8. 8. 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
    9. 9. 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
    10. 10. 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
    11. 11. 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
    12. 12. 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
    13. 13. 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
    14. 14. 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
    15. 15. 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
    16. 16. 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
    17. 17. 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
    18. 18. 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
    19. 19. 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
    20. 20. 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
    21. 21. 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
    22. 22. 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/
    23. 23. 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/
    24. 24. Intro Models Tells Network Next Steps Databases2011 David Teten. More at ffventure.com and teten.com
    25. 25. 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
    26. 26. 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)
    27. 27. 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
    28. 28. 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
    29. 29. 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

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