Business Models for the Web

Business Models for the Web - Find Your Best Fit October 16th 2009 [email_address] twitter: @seedcamp

Business Models for Startups
Think through a biz model early on; Don’t just build and worry about survival
You don’t need to deploy it at the beginning but it’s a helpful exercise to figure out how you’ll make money
Also helps you figure out what about your product would be valuable for a user and potentially avoid build mistakes
Lots of ways to sell valuable services. Find your ‘Best Fit’
The devil is in the details and secret to success in the execution – talk to other startups and learn from each other
Seedcamp companies
Of the 11 (13) startups; Mobclix (mobile ad-network), Kublax (freemium?), Basekit, Zemanta, Soup, Ubervu (Freemium), RMO (Subscription), myBuilder (marketplace), Kyko (Virtual goods), Toksta, Stupeflix (License)

Business Models for Startups
A flavor of the popular and successful few:
Advertising
Freemium and Subscription
Marketplaces and eCommerce
License and SaaS
Virtual Goods
Graduated Business Models

Advertising
Everyone
There’s a lot of noise. Isn’t so dissimilar to the physical world Don’t rely solely on advertising

You have to pedal twice as fast to go the same distance data thanks to
Advertising as a supporting Revenue stream; Blend with complementary models
Look at verticals, lead generation , affiliate programs (eBay, Amazon), Mobclix (ad network + analytics subscription)
Expedia (Marketplace), Business Week and NYT (Offline one-off and subscriptions) Startup examples – Zoombu (lead gen), Simply Hired (job seekers), Zemanta (Amazon affiliate)

Freemium Skype, Flickr, 37Signals, iMall, Freetailer, Freeservers Basekit, Box.net, Zemanta Pro, Kwaga Model: Offer basic services for free (features, use), drive users, and charge a premium for truly advanced features

Subscription Model: Straight charge for use of service. Can have promotional offers Salesforce, Amazon EC2, Gartner Slicehost, Erply (actually, fewer startups starting with a straight subscription model)

Marketplace & eCommerce Build a great marketplace and they will pay Or make and sell something people want

Marketplace and eCommerce
Model:
Mktplace - % of success fee, listing fee, subscription
eCommerce - Acting as the merchant itself or agency
There is a LOT of CONSISTENT Revenue to be made here
Expedia (Merchant model),Net-a-porter, Zappos myBuilder, Rent Mine Online

Licensing and SaaS
Model: License underlying technology or offering software as a service to customers
SMEs – Distribution (Channel, channel, channel)
Corporates – longer sales cycles, customization
Big company: Livebookings, Meebo, Magnify.net, NetSuite Startups: Toksta, Stupeflix, Codility

Virtual Goods
Model: Selling virtual gifts, furniture, in-game upgrades like weapons, online currency, etc
Changeyou, Tencent, Second Life, Habbo Hotel Stardoll, Kyko, HotorNot, Platogo

Graduated Business Models
Blended business models that add further relevant revenue streams
myBuilder – going from % of transaction to subscription to advertising/lead-gen
Amazon – E-commerce to hosting to affiliate advertising
Other models: Micropayments, Third party support models
Consulting = NOT a business model b/c it’s not your core activity

Good Blogs/Resources
http://biztools.pbworks.com
http://startup-marketing.com/the-right-business-model-for-your-startup/
http://omalleyblog.typepad.com/infectious/2009/02/ad-based-startups-bad-idea.html
http://500hats.typepad.com/500blogs/2008/09/startup-metrics.html
http://www.avc.com/a_vc/2006/03/my_favorite_bus.html
http://www.techcrunch.com/2007/06/20/virtual-goods-the-next-big-business-model/

Business Models for the Web

by Launch 48 on Oct 17, 2009

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