A Crystal Ball for your Internet Startup August 30, 2009 Mike Koss – StartPad.org StartupWeekend – BizSpark/Redmond
Your Site = Social Experiment
Predictions <ul><li>How many unique visitors will you eventually have? </li></ul><ul><li>What will be your maximum revenue...
A Simple Model Active User Base New Users Leave Stay % (Attrition)
A Simple Example Max User Base = New Users/Attrition_rate (1,000)
What Can Change? <ul><li># of New Users: </li></ul><ul><ul><li>Search Engine Optimization (SEO) </li></ul></ul><ul><ul><li...
StartPad.org
Example (cont) 958 Unique (Last Month) 836 New Leave 89 Returns 91% (Attrition) Prediction: User Base Peak =  836/91% =  919
A “Freemium” Model Organic New Users Paid Viral Free Trial Users % Conversion Rates % % $$$ Subscription Users Referrals %...
Data Collection <ul><li>Customization of Google Analytics Needed </li></ul><ul><li>User Defined variable can be used to ta...
Summary <ul><li>Understanding your web site dynamics you can predict: </li></ul><ul><ul><li>Peak User Base (Trials and Sub...
Photo Credits <ul><li>http://www.flickr.com/photos/plasticbystander/ </li></ul>
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Crystal Ball for your Internet Startup

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This presentation outlines a method of modeling a Freemium internet startup to predict it's ultimate business value.

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Crystal Ball for your Internet Startup

  1. 1. A Crystal Ball for your Internet Startup August 30, 2009 Mike Koss – StartPad.org StartupWeekend – BizSpark/Redmond
  2. 2. Your Site = Social Experiment
  3. 3. Predictions <ul><li>How many unique visitors will you eventually have? </li></ul><ul><li>What will be your maximum revenue? </li></ul><ul><li>What is the life-time value of a new customer? </li></ul><ul><li>How much is your business worth? </li></ul><ul><li>How can you improve the above? </li></ul>
  4. 4. A Simple Model Active User Base New Users Leave Stay % (Attrition)
  5. 5. A Simple Example Max User Base = New Users/Attrition_rate (1,000)
  6. 6. What Can Change? <ul><li># of New Users: </li></ul><ul><ul><li>Search Engine Optimization (SEO) </li></ul></ul><ul><ul><li>Paid Ads </li></ul></ul><ul><ul><li>PR or “Events” </li></ul></ul><ul><li>The user type : </li></ul><ul><ul><li>May have different expectations or be more or less inclined to join </li></ul></ul><ul><li>Attrition rate (through site improvements or active engagement, e.g. email) </li></ul>
  7. 7. StartPad.org
  8. 8. Example (cont) 958 Unique (Last Month) 836 New Leave 89 Returns 91% (Attrition) Prediction: User Base Peak = 836/91% = 919
  9. 9. A “Freemium” Model Organic New Users Paid Viral Free Trial Users % Conversion Rates % % $$$ Subscription Users Referrals % Leave % Leave %
  10. 10. Data Collection <ul><li>Customization of Google Analytics Needed </li></ul><ul><li>User Defined variable can be used to tag each user as “Paid”, “Referral”, “Trial”, or “Subscriber” </li></ul><ul><li>“Cohort Analysis” </li></ul><ul><ul><li>Track individual users by month they first visited your site (or signed up for an account) </li></ul></ul><ul><ul><li>Track each cohort monthly to see % returning </li></ul></ul>
  11. 11. Summary <ul><li>Understanding your web site dynamics you can predict: </li></ul><ul><ul><li>Peak User Base (Trials and Subscribers) </li></ul></ul><ul><ul><li>Expected Lifetime of each user class </li></ul></ul><ul><ul><li>Lifetime value of each new user </li></ul></ul><ul><ul><li>Peak Revenue </li></ul></ul><ul><ul><li>Current Enterprise Value </li></ul></ul><ul><ul><li>Download Spreadsheet from </li></ul></ul><ul><ul><li>http://startpad.org/crystal-ball </li></ul></ul>
  12. 12. Photo Credits <ul><li>http://www.flickr.com/photos/plasticbystander/ </li></ul>

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