Crystal Ball for your Internet Startup
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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.

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 Presentation Transcript

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