Michael Arrington @ FOWA Feb 07

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Michael Arrington of TechCrunch speaking at Future of Web Apps in London, February 2007.

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Michael Arrington @ FOWA Feb 07

  1. The Magic Formula Michael Arrington February 2007
  2. Topics • Market Timing • Key Factors • Areas of Opportunity
  3. Looking Back At 2006 Was 2006 a “healthy” year for the web, or was it the beginning of Bubble 2.0?
  4. $600 million in venture capital was invested in “Web 2.0” startups in 2006. …Bubble?
  5. Not Yet However, a single acquisition was completed for $1.65 billion, paid for in cold, hard Google stock. Nearly 3x the total amount invested by venture capitalists
  6. Facebook was almost acquired by Yahoo for $1.62 billion.
  7. MySpace generates $25 million per month in advertising revenue.
  8. My Point Is… We’re just getting started.There is no bubble. And the best Internet apps are still to come.
  9. What To Focus On 1. Have a good idea! • Invent a market • Destroy a market • Remove Friction 2. Have a business plan 3. Have a revenue model 4. Build it cheap, test the waters 5. Avoid high burn rate
  10. However 1. Threw away their original business plan and one founder bailed out. 2. Flaunted international copyright law. 3. Had no revenue stream. 4. Was spending $1m/month in bandwidth.
  11. It worked because… 1. They removed friction by providing a much needed service - IPTV (not user generated video clips). 2. First to market. 3. So much growth that money poured in to cover burn rate.
  12. Case Study: MyBlogLog 1. Launched October 19, 2006 2. Acquired January 8, 2007 3. Never raised a venture round
  13. Case Study: Amie Street 1. Launched mid 2006 2. Three university students 3. No capital raised 4. Can do to music industry what Digg did to news industry
  14. Case Study: Jingle Networks 1. Free business information (411) 2. Has taken 3+% of U.S. market 3. Forced AT&T to compete 4. UK opportunity?
  15. Shared Attributes of Winners • Passion for what they are doing • Doing Something Extraordinary • Removing Serious Friction • Great Founder Dynamics • Never Raised Big Money, or Raised It After They Won • Perfect Revenue Model Not Required • Had a lot of buzz about their product early on (free marketing)
  16. Shared Attributes of Losers • Poor Founder/Team Choices • Lifestyle/Ego Entrepreneurs • Raised Too Much Money • Spent Too Much Money • Over Business-Planned • Forgot About Scaling (Don’t be Friendster) • Had to try too hard at marketing
  17. The Buzz Factor To be successful you must create buzz about your product: • Solve a real problem • Do not be the 200th video sharing platform – Instead, be Aniboom • If you don’t have a blog, start one now • If buzz isn’t happening, seriously rethink your product (not your marketing)
  18. Areas of Opportunity 1. Offline/Online • Apollo • Firefox 3.0 • File system + html/flash/ajax 2. DRM and Music/Movies/TV 3. Data and service portability (teqlo, ning, pipes) 4. Mobile
  19. Discussion

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