Dave Parker's 6 Month Startup program (Saturday version). Month 3 includes, how startups make money, go-to-market, pitch prep and tools for pitching

1. Copyright
DKParker, LLC
2017
OHUB KC Month 3
Dave Parker
@DaveParkerSEA
www.dkparker.com/blog
Dave@dkparker.com
@DaveParkerSEA

2. Copyright
DKParker, LLC
2017
Month 3 Agenda
¤ Building defense
¤ Go-to-Market
¤ How Startups Make Money & Metrics that Matter
¤ Marketing Sales
¤ Business Development Revenue Models
¤ Pitch Prep
¤ 13 Slides
¤ Tools
¤ Forwardable email
¤ Executive Summary
¤ Monthly Updates

3. Copyright
DKParker, LLC
2017
Defence

4. Copyright
DKParker, LLC
2017
What’s your path to a Moat
¤ No such thing as “sustainable competitive advantage”
¤ Speed
¤ Knowledge of the customer
¤ Ability to iterate
¤ Customer acquisition

5. Copyright
DKParker, LLC
2017
Go-to-Market

6. Copyright
DKParker, LLC
2017
Marketing, Sales, Biz Dev Plan
¤ Given what you’ve learned so far:
¤ Marketing hypothesis
¤ Sales hypothesis
¤ Biz Dev/Partnership Hypothesis

7. Copyright
DKParker, LLC
2017
What to track – best practices
¤ Marketing Metrics – “Marketing Motion”
¤ Ad Spend
¤ Traffic
¤ Marketing Qualified Leads (MQLs)
¤ Sales Metrics “Sales Motion”
¤ Outbound/Inbound
¤ MQL to SQL Conversion
¤ Business Development – Partnerships
¤ What’s in it for them?
¤ Pricing

8. Copyright
DKParker, LLC
2017
How Startups Make Money

9. Copyright
DKParker, LLC
2017
Do you know?
Make your selections:
¤ Cost to Build Known Unknown
¤ Cost to Sell Known Unknown
¤ Price Known Unknown
¤ Profit Known Unknown

10. Copyright
DKParker, LLC
2017
Business Model: Should You Build
It?
¤ Creating Value
¤ You’ve identified a problem
¤ Can you build a solution?
¤ Delivering Value
¤ Ship it!
¤ Capturing Value for what you created
¤ Cost to build – last month (and next month)
¤ Cost to Sell
¤ Make a Profit

11. Copyright
DKParker, LLC
2017
How not to make money?
¤ Small transaction values are bad
¤ Small percentages are bad
¤ Not being able to capture value is bad
¤ Lumpy sales cycles are bad
¤ Long sales cycles are bad
¤ Pricing too low could kill your idea before you start

12. Copyright
DKParker, LLC
2017
Marketing – Finding the right
customers

13. Copyright
DKParker, LLC
2017
Marketing – Finding Customers
¤ Messaging/Value Proposition
¤ Does it resonate with the target customer segment
¤ They are the hero of the story
¤ Is it repeatable?
¤ Strategy
¤ Outbound first
¤ Inbound second

14. Copyright
DKParker, LLC
2017
Key Metric Terms
¤ State your hypothesis
¤ CAC
¤ LTV
¤ ARPU
¤ Churn
¤ Time to Close
¤ Customer engagement
¤ Time on Site

15. Copyright
DKParker, LLC
2017
OrganicSearch
PaidSearch
WordofMouth
SalesCalls
PR
Miracles!
TimetoClose
Month1
Month2
Month3
Month4
$
Spen
d
#
Conv
#
Conv
#
MRR
Time

16. Copyright
DKParker, LLC
2017
Marketing Channels
¤ Paid Search
¤ Organic Search
¤ Word of mouth
¤ Sales calls
¤ Public Relations
¤ Affiliate
¤ Email marketing
¤ Social

17. Copyright
DKParker, LLC
2017
Marketing Qualified Leads
¤ Define qualified vs list
¤ Suspects
¤ Prospects
¤ Qualified Prospects

18. Copyright
DKParker, LLC
2017
Sales Qualified Leads
¤ Hand off to Sales
¤ Identify steps to close
¤ Number of calls

19. Copyright
DKParker, LLC
2017
Time to Close
¤ Lead attribution
¤ Source time
¤ Compressing or Expanding
¤ Trend by source

20. Copyright
DKParker, LLC
2017
Tracking
¤ Data allows you to know where to double
down and where to hold back
¤ Conversion ratios

21. Copyright
DKParker, LLC
2017
Monthly Budget
¤ Hypothesis:
¤ $100 in ad spend will create ____ MQL
¤ Monthly Amount
¤ Channels
¤ Track your results

22. Copyright
DKParker, LLC
2017
Sales – capturing value creation

23. Copyright
DKParker, LLC
2017
How will they buy?
¤ Web Direct – place the order to buy on the web
¤ Direct – outbound sales, inside/outside
¤ Indirect/Channel – fulfills demand, doesn’t generate
¤ Retail – BestBuy, etc

24. Copyright
DKParker, LLC
2017
Sales Model Hypothesis
Known
Market
Unknown
Market
Low
Price
Point
High
Price
Point
Known
Search
Words
Unknown
Search
words
Web Direct
Direct
Indirect
Retail

25. Copyright
DKParker, LLC
2017
Sales
¤ Model – Pick one, why?
¤ Strategy
¤ Who
¤ Tactics
¤ How
¤ Tools
¤ Sales tools

26. Copyright
DKParker, LLC
2017
Business Development

27. Copyright
DKParker, LLC
2017
Business Development
¤ Strategic relationships
¤ Who has the list you want
¤ How do you get the partnership

28. Copyright
DKParker, LLC
2017
Business Development
¤ Strategy
¤ Who should you get as a partner
¤ How will you build the relationship?
¤ What channels
¤ Tactics
¤ Messaging/Value proposition
¤ Tools
¤ CRM

29. Copyright
DKParker, LLC
2017
Revenue Models:
Services = 1
Products =15

30. Copyright
DKParker, LLC
2017
Business and Revenue Models
¤ Business Models – abstract framework of Creating,
Delivering and Capturing Value
¤ Revenue Models (part of business model) is the
framework of revenue, pricing, who pay
¤ Models Lean toward Tech and Product

31. Copyright
DKParker, LLC
2017
1. Fee for Service
¤ Example: Consulting Services company
¤ Use: B2B & B2C
¤ Key Metrics
¤ Project Revenue
¤ Cost of delivering (usually time)
¤ Gross Margin
¤ Services are hard to scale because they require people
to deliver including Restaurant, Contractors, etc.
¤ Services include markup on cost of goods sold

32. Copyright
DKParker, LLC
2017
2. Commerce
¤ Example: Amazon, AmazonSupply
¤ Use: B2C & B2B
¤ Key Metrics:
¤ Wholesale or cost of goods sold
¤ Average Margin %
¤ Average Basket
¤ Commerce – Physical Goods- Wholesale, cost of goods,
retail, average margin, physical good
¤ Notes: Can mature into marketplace

33. Copyright
DKParker, LLC
2017
3. Subscription
¤ Example: Salesforce , Box, Spotify
¤ Use: B2C & B2B
¤ Key Metrics
¤ Average Revenue Per User (ARPU)
¤ Conversion ratio – e.g. trial to purchase
¤ Churn
¤ Challenges: MVP won’t be enough to be Kick Ass Product
¤ Notes: Highest multiple, forecastable revenue

34. Copyright
DKParker, LLC
2017
4. Productize a Service
¤ Your offerings is generally complex and requires services
to deploy
¤ Gross margin on Services >35%
¤ Product development comes with services
¤ Use: B2C & B2B
¤ Examples: Moz, service company convert to tools.
¤ Challenges – difficult to make the transition away from
services

35. Copyright
DKParker, LLC
2017
5. Transaction Fees/Rental
¤ Example: 99Designs, KickStarter, Elance, Chugg
¤ Use: B2C & B2B
¤ Key Metrics
¤ Average transaction revenue
¤ Fee % per transaction
¤ Number of transactions
¤ Challenges: Margins are small (15%), need efficiency
¤ Notes: Don’t start too low

36. Copyright
DKParker, LLC
2017
6. Lead Generation
¤ Example: Mint.com, AllStarDirectories, NetQuote
¤ Use: B2C & B2B
¤ Key Metrics
¤ Cost to generate traffic
¤ % conversion of form data
¤ Price per lead
¤ Challenges: Highly competitive, barrier of entry is low
¤ Notes: Conversion rates average 0.06%

37. Copyright
DKParker, LLC
2017
7. Gaming
¤ Example: King.com/Candy Crush
¤ Use: B2C Only
¤ Key Metrics:
¤ Downloads
¤ % play
¤ Average in app purchase
¤ Challenges – tends to be “hit driven business”
¤ Notes: use in first 21 days is a predictor of success

38. Copyright
DKParker, LLC
2017
8. Marketplaces
¤ Example: eBay, Alibaba
¤ Use: B2C & B2B
¤ Key Metrics
¤ Average Transaction Amount
¤ Number of Monthly Transactions
¤ Commission %
¤ Challenges: two sided market places require you start
with one side, value to seller & Product market fit (x2)
¤ Notes: critical mass or marketplace required

39. Copyright
DKParker, LLC
2017
9. Advertising/Search
¤ Example: Google, Facebook
¤ Use: B2B – advertisers pay, users are free
¤ Key Metrics
¤ Traffic
¤ Click
¤ Avg. revenue/click
¤ Challenges – Scale, need >1M uniques/month to
consider the option

40. Copyright
DKParker, LLC
2017
10. New Media
¤ Example: SnapChat, WhatsApp
¤ Use: B2C only
¤ Key Metrics:
¤ K-Factor (Viral Co-efficient)
¤ Network effect of inviting others to join
¤ Challenges – K-Factor is hard. Little revenue until scale
¤ Notes: Everyone wants to! Not happening in B2B

41. Copyright
DKParker, LLC
2017
11. Combinations
¤ Combinations business models happen for two reasons
¤ You don’t know which model is right
¤ At scale you can expand revenue sources
¤ Examples: Hardware sensors + software services to create
data analytics
¤ Challenges – most require scale or at least traction

42. Copyright
DKParker, LLC
2017
12. Coin/Tokens
¤ Bitcoin and Blockchain have burst onto the scene over
the last couple of years
¤ Blockchain is a technology
¤ Bitcoin is a token, ICOs have been very succesful but
aren’t a security.

43. Copyright
DKParker, LLC
2017
Three that could cost you
everything!

44. Copyright
DKParker, LLC
2017
Three at Scale – Not Launch
13. Multi-sided Marketplaces – The RealReal – create
products and customers
14. Big Data – PatientsLikeMe is emerging, but requires
massive data in advance = massive cash
15. Panels – Toluna, precise groups of customer service
research
Dead Model
1. Licensing – the old Microsoft model <pre-subscription>

45. Copyright
DKParker, LLC
2017
Summary – Pick Two (Primary & Secondary)
1. Fee for Service
2. Commerce
3. Subscription
4. Productize a Service
5. Transaction Fee/Rental
6. Lead Generation
7. Gaming
8. Marketplace
9. Advertising/Search
10. New Media
11. Combinations
12. Coins Tokens
13. Multi-sided Marketplaces
14. Big Data
15. Panels
16. Licensing

46. Copyright
DKParker, LLC
2017
Pricing

47. Copyright
DKParker, LLC
2017
Your price will be wrong!
Increase it every year and
grandfather early customers for a
period of time

48. Copyright
DKParker, LLC
2017
Art or Science?
¤ Benchmarks
¤ Comparable products
¤ Don’t start too low
¤ Cost base vs Value based
¤ What is the alternate for the “Job to be Done”?
¤ Remember Freemium is a marketing mechanic, not a
price

49. Copyright
DKParker, LLC
2017
A/B Testing
¤ Removing pricing from top navigation
¤ Source traffic for A/B Testing
¤ Unbounce.com or similar
¤ Test traffic with same headline, content, testing only price
¤ “Squeeze page” no other navigation except check out –
just like Amazon checkout page (back or retype url)
¤ Get results – winner is A – Test again

50. Copyright
DKParker, LLC
2017
Promotions
¤ Time based
¤ Feature based
¤ Marketing based
¤ Track sending URL via Google Analytics
¤ Create “Pick-;list” for “How did you hear about us”
¤ Bundled product offers
¤ Grandfather early customers – if possible
¤ Sunset features may mean dropping old customers

51. Copyright
DKParker, LLC
2017
Product Pricing
¤ First Product
¤ Staged pricing – up or down over time
¤ Second Product
¤ Staged pricing – up or down over time
¤ Launch timeline based on product road map
¤ Services?
¤ Could it improve you sales cycle

52. Copyright
DKParker, LLC
2017
Company Road Map

53. Copyright
DKParker, LLC
2017
Company Roadmap
¤ Where will you be in 18 Months
¤ Product
¤ People
¤ Customers
¤ Owner of category
¤ Should map to your financial model
¤ Should double your enterprise value

54. Copyright
DKParker, LLC
2017
Quarterly Roadmap – 18 Months
Q1
People
Product
Revenue
Month to
Cash out
Owner
for each
Q2
People
Product
Revenue
Month to
Cash out
Q3
People
Product
Revenue
Month to
Cash out
Q4
People
Product
Revenue
Month to
Cash out
Q1
People
Product
Revenue
Month to
Cash out
Q2
People
Product
Revenue
Month to
Cash out

55. Copyright
DKParker, LLC
2017
Roadmap Highlights
¤ Because it’s an eye chart
¤ Highlight key components, e.g.
¤ Key Hires
¤ Ship dates
¤ Customer onboarding
¤ First revenues
¤ Major event

56. Copyright
DKParker, LLC
2017
Pitch Prep

57. Copyright
DKParker, LLC
2017
Tools for Pitching
¤Forwardable Email
¤Executive Summary
¤Presentation
¤ ~11 Slides
¤Monthly Update

58. Copyright
DKParker, LLC
2017
Forwardable Intro Email
¤ Great blog post from Alex Iskold, Techstars NYC
¤ The associate needs to be able to repeat your
message
¤ Make it easy to get the introduction
¤ Avoid buzzword bingo

59. Copyright
DKParker, LLC
2017
Not

60. Copyright
DKParker, LLC
2017
Executive Summary
¤Two pages
¤ ”Don’t Bury your Lede”
¤ Your headlines and opening paragraph tell the
story (see slide 10)
¤ It’s designed to get the next meeting, not to get
a check
¤ Stay at 10k feet and out of the weeds
¤ Numbers should sync with deck and forecast!
You’ll be tempted to get out of sync – be careful!

61. Copyright
DKParker, LLC
2017
Deck
¤Generally lead with problem/solution format
¤However:
¤ If you have traction lead with traction
¤ If you’re in a complex market, you may want to
lead with your team
¤ Have one customer story arch
¤Include contact info

62. Copyright
DKParker, LLC
2017
13 Slides for Your Pitch
1. Title, Value Proposition,
Contact Info
2. Presentation Overview
3. Problem/Solution
4. Traction
5. Market
6. Timing
7. Product Roadmap/Demo
8. How You Make Money/Key
Metrics
9. Go-To-Market
10.Secret Sauce/Moat/IP
11.Team
12.Competitive Analysis
13.Clear Ask
Blog Post

63. Copyright
DKParker, LLC
2017
Monthly Updates
¤ Every month
¤ Mail Chimp Free Account
¤ Content
¤ What we did
¤ What we’re going to do
¤ Where we could use help
¤ Show steady progress with or without capital

64. Copyright
DKParker, LLC
2017
Pitching

65. Copyright
DKParker, LLC
2017
Pitching your Idea
¤ Clearly communicating your idea is critical for recruiting
a co-founder and capital
¤ Starting strong
¤ What questions do you want the audience to ask when
you’re through?
¤ Can I invest
¤ Can I help
¤ WTF?

66. Copyright
DKParker, LLC
2017
Dave’s Madlibs Pitch
Hi, I’m <your name here>, and my company <your Company
name here> the problem I’m solving is <insert problem here>. Our
product <insert product info here> is designed for our target
customer of <insert target customer here>. We make money by
<insert method here> and our team is the right team because
<insert why you’re awesome here>. I need help with <insert help
needed here>.

67. Copyright
DKParker, LLC
2017
Write and practice your pitch

68. Copyright
DKParker, LLC
2017
Pitches

69. Copyright
DKParker, LLC
2017
Month Three Deliverables
¤ Prepare you deck
¤ Write your executive summary
¤ Prepare your forwardable email
¤ Setup your monthly update

70. Copyright
DKParker, LLC
2017
Score Along with me…
https://bit.ly/2SNTKwk

71. Copyright
DKParker, LLC
2017
THANKS!