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Revenue and CustomersDevelopment Approach
The Founder Institute1 Oct ’13
by Raphael Costa (@raphacosta)
Revenue & Customers
The Startup Culture
Steps To Develop Your Revenue Model
Cash Creation vs. Value Creation
Your Customers & Your Startup
Reality Check
Background
Q & A
Why do most Startups fail?
Background
A family man
A software developer by trade
A startup enthusiast
Co-Founder & Director of Hashtag Consulting
Co-Founder & CEO of AdTangerine
@raphacosta
http://za.linkedin.com/in/raphacosta
https://www.facebook.com/raphael.costa
Up Next
Startup Culture
The Startup Culture
Why a Startup?
Why you should be a Startup Founder?
Why you shouldn’t be a Startup Founder?
What could we expect from a Startup?
What are the needs of a Startup?
How can a Startup raise funds?
Up Next
Why do Most Startups Fail?
Why Do Most Startups Fail?
Business Model based on Assumptions
Lack of Effective Marketing Strategies
Lack of Investment
Lack of Mentorship
Lack of Vision
Stupid Idea built in isolation
It’s no longer fun or driven by passion
Up Next
Your Customers & Your Startup
Your Customers & Your Startup
Knowledge of your customer base
Knowledge of the MarketWhere is the GAP?
What is the NEED?
How things are done? (Processes)
Who are they?
What they do?
What is their context?
How much do competitors charge for similar products?
How does your product fit in?
What do they need?
Your Customers & Your Startup
Supporting Tools for DiscoveryAnalytics
Split Tests (A/B)
Knowledge of your Product
Strengths
Weaknesses
Cost of Production
Cost to Market
Cost to Maintain
Others
What makes your product unique?
Up Next
Reality Check (CHASM)
Reality Check (Chasm)
What do your customers expect from you?
What do you expect from your customers?
What do investors expect from you?
What do you need to survive?
Customer:“Your idea is awesome, but it just doesn’t work for me. I’m sorry.”
Investor:“I like the concept, but I don’t see how I can make money here?”
You:“What’s my real cost here? How long can we survive?”
Reality Check (Chasm)
Reality Check (Chasm)
Reality Check (Customers)
INNOVATORSThey are willing to take a risk on a good idea.
EARLY ADOPTERSThey wait to hear a few good stories
EARLY MAJORITYThey need solid evidence
LATE MAJORITYThey want to see at least 3 product success stories.
LAGGARDSThey wants solid proof that it works
Customer Classification
Short CLV, Low CAC
Medium CLV, Low CAC
Medium CLV, Medium CAC
High CLV, Medium CAC
High CLV, High CAC
CLV = Customer Lifetime Value
CAC = Customer Acquisition Cost
Up Next
Cash Creation vs. Value Creation
Cash Creation vs. Value Creation
Pressure
Quality Decline
Cash over Innovation
Up Next
Steps To Develop Your Revenue Model
Steps To Develop Your Revenue Model
Steps To Develop Your Revenue Model
"In the absence of revenue, there can be no profit... and many other things."
Choose a revenue model approach that is best for your company and background.
Your revenue model should allow you to communicate your value.
Identify potential investors strategically based on your revenue model.
Project out into the foreseeable future.
Understand that your revenue model is always evolving.
Identify the key variables for your company.
Mitigate for variables
Steps To Develop Your Revenue Model
DISCOVERY QUESTIONS
What revenue model do your competitors use?
How do your customers like to pay for a solution like yours?
What are your costs and at what frequency? (Monthly, Weekly, Annually)
Thanks!
@raphacosta
http://za.linkedin.com/in/raphacosta
https://www.facebook.com/raphael.costa
Revenue and CustomersDevelopment Approach
QA
Background
