Monetization Strategies

…and other measurable forms of success

#csEntrepreneurship

Overview• Evaluating Economies of Scale

• Common Pitfalls

• Guarantee Costumer Adoption

• Idea Maze

• Framework for Determining Product Tiers

#csEntrepreneurship

Economic growth may be achieved when economies of scale are realized

Evaluating Economies of Scale

Start-ups are in

Economies of Scale

The sigmoidal curve for the development

of an industry

Economic growth may be achieved when economies of scale are realized. Faster, Easier, and Cheaper

Cheaper, faster, and easier

Yahoo and Google's July traffic across all properties, measured by visits. (SimilarWeb)

User adoption rate increases and takes over the competitor. What next? Talk about other competitors who might enter the market and how to compete.

It's pretty difficult to solve big problems in four

years. I think it's probably pretty easy to do it in 20

years.

September 4, 1998 founded, what will google accomplish in the next few years? Larry Page and Sergy Brin with Vinod Khosla https://www.youtube.com/watch?v=Wdnp_7atZ0M

Why is the product valuation

important?

Serious venture investment is not required in the earliest stages of a company’s life, so angel investors have been getting the best seed deals. That spawned “super angels” and their subsequent micro-VC funds, which in turn evolved into crowdfunding platforms like AngelList.

Good founders can get capital anywhere. So they’re choosing the firms that will help them the most. Founders objective is to minimize risk to get investment by guaranteeing customer adoption

Common Pitfalls

Common Pitfalls• Charging too little

• Charging too much

• Short sighted

• Charging the wrong person

• Not valuing users/data as assets

http://www.joelonsoftware.com/articles/CamelsandRubberDuckies.html

How can we determine the best strategy to monetize our technology

Where to start?

challenge to cross the gap

Crossing the Chasm by Geoffrey A. Moore

Quantify your Customer Segment

• Estimate the Customer Lifetime Value (CLV): assess the financial value of each customer

• Estimate the Customer Acquisition Cost (CAC): cost associated in convincing a customer to buy a product/service

Reduce the cost of customer acquisition by building products, technology and services that customers want

Customer Acquisition Cost -will typically increase as a business matures. It is also typical to see a diminishing return on CAC as a business grows in size and possibly geographical distribution. At some point, a given customer acquisition strategy will no longer be beneficial - this means that the financial rate of return that can be expected to accompany new customers is surpassed by the cost of acquiring those customers in the first place.

• Cheaper to ship furniture in parts rather than already built. • Customers value cheap furniture more than expensive already built furniture.

Cheaper to ship furniture in parts rather than already built. Customers value cheap furniture more than expensive already built furniture. Ikea Effect.

Are there any common threads you found between successful underdogs?

They're defined by their disagreeableness, which is not obnoxiousness, but rather they are not people who require the social approval of their peers to go forward with an idea. I give the example in the book of Ingvar Kamprad who was the founder of IKEA. In order to save IKEA at a certain point, he starts to make his furniture in Poland in 1961. Imagine going to a communist country to make your product at the height of the Cold War. The only way you can do that is if you are indifferent to what the world says about you. That's the crucial part about why he was able to do this incredibly disruptive, innovative thing because he wasn't someone who spent anytime worrying about his reputation.

https://www.youtube.com/watch?v=jkaWYKlnli0

The IKEA Effect by Dan Ariely

The IKEA Effect, by Dan Ariely A beginners guide to irrational behavior

The Becker–DeGroot–Marschak method (BDM), named after Gordon M. Becker, Morris H. DeGroot and Jacob Marschak for the 1964 Behavioral Science paper, "Measuring Utility by a Single-Response Sequential Method" is an incentive-compatible procedure used in experimental economics to measure willingness to pay (WTP).[1]

Priced origami value.

Increased time and effort cause us to love something more. Minimize the effort, and the amount of love into it you are not going to get much from it. If you actually invest time and put effort in then you will get more out of it, because you will derive more enjoyment.

What was Apple’s strategy for selling the Apple II to hobbyists and non-hobbyists, after selling the Apple I exclusively to hobbyiest?

Guarantee Customer Adoption

What was Apple’s strategy for selling the Apple II to hobbyists and non-hobbyists, after selling the Apple I exclusively to hobbyist?

This was an entirely novel repositioning of the computer towards the general public, with a promise that computing could be easy, fun and productive. Jobs insisted that the design of the case reflect this new audience. n terms of ease of use, features and expandability the Apple II was a major technological advancement over its predecessor, the Apple I, a limited-production bare circuit board computer for electronics hobbyists that pioneered many features that made the Apple II a commercial success.

I love it when you can bring really great design and simple

capability to something that doesn't cost much.

Lean UX Process

http://uxdesign.smashingmagazine.com/2011/03/07/lean-ux-getting-out-of-the-deliverables-business/

Stay lean and focus on the experience, not the paperwork. the designer is still driving the design by aggregating all of that feedback, assessing what works best for the business and the user, and iterating the design forward. By providing insight into the design work to your teammates sooner rather than further down the design road, you accomplish the following: Ensure that you’re aligned with the broader team and the business vision; Give developers a sneak peek at the direction of the application (speeding up development and surfacing challenges earlier); Further flesh out your thinking, since verbalizing your concepts to others forces you to focus on areas that you didn’t think of when you were pushing the pixels. The trick is to stay lean: keep the deliverables light and editable. Eliminate waste by not spending hours getting the pixels exactly right and the annotations perfect. Got an idea for a flow? Throw it up on the whiteboard, and grab the product owner or project leader to tell them about it.

Sell me a pen.

Article

Type of Monetization Strategies

the limits are endless

Options(not limited to these 5)

1. Membership

• Subscription or pay wall: once paid, free access

• Transaction

• Metered: free until user reaches a threshold

2. Selling Content

3. Affiliate Products/Joint Ventures

4. Sponsorship

5. Putting your contact list to work: Valuable User Datahttp://www.quicksprout.com/the-advanced-guide-to-content-marketing-chapter-10/

Members need to feel like they are gaining: Elite status High-value information VIP treatment Network opportunities with other members Insider access to the owner/director of the site Members-only forum or private Google+ group Develop a content strategy that offers as many of these benefits as possible.

Idea MazeBalaji S. Srinivasan -

General Partner at Andreessen Horowitz Co-Founder and CTO at Counsyl

Startup Engineering Class: class.coursera.org/startup-001 Balaji S. Srinivasan - General Partner at Andreessen Horowitz - Counsyl- Co-Founder and CTO Signup: coursera.org/course/startup Stanford University

Figure 1: Visualizing the idea maze. A good idea is not just the one sentence which gains you entrance to the maze. It’s the collection of smaller tweaks that defines a path through the maze, along with explanations of why this particular combination will work while others nearby have failed. Note that this requires an extremely detailed understanding of your current and potential competitors; if you believe you don’t have any competitors, think again until you’ve found the most obvious adjacent market. This exercise is of crucial importance; as Larry Ellison said, “Choose your competitors carefully, as you will become a lot like them.” A good founder is thus capable of anticipating which turns lead to treasure and which lead to certain death. A bad founder is just running to the entrance of (say) the “movies/music/filesharing/P2P” maze or the “photosharing” maze without any sense for the history of the industry, the players in the maze, the casualties of the past, and the technologies that are likely to move walls and change assumptions (Figure 1). In other words: a good idea means a bird’s eye view of the idea maze, understanding all the permutations of the idea and the branching of the decision tree, gaming things out to the end of each scenario. Anyone can point out the entrance to the maze, but few can think through

Qualitative graph of market size (in $) vs. scientific novelty (in citations or impact factor).

Regularly Test PrototypesIdeally: once a week

Anki Founders

After all, you only need to test 5 users

http://www.nngroup.com/articles/why-you-only-need-to-test-with-5-users/

Summary: Elaborate usability tests are a waste of resources. The best results come from testing no more than 5 users and running as many small tests as you can afford. Famous Jakob Nielsen's

Framework for Product Tiers

Kickstarter Campaign:

Reward Tiers• Dream market testing platform-

take advantage of it!

• Zero in on ideal price of product

• Create table to evaluate amount person will pay for features

• Estimate revenue for each versionCheap Love $1-$5

Rewards for the masses $10-$25

Good Margin $50-$100

Statement Makers $200-$500

VIPs $1000+

http://blog.boundforanything.com/2012/02/how-to-set-tiers-on-kickstarter/