I’m getting excited to attend the upcoming Web 2.0 Expo in San Francisco hosted by O’Reilly Media and TechWeb.
While there are many great sessions in the works, two standout as particularity relevant to readers this blog and speak directly to the changes taking place in the world of early-stage funding.
First Alastair Michell is doing a session titled, S Factor – Why Sales Shouldn’t Be a Dirty Word in Web 2.0. Second, Eric Ries from Kleiner Perkins will be talking about The Lean Startups.
Alastair’s session is spot on: I continue to hear about company after company re-tooling their viral growth strategies to instead focus on producing revenue. Not that the two approaches (viral vs. revenue) are conflicting in all cases, but many times, one is sacrificed for the other due to limited resources. Many startups fail to understand the amount of resources required to actively make sales and support customers, especially early on during the alpha or beta phase.
A direct consequence of a focus on revenue production is the need for a critical evaluation of value propositions, especially from the perspective of potential paying customers.
Revenue generation has recently been viewed as more the exception, than the rule. This is where Eric’s approach (i.e. customer discovery) proves invaluable. Often when a startup pursues a hyper-adoption business model (think Twitter), the marketing efforts are focused on pushing a free version of the product and capturing eyeballs. However, unless there is specific value resulting from the network effects of the product, revenue is generally expected to be derived from specific functionality (often ‘premium features’) sold to a subset of users who will ‘theoretically’ pay for. It then becomes a modeling game of conversion rates, instead of a focus on “process” around determining whether a customer would actually pay for the service(s) provided. In an economy where wallets are tight (both for customers and venture funds) the need to 1) focus on revenues and 2) identify where true, scalable value exists is absolutely imperative.
Free Ticket Giveaway.
In the spirit of “small being the new big,” I am opening up my blog for posts on hacks, insights and anecdotes about doing more with less.
What can you share or suggest with fellow entrepreneurs to help navigate these turbulent waters? I will post all submissions and pick two authors to receive free admission, courtesy of the great folks at Web 2.0!
