What’s the best way to monetize?

Jeff Haynie (CEO, co-founder at Appcelerator)
Five things I will do different for my next startup — Life Tips — Medium

The conundrum that a lot of companies face — in fact most of them — is the balance between reach and revenue (or in another way to frame it: the conflict between the two). The further you maximize reach the harder it is to scale revenue — or at the very least, more friction is introduced in capturing it.

What’s the best way to navigate the fundraising climate?

Sam Altman (President at Y Combinator)
What to do if a bubble is starting – Sam Altman

The only thing that is cheap during a startup bubble is capital. Make sure you have enough money in the bank, and treat this money as the last money you’ll ever raise. Focus on a path to profitability. Resist the urge to ramp up to a crazy burn rate.

Sam Altman (President at Y Combinator)
Valuations – Sam Altman

Definitely don’t start a company just because capital is available. Resist the urge to raise and spend too much money; if capital feels cheap, its psychologically easier to spend.

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
When the going gets tough, the tough get going – AVC

The real reason I welcome the tougher environment is that it will make all of us better. We will have to make better decisions. The market won’t bail us out. We will have to earn our returns instead of being handed them. And I’m not just talking about investors. I’m talking about everyone working in tech startups. The going is getting tougher. Time for the tough to get going.

Reid Hoffman (Partner & Co-Founder at Greylock Partners)
LinkedIn’s Series B Pitch to Greylock: Pitch Advice for Entrepreneurs

Understand the broader financing climate. In 2004, investors regained interest in the consumer internet again. Friendster raised a big round in 2003; MySpace started gaining traction. But with so many investors still licking their wounds from the dot-com bust, many focused on proven business models, such as advertising or e-commerce. As a result, we knew that our pitch would need to steer into investors’ biggest concern: the lack of revenue.

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
Reblogging An Old Post: The Word Bubble – AVC

That doesn’t mean we aren’t investing in this cycle. We are as active as we’ve ever been. But we are investing at this stage of the cycle with our eyes wide open. And I’m writing about it in the hopes that others do the same.

Josh Kopelman (Partner at First Round)
What the Seed Funding Boom Means for Raising a Series A | First Round Review

The problem is that the number of A rounds hasn’t changed. That amount of Series A capital HAS NOT increased. So, if you have 4x the number of companies with seed funding, that’s 4x the players competing for the same money… making it 4x harder to raise an A round than it was five years ago.

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
The First Law Of Internet Physics – AVC

I told him that when you are looking at financial manias, the amplitude of the mania is inversely correlated to its duration.
I like to think of these manias as waveforms. When they build slowly they last longer. When they develop overnight, they dissipate quickly as well. This rule also works pretty well for consumer internet services.

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
What Has Changed – AVC

the momentum/late stage investors have moved from consumer to enterprise. there is a large pool of money in the venture capital asset class that is opportunistic, momentum driven, and thesis agnostic. the consumer web has matured. we are almost 20 years into the consumer web and we have large platforms that are starting to suck up a lot of the oxygen. google, facebook/instagram, amazon, microsoft, apple, twitter, ebay, yahoo, AOL, craigslist, wor… (read more)

Reid Hoffman (Partner & Co-Founder at Greylock Partners)
LinkedIn’s Series B Pitch to Greylock: Pitch Advice for Entrepreneurs

For consumer internet properties in 2004, because we had just gone through the dot-com winter, investors’ principal concern was whether or not you could make money.

Reid Hoffman (Partner & Co-Founder at Greylock Partners)
LinkedIn’s Series B Pitch to Greylock: Pitch Advice for Entrepreneurs

In 2013, it [was] whether you can break through the noise. [In 2013], there [were] probably a thousand consumer internet startups founded every quarter — how do you become one of the 1 to 3 that matter in a 7-year timeframe? Those are the kinds of objections you need to steer into at the beginning of your pitch.

Mark Suster (Managing Partner at Upfront Ventures)
What Do LPs Think of the Venture Capital Markets for 2016? | Bothsides of the Table

LPs remain staunch supporters of the venture capital industry, and their investment pace into VC seems likely to hold steady for the next one to two years (barring any unforeseen negative market events). This support will start to meet headwinds in the next three to four years if our industry doesn’t find a way to drive more exits and recycle capital back into the ecosystem. Without some cash distributions, eventually LPs will become stretched. … (read more)

Mark Suster (Managing Partner at Upfront Ventures)
So What is The Right Level of Burn Rate for a Startup These Days? | Bothsides of the Table

[In 2016] As I have pointed out in previous posts, 91% of VCs surveyed believe prices are declining (30% believe substantially) and 77% believe that funding will take longer than it has in the past.

Heidi Roizen (Operations Partner at Draper Fisher Jurvetson (DFJ))
Dear Startups: Here’s How to Stay Alive — Medium

Stop clinging to your (or anyone else’s) valuation: You know what somebody else’s fundraise metrics are to you? Irrelevant. You know what your own last round post was? Irrelevant.

Heidi Roizen (Operations Partner at Draper Fisher Jurvetson (DFJ))
Dear Startups: Here’s How to Stay Alive — Medium

Redefine what success looks like. In order to survive, it is critical to redefine what success is going to look like for you — and your employees, and your investors, and your other stakeholders.

Heidi Roizen (Operations Partner at Draper Fisher Jurvetson (DFJ))
Dear Startups: Here’s How to Stay Alive — Medium

Get to cash-flow positive on the capital you already have.

Heidi Roizen (Operations Partner at Draper Fisher Jurvetson (DFJ))
Dear Startups: Here’s How to Stay Alive — Medium

Understand whether your current investors are going to get you there. Go to [your] backers and get their commitment that they will see us through (or know that they won’t, because if they won’t, the sooner we know that, the sooner we can go out and do something about this. ) I know many VCs hate to be put on the spot about this, but I think entrepreneurs have the right to ask, and to know.

Heidi Roizen (Operations Partner at Draper Fisher Jurvetson (DFJ))
Dear Startups: Here’s How to Stay Alive — Medium

Stop worrying about morale. You know what hurts morale even more than cost- cutting and layoffs? Going out of business.

Jeff Haynie (CEO, co-founder at Appcelerator)
How to prepare for the coming startup storm — welcome to your startup life — Medium

1. Take a hard look at your finances. 2. Take a hard look at your priorities. 3. Take a hard look at your people.

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
The Mobile Downturn – AVC

In tech investing, we get booms when a new cycle emerges and downturns as it matures and consolidation of economics happens (think Microsoft in the late 80s/early 90s). The downturn is always followed by something radical and new that starts on the fringe and becomes mainstream. Timing all of these things is hard. But it is what we have to do.

What’s the best way to monetize?

Sam Altman (President at Y Combinator)
Startup Playbook

In any case, try to get to ramen profitability i. e. , make enough money so that the founders can live on ramen as quickly as you can.

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
Free Vs Paid – AVC

We’ve struggled with early stage investments in enterprise oriented web services. It’s much better, in my opinion, to go with the freemium model, give a version of the service away for free to all comers, get a lot of users, get good market feedback, then develop a premium version of the product/service for sale to enterprise customers. If your free version is popular with a lot of users, your customer base is the target for the upsell and you mi… (read more)

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
The First Law Of Internet Physics – AVC

You can extract a higher average revenue per user (ARPU) from a paid model, but you get so many fewer users that it’s better to extract a lower ARPU with a free model and get many more users. The rule: many users * low arpu >>>> few users * high arpu. I guess a corollary is that you can implement a freemium model on top of a free model and turn some of your users into high ARPU customers, but they will always be a small portion of the total numbe… (read more)

Tomasz Tunguz (Partner at Redpoint Ventures)
The Common Characteristics of Successful Freemium Companies

Startups should consider freemium when four conditions are met: The number of potential free users numbers in the tens of millions. Freemium conversion funnels tend to be very lossy. On average, 1-4% of users convert to paid. 2. Free distribution is a competitive advantage in the market. 3. The product used by a free user has a simple and straightforward value proposition. Because customers are educating themselves, freemium products have a very … (read more)

Tomasz Tunguz (Partner at Redpoint Ventures)
The 3 strategies of freemium companies | A Founder’s Notebook

Successful freemium companies do three things: 1. They use free to market, educate and win mindshare. The Internet enables potential customers to research products much more deeply before engaging with a sales person. 2. They leverage usage data to improve their product. The large amount of users using the product enables A/B testing with statistical significance, a non-trivial strategic advantage. 3. They gather information about their customer … (read more)

Alex Austin (Founder of Branch Metrics)
Mobile App Developers are Suffering — The Startup — Medium

[Mobile-only business models aren’t working]. According to a study done by Activate, the top 20 app publishers, representing less than 0. 005% of all apps, earn 60% of all app store revenue. The 10th most popular app (Skype) has a small fraction of the traffic seen by the top app (Facebook), and the 1,000th app (Pixable) has just 0. 2%. Yet in the past four weeks, there were 45,000 new apps submitted to the iOS App Store.

Chris Savage (CEO @ Wistia)
“Monetize Backwards” to Build a SaaS Business That Lasts | Wistia Blog

At Wistia, we started with a paid plan only, and over the last eight years, we’ve progressively made the product more and more free. It’s counterintuitive, but constraining growth by not making our product free from the start has been one of the best decisions we’ve made.

David Jackson (Founder, Seeking Alpha)
The challenge of monetizing free products | A Founder’s Notebook

The best monetization of a free product avoids taxing the user flow. Tumblr couldn’t figure out how to do that, and it’s not clear that Facebook, Twitter or Yahoo have either.

David Jackson (Founder, Seeking Alpha)
Measurement is the key to success for content businesses; but measurement of what? | A Founder’s Notebook

If your main revenue stream is ads, you’ll optimize for page views, namely ad inventory. you’ll find that many levers are more important than content quality, such as titles, populist subjects appropriate for social sharing, and page-maximizing formats such as slide shows. But if your main revenue stream is paid subscriptions, then quality the key determinant of willingness to pay comes first.

Jeff Haynie (CEO, co-founder at Appcelerator)
Five things I will do different for my next startup — Life Tips — Medium

The conundrum that a lot of companies face — in fact most of them — is the balance between reach and revenue (or in another way to frame it: the conflict between the two). The further you maximize reach the harder it is to scale revenue — or at the very least, more friction is introduced in capturing it.

Sachin Rekhi (Group Product Manager at LinkedIn)
Lessons Learned on the B2C2B Model | Sachin Rekhi

The main advantage of B2C2B [selling to individual employees as a path to an enterprise sale] compared to traditional top-down sales is that it can significantly reduce your customer cost of acquisition. The traditional B2B sales process requires large marketing budgets and long sales cycles. With B2C2B, you can gather detailed demographic and behavioral data on each of your end users that can help to significantly optimize and prioritize your up… (read more)

Boris Wertz (Founder of version one ventures)
Does free/freemium work in the enterprise? – Version One

While free rules the consumer world, it can be a different story in the enterprise: Offering an app/service for free can send the wrong message. Here, free can be equated with low quality. While viral growth and network effects exist in certain enterprise settings, network effects are typically more limited in a B2B environment compared with B2C. Free isn’t necessarily sustainable with B2B. Acquiring business users may prove too costly, forcing s… (read more)

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
In Defense Of Free – AVC

When scale matters, when network effects matter, when your users are creating the content and the value, free is the business model of choice.

Sam Altman (President at Y Combinator)
Startup advice, briefly – Sam Altman

Generate revenue early in the life of your company.

David Jackson (Founder, Seeking Alpha)
The problem with content paywalls, and the solution in one vertical | A Founder’s Notebook

How could we create a valuable subscription product without reducing the ubiquitous mindshare we have among [customers], and the distribution and exposure we recieve? We’d give our paying subscribers an early look at the best investment ideas in Seeking Alpha, and exclusive access to single-stock articles 30 days after publication.

David Jackson (Founder, Seeking Alpha)
What content will people pay meaningful amounts for? | A Founder’s Notebook

People won’t pay meaningful amounts for content to entertain them. But they will pay meaningful amounts for something that helps them get their job done better and faster