I can’t stress how important last week’s FI session was. And the topic? Revenue models!
Thank you Kenneth Kay, Founder and Chairman, San Juan Tech Meetup, Ramphis Castro, Kauffman Fellow, Society of Kauffman Fellows, and Jeff Wald, Founder and President of Work Market.
Set your price for a user willing to pay a premium price.Set your price for a user that is more spend conscious.
Kenneth walked us through the importance of Price Discrimination and that we should consider them for our business. For example, when a student gets a student discount on a product or service. In return you get more value back overall.
At launch, you get one, at scale you can have many! Pick one!
Ramphis provided some insights around the extensive list of revenue models.
Speaking of business models, let’s take a quick look at some business models in the Smart Toy space
- Hardware – Physical toy only. E.g Mattel
- Hardware + App with in-app purchases (up-sell on games, templates and other content) E.g. Ubooly
- Hardware + Freemium/Premium App
Are you ready? Financially, mentally/emotionally or physically?
Jeff hits us with the million dollar question before explaining the 3 different phases of a startup:
Entering (most people fail here). Things are very unstructured because you are just figuring things out and then you go live.
You are live and you have customers. Process and budgeting are put in placed.
People get fired during this stage because they are not used to following a process.
You start optimizing. For example, how do you squeeze out that extra 10%.
There are 3 types of models
Budget – Includes your burn and revenues
Forecast – What does 2016 look like?
Projection – What does it look like in 2017 & 2018.
To end, here is the WOW – Words of Wisdom
- Milestones – You won’t have certain costs until certain events happen. Ex. Funding beta-launch
- Cash needs – When you run out of money, it’s over. DON’T RUN OUT OF MONEY!
- Cost – How much do you need to get to the next value creation moment
- Payroll – 90% of cost will go to payroll (Software development)
- Revenue – Build something that is relative to your business, something logical and defendable
- If you don’t have money, get creative and find a way to generate cash for your business: sell service, etc