The ‘other’ 1%
Originally posted on A Founder's Notebook:
From Things I’ve Learned About How to Build Good Product by Peter Nixey:
1. Golden rule of social: 90% of people consume, 10% of people curate, 1% of
2. Rules of engagement: Registered users / installs — 30% will use it each
month, 10% will use it each day, 1% will use it concurrently.
3. Fremium conversion: 1% of your signups will pay (normally 1-5%).
4. Expensive is profitable: “50% of our revenue comes from only 11% of
our customers” — Ryan Carson, founder Carsonified and Treehouse.
5. Cheap is expensive: Cheap accounts cost more in support (7x).
6. Advertising revenue: Social network CPM ~$1, Times Newspaper ~$10; $1M
/ year in revenue = 1bn page views (good luck).
7. Email subscriptions: Open rates = 20-40%, click through rates = 1-5%; 1
sale per 3,000 emails.
8. Churn determines Sa... (more)
A reader of my venture capital careers mailing list wrote to me with
the question below. She’s an investment banker that’s thinking of going
to work on a CFO’s team at a small tech company. Her goal? To eventually
get a job in venture capital.
Here’s what she said (slightly modified to protect the innocent):
I wanted to get your opinion on a job I’m currently interviewing for. At
some point I would like to get into VC but I realize with my current
background that it may be more challenging. I am currently interviewing with
XXXXXXXX in XXX. The role entails working with the CFO, as... (more)
I didn’t want to work. I didn’t want to get out of bed. I didn’t want
to cold call people. But I did it anyways.
via How I Started 3 Companies in 3 Months.
Filed under: Uncategorized
Now the math gets interesting:
To build a $100m business on a $5 a month freemium tool, you need 2,000,000
paying customers. Congrats to DropBox and SurveyMonkey. But who else is
pulling this off? Not too many.
To build a $100m business selling to SMBs at $300 a month, you need ~25,000
paying SMB customers. A lot. But achievable. If you dominate a large
In fact, it’s easy to see, 5-7 years down the road — 15-20 $100m+ ARR
winners here. All selling verticalized solutions to SMBs. It’s,
The Rise of the SMB SaaS Solution.
via The Next ... (more)
Before your B2B startup has a product available you’ll want a few –
but not too many – metrics to help you steer the ship in the right
Based on my experience at a couple of startups that I joined pre-product or
founded here are the handful of metrics that I suggest you measure/goal.
Customer Development conversations
It doesn’t matter what your startup is building if customers don’t want
Get out of the building and make sure you are talking to potential customers
often. This is the only way you’ll get a deep understanding of your
potential customers’ needs.