Presentation from Seattle Tech Startups about monetizing web startups and the "startup funnel".

1. MONETIZATION IN THE
TRENCHES
Metrics, tips and tricks for making money with software

2. ABOUT ME
•I don’t smoke a pipe.
•Founder and CEO of RescueTime
•Founded and sold a recruiting software startup
•Founded and sold a 20ish person web
consultancy in Anchorage, Alaska
contact:
@webwright (Twitter)
tony@rescuetime.com (Email)
tonywright.com (interweb site)

3. ABOUT RESCUETIME
•Helps people get more productive by:
•showing individuals and businesses exactly how
they spend their time and attention (with no
data entry!)
•Giving people tools to focus better including
“nudges” or actual blocking of sites under certain
conditions.
•Feature I’m most excited about: “Focus Button”
more info:
www.rescuetime.com
team@rescuetime.com

4. TWO TRUTHS
#1: There are virtually no examples of software that people
really really love going out of business.
#2: The most amazing businesses have a great story about how
they make money.

5. LET’S TALK ABOUT METRICS

6. WHAT’S THE MOST
IMPORTANT STARTUP
METRIC?

7. PROFIT!

8. STARTUP SUCCESS FUNNEL

9. METRICS
Each step has associated metrics:
•Visitors / Pageviews (acquisition)
•Bounce Rate & time on page (“they get it”)
•Clicking “sign up” (action)
•Successful signup (signup)
•Successful credit card charge (purchase)
•Cohort retention (1st cycle and “happy customer”)
•Tweets and blog posts (evangelism)

10. COHORT ANALYSIS

11. BUILD METRICS FROM DAY 1
(But once you have the metrics, which do you work on?)

12. IT DEPENDS

13. “SKINNY PARTS WITH BIG
OPPORTUNITIES”
•Find the part of your funnel that gets skinny
•Take a guess at how “low hanging” the fruit is
•Goal is maximizing the ratio of time/$ investment and how
how much it improves the output
•When in doubt, aim low on the funnel

14. HEALTHY FUNNEL

15. WHAT’S HAPPENING HERE?

16. WHAT’S HAPPENING HERE?

17. SO JUST MEASURE THE
FUNNEL AND FIX THE SKINNY
PARTS?
(Almost! Let’s talk about leverage)

18. LEVERAGE!
Leverage is focusing on revenue opportunities that provide
ongoing value.

19. LOW LEVERAGE EXAMPLE
What’s the biggest thing you could imagine doing to improve
your web app metrics this week?

20. BUY A SUPERBOWL AD
•Huge 1-time shot in the arm for traffic
•Monsterous credibility boost
•Big acquisition boost moves down the funnel and
helps all of your metrics
Short Term Result: Big win (100,000 new
customers when you normally only get 1,000 per
month)
Long Term Result: Back down to about
5,000 next month and 1,200 the month after that.

21. HIGH LEVERAGE EXAMPLE
What one thing could you improve that’d have the biggest effect
on profit for the longest period of time?

22. BUMP RETENTION
FROM 80% TO 90%
•No meaningful revenue impact that month.
Short Term Result: Meh. You retain 900 of
your customers that month instead of 800.
Long Term Result: After 1 year, 282 of the
1,000 are still around instead of 68. So a 300%
revenue increase for that cohort!
(and it’s a gift that keeps on giving)

23. TRIP UP THE FUNNEL!

24. EVANGELISM &
HAPPY CUSTOMERS
•Make your product really freakin’ good. Give WAY more value
than you ask for.
•Make your product FEEL really freakin’ good.
•Make sharing/talking about your product an implicit part of the
experience
•If people start evangelizing on their own, build features that
help them do it!
•Reward evangelism (with love/thanks/recognition)
•Build features from customer requests
•Great support (Zappos, Wufoo)
•Other ideas?

25. 1ST CYCLE
RETENTION
•Great new user experience - you’ve only got a minute
or two to hook them
•Nag/survey on abandons - “Hey, we noticed that you
didn’t get up and running... What did we miss? Here are a few
links to help you out!”
•Checklists - Give users a list of things to check off to get
oriented.
•Any other ideas?

26. PEOPLE “GET IT”, TAKE
ACTION, & PURCHASE
• Beware the “curse of knowledge” - the more you grok your
product, the worse you are at explaining it.
• Action/Signup isn’t about ease. It’s the ratio of how much they care to how
easy it is. Make them care more!
• Minimize steps to signup - less screens, less form fields
• Don’t sweat fraud - fewer fields means higher credit card transaction
costs, but it’s worth it.
• Minimize Customer Risk with clear pricing, free trials, demos,
screencasts
• Sell Benefits not features.
• Show, don’t tell.
• Credibility (design, writing, clear contact info, press coverage)
• Social Proof - show that other people use/love it
• BABB - Big ass beveled buttons. Everywhere. With drop shadows.
• Any other ideas?

27. ACQUISITION
• Get enough users to experiment but “solve” the bottom of the
funnel if you have the luxury to do so.
• SEO - it’s slow to build value, but SEO is truly a gift that gives forever.
• Don’t chase PR - focus on being worth talking about. Empathize with
reporters/bloggers and give them a story that rocks.
• Viral wins, but don’t staple it on - “tell a friend” links don’t work if
people don’t think you’re awesome.
• Word-of-mouth is not a marketing strategy. Seriously.
• Don’t buy eyeballs unless your conversion and retention are solid.
• After TechCrunch comes the trough of sorrow. Worth it for
SEO, but converts poorly. See “don’t chase PR!”
• Any other ideas?

28. QUESTIONS? COMMENTS?
Reminder contact info:
Me:
@webwright (Twitter)
tony@rescuetime.com (Email)
tonywright.com (interweb site)
RescueTime:
www.rescuetime.com
team@rescuetime.com