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 and speak directly to the changes taking place in the world of early-stage startup 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 looks 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 (grow at all costs vs. generate revenue) are conflicting, but many times, one is sacrificed for the other due to limited resources or as a fundraising strategy.
Many startups, especially enterprise software, 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 (validating customers).
This is where Eric and Steve Blank’s approach to customer discovery proves invaluable. Often when a startup pursues a hyper-adoption business model (think Twitter), marketing efforts are focused on pushing a free version of the product to grow as quickly as possible and simply capture mindshare.
However, unless there is a clear network effect leading to advertising monetization, revenue is generally expected to be derived from up-selling premium features to the power user subset who will ‘theoretically’ pay.