PAFI - 18 nov 13- François Mazoudier- Rev models

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Revenue Modelling

Theory & Real life case study

Founders Institute

Paris, France

18th Nov 2013



MY LIFE DIGITS







WE TRUST, BACK AND CO-INVEST WITH TOP TE

HIGH END, GLOBAL, ACTIVE NETWORK.





BMCBusiness Modelling Canvas

www.businessm

Ale

ALEXANDER OSTERWALDER





BMC | Business Modelling Canvas

www.businessm

Ale





BMC

For what value are our customers r

For what do they currently pay?

How are they currently paying?

How much does each Revenue Str

overall revenues?

Through which Channels do

our Customer Segments

want to be reached?

How are our Channels

integrated?

Which ones work best?

Which ones are most cost-

efficient?

How are we integrating them

with customer routines?

What type of relationship

does each Customer

Segments expect us to

establish and maintain?

Which ones have we

established?

How are they integratedwith the rest of our

business model?

How costly are they?

What value do we

deliver to the

customer?

Which one of our

customer’s problems

are we helping to

solve?Which customer needs

are we satisfying?

What Key Activities do our

Value Propositions

require?

Our Distribution Channels?

Customer Relationships?

Revenue streams?

Who are our Key

Partners?

Who are our key

suppliers?

Which Key Resources

are we acquiring

from partners?Which Key Activities do

partners perform?

What Key Resources do

our Value Propositions

require?

Our Distribution

Channels? Customer

Relationships?

Revenue Streams?

What are the most important costs inherent in our

business model?

Which Key Resources are most expensive?

Which Key Activities are most expensive?

www.businessmodelgeneration.com Alexander Osterwalder



www.se

• People

•

Technolog y

• Equipment

• Channels

• Partnershi

ps

• Brand

BMC for DummiesCustomer-value Proposition

Profit FormulaKey Resources Key Processes

• Job-to-be-done by customer

• Offering to satisfy need

• Customer satisfaction

• Revenue model (price X

quantity)• Cost structure - direct, indirect,

overhead, economies of scale

• Target unit margin - achievingdesired profit levels

• Resource velocity - throughput,inventory turnover, assetutilization

• People

• Technology

• Equipment

• Channels

• Partnerships

• Brand

•

Processes• Business Rules

• Success metrics

• Behavioural

norms





Simple summary

Asset SaleSelling a product, or ownership rights to it

Usage feesUsually for using service, and now products to (CC)

Subscription fees

Continuous access to a service, and now products too (CC)

License feesPermitting others to use copyrighted property



The basicsHow to choose your revenue model

Think about your revenue model during

your business planning stages.

VERY hard to change mid-flight.

Test and A/B test excessively, and all the

time. NEVER stop testing – clients change

all the time.

Don’t lock yourself into just one model –

you don’t have to.

You don’t really ever know what’s best,

nor do your customers.

Customer preferences and habits change

over time.

You can’t be everything to eve

Get one model working really

Keep tracking your results vs A

During planning you might ide

revenue models that could su

Test them to match the best o

customer segment and which

profitable.



Real Life lesson(s): GoHello



goHello







Business case summary

Mob telco focused Fixed fee license per company

Massive USP, high user ratings, amazing R

Proven in Denmark 50+ happy companies, no churn.

€1.8m revenues.



So what’s the problem

Mob telco focused

Fixed fee license per company

Massive USP, high user ratings,

amazing ROI

Proven in Denmark

50+ happy companies, no churn. €1.8m revenues.

Zero distribution cont

No growth with usage

Telco giveaway (real fodongles)

Denmark, where’s tha

Under 10% growth y/y

Negative EBITDA – higtax , expensive channechannel)

Low margin, not scalable. Not for VCs.





Say no to TelCo





Plenty of issues

RAISING CAPITAL SaaS unknown model (2006) and never

done in TelCo

DK (size, representative enough?)

VoIP hype vs GSM

Total lack of investor knowledge

UNTESTED FINANCIALS Same high costs, now from fixed yearly

income to contract-less seats per month.

rom €25k - €100k per deal to… €3.99

Cost of acquisition & scalability unknown.

Will SME buy online?

CHANNEL CONFLI Complex Channel mix

Direct under 10 sea

10-50 seats: telco+

Over 50 seats: telcocompetition

Telco threat to stop sellingrevenues, only SIM sales.keeping mPBX low/free

Army of VoIP and PBX reschange (golden goose kill

TEAM DK, UK, Asia: huge geo sp

ex Telco teams and senio

Simple compensation pla



New model, new set of numbers €3.99 x 18,000 per year

2 year breakeven

Totally independent growth

Telco as any other Channel Cannot leave SIM sales to other networks

No privileges or deep discounts

Must perform

Must commit volumes

Large Asia Telco x 2 deals Hong Kong, Philippines

No PBX for SME possible before

20,000 unit commitments year1, 100% y/y f’cast

Company sold in 2009 2 offers

US buyers

12m SME



Key Learnings

No two businesses alike

You don’t know, they don’t know either. Onlycustomers know what works for them.

Focus on ONE business model only, prove it o

THEN move on. Customers and buyers change patterns supe

DO IT, TRY IT or LOSE IT. life’s short.

PAFI - 18 nov 13- François Mazoudier- Rev models

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