Business Freemium - Another Decade, Another Business App Revolution

1. October, 25th 2010
Another Decade,
Another Business Apps Revolution

2. Every 10 Years in Business Apps….
2
Client Server (90s) SaaS (00s) Freemium (10s)
“Technology is always becoming lower in cost and easier to use. It’s
a continuum. Let’s ride it.”
Marc Benioff
November 1998
Behind the Cloud, Play #6 Page 10

3. Disruptive Business Model (Really)
Clayton Christensen Disruptive Innovation
 Simpler, easier, less
profitable (?)
 New or hard to serve
markets
 New business model
 New financial model
 New leaders
3

4. Business Apps Markets by Model
4
Client Server
SaaS (20-500 EE)
Freemium (<10 EE) & QuickbooksWas Hard to Serve
Company Size
Freemium companies are servicing new global markets from the start

5. Freemium vs SaaS Business Models
5
Marketing Churn &
Satisfaction
Sales
Product &
Pricing
• Different functional and cross functional work
• New operating metrics
Trial
Experience

6. Freemium vs SaaS Financial Model
6
Linearity
Capital
Requirements MetricsHeadcount Core Assets
Paying Subs
Brand
Salespeople
Active Free Users
Data to Mine
Paying Subs
Autoconversion
CAC
CLV
• Non-linear financial model
• Investors should focus on CLV

7. Accelerating Growth and Capital
 Growth Opportunities
 Virality
 Engagement
 Conversion
 Customer satisfaction
 Use the data
 International
 New editions (groups)
 Marketing and “Sales”
 Marketplaces
 Mobile
 Venture Capital
 Religion?
 Market leadership
7

8. Emergence Capital = Business Apps
 SaaS
 salesforce.com
 Successfactors
 Lithium
 Freemium
 Yammer
 yousendit
 echosign
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9. Lead The Revolution
9
SaaS
• Evangelize the new model
• Accelerate to lead your market
• @mattholleran and Linkedin