Henrik Torstensson's Weblog

Netflix x 2, Daniel Ek and Mattias Miksche

noreply@blogger.com (Henrik Torstensson) — Mon, 29 Apr 2013 20:12:00 +0000

Netflix: Netflix Long Term View. "Over the coming decades and across the world, Internet TV will replace linear TV. Apps will replace channels, remote controls will disappear, and screens will proliferate. As Internet TV grows from millions to billions, Netflix, HBO, and ESPN are leading the way." Netflix view of the world. A must read and rare glimpse into a company's thinking.

New York Times: Netflix Looks Back on Its Near-Death Spiral. "“But the phrase I used was, ‘There are no shortcuts.’ We weren’t going to find an idea or gesture that would make people love us again overnight. We had to earn their trust by being very steady and disciplined. And we had to be careful because we were on probation. We had to stick to what we do well and not lose confidence. I couldn’t say for sure we’d recover. But I was confident that our best odds were to be very steady and focus on improving the service.”" Good read about Netflix' reaction to adversity.

TV4 Nyhetsmorgon: Spotifygrundaren Daniel Ek om musiken, pengarna och idéerna (video). "Enligt flera stora affärstidningar är han en av framtidens stora entreprenörer och redan nu är han värderad till över 2 miljarder kronor. Jesper Börjesson träffade Daniel Ek och samtalde om musiken, Spotify och pengarna."

This Week In Startups: Mattias Miksche CEO and Co-Founder Stardoll (video). Jason Calacanis interviews Mattias Miksche of Stardoll.

Weekend reading and viewing

noreply@blogger.com (Henrik Torstensson) — Sat, 27 Apr 2013 18:12:00 +0000

Kinnevik: E-commerce and market places (Capital Markets Day 2013) (video). Kinnevik talking about its online investments (€1+ billion in investment) and Zalando founder Robert Gentz talking about Zalando. A relatively detailed look at Kinnevik's online investments and Rocket Internet's flagship Zalando.

VentureBeat: King overtakes Zynga as the largest social gaming company. "“King now has more than 66 million daily players of our games, and in Candy Crush Saga, we have a global hit on Facebook and on mobile,” said Riccardo Zacconi, the chief executive of King, in a statement." Another leading Stockholm-originated company becoming large internationally together with Spotify and Klarna.

Reaction Wheel: Andy Weissman on entrepreneurship, product development and the future of the Internet (video). "Andy talks about what an entrepreneurial environment looks like--even in a company that's no longer a startup, how Betaworks did product development, where he sees business on the internet going, and what USV looks for in a startup."

Swedish Startup Space: Joacim Nitz (Smartbudget): ‘It takes more than time, knowledge and a pretty website to deliver a good product’ "Until that model is possible for us we offer a “plus service” to those who want to get even more out of the tool. It has worked well in the way that these types of users are very happy with what they get, but also the users with less needs are happy with the free service."

Andreessen, Fishbrain and Netflix

noreply@blogger.com (Henrik Torstensson) — Tue, 23 Apr 2013 19:22:00 +0000

Harvard Business Review: In Search of the Next Big Thing. "The best founders are artists in their domain. They operate instinctively in their industry because they are in touch with every relevant data point. They’re able to synthesize in their gut a tremendous amount of data—pulling together technology trends, their companies’ capabilities, their competitors’ activities, market psychology, every conceivable aspect of how you run a company." Interview with Marc Andreessen.

Swedish Startup Space: Startup of the week: Fishbrain. "Our focus is now on growing outside Sweden and we want to dominate the US market. Long term we are starting developing for Google Glass. The fit for anglers is exceptional!" I met with Fishbrain's CEO Johan Attby last week and wouldn't be surprised if they do well.

Netflix Investor Relations: Investor Letter Q12013 (pdf). "In Q1, we added over 3 million streaming members, bringing us to more than 36 million, who collectively enjoyed on Netflix over 4 billion hours of films and TV shows." Netflix passed $1 billion in quarterly revenue and made a profit of $3 million.

Sunday reading

noreply@blogger.com (Henrik Torstensson) — Sun, 21 Apr 2013 13:47:00 +0000

Information Arbitrage: Breaking Through. "The fact is that no matter how smart or hungry you are, it just takes time to network, acquire knowledge and experience and to feel comfortable in your own skin as a member of the start-up community. And this is a good thing. Life is a marathon, not a sprint, so be purposeful and focused without feeling like you’re behind where you should be."

Above The Crowd: A Rake Too Far: Optimal Platform Pricing Strategy. "High volume combined with a modest rake is the perfect formula for a true organic marketplace and a sustainable competitive advantage. A sustainable platform or marketplace is one where the value of being in the network clearly outshines the transactional costs charged for being in the network. This way, suppliers will feel obliged to stay on the platform, and consumers will not see prices that are overly burdened by the network provider."

Fortune: The second coming of Facebook. "When designers and engineers file in to show off their products, his first question is nearly always, "What's that look like on mobile?""

Index Universe: Nate Silver: Confidence Kills Predictions. "People tend to underestimate what the uncertainty that is intrinsic to a problem actually is. If you have someone estimate what they think a confidence interval is that’s supposed to cover 90 percent of all outcomes, it usually only covers 50 percent. You have upside outcomes and downside outcomes in the market certainly more often than people realize."

Yahoo! Finance: Twitter: Great Investor Tool That Won’t Make You Money. "But the true advances for small investors have come in free or cheaper investment information, tax-efficient exchange-traded funds and ultra-low trading costs – not real-time performance advantages."

Silicon Alley Insider: The Bull Case For Apple. "Now, however, the stock is priced at such a low level that almost everything has to go wrong for the stock to continue its collapse."

Charlie Rose: Bill Gates and Michael Bloomberg on the Global Polio Eradication Initiative (video).

Osom mobile marketplace for vintage and fashion launches

noreply@blogger.com (Henrik Torstensson) — Wed, 17 Apr 2013 07:02:00 +0000

Established web (desktop/laptop) category leaders are facing new challengers as the online world is going mobile (smartphone/tablet). One category that ought to be better fortified than most due to the buyer/seller liquidity requirement is the classifieds category with companies like eBay, Craigslist, Blocket and Avito. However, Swedish startup Osom thinks it can attack the market from an angle where the established companies have a chink in their armor.

Osom has built a classifieds app for iPhone and iPad, an Android version is coming later this year, dubbed as Instagram meets Craigslist (or Instagram meets Blocket for Swedes). The idea being that a beautiful marketplace, especially when compared to incumbents, focused on vintage and fashion could gain traction.

It's a tough challenge the alumni of companies like Videoplaza, Twingly, Headler and MTG have taken on, but it will be interesting to follow.

Download Osom from the App Store.

(disclosure: I'm friends with the founders of Osom).

Freemium strategy, paid acquisition and the leaky bucket

noreply@blogger.com (Henrik Torstensson) — Mon, 01 Apr 2013 19:30:00 +0000

Many freemium services start out planning to attract users for free via PR, word-of-mouth and viral growth. Regardless of if actual growth is slow or quick, the question to grow via data-driven, trackable and paid marketing, a.k.a. paid acquisition, is likely to arise.

Looking at the entire conversion flow from a user registering for the free service, free users engaging with the service and finally converting to paid the flow looks like a leaky bucket. A significant percentage of users drop out during each stage of then funnel.

This will prompt a version of the question: Should we pay for pouring more people into the bucket when it has so many holes? Shouldn't we fix the conversion issues first and then quickly scale aggressively by ramping up advertising?

Unfortunately, the real world won't let you turn on paid acquisition and immediately start running at high speed with a high degree of control. You need to learn to walk before you can run. Unless you have the basics in place, you won't be able scale with control (which you want to have).

In order to have control when you scale, you have to invest ahead of time in people, systems, processes and market knowledge even while the foundation is a somewhat leaky bucket.

As you're learning about acquisition and plugging engagement and conversion holes, a good plan is to invest more in fixed costs (online marketing staff, engineering time, tracking systems) while investing relatively less in media spend.

Among the things that take time to learn and implement as an organization are:

* Where can we buy registrations cheaply or at least cost effectively?
* Which ads are effective (per channel and country)?
* How do we quickly translate ads into multiple languages and produce multiple language versions?
* How do we track user behavior from click to registration to multiple transactions over time? (Will take engineering time to implement and quality assure.)
* What's the revenue over time, per channel, from user cohorts coming via paid acquisition? And the only way to learn about behavior over time is to have old cohorts. (They'll usually perform worse than organic users, but you want to know how much worse and adjust your target.)

More posts on freemium strategy:

Freemium strategy and product business model design

noreply@blogger.com (Henrik Torstensson) — Fri, 29 Mar 2013 17:19:00 +0000

I wrote that a freemium product needs to have at least one must have feature only available to paying users. That's a bit of a mental shortcut. Customers don't really pay for features, they pay to solve a problem. Like Ted Levitt wrote in the classic article Marketing Myopia: "People don't want to buy a quarter-inch drill. They want a quarter-inch hole!"

But having certain features being paid-only, highlights that the paid version solves a customer problem. Which both pulls users to the paid version and makes it easier to communicate the advantages of the paid version.

From a business model design perspective, a freemium product should be designed to maximize revenue by taking advantage of both the user acquisition opportunities and virality of a free product and the monetization of a paid product.

User acquisition comes in many forms, but a free option makes it easier for users to sign-up and try out the product. Which should help to optimize registration and activation flows. Two well-known distribution channels that work well for free products are organic search and mobile app stores. In addition, free products are easier to link to from social media like Facebook and Twitter. A free product can also be designed to be inherently viral like Hotmail and most communication services.

However, the free part of the freemium product needs to have long-term utility to drive strong retention. Poor retention among free users offsets the positive effect of stronger acquisition. The reason is that without strong free retention, the product will not have a growing base of active free users that over time get more likely to convert to paid.

When designing a freemium product, one needs to create a path to paid. How does free and paid parts of the product interact in activating a free user, getting them highly engaged and getting the user onto paid? The product business model design decisions of what's free and what's paid thus become key drivers of both product quality and overall sales. With an integrated freemium model, sales cannot really be separated from product. In practice, the product organization needs a to have online marketing and sales skills in addition to product management skills in order to both create a great product and drive sales. Conversely, the conversion/sales team needs product managements skills and think long-term about the product in addition to hitting the sales targets.

The answers to the questions what's free and what's paid differ between products and industries. The answers depend on the product, the competition acquisition channels, types of customers and many other factors.

One thing that paid-only features should have in common should be that most users find them to be of high utility and have high willingness to pay for those features. Utility is a generic term to describe what the user might find valuable, like solving a business problem, having fun or saving time.

Some exempels of paid features in freemium products:

Users pay to have their classified ads highlighted at Avito or Tradera. To solve the problem of selling goods quicker and at a higher price.
People pay to see who have visited their profiles. Currently LinkedIn is the most famous example, but Swedish community LunarStorm did this in the early 2000's. Users pay to satisfy their curiosity or identify an opportunity.
Users pay to get additional currency in games. Often at its core in order to have more fun by saving time or getting access to better gear.

These decisions are almost always product specific, but the difference between getting them right and getting them wrong can mean the difference between financial success and bankruptcy.

(With more time this would have been a shorter, well-edited post.)

More posts on freemium strategy:

Freemium strategy and network effects

noreply@blogger.com (Henrik Torstensson) — Thu, 28 Mar 2013 20:57:00 +0000

A reason to have a freemium business model, which I didn't clearly point out in my last post, is to combine the network effects of a free service with the revenue-generation of a paid service.

Network effects are obviously core to social and communication services. Building a new service while being paid-only is difficult, as the initial utility is close to zero for users. Having free users make the service better for paid users.

Skype is an example of a freemium service that the majority of users doesn't pay for, while some users pay for premium features like international calling and group video chat.

That's not to say it is impossible to build a primarily paid-for communications service. WhatsApp has done just that. The reason likely being that its users see WhatsApp as a replacement to text messaging (which is more expensive than WhatsApp).

Generating advertising revenue in a communications online environment is tricky, even at massive scale (the history of ICQ, MSN Messenger and webmail). Successfully implemented premium features should generate high revenue per paying user, and with a decent conversion rate the average revenue per user (free and paying) should be quite good.

More posts on freemium strategy:

Freemium strategy and getting free users to pay

noreply@blogger.com (Henrik Torstensson) — Wed, 27 Mar 2013 19:50:00 +0000

Turning a product with a freemium business model into a great business is tough, but can be done both for B2B and B2C. The reason to have a freemium business model (instead of paid-only) is to get more users to try the product and effectively lower customer acquisition costs.

There are three different types of free economics for freemium services.

An online service can ideally be paid-for with advertising from third party advertisers. Marginal costs can be as high as the advertising-sales will cover.
If the service is not paid-for by advertising, the free service should provide brand awareness and leads for the paid service at lower cost than trial/traditional sales. Marginal costs needs to be low.
A downloadable software (like MySQL or WordPress) can be provided with no marginal costs (depending on how distribution is managed) can be provided for free.

In order to convert free users into paying users and revenue, a company needs to work on multiple areas. There's a lot of learnings to be had in each area, which a company will gain over time.

Premium business model - Is it a one-off payment, a membership/subscription or a virtual goods/usage based type model? Preferably the model matches the long-term costs of operating the service. Together with pricing it's the main driver of long-term revenue and customer lifetime value.
Pricing - Finding the right price point is essential. Just because 'everyone' in media charges $8-10 per month doesn't mean it's right for your service or product. B2B should likely be much higher. Offer pricing for 3, 6 and 12 months instead of one month makes a lot of sense too, not least to fight churn.
Premium product features - At least one must-have feature that highlights an important difference between the free and paid version. Preferably you have several strong features that give the users the reason to pay.
Promotion - You need to actively communicate with free users why they should upgrade. You need several channels (in-product, e-mail, notifications, text messages) and a plan that gives you reason to reach out to users over-time.
Conversion - You need to work on landing pages or other sales/closing techniques (which could be telephone or in-person meetings) to get users to upgrade.
Payment options - Need to be adapted depending on if the customer is a consumer or a business, the country of users and the age of users. Credit card and Paypal works well in the US to consumers older than 18 years old. Premium text messaging works well for teen audiences (even if premium text messaging is a pretty bad payment option technically). For a B2B product, offering invoicing makes sense. For Brazil, Germany, Netherlands, Sweden etc there are local payments options that drive sales. Payments also includes the important aspect of churn due to technical payment errors (a significant source of overall churn for a subscription churn) if the business model is a subscription model.
Language - If the service has many non-English speaking users, the service/product, communication and conversion pages need to be translated to drive conversion (and usage of free product).

(This post was adapted from a comment I made at the news community Quibb.)

Videoplaza launches Karbon 2

noreply@blogger.com (Henrik Torstensson) — Tue, 26 Mar 2013 21:51:00 +0000

Videoplaza has launched Karbon 2, the new version of its video ad-serving technology. The big news is that Videoplaza now enables publishers to do audience-based targeting in addition to content-based targeting. Its done by allowing publishers connecting its own or third-parties (like Nugg.Ad, Meetrics, Enreach, Eyota and Bluekai) data to the ad-server. It's not an out-of-the-box solution, but rather targeted towards the higher-end of online video publishers.

(Disclosure: I'm an investor in and former board member of Videoplaza.)

Maximising the less important things - smartphone edition

noreply@blogger.com (Henrik Torstensson) — Sat, 23 Mar 2013 07:57:00 +0000

The new smartphones seem hellbent on maximising screen size and resolution, processing power and headline catching high tech features. It would make a lot more sense if they extended battery life and maybe added a second SIM slot to use for data when travelling. Android phones would do well with some great games, too.

When news isn't - Kinnevik and Naspers edition

noreply@blogger.com (Henrik Torstensson) — Thu, 14 Mar 2013 21:26:00 +0000

In my post When Nordic success is classifieds I wrote that it was news that Kinnevik and Naspers had invested in the same company, even though they invest in the same geographies. It turns out that it wasn't the first time they had invested in the same company. About a week ago Naspers confirmed it had invested in the Nigerian e-commerce company Konga.com. It just so happens to be that that a major earlier investor in Konga.com was Kinnevik.

When Nordic success is classifieds

noreply@blogger.com (Henrik Torstensson) — Tue, 12 Mar 2013 21:17:00 +0000

Sorry for the bad pun in the headline, but the Nordic success in online classifieds outside the US is noteworthy. Schibsted's export of the Blocket & Finn model to France (Le Bon Coin) and elsewhere and Jonas Nordlander's and Filip Engelbert's Avito in Russia are growing into sizeable operations.

From an inside baseball perspective, it's worth noting that Avito (backed by among others Kinnevik, Northzone and Accel) merged with two Naspers owned Russian sites (QXL and Slando) and at the same time took a $50 million cash investment from Naspers. The South African media company got in an 18.6 % ownership in Avito.

That Kinnevik and Naspers are doing similar investments in emerging markets isn't news. That they've invested in the same company is.

Toca Boca hits 30 million downloads (and acquires a new team)

noreply@blogger.com (Henrik Torstensson) — Thu, 07 Mar 2013 07:49:00 +0000

Stockholm-/San Francisco-based app developer Toca Boca is growing and adding Toronto to the list of places it has an office.

According to TechCrunch, Toca Boca has acquired the team making up the developer zinc Roe and the apps that make up the Tickle Tap brand. The team is being renamed Sago Sago.

It seems like Toca Boca is using the acquisition to expand development capacity and adding a product-line for slightly older kids.

Acquisitions make good news articles, but the fact that Toca Boca's current apps have been downloaded 30 million times might, at the moment, have been the even more impressive part of the announcement.

Evernote, e-mail, passwords and online security

noreply@blogger.com (Henrik Torstensson) — Wed, 06 Mar 2013 07:18:00 +0000

A couple of days ago Evernote said hackers had gotten access to, among other things, e-mails and hashed and salted passwords (aka not in clear text). As a response, Evernote reset all passwords on its service.

That is a reasonable response, but to be fully effective it requires that an Evernote user didn't use the same password for her e-mail account as it is possible to break hashed and salted passwords with a brute force attack. And with access to a user's e-mail, a hacker can start getting access to other services by resetting passwords.

Yes, it's a core security rule not to use the same password across services, but obviously lots of people do that. Therefore, if you know you violated that rule and shared the same password for your e-mail and Evernote, change your e-mail password right away.

While your at it, consider start using 1Password or a similar program that makes it easy to manage long and unique passwords and use 2-Step Verification if you're using Gmail. It's a pragmatic way to beef up your protection against being hacked.

Readmill - now available for iPhone

noreply@blogger.com (Henrik Torstensson) — Fri, 08 Feb 2013 07:57:00 +0000

Earlier this week Readmill released an iPhone version of its ebook reader. Previously their app has been iPad only. In general I find the reading experience on an iPhone to be good but not great. However, I find myself reading quite a bit on the iPhone, as I can read basically at any time.

In general I find it ok to sacrifice the 'production quality' of media experience to be able to see, watch, play, listen or read it on a mobile. Most of the time some experience beat no experience.

Media experiences are a combination of product experience and content. Readmill has the former, but lack some of the later. Especially if you've been buying books for your Kindle, which uses a non-supported proprietary format. On the other hand, I should be able to figure out how to get books bought at Dito into the Readmill experience as they both support Adobe DRM.

Vivino - an app all about wine

noreply@blogger.com (Henrik Torstensson) — Mon, 04 Feb 2013 22:07:00 +0000

Vivino is a Danish-developed app (iOS and Android) all about wine. It allows a user to take a photo of a bottle, match it against the company's database of more than 500,000 wines, rate it and see community rating information (average rating, ranking etc). If you like me aren't very knowledgable about wine, it's a helpful app.

Betaworks Shareholder Letter 2012 - excellent reading

noreply@blogger.com (Henrik Torstensson) — Sat, 02 Feb 2013 18:16:00 +0000

If all shareholder letters were like the Betaworks Shareholder Letter 2012, there would be a whole lot more interesting reading in the world. Usually there's a short sentence that captures the gist of an article, but there isn't one for this shareholder letter. It covers a lot of areas, from data to navigation to personal device clouds. In some way, it is the Berkshire Hathaway shareholder letter of the tech world.

Set a side time, make sure you have some coffee or wine and read.

Netflix Reloaded

noreply@blogger.com (Henrik Torstensson) — Fri, 01 Feb 2013 22:21:00 +0000

While growing into a multi-billion dollar revenue company, Netflix's share price has been on a roller coaster ride. From $17.94 in 2008 to $298 in 2010, then back to $53 last September back to $164 today.

The path to 33 million subscribers has not been straight, remember Qwikster, but Netflix is a good example of when the share price and company operations don't walk to the same tune every day.

Netflix is also an example of the short-term financial cost of disrupting oneself. Netflix is doing a great job of reinventing itself as international streaming service instead of being a US DVD-by-mail service. But the company's gross margin and thus profit for streaming is significantly lower than for DVD rentals on a subscriber basis. If there's a lesson there, it might be that in the real world disruption is a painful thing.

Qapital - a promising Swedish personal finance service (and startup)

noreply@blogger.com (Henrik Torstensson) — Thu, 31 Jan 2013 17:28:00 +0000

Qapital is an interesting personal finance startup based in Stockholm. Their service imports account and transaction data from most major Swedish banks and automatically categorizes spending into different categories (some manual training of the system is required). This allows analysis of spending at a level that is superior to standard Swedish Internet banks.

Qapital is still in closed beta and lacks a number of integrations that would make it great (like the ability to see through and analyze the actual spending with a credit card), but is still very promising. If you're interested in a personal finance management tool, you can get in line for an invitation by visiting Qapital's web site.

Recruiting is sales

noreply@blogger.com (Henrik Torstensson) — Tue, 29 Jan 2013 22:02:00 +0000

Hiring the first ten to twenty employees to a startup can often be done from the founders' networks. But when a startup starts to do well, one core activity the company will have to deal with over the next few years is recruiting staff. The faster the company grows, the more time it will have to spend on recruiting and interviewing.

Still, most startups will hire slower than planned. Even those with venture capital backing that can actually afford to hire aggressively. This isn't rocket science, but it took me a long time in the startup world before I really started to grasp the implications.

- Recruiting is like sales. You need to build a pipeline, interview and finally close candidates.
- A great "product" (company brand + role + current staff) make it easier to get people to sign on
- Price (salary) is obviously very important, but not the only factor
- Your throughput is dependent on how many "salespeople" (recruiters) you have
- Recruiting has a sales cycle like all qualified sales (in Sweden likely at least 5-6 months from start of recruiting of role to first day of hired employee)
- Hiring managers and team members will have to spend quite some time on hiring
- A good process saves time and increases efficiency
- One should always complement interviews with skills testing (for technical and non-technical roles)

Surf a long - Fyra nyanser av brunt edition

noreply@blogger.com (Henrik Torstensson) — Tue, 29 Jan 2013 21:37:00 +0000

With the Swedish #blogg100 challenge, there's been a lot of activity on normally rather dormant blogs. If you like this blog and read Swedish, I believe you'll enjoy the blogging of Anton Johansson of Headler and Osom. On his blog he's been covering why you need co-founders, B2B startups, simplicity as a business design principle, what the Stockholm startup community can learn from Berlin and much more. Head over to Fyra nyanser av brunt!

The first $40 million doesn't guarantee success - AdBrite edition

noreply@blogger.com (Henrik Torstensson) — Mon, 28 Jan 2013 21:26:00 +0000

Today I read on AllThingsD that ad exchange AdBrite is closing down. Back in 2005 AdBrite was one of the ad networks we used at Stardoll, when Stardoll was still called Paperdoll Heaven. AdBrite must have morphed into an ad exchange at a later stage.

AdBrite had taken more than $40 million in venture capital since 2004. Its closing reinforces the point that a big funding round isn't what creates a sustainable company. A sustainable company is created by a good product and enough revenue to cover costs and make a profit.

Mobile web apps vs native apps

noreply@blogger.com (Henrik Torstensson) — Sun, 27 Jan 2013 21:36:00 +0000

Apple has been the driving force of the mobile world going apps instead of web. With the App Store's more than 600,000 apps and even more apps in Android's Google Play, native apps have been a big success. Many type of applications, including games, really use the additional performance of native apps.

But for news publishers coming from the web world, native apps creates issues. Including the approval process and the additional cost of developing for iOS and Android.

App Store and Google Play are retail stores. They solve part of the distribution issue by making it easy to install an app, but they don't make it very easy to discover apps. And they don't support organic search traffic.

With the performance of web apps like Fastbook (a very fast proof-of-concept implementation of Facebook Mobile in HTML5) and the Financial Times web app, news organizations should think a lot about if the advantage of app store distribution outweighs the additional cost of developing multiple native mobile apps.

The business model does matter - to founders

noreply@blogger.com (Henrik Torstensson) — Sat, 26 Jan 2013 14:55:00 +0000

When an online consumer startup begins to develop a new product, for some time there's often an intense focus on the core product and less on the business model. Sometimes summarized as, if you have more than a 100 million users you will be able to figure out a way to monetize.

However, product design choices will impact the business model and vice versa. In terms of revenue opportunity, cost structure and capital needs. A company's capital needs directly impacts how much dilution the founders of a successful startup will have to endure. If the company isn't successful, high capital needs will force the company to turn off the lights sooner.

In my mind, many founders would be well served by thinking deeper and harder about the business and revenue model early in their companies' life. It would increase their likelihood of survival (and success) as well as the likelihood of keeping a large ownership stake in their companies.