Validating Hackathon Ideas

Raj RajamaniVP Product Management

MBA from Berkeley’s Haas School of Business VP Products at Cylance (Unicorn > $1B valuation) Product Management positions at

Marketo (went public in 2013) Arcot (acquired by CA Technologies) McAfee (acquired by Intel) Solidcore (acquired by McAfee)

ABOUT ME

1. Why us? Why now?

2. Unmet/underserved need

3. Large and Growing Market

4. Sustainable Competitive Advantage

5. Scalable Business Model

VALIDATING IDEAS

1. Cylance – Enterprise AV2. AppDynamics – Performance Monitoring3. Nutanix - Hyperconvergence4. Box – Collaboration5. Slack – Collaboration

B2B (ENTERPRISE) OR B2C (CONSUMER)1. Uber2. AirBnB3. Fitbit4. Spotify5. Blue Apron

More B2C University startups than B2B?

TRUE OR FALSE

Dropbox founder Houston conceived the Dropbox concept (in 2007) after repeatedly forgetting his USB flash drive while he was a student at MIT. He says that existing services at the time "suffered problems with Internet latency, large files, bugs, or just made me think too much.“

CASE STUDY - DROPBOX

Timing Need Market Size Competitive Advantage Business Model

DROPBOX

Timing – With the introduction of iPhones more users with multiple Internet capable devices Need Market Size Competitive Advantage Business Model

DROPBOX

Timing – With the introduction of iPhones more users with multiple Internet capable devices Need – Convenience is a BFD Market Size Competitive Advantage Business Model

DROPBOX

Timing – With the introduction of iPhones more users with multiple Internet capable devices Need – Convenience is a BFD Market Size - ?? Competitive Advantage Business Model

DROPBOX

INTERNET TRENDS BY MARY MEEKER

Timing – With the introduction of iPhones more users with multiple Internet capable devices Need – Convenience is a BFD Market Size – (150M (NA) + 150M (EU) + 300M (AP) ) X $1/month = $6B Competitive Advantage Business Model

DROPBOX

Timing – With the introduction of iPhones more users with multiple Internet capable devices Need – Convenience is a BFD Market Size – (150M (NA) + 150M (EU) + 300M (AP) ) X $1/month = $6B Competitive Advantage – Design + multi-platform support Business Model

DROPBOX

Following slides are Drew Houston’s (not mine)

BUSINESS MODEL

Public launch (Sep 2008): Time to get real

Public launch (Sep 2008): Time to get real

Our Web 2.0 Marketing Plan• Big launch at TechCrunch50• Buy some AdWords• Hire, um, a PR firm, or a VP of Marketing, or something

EXPERIMENT: PAID SEARCH Hired experienced SEM & affiliate marketing guy ($$) Picked out keywords, made landing pages Hid the free account option for people arriving via paid search, replace with free time-limited trial Went live in early 2009

Cost per acquisition: $233-$388

Cost per acquisition: $233-$388

For a $99 product. Fail.

LIFE TIME VALUE OF A CELL PHONE CUSTOMER

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6Revenues $720.00 $720.00 $720.00 $720.00 $720.00 $720.00

Service Cost (marginal cost) $150.00 $150.00 $150.00 $150.00 $150.00 $150.00Incentive Cost $0.00 $0.00 $0.00 $0.00 $0.00 $0.00

Customer Profit $570.00 $570.00 $570.00 $570.00 $570.00 $570.00Probability of being active 65.8% 43.3% 28.5% 18.8% 12.3% 8.1%

Profit expected on average $375.14 $246.90 $162.50 $106.95 $70.39 $46.32Present Value of Expected Profits $341.04 $204.05 $122.09 $73.05 $43.70 $26.15 $810.07

EXPERIMENTS FAILING LEFT AND RIGHT Problem: Most obvious keywords bidded way up

Probably by other venture-backed startups Problem: Long tail had little volume Problem: Hiding free option was shady, confusing, buggy Affiliate program, display ads, etc sucked too Economics totally broken

BUT WE WERE STILL DOING WELL…? Reached 1mm users 7 months after launch Beloved by our community

ADWORDS WASN’T THE PROBLEM Nobody wakes up in the morning wishing they didn’t have to carry a USB drive, email

themselves, etc. Similar things existed, but people weren’t actively looking for what we were making Display ads, landing pages ineffective Search is a way to harvest demand, not create it

TYPICAL DROPBOX USER

Hears about Dropbox from a friend, blog, etc. and tries it

“I didn’t realize I needed this”

“It actually works”

Unexpectedly happy tell friends

NEW STRATEGY: ENCOURAGE WOM, VIRAL

Give users better tools to spread the love Referral program w/ 2-sided incentive permanently increased signups by 60% (!!)

Inspired by PayPal $5 signup bonus Help from Sean Ellis: Surveys, split tests, landing page/signup flow

optimizations, encourage sharing big wins Big investment in analytics

Trailing 30 days (Apr 2010) : users sent

2.8 million direct referral invites

RESULTS September 2008: 100,000 registered users January 2010 (15 mos later): 4,000,000 Mostly from word-of-mouth and viral:

35% of daily signups from referral program 20% from shared folders, other viral features

Sustained 15-20%+ month-over-month growth since launch

Timing – With the introduction of iPhones more users with multiple Internet capable devices Need – Convenience is a BFD Market Size – (150M (NA) + 150M (EU) + 300M (AP) ) X $1/month = $6B Competitive Advantage – Design + multi-platform support Business Model – Direct to consumer, WOM marketing

DROPBOX

1. Why us? Why now?

2. Unmet/underserved need

3. Large and Growing Market

4. Sustainable Competitive Advantage

5. Scalable Business Model

VALIDATING IDEAS