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Navigating the Costs of Starting an Internet Company: Insights from Stanford's Facebook Class

This presentation by Jeremy Liew, Partner at Lightspeed Venture Partners, discusses the evolving landscape of launching and operating an internet or application company. It emphasizes the decreasing startup and operational costs, alongside a strategic look at advertising revenue models, breakeven analyses, and the essential metrics for successful app development. With informative insights backed by data from prominent companies, this session equips aspiring entrepreneurs with the knowledge to effectively plan and execute their business strategies in the competitive tech industry.

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Navigating the Costs of Starting an Internet Company: Insights from Stanford's Facebook Class

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  1. Business models on Facebook Stanford Facebook Class Nov 15th, 2007 Jeremy Liew Partner, Lightspeed Venture Partners jeremy@lightspeedvp.com www.Lightspeedvp.com Lsvp.wordpress.com

  2. Its cheaper than ever to start an internet or app company… $ ‘000s Source: Carsonified.com/SXSW Presentation

  3. … and cheaper than ever to run an internet company SAMPLE EXPENSE BUDGET

  4. As a result, getting to breakeven isn’t too hard… Illustrative * Assumes ad sales by an ad network or ad rep firm

  5. Advertising RPMs* depend on your ability to deliver a targeted audience $0.50 - 2 $1-5 $10-40 Source: Myspace, Merrill Lynch; Facebook, MSNBC; Fandango, Techcrunch; Traffic, Comscore; Lightspeed Analysis * RPM = Revenue per thousand pageviews, taking into account multiple ad units and all forms of advertising: CPM, CPC and lead gen ** Facebook revenue estimate “well over $100m”, Fandango revenue estimated to be “around $50m with half from advertising and half from ticketing”

  6. Pageview targets get progressively harder as revenue aspirations increase… Monthly Pageviews needed to hit Revenue Goal Annual Revenue Goal RPM

  7. …requiring stretch targets for installs Total app installs needed to hit revenue goal* Annual Revenue Goal VS. RPM 21m installs * Assumes 5% active per day, 3 pageviews per visit

  8. Implication for ad models – get big or get expensive • Get big • Multiple apps • Multuple platforms • Get expensive (High CPMs) • Endemic categories (Movies, Travel, Health, Shopping etc) • Standard ad units • Targeting

  9. What about digital goods? Total installs needed to hit Revenue Goal Annual Revenue Goal Purchase rate * Assumes 5% active per day, $1 per item

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