Startuplet financial model, users
October 23, 2008 – 19:31Ok, now goes the final part of the startuplet financial model review.
It bothers with the crucial question: how much we’ll have users and where they come from.
Here you might see a simple yet powerful userbase model.
It defines three distinct kinds of visitors:
- ambient, that come to your site “as is”, for example with a random google search; the only way to influence it is do a better SEO
- PR&Sales – those are the direct and measurable result of your PR and sales activities; they come via your posts in blogs, forums, digg/reddit submissions, et cetera
- and, finally, viral; those are the visitors that come to you via referral of your current users; that source costs you virtually nothing and is the most powerful.
For a sake of simplicity, we won’t separate ambient and viral source of visitors in the model.
To add numbers, we’ve introduces 4 more guesses (or call them decisions if you’d like):
- default number of PR actions per month; in the given example we plan to do two blog posts each week
- number of eyeballs on the link; we pretend that the link will be presented to 10K visitors
- conversion of link viewers to actual visitors of the product; let it be 5%
- virality rate – how much visitors will come since an established user gives him a link; for this example we plan that each user will lead avg 7 visitors
The math after that is easy:
- PR actions and eyeballs converts to visitors
- visitors convert to users
- users we’ve got on month N show our site to 7 visitors on month N+1
Being simple, that model still shows one important trait:
- given that virality rate, the service visitors count will stabilize at 9th month and all further growth will depend exclusively on your PR and sales activities
The “ignition” virality rate is close to 20 – that’s when each user brings another active user or even several of them.
Play with numbers, that spreadsheet is insightful.
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