Analyzing a Marketing Idea

"What if we paid for the rest of these guy's kickstarter, provided they embed numberfire content and have upsells into premium from the app?"

This is the kind of question you might come across as the business end of a startup equation. Might be through your own research, and the quote is coming from your inner voice, or might be someone on your team asking.

Off-the-cuff reactions might include:
"Yeah dude! Kickstarter is awesome! Let's do it! Their project's going to be totally huge, and it would be awesome to get involved!"

Or

"That's totally lame."

In my view, everything in a startup, where you don't know if you're going to get fed tomorrow, is a giant cost-benefit equation. If it drives results at or greater than expectation, it's good. If it's repeatable, it's bomb.com, and you may have just discovered your way to your next venture round. If it doesn't get you where you want to go, brush it off like Jay-Z's shoulders.

Here's how I responded. Might be food for your thought:



"You're paying out $X for their Kickstarter project. Let's assess our options.

They've got 550 people pledged. I don't know what the viral rate is. Let's assume it's 0.
Let's say you get a conversion rate of anywhere between 1 (reasonable) and 5% (unreasonably high).

5.5 people = 33 months/user to break even

30 people = 6 months/user to break even

Anywhere between 1/2 a year and 3 years to break even.


Other option is to write some bomb ass articles that you can feed through Outbrain, get a bunch of registrations, make a special email list of all those people, keep sending them emails about Premium until a bunch register.

Let's say you spend the same money there - at a high $/click rate, average conversion to subscriber rate, and average conversion to Premium product rate, let's call it an average of 20 users.

20 people paying our average revenue on our Premium product = 9mo's to breakeven.

Even if you adjust the number of clicks that you're going to generate down, you'll probably end up somewhere around 9 mo's to breakeven. Probably a smarter/surer bet that it's going to happen."