Value of the User Base: Part 1 (Craigslist, Uber, ClassPass)
This concept is the approximate value a company can get once it activates its revenue model. This metric requires a bit of forward thinking. It is not the immediate monetizable value of your users. Before we dive into our companies, I’d like to explore how to squander the opportunity of maximizing the value of your user base.
Getting it all right
When Craigslist was founded by Craig Newmark in 1995, it was the first online classifieds advertisements that got proper traction. It currently services over 700 cities in 70 different countries and is available in 15 different languages. In addition, it still sits as the top 100 most trafficked sites on the web. Not bad for a site that is over 20 years old and looks the way it does. Even though it has chosen function over form, there was something that it was missing; accountability. The barrier to entry to posting something on Craigslist is just an email. It can be any email: real, fake, or temporary. And this is the same onboarding process for all sections of the sites; from real estate to transportation to housing.
Soon after Craigslist launched and received traction, companies began unbundling different verticals and adding end to end transactional loops, as well as accountability. For example, if you wanted to find a short term stay on Craigslist, you would just need an email to sign up and message different listing. The users of the site were tasked with handling the payment, doing the background checks, taking some security deposit. They had to trust that the pictures of the apartment were accurate. When Airbnb came in, they did all that for you. From handling the payment, to verifying that all the parties are who they said they are, to making sure that the apartment is as cozy in real life as it is on the pictures.
Below is graph from CBInsights on how Craigslist was unbundled by vertical. Let me remind you that all these companies did the same thing: built in accountability and end to end transactions, so they could get in the middle of the payment process.
One of the most important things a company can do is capture a user’s credit card number and have their permission to charge it. Uber can now roll out the delivery of other things such as food and goods, and users will not need to do anything new or add any new information. Uber is already delivering food with it’s UberEATS program where a user can open up the Uber app and select from a variety of dishes to be delivered to you. Or UberRush, the courier service inside of the app.
As people use Uber, the data in their journeys tell a story. A frequent journey from a train stop to another part of town can signal there would be demand for a public transportation route there. There is a blog post about using Uber’s Smart Data and it can be found at http://blog.uber.com/city-data.
Since day one, Uber's mission has been to improve city life by connecting people with safe, reliable, hassle-free rides…blog.uber.com
Lastly, as car technology evolves, Uber is perfectly positioned to roll out that technology to its existing user base. Netflix did this when it shifted from a DVD renting business to a media streaming business. It had the right audience, and it was able to onboard them to the next generation of technology.
Capturing the fitness habits of millions of users is immensely valuable. Digging into the data they would be able to answer:
- Which days/times are the most popular for X type of workout?
- What is the age/demographic of client that likes X type of workout?
- How much does the location of a studio affect class attendance?
- What is the perfect size for a class for X type of workout?
- What makes the perfect instructor for X type of workout?
- Would people follow an instructor if they moved around, or they are ok with any instructor?
Based on this information, Classpass would be able to create the perfect gym experience and roll it out to an engaged and target list.
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