Startups have successfully had their users create value for them in a number of ways. Here are four :

1. They pay you ! Pretty obvious – they pay for the service which you provide to them. (Investors, of course, love this !) They may entice users in with a simple free basic service – then add charges for increased levels of support like SurveyMonkey. Charge by subscription or by usage, or combine the two.
2. They create content. The most obvious examples are Facebook, Twitter and YouTube, where the content is the bait through which they create a thriving market, and through it deliver advertising revenues. YouTube’s adverts are directly linked to content, Facebook and other services put the adverts into a feed.
3. They provide eyeballs. These users don’t have to be active in any way other than reading the content. Adopted by online publications, eyeballs are the means to extract increased advertising income.
4. They introduce other users. LinkedIn uses a model where they provide a free service and have their users invite all their contacts. This drove LinkedIn’s stellar growth. The more users they have, the more effective their service is – and the more likely it is that “power” users will emerge who will want to pay for the service. Similarly Dropbox “shared folders” is a key part of the product which effectively “demo’s” the service to other users who may then subscribe. Most services have a “sharing” option through which they have their users can invite others to take part.

These four can be deployed in different combinations :

• YouTube : 2 and 3 (and to some extent 4)
• Dropbox : 1 and 4
• Facebook : 2, 3, and 4
• But hat’s off to LinkedIn – they use 1, 2, 3 and 4 – and have built a business which can capitalise on all 4 models, and through which these reinforce each other.

Here are five keys things that investors are looking for you to demonstrate :

(a) Metrics – or “up and to the right”. The most oft-quoted investment factor – but only one of the things that investors are looking for. Include pretty much anything you can to show your product is being used – being used frequently, and by a lot of people. Essentially these metrics show that your product is delivering its value proposition in the real world – so they show that you’re onto something. Other metrics include Cost Per customer Acquisition, Net Promoter Score…. [add your favourites here !].

(b) Team – Some investors focus solely, or primarily, on the quality of the team. The simple idea being that you back amazing people. Following great people will win out in the long run. Even if their idea is not fully formed then they will pivot. They may even fail but their next venture will be better.  We don’t expect you will fail – just make sure that you demonstrate you’re “investable”.

(c) Revenues – Pretty obvious really – especially important for B2B startups. Demonstrate that people/companies will pay for your product.

(d) Design/UX – The theory here being that a beautiful design will win in the market. Think of the simple elegance of the left/right swipe of Tinder. If you can be one standard deviation away from the norm, then you create something which delights users but doesn’t scare them.

(e) Customers – not so much an objective measure of the number of customers or revenues associated – rather a subjective measure of the “quality” of the customers. So if your customer base is Coca-Cola, Microsoft, P&G, HM Government etc

One of these is interesting… If you can show you have more than one, let’s talk ! (All five and you’re probably got a Unicorn !)