Web3 pricing and business models | Maggie Hsu and Jason Rosenthal

Transcript

[Music] thank you it's awesome to be with you guys here on this Wednesday afternoon to talk pricing and business model who's fired up my personal approach to preparation was I just ate an entire plate of the chocolate covered matzah so I'm running on Rainbow sprinkle power for now so as Jeff said we're going to talk about pricing in business models I'm Jason I'm an operating partner at a16z my partner in crime today is Maggie who runs our go to market team and uh so we're going to divide and conquer on this topic I'm going to talk first about six questions

that all of you should be asking yourselves as Founders and CEOs about your business model and pricing Maggie's going to take us through some case studies and then also talk about some additional pricing considerations that you want to think about uh and let me let me sort of set the context for what we'll cover in the next little bit so if you reflect on the on the kinds of presentations and discussions and content that you all have seen before like words that I would use to describe them are you know very visionary very super intellectual strategic inspirational this is going to be none of that so the image that I want you to keep in mind as we go through this is of this of this

toolbox if we do our job today what we want to give you is a set of Frameworks and examples and heuristics so as you think about your own business model and how you price your products you can you can reach into this toolbox for your mind find the right tool Tinker with your pricing and come up with an approach that that's going to work for you and your product and your business uh and so uh let me just walk through sort of what the six questions are that uh I think you all want to be asking yourselves so question number one what are all of the different ways I could price and which approach makes the sound the most sense for my product and my market and the the reason that I'm

emphasizing the word all here is that I think for each of you right there's some there's there's sort of some set of pricing heuristics or approaches that are going to logically make sense to you but given that you're so early if you sort of take a step back and think through every way that you could press your product every approach that you could take you may unlock a combination of pricing models that are going to lead you to a much much more customer aligned pricing model that uh that is going to help you maximize your your business in your Market opportunity and so let me just walk through a number of different ways you can uh think about this so one would be user base pricing so right this is a very common SAS and Enterprise

best uh pricing approach you can think of how slack prices or sales sales force prices you count the number of people within an organization who are using your product you charge them a monthly or a quarterly or an annual fee the more people within the org that use your product the more Revenue you generate typically you'll also you know as you as you get to larger and larger organizations you'll introduce volume discounts so that you have the price on a per user basis for a thousand users obviously it's more in terms of nominal dollars but on a on a per user basis they're getting a discount than if it was just a 10 user organization next is uh is usage-based pricing right and if you think of the public Cloud

providers AWS gcp Azure this is something that you know that they've made super common and well understood the more compute storage bandwidth GPU that use the more that you're uh paying them and that this approach tends to work really well when you have you know what I describe is a consumptive product meaning the more people use it uh both the more value they get and the more underlying infrastructure expense you have in uh in providing them so this can work really well in that uh in that approach uh feature based there's actually one that's come up a ton in the conversations that I've had with each of you right so you're all thinking about well okay I've got you know some users

some customers who are developers and they're just getting started and they're maybe like a three-person startup but I've got a lot of interest from a big Enterprise or a much larger more established company who wants to use what I have I don't want to charge them all the same price you know how can I segregate and and a you know a feature-based way think of it as like a good better best or you know freemium Pro Enterprise type of offerings where you put different capabilities into different buckets that are going to appeal to different users and price them differently uh is a really good way to orient around that and and some things to think about are you know particularly for your Enterprise tier which is what you want to be uh the most most

expensive most valuable things that tend to work really really well and that is uh you know Enterprises love to pay for better support uh you know because the the old saying of like you know nobody ever got fired for buying IBM although today you probably would get fired for buying IBM like you know they want they Enterprises tend to want the all-singing all dancing like best version of what you have to offer because uh while they want capabilities they also want to like reduce their exposure and risk so you can put a lot of like extra special capabilities into that bucket uh value-based pricing is one that I think can actually apply really well to crypto that that not a lot of people

think about so what I mean by value based is imagine that you're a new product in a new market uh offering a set of capabilities that uh that historically companies or or groups have had to build themselves or or do themselves um a really powerful way to price is if you can come in with your offering and say well like here's a ton of work or a ton of risk uh or just a Breakout set of things that's going to take you know your customers business to the next level uh and and by buying our service you're going to save a bunch of money or make a bunch of money you can often use that as an umbrella pricing model so at a startup I did now uh now over a decade ago it's called Uh it was actually where

uh Ben Horowitz and Mark Andreessen came from before they did a16z it was an Enterprise software company called opsware uh we were doing what was called at the time data center automation software and it was it was automation software to make system administrators and network engineers and and storage Administration administrators more efficient and and we were doing this at a time it was you know just past 911 post the.com crash and uh and everybody was looking at how could they save money uh on on their I.T and their data center operations and so our approach is that we would come in and we would say well you know to to run an application like this and today it takes you uh you know 20 system administrators if you use our

automation tools you can do the same work with two so you get you know like a net Savings of 90 in terms of human labor and so that would be our our pricing model and actually another company that has done this really well is uh is palantir uh kind of in the defense and intelligence space you know there they're often replacing huge armies of consultants and so they're able to capture some of that value for themselves and this this tends to be like a very high margin very high value way of pricing if you have an effective way of communicating not to your customers uh transaction based you know this is one that in crypto and blockchain a lot of people are looking at and doing I'd say the the more traditional company

that's done a great job of this is Stripe Right Where if you use their payment API they're taking a small track a small fraction of every transaction that goes through the system um I think that this will work great in crypto over time the one caution that I would have for you today is that uh you know the the transaction volumes across most networks tends to be sort of so small today that you want to you want to have fairly realistic uh understanding and estimates of how much that transaction volume is going to grow such that if you're taking you know say like point one five percent of every transaction on a network if you actually do the math and I'll talk about this uh in just a few minutes you're going to

see that the number of transactions on that network has to get pretty darn large for you to ultimately have an interesting business so it's something you want to be cognizant of uh Revenue share this is something that that Google did really really well in the early days in the business where you know when their District before sort of google.com uh and chrome were the dominant ways that people search right Google would pay for placement to be the default search provider on Yahoo on AOL uh on you know ATT and Verizon when uh when mobile first became a thing uh and and it was a very customer aligned business model right because the more searches that someone did you know via Yahoo but using Google the more Revenue

both Google and Yahoo would uh would earn and so this is nice when it works in that uh it allows you to share an upside with your with your customers and distribution partners Services based this is like you know classic Consulting and Professional Services well I wouldn't recommend that you adopt this as your as your dominant approach to pricing this is a this is a um you know sort of great approach you can take when you have a customer who wants a feature uh or like think of it as like a custom report or or something that's not in your mainstream product roadmap you're not imminently going to ship it but the customer needs it in order for you to close the deal one way

that you can bridge that Gap is by charging them a nominal uh Professional Services fee to either you know accelerate or custom build that feature for them so sort of you you get compensated for it and you give your customer the thing that they need to get excited about your product this can be sort of a really useful accelerator and deal closer for other things you're doing uh Dynamic pricing you know Uber Lyft Airlines have done a good job of this and this is the the idea of right you know your your pricing may vary depending on uh on volume and demand at a given time and so depending on your product or service this can be interesting as well and then last but not least just sort of like a general uh catch-all bucket of

you know subscription-based businesses tend to be really really powerful for a couple different reasons but but one of them right is that if you have subscribers you effectively can lock in uh compounding growth for a very very long period of time because you don't need to uh you know net recreate your business every single quarter every single year you're growing on top of a stable Revenue base uh that you have so when when a subscription model makes sense for you and your customers it can be super helpful and Powerful all right question number two am I charging the right price so one conversation I've had with many of you is you're brand new your products and beta you don't know if you're charging

too much too little uh there's a really actually good way to go test this which is that uh that you can do an early a B test of your pricing and and the way that I would encourage you to think about it you know particularly for those of you who are engaging directly with prospective customers uh you can you can pick a small prospective customer cohort say five customers and and you know say that you're doing feature-based pricing so you've got uh you know uh you know basic uh basic premium and Enterprise price uh basic basic for for this first cohort basic it acts premium at y Enterprise at z uh and then take a second customer cohort about the same

size and do 5x 5y 5z so literally create a 5x or a three action or maybe even a 10 tax differential between your your customer your prospective customers pitch them both the same thing and see what happens uh and and you know if you close a hundred percent of the uh the cohort who you pitch at five or ten acts that tells you that you've got you know probably a lot more a lot more uh pricing Headroom than you thought you had and what I'll tell you from having done this a lot of times and seeing hundreds of customers is it's much much more common for an early startup to underprice rather than overpriced so experiment here have some fun and uh and see what you learn and and there there

is like a great escape hatch in all of this which is if you're if you're higher priced customer uh cohort you know just sort of like throws up on what your what you're proposing to them you can say well you know you guys are special you're early we really want your business so we're gonna as a as an introductory offer we'll give you the XYZ pricing um you know the one the one mistake you you want to avoid here right is that when you're doing that price Discovery don't publicly publish your price list on your on your website right if they can if someone can go look at your website see what you say you're charging and you present them a different price list that's obviously again a really foul your your a b testing so so you

know resist the temptation to to make your pricing public until you zero in more on what uh what you think your actual pricing is going to be uh question number three are there opportunities for me to price discriminate within my product offering you know absolutely I I talked about this a little bit on feature-based pricing right but you want to you want to think deeply about how you can segment your product offering how you can segment your customer base and the better job you can do of putting capabilities in uh nicely grouped and defined buckets that are easy for your customers to understand each which come with Each of which come with a slightly different price uh the better better opportunity you're going to have to you

know capture many many uh brand new businesses who want to experiment with your product uh and and get to know it before they commit and also you'll be able to capture you know very large established players you know both like kind of the big guys in the in the crypto space as well as more traditional Enterprises by by offering a feature set tailored to them question four how do other products and services in adjacent markets price so this is like what I would call a cheat code right if you're if you're starting out you don't really know what to do and there's another Market that you can think of as almost uh a substitute for what you do actually where's the chain Patrol team yeah right uh right there right so so if you think about what

chamber trolls doing you know they're offering a new native service for uh essentially scam protection and takedowns uh in crypto which is which is amazing and it's going to be great um but there's a whole existing web 2 market for the same kind of things like you know uh basically fraud Defender and other things that will that will take down uh companies and services that are doing malicious things so if you're if you're chain Patrol and you want to figure out sort of what what uh ballpark you should price in you can go look at all the web 2 companies that are doing a similar kind of thing and use that as a way to guide you actually same thing with with Bello right you guys are offering an analytics service there are

lots and lots and lots of you know conversion oriented web 2 Services analytic Services out there you can use that as a way to map the train that you're operating question five the next two if if you remember only two parts only two questions I hope you remember all six questions but if you remember only two from from my talk uh five in sector where you want to pay attention so number five do my unit Economics work right so you want to make sure super super early in your company that you have a margin structure that if you execute well you get massive market share you build a great product like it's actually actually going to lead to

a business that works for you uh and let me give you a counter example of that from my prior company uh my prior employer Google right so about a decade ago uh Google was riding High you know I thought they could do no wrong like everything the company had done today just like really really really worked uh and so they decided to get into the high-speed internet access business with Google Fiber where they were you know amazing service right yo gigabit Ethernet to your door uh like before anybody was offering anything like that and the mentality was like were Google we got this the laws of gravity don't apply to us and so you know the company invested billions and billions of

dollars in uh enrolling this out like first in Kansas City then to a few more markets uh and unfortunately what turned out to be the case was doesn't matter if you're Google if your Verizon uh if you're if you're a local infrastructure provider like the cost of jackhammering a sidewalk uh so that you can so that you can lay high-speed fiber optic cable and then like rolling trucks uh to everybody's homes to like set up the service it doesn't matter who you are that costs a lot of money and so it turned out that you know before Google knew it there were billions of dollars into a market that was in into a product line there was just never going to work for the company so like don't make that

mistake make sure that you can profitably deliver your service and and you can for sure you know make um make guesstimates and extrapolations that things are going to change and converge over time but but it turns out that you know particularly in this economic and fundraising environment the business model of you know we lose money on every customer but we're going to make it up in volume is not going to work very well for you uh so don't don't do that one uh and then last but not least this is something that nobody does but everybody should uh if I imagine that my market was going to grow 10 to 100 actually one to two orders of magnitude from where it is today and I captured 100 market share using my current pricing would I end up

with an interesting business and this this is like a super simple Google Sheets exercise that you can do right after the session and the reason that I encourage you uh to do this is because you know the the conventional wisdom right is like oh gosh like startups are really hard really hope it works like failure would be terrible uh and and you know I'm gonna do everything not to fail I would argue to you there is a much much much worse outcome than failure which is that you pour you know four five six seven years of your heart your mind your soul uh your employees lives into building what your what you're building you know you rate you successfully raise capital and you execute perfectly

but then you get to the end of your journey and you're like oh like like you know everything even though I did it all right the End Market the end size of my opportunity just isn't big enough and interesting enough for me to have built a business that was worthy of everything that I put into it and and just that like close with an example that that has a happy ending here there's a there uh was a layer two project if I said the name you would all you know immediately know who it was that I was uh working with and they had like a very you know elegant way of thinking about how they were going to do a transaction rev share uh on all this cool stuff that they were going to be doing and it was like super customer

aligned it was the it was going to be amazing and I had them uh do this exercise and and within about 15 minutes the realization was oh my gosh we would need about 70 acts the daily transaction volume of of ethereum on our Network to have a business model that made us break even so like you know they'd have to be 70 times larger than ethereum is today just for their relatively small team to be able to be self-sustaining so the good news is when they realize that and they just had literally never done the math before so when they did that they you know changed everything made a few modifications were able to keep going with most things they just sort of changed their pricing and like

everything everything worked out where you know it kind of won one thousandth the volume they were able to end up with a pretty good uh pretty good business so my my plea to you is do this exercise so you don't end up regretting it four five six years into the future with that let me hand it over to Maggie thank you Jason so I'll be talking through pricing strategies for three types of business models the first is a Marketplace model the second is a SAS business and then the third would be a business that offers some sort of downside protection so in a Marketplace model you have buyers and sellers and the marketplace itself exists because there's some sort of friction in getting these buyers and sellers together

and so in a Marketplace you can really charge some combination of the buyers and or the sellers and so I've put that on this grid here and I'll just walk through from the inside out what this could look like so when would you not charge a buyer or a seller well this seems quite straightforward but when you're looking to grow the marketplace you don't want to have friction in onboarding either of these groups and so if you don't have enough buyers you probably wouldn't charge them same thing if you didn't have enough sellers the next category is a one-time charge so in this example you could think about something like a merch marketplace where the merch is really popular and everyone want access to it and so you're actually token getting this Marketplace you're making buyers purchase a token in order

to get that access you could do the same thing for the sellers you could basically make sure their incentives are aligned if you have this curated Marketplace and you want them to have a token in order to even gain access to sell into it the next model or the next category is recurring and this could come in two forms one is transaction based and the second would be subscription based and this is what we most typically see in marketplaces which is why I've put the little yellow dot there so transaction based we're all very used to this when you purchase an item you typically pay a transaction fee but that fee can actually change it doesn't necessarily have to be the same for every single transaction in the marketplace and so you'll oftentimes see marketplaces charging reduced fees if

the transaction value is higher they might charge different fees for different categories and as we've seen recently with some of the kind of the marketplace battles they can kind of move this fee up and down to better map out some of the needs that they have on the competitive front now a subscription-based model might apply if you have a marketplace where it's actually hard to estimate the net value of the transaction and so an example here might be something like a Marketplace for nft holders where it gives them opportunities to commercialize their nfts through some sort of Ip licensing and so in this case you're serving up these opportunities but oftentimes it's hard to estimate the net value of the transaction most of these deals probably won't even close

and so you could think about offering something like a subscription where they're getting recurring access to the deals on this Marketplace but you aren't responsible for the the net transaction value on the seller side we often see this as a listing fees so this is essentially a fee to list a certain item but sellers could also pay for things like premium placement or other co-marketing and so you have these value-added features that a seller might want in a SAS example so you're selling to these archetypes you're selling to individuals then teams then Enterprises and so if you think about you look at most SAS companies they almost all follow this the same logic they have this entry tier and so that's their base tier their free tier they then have

their standard tier and then they go to this kind of power or Enterprise tier and if you think about an individual they're essentially going up these tiers based on a combination of increased usage and increased features and these might map but they don't have to exactly correlate you can think about increased usage being on a Continuum so they're using and you really need to figure out where to cut off those usage at each of these tiers and the same thing with features and so that's that kind of packaging element and so to what Jason was saying earlier this is really where a lot of the work goes into it because these things may look neatly packaged here but the work that you're doing with all those six questions is really to understand how you're pricing these different tiers and reallocating and

kind of testing between them because oftentimes what's in these will change over time so an example from our portfolio Alchemy they offer web3 development tools you can see here they have their free tier so it offers a certain number of compute units and it also offers a certain number of features they then want you to move into their growth tier which offers more compute units and more features and I would say that this is a bit of a B to C or B to D business to developer motion where it's essentially self-serve so someone could come to the site they sign up for the free tier they then upgrade to the growth tier they might then downgrade back to the free tier and they could leave all without you ever potentially speaking to them and this is actually very different from an Enterprise model and an Enterprise model

the sales motion is likely a lot more custom so you are talking to the Enterprise your negotiating a Custom Contract you have these features and and it's really a different sales motion where you really do need some sort of sales resourcing against it and so it may look clean and similar and you have these three tiers lined up but when you think about how you're allocating your sales resourcing the first one is this much more self-serve motion what does that look like when sales process and then the second one is is much more kind of that white glove approach of this Enterprise motion another example from our portfolios nansen so nanson offers web3 analytics and in this case they're taking an individual and they're moving the individual up from standard to VIP to Alpha and this is all with an increased number of features they also offer

length-based discounting so you can get discounts if you pay quarterly or annually and they also offer things like trials so the third type of business is is a business offering some sort of insurance or downside protection this could be against hacks it could be against scams and the stakeholders in this case are the individual nft holders as one and then the nft Creator as another and so that could include the Creator it could include an employee of the creator that company it could include the community manager it's really a different set of stakeholders and the upside and downside for each of these sets of stakeholders is actually a little bit different so for an individual holder the downside is quite clear if their wallet is hacked their assets are gone and you can measure this

because you know the value of the Assets in their wallet you can calculate the expected probability of a hack happening because you have all this on-chain data of hacks you know the value that your service brings so you can do some sort of estimation of taking that estimate X percent and taking it to Y percent and then it's actually a very straightforward calculation of the expected value here where you can multiply those numbers and get some sort of expected value of loss and then you could theoretically charge the holder a premium based on this what I do think is interesting is psychology here because most holders probably think that they are less likely to get hacked than the next holder and so even though you should have this this number and this premium you're likely potentially charging less than that just because of the psychological effect

for the nft Creator they actually don't have a direct impact if the holder is hacked right this isn't something that's they're losing revenue from but they have a cost to fix this so potentially this came from something in their Discord or it was a Twitter link that got sent out and so they need to repair this there's also reputational consideration so if you're in a community and everyone's all getting hacked that's not a great nft community and to Jason's point there are likely alternative options so are they paying for security other web 3 security web 2 security kind of what else are they using and what else are they paying for this is something that they've likely looked into and then if you're thinking finally about how to differentiate how would I sell into nft communities you could differentiate in a few different ways so

one could just be the number of holders right so the number of holders of nfts and that's a measure of the community size but that might not be the best way because the number of holders might be changing the other one could be market cap so you essentially could take the floor price or the average price from nft multiplied by the number of holders and you get a rough estimate of total value and total assets and then the third would just be the type of nft community so potentially it's an art nft community or a sports nft Community maybe they have different factors and they have different considerations in what they would want in the service and just wanted to close on some additional pricing considerations so the first one is if you're pricing to enter a market and you already have a competitor in that market you are likely

pricing under the competitor right you're just trying to get market share and so once you're entering that market I think the danger is that you stay at that under pricing for too long customers are much more sensitive to small increases in price and so once you have that market penetration it's really important to quickly raise the prices back to parity a number of you asked about beta pricing versus launch pricing I personally think that the role of a beta is to feature test and you want to understand price sensitivity but you actually don't have to take exactly your beta pricing framework and make that your same launch pricing framework these can be different things right the role of the beta is experimentation the second one is more of a uniquely web 3 issue and it's essentially exchange

risk and so if you think about your pricing and matching your income against your expenses you might be pricing an eth but all your expenses are in Fiat so there's some sort of hedging you need to do in order to maintain that parity in terms of being customer friendly maybe you want to offer the ability to accept basically everything so you're accepting lots of different cryptocurrencies Bitcoin eats stable coins and Fiat but from a management perspective on the back end just understand that you'll have to hedge that out and there's just certain considerations that you'll want to think about one potential way to kind of address this is with things like pricing oracles and others and then finally I think this is kind of my biggest point to hammer home is don't be in too much of a rush to lock in your

pricing model this is something that's incredibly important to get right and so it's okay to set up these custom pricings and and really work with customers in a more customized way instead of just putting something out there I think it's it's just really important to take your time and not you know rush to put something in place that doesn't make a lot of sense so that's it happy to take any questions but hopefully that provides a practical pricing framework for you thank you both very very useful session um so we are building like a B2B sales type product um and we are not starting with tiering we're just having a flat price and then we were planning on looking at how users interact with different features to then

figure out tiering um I'd be intrigued to to get your perspective on that because we looked at uh all these these three tiers but these were all of mature businesses and so I wonder what they did at the start so I I mean I think you can definitely give that a try I think that my my bias would be towards taking your your best shot and best guess at an initial set of tiered features and and the reason why is that uh if you do that you you then you know in in a in a customer conversation or prospective customer conversation you have places that you can move you know you can you can go to a lower price

offering with less features if they are pushing back on the price point you can give them more if they want more and they have the ability to pay if you just um if you if you just have one offering you sort of you lose the opportunity to acquire signal about what might work for you long term so I I'd say my bias would be you know be be knowingly imperf imprecise uh as a way to acquire data and Intelligence on your on your prospective customers I know what do you yeah I mean I would say have at least two tiers um very rarely almost never have I seen kind of that one tier work out and so for a slightly different reason I think it's important to start

that differentiation early hi Jay from ether ID thank you very much for the talk um I was curious how uh for a lot of us where we're still in the process of finding product Market fit so like how uh you think of like should we first find product Market fit before iterating on the pricing model should we try to do both um how do you calibrate that so I think it's something that you you time um but ultimately you want to get to that product Market fit first because a lot of that does determine kind of what you can charge in terms of pricing um so I think I would prioritize the former but have an eye to you know what are what are kind of some ways in which you can test out willingness to pay

building on what Maggie said right you're think of your pricing as some of the tools and levers that you have in that journey to finding product Market fit because basically I mean what you wouldn't want to learn right if you find that you know some meaningful number of people will uh use your product for free but if you then you know want to charge them five dollars a month they all lose interest that's a useful thing to know earlier rather than later thank you hey guys Emmanuel from Shield my question is around when do you bring up pricing like the timing of bringing up pricing during a sales cycle and just to give like some more context

so we we've been meeting with a certain company where we've had two calls with them so far the first one was with someone kind of more entry level the second one was with the head of marketing and it still seems like we would need one more call to kind of get the founder to to buy into it so we did bring up pricing with the head of marketing but I'm just wondering you know if there's any best practices around like you know when you should you should bring that up I think my in my experience you sort of know it when you see it right you want to you don't want to hit them over the head with like hey I hope you like what you see and here's how much it's going to cost you you know like in the first meeting you want to get to the point

where they're clearly interested and they want to know more and then rather that I mean I I think a good way to introduce it is to is to say like hey it sounds like we could add some value to what you're doing would it be helpful if we if we uh gave you some pricing and they can say yes or no so you know when they're when they're interested when you think you're you're winning you can propose it and oftentimes they'll ask you but I think you can uh you know particularly with how early everybody is here I think you can wait yeah it doesn't need to be in the first meeting yeah I think in that specific example I would if the head of marketing is going to be your Advocate right they're the ones kind of pitching it they're excited um giving them an

indication of what the price is so they can help Tee It Up for that you know founder meeting versus to Jason's point just like throwing it out in the meeting and having everyone you know it's the first time they're looking at so I would identify kind of who your main stakeholder Advocate is who's getting the benefit um helping them understand the pricing and then they can help Tee It Up For You know the decision makers all right thank you I wanted to ask um you know we've been chatting with um you know a couple of a couple of companies are also like they're validating are all further evaluating also some like competitive offers um and so uh you know when you're kind of not necessarily like a bidding war but you're kind of in this place where you know whoever you're selling to has is a

like exploring different like Alternatives like is there a strategy you found that are effective of one like is there a nice way of asking like what the alternatives are and what the alternative proposals are is there ways of like doing that competitive research um and basically how do you find what like the blockers are like what are the maybe if there's like a step somebody else is offering that maybe you're not thinking of or that maybe just like wasn't in your pitch or something that is making the client lean towards another um uh and other potential like you know contract with somebody else um I think it a depends on how important this customer is to you right so you

have your Lighthouse customers that you'll really do most anything to to kind of land versus is this kind of a talent customer that you might be hoping to get and then from there I would just ask them I think in in that sort of situation they might want to go with you but there are some either pricing or future considerations that are the blockers um and and they will probably tell you right they might not tell you exactly who you're competing against but they might say this competitor is offering XYZ and just so just understanding um and it oftentimes just starts with asking right 100 agree I would I would give you a simple mathematical model to think about you guys are all better at math than I am but so we're going to solve this problem together if you have like

say in in every in every account right that you're going after like particularly if you're an Enterprise uh sales model uh think of it in in every uh customer there's a decision maker a champion and an end user uh if you convince uh you know the end user and your Champion uh to yeah that you're the right solution but like not the decision maker how would you probably assess your your uh let's say they each have like uh 33 voting uh voting authority over the decision if you convince like two of the three what's the probability that you're going to win no 66 right so decision maker

decision maker you know Advocate user like if two of the three are like yeah we should buy uh chain Patrol you've got a two-thirds chance yeah of winning if you convince all of them uh you know pretty much 100 chance if you convince one of them or none of them much much lower so so part of your job when you're when you're talking to the customer is to gather that intelligence like you want to particularly if it's a competitive deal you want to know how you're doing you want to know uh what they like about you what they don't like about you you want to uh you know know who else they're considering the best way to figure that out is to ask them all right perfect thank you uh Lucas from plug it here my question

is about marketplaces and how you all think about solving the chicken and egg problem especially around like bootstrapping liquidity that's why you know the power of web3 and so um you know thinking about kind of the token incentive model are you asking about without that or are you potentially with that yeah I mean that's like a whole other conversation I feel like um you know we touched on some webtoon web3 pricing I know Scott talked about things like you know nft drop pricing and auction mechanics I feel like bootstrapping marketplaces in web free is a whole other topic um and really goes back to your tokenomics model and so that's something you know that some of the other teams might address we can talk about offline as well okay uh this is ash from lockbox

we're working on better monitoring and automation for crypto treasury so we'd love to chat more about uh your previous company Jason at some point my question has to do with value-based pricing and just generally how you price things when it comes to like these expected value calculations for how much you might be saving someone as far as a risk especially early on when let's say you have one or two customers that you have yet to actually launch uh how much research is how much is research based off of like analyzing market conditions for like previous hacks or like previous companies that have lost money and then how do you balance that that with like a very small sample size with like how you've actually deployed if that makes sense when you're super early yeah so I would say in the in the early customer set right it's largely based on

what you can convince them the value is that you're actually delivering so it's more it's more hypothetical uh either you know savings or it's a hypothetical cost benefit calculus you know based on publicly available data and then really what you're trying to do is assemble a large enough first cohort of customers that you can then uh you know sort of mine their experience to go to the net to the second cohort of customers and say well like with our early cohort this is what we've seen uh you should believe it too so therefore we're pricing this way but it is definitely uh you know it's intuition inspiration uh you know good presentation for that for that

early set of customers and and so the the result is that you're probably gonna underprice for them but that's okay got it thank you I think we had one more that a team shared with me which I'll read to you guys um how do you think about pricing within a certain company you have one customer and how do you think about pricing across different projects like is it okay to start at a certain price for one project but then increase that price over time or would that be kind of frowned upon I think it just depends on the nature of the project and so it if you're adding kind of custom work what that looks like and happy to talk about offline but I

think if it feels like it doesn't make sense it probably doesn't so if you're just arbitrarily increasing the price for the same type of work you should have a pretty good reason but if these projects truly are kind of new builds or different things then I think you know there's absolutely a logical argument to increasing price and I think if you if you know that your price is going to have to go up uh within that same customer over time like say it's a say it's a collection of multiple nft projects and you're like you know starting on their smallest brand and you want to move to the larger one it's logical that uh that the bigger ones are gonna uh cost more and so again you want to I guess another another concept I'd leave you guys with is is

you want these pricing in the business discussions to be really a two-way street you're providing information and extracting information uh so that so that you you know it's sort of like you want to ultimately end up at a at a price and a contract and a business relationship that both you and your customer are are if not happy with both you know feel as fair value and the way to do that is through dialogue versus you know sort of keeping all the insight and data cluster about so in in the example that you're giving you you would very much want to say like Hey we're giving you this price for this project but just know that if we move on to bigger things or you want more features or we're going to do this

for you like the the price is going to need to change awesome well thank you so much Jason and thank you guys [Applause] [Music] foreign