How SlideRocket plans to make money

Unlike so many misguided Web 2.0 startups, SlideRocket is going to ask its users to pay to use its Flex-based on-demand presentation application, and it plans a potentially lucrative add-on marketplace too. I got an exclusive sneak preview of its pricing plans.

SlideRocket, the Flex-based online presentation builder that's been attracting pre-release plaudits from industry observers, has shared with me its planned pricing when it comes out of beta in September.

SlideRocket logoSlideRocket has had positive coverage not only from ZDnet's rich Internet application expert Ryan Stewart (twice, plus a screenshot gallery) but also from TechCrunch, Mashable and ReadWriteWeb, which headlined its story Look Out PowerPoint - SlideRocket Rocks.

Unlike many of the Web 2.0 startups those sites cover, SlideRocket isn't relying on advertising, venture capital or the prospect of getting bought out by Google/Adobe/whoever to make money. It's going to ask its users to pay — not only for its own application but also for third-party add-ons.

"I've never been a huge fan of the advertising model," CEO Mitch Grasso explained to me in a call late last week. "We definitely from the get-go wanted to make sure we had the right kind of functionality that people would want to pay for."

"I think you're going to see more and more companies needing to do that," he added. "Giving stuff away for free is just not a sustainable business model" [my emphasis added] "... Enough of building these destination sites that are just features and not actually [complete] products or [viable] companies."

SlideRocket currently has 10,000 users on its beta program plus another 30,000 on the waiting list who'll be offered free access to the application in the run-up to the production launch. SlideRocket's moment of truth will come in October when it finds out how many of those beta users believe the functionality really is worth paying for. It plans to launch two paid versions, both with a 25% discount: single users will pay $9 per month; while a team edition, which adds a shared library and other team management features, will cost $18 per user. Prices will rise to $12 and $24 respectively whenever the trial period ends, but there will still be a 15% discount for those prepared to pay a year's subscription in advance. Up to 5 users will be able to trial the product free of charge for the first 30 days.

There will also be a free version but it will lack important features such as offline operation, the slide library, viewing analytics and integration of dynamic data. The offline capability uses Adobe's Flex-based client AIR and although it doesn't yet support offline editing of presentations, it's invaluable for viewing and showing them, especially when presenting in poorly connected conference rooms (we've all been at events like that, haven't we?) or for those of us who always seem to end up rehearsing our presentations (if not finishing them) while on the plane to the event.

The two killer features that are hugely valuable in my view are the user analytics and the dynamic data integration. TechCrunch's Mark Hendrickson did a good job of describing the analytics feature and why it's useful:

"[A] pretty sophisticated analytics tool that let slideshow creators track who and how many people have viewed their shows, as well as how long each spent on particular slides ... The company has already worked with Salesforce to create a version of SlideRocket that operates within Salesforce and makes it easier for sales people to create and track the slideshows they send to clients."

The dynamic data feature lets you link to live data sources from slides in the presentation. This is not only good for making sure you have the latest information. In the example just cited, you could have recipients viewing different data being shown in the slideshow depending on who they are.

sliderocketIt's still a nervous time for SlideRocket, though. There's no way of knowing how many paying subscribers will sign up until the vendor goes live with the paid plans. "It's tough to know how people are going to respond," Grasso told me, "especially in this new environment where people expect everything for free, which of course isn't tenable." On top of that there's the worry that it doesn't cost people anything to stick with SlideRocket's main competitor: "Many people perceive Powerpoint as free because they've already got it," he pointed out.

One innovative extra that will help SlideRocket make money is its plan to offer a marketplace of data and asset services for paid use in presentations — for example, market sizing data and other material from analyst firms, or stock images from photo libraries. It's the sort of money-making add-on that Microsoft ought to have done long ago with PowerPoint — it's the classic 'software plus services' play — but its Office Marketplace doesn't really cut it. SlideRocket has the advantage that its subscription model means that its customers already have a live account with the vendor, and it has put the infrastructure in place to process micropayments for third-party services through the customer's SlideRocket account, rather than forcing users to open separate accounts with each separate provider.

This could turn out to be a significant source of extra revenue because, as I've previously argued, offering useful services that fit naturally into the user's workflow is a far superior way to monetize an application than trying to divert them away with advertising. There's one problem though, as I highlighted at the time:

"There needs to be a reliable infrastructure for measuring whatever is due to each partipant in the partnership, and there needs to be highly effective workflow so that the user experience is seamless and convenient. The ease of funding everything through advertising has meant the giants of Web 2.0 (and many venture-funded startups) have neglected the more sophisticated infrastructure needed to support such functionality."

To make sure its subscription and micropayments infrastructure is up to the task, SlideRocket has turned to SaaS billing provider Aria Systems (with which it shares VC firm Hummer Winblad as an investor). Aria, which I wrote about while reviewing the SaaS billing scene back in April, provides the infrastructure as a pay-as-you-go hosted service. "We're not necessarily expert about creating billing systems," said Grasso. "I don't have an engineer to spare for even the simplest billing model. With SaaS, we can just pay for what we use."

Aria Systems' CEO Ed Sullivan told me later that handling third-party payments — known as 'conversion billing'— has previously tended to be used only by gaming and telecoms clients. "It's good to see software companies going ahead with this," he said. "It's a great validation for us and the SaaS model, moving to a multi-tier, multi-party monetization model. It's kind of what I think should have done with AppExchange." Me too, as long-term readers will recall.

Grasso is enthusiastic about having these kinds of infrastructure services on tap — the company also uses Amazon S3 to store asset resources such as images. "Anything that I can find that makes my life easier is great for me to use," he said. The smart client architecture itself allows the vendor to offload a lot of the application processing to its customers client machines, which means its own servers have a relatively light processing load. "We're fortunate with Flex we don't require the same sort of back-end infrastructure as a traditional application would need," said Grasso, although he did concede that SlideRocket may have to look at doing more in-house as it expands.

"These services make a lot of sense when you're starting out but eventually it does make sense I guess [to evaluate] whether they work at scale," he said. "But right now it's a no-brainer."

It's good to see that SlideRocket, unlike so many of its Web 2.0 brethren, is equally emphatic about its decision to charge users for its services. At last, there's a faint glimmer of a monetization strategy coming into sight at the end of the Web 2.0 tunnel.