In your groups Develop a business model canvas on any one idea The key is the thought process of developing the canvas versus the ingenuity of the idea itself If you cannot think of an idea… . ◦ Develop an Ice-Cream shop chain on campus Thursday – 10 minute presentations 4 – 5 groups Hom e Assignm ent!!!
Slide 1: Cover slide (Team member names, Team name, Team number, 1 to 2 sentence description of your product and the number of customer contacts you’ve made or think you should make) Slide 2: Current business model canvas with any changes marked Slide 3: Tell us about your Market size (TAM/ SAM/ Target) Slide 4: What type of business are you building?: IP , licensing, startup, unknown Slide 5: What are your proposed experiments to test customer segment, value proposition, channel and revenue model of the hypotheses: What constitutes a pass/ fail signal for each test (e.g. at what point would you say that your hypotheses wasn’t even close to correct)? Assignm ent
“What’s a Startup? First Principles,” http: / / steveblank.com/ 2010/ 01/ 25/ whats-a-startup-first- principles/ “Make No Little Plans – Defining the Scalable Startup,” http: / / steveblank.com/ 2010/ 01/ 04/ make-no-little-plans-–- defining-the-scalable-startup/ “A Startup is Not a Smaller Version of a Large Company”, http: / / steveblank.com/ 2010/ 01/ 14/ a-startup-is-not-a-smaller- version-of-a-large-company/ Mark Pincus, “Quick and Frequent Product Testing and Assessment” http: / / ecorner.stanford.edu/ authorMaterialInfo.html?mid= 2313 Som e Good Reading
Agile development: I terative and incremental development, where solutions evolve through collaboration Business Model Canvas - BMC: template for developing and documenting new business models, made up of 9 key building blocks Customer archetype: fictional character created to represent the different user types within a targeted demographic, attitude and/ or behavior set that might use a site, brand or product in a similar way. Customer discovery: Process of asking questions to understand needs and pain points of potential customers Peer Review Document: An online document for comments, suggestions and SAM: Served Available Market TAM: Total Available Market MVP: Minimum Viable Product; the basic product (or service) you can take to market Teaching Team: The instructors; usually serial entrepreneurs, entrepreneurial educators and technologists Peer Review Document: An online document for comments, suggestions and Value Proposition: What value do we deliver to the customer? What customer needs are we satisfying? The Jargon
Why startups fail The Pragmatic approach Business model canvas Building the canvas through customer discovery Example application Tools for discovery Agenda
Why Startups Fail Building a successful business is every entrepreneur's goal – but only 1 in 12 succeed in doing it! Why do Startups fail? The Startup Genome Project analyzed data from 3,200 companies and came up with some answers. At the core of any successful business are two things A good product and A large market for the product. In other words, a startup should be able to scale. And to scale properly, it must balance the growth of five core dimensions : Business Custom ers Product Team Funding Model The dominant reason for failure : prem ature scaling of those dim ensions How Not to Fail – Scale Consistently
Business Model Everyone has a business plan till they get punched in the mouth - Mike Tyson Business Model
• What’s a business model? • What are the 9 parts of the model? • What are hypotheses? • What is the Minimum Feature Set? • What experiments are needed to run to test business model hypotheses? • What’s “getting out of the building?” • What is market size? • How to determine whether a business model is worth doing? Business Model
Fram ew orks Help Keep You On Track
1. An outside-in approach increases the likelihood of product success Preferred Approach Typical Approach Pragm atic Marketing Rules
2. The answer to most of your questions is not in the building : You wont learn anything about problems in the market while sitting at your desk I met a competitors customer and I recently I have a he said… attended a I made a neighbor in conference cold call my industry and met… and Our user and she said heard… My buyers group tell me said… that.. Pragm atic Marketing Rules
3. We are all pragmatic marketers : Product team quantifies the problem Development solves the Dev problem Communication promotes Product the product Team Sales helps people buy Com m Sales 4. If the product team doesn’t do its job, other departments will fill the void Pragm atic Marketing Rules
5. The building is full of product experts. Your company needs market experts Find the quiet 80% Know all levels of customers – vendor, distributor, seller, buyer, user Engage customers as well as potentials Ask and Observe them Engage recent evaluators Pragm atic Marketing Rules
6. Win/loss should be done by someone not involved in that sales effort 7. Your opinion, although interesting, is irrelevant 8. Only build solutions for problems that are urgent, pervasive and that the market will pay to solve. HIGH Depth of Investment LOW HIGH Impact to Customer Pragm atic Marketing Rules
9. Positioning focuses on the problems you solve Market Problems Feature - Function - Benefit Product Features 10. Create a separate positioning document whenever the personas’ problems are different Positioning by Persona Positioning by Industry 11. Name the product after positioning is finished 12. Positioning drives execution The test of innovation lies not in its novelty, its scientific content or it’s cleverness. It lies in success in the marketplace - Peter Drucker Pragm atic Marketing Rules
Business Position Marketin Plan ing g Plan Market Customer Market Buying Pragmatic Marketing Definiti Pricing Acquisit Problems Process on ion Buy, Framework Distribu Customer Win/Loss Build, Buyer tion Retentio Analysis or Personas Strategy n Partner Distinct Product Product Program ive User Innovation Portfoli Profitab Effectiv through Competen Personas Innovation o ility eness customer Strategy ce through outreach Execution Internal Readines Lens Market Focus Business Planning Programs Support s Competit Presenta Other ive Product Innovati Requirem Launch Sales Ideas tions & Landscap Roadmap on ents Plan Process Demos e Technolo Use Thought gy Collater “Special Scenario Leadersh Assessme al ” Calls s ip nt Status Lead Sales Event Dashboar Generati Products Tools Support d on Referral s & Channel Channel Referenc Training Support es Adaptation of Pragm atic Marketing Leveraging LaunchPad 17
INNOV OVAT ATIO ION F N FRAME MEWO WORK RK Hypothesize 1. 2. 100 Customer Iterate Test 3. Interviews 4. 5. Invalidate 6. I terative Process
Key Key Value Custom er Custom er Partners Activities Propositions Relationships Segm ents Channels Key Resources Cost Structure Revenue Stream s Fram ew ork For Business Model 19
Key Key Value Custom er Custom er Partners Activities Propositions Relationships Segm ents 1. What core value do you deliver to the customer? 2. Which customer needs are you satisfying? Channels Key Resources Cost Structure Revenue Stream s Central Them e 20
What is your product or service? How does it differ from an idea? Why will people want it? Who’s the competition and how does your customer view these competitive offerings? Where’s the market? What’s the minimum feature set? What’s the Market Type? What was your inspiration or impetus? What assumptions drove you to this? What unique insight do you have into the market dynamics or into a technological shift that makes this a fresh opportunity? Value Proposition
Key Key Value Custom er Custom er Partners Activities Propositions Relationships Segm ents 1. Who are your key partners/suppliers? 2. What are the motivations for the partnerships? Channels Key Resources Cost Structure Revenue Stream s Don’t Do I t Alone 22
• Who are partners? • Strategic alliances • Coopetition • Joint ventures • Buyer supplier • Licensees. Partnerships
Key Key Value Custom er Custom er Partners Activities Propositions Relationships Segm ents 1. Key activities required by value proposition? 2. Important. activities in distribution channels, customer relationships, revenue stream…? Channels Key Resources Cost Structure Revenue Stream s W hat Are The Focus Areas 24
Key Key Value Custom er Custom er Partners Activities Propositions Relationships Segm ents 1. What relationship that the target customer expects you to establish? 2. How can you integrate that into your business in terms of cost and format? Channels Key Resources Cost Structure Revenue Stream s Relationships Matter 25
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