Business models and startups

Business models and

startups

Georg Singer Email: [email protected] Twitter: @Georg_Singer, Linkedin: linkedin.com/in/gecko, Facebook: facebook.com/georg.singer Slideshare: slideshare.net/georgsinger

Agenda • 1. session – startups – online business models

• 2. session – Lean-product management (development) principles

• 3. session – Internet marketing

Readings Business models and startups • „The Lean Startup“ – Eric Ries • „The Startup Owner‘s Manual“ – Steve Blank • „Rework“ – Jason Fried, David Heynemeyer • Michael Rappa, http://digitalenterprise.org/models/models.html (Business models) • http://businessmodelgeneration.com/ Internet marketing • „How to get found everywhere“ – Rand Fishkin • „Internet marketing“ – Dave Chaffey et al. • „The new rules of Marketing and PR“, David Meerman Scott

Today´s model to build a startup • Have an interesting idea • Raise a lot of money very early • Create a perfect product with best people • Hire an experienced CEO • Start the marketing machine • Fail

Steve Blank http://www.slideshare.net/sblank/lecture-1-businessmodel-customer-development

Why?

Reasons for failure • Did not meet customers´needs • Bad ad predicting the future • Wrong progress measures


Failure is… ..due to a lack of

customers NOT a product development failure... Image http://www.flickr.com/photos/emmely1/6880611523/ http://www.slideshare.net/sblank/customer-development-past-present-future-steve-blank-111909

Then

why….

• Process to manage product development? • No process to manage customer development?

http://www.slideshare.net/sblank/customer-development-past-present-future-steve-blank-111909

Business plans – why? • Why write a plan? –VC´s require it –Planning (strategic, financial, ops)

• What´s wrong with a plan? –Static –Execution Oriented Steve Blank http://www.slideshare.net/sblank/lecture-1-businessmodel-customer-development

An idea is NOT a Company Steve Blank http://www.slideshare.net/sblank/lecture-1-business-

It´s just ONE of Many

Hypotheses Steve Blank http://www.slideshare.net/sblank/lecture-1-businessmodel-customer-development

What is a company? Photo by: Shariff Che'Lah

A business organization, which sells a product or service in exchange for revenue and profit Steve Blank http://www.slideshare.net/sblank/lecture-1-businessmodel-customer-development

How are companies organized?

For their organization companies use business models


What is a business model?

A business model covers and describes all necessary parts of a company to make money Steve Blank http://www.slideshare.net/sblank/lecture-1-businessmodel-customer-development

What about „our“ technology?

Your technology is one part of the many critical parts needed to build a company Steve Blank http://www.slideshare.net/sblank/lecture-1-businessmodel-customer-development

Customers don´t care about your technology, they are trying to solve a problem

Image http://www.brucebucks.com/2011/09/ignore-list/ Steve Blank http://www.slideshare.net/sblank/lecture-1-businessmodel-customer-development

What is a startup?

• Aren´t small versions of large companies • They are about learning/discovery, not execution • Entrepreneurs and their VC´s were/are executing on guesses • But the facts are/were outside the building

http://www.slideshare.net/sblank/customer-development-past-present-future-steve-blank-111909

A startup is a temporary organization designed to search for a repeatable and scalable business model


How to build a start-up Idea

Business model(s)

Theory

Size of the Opportunity

Customer Discovery

Customer Validation

Practice

Image http://xpda.com/junkmail/junk155/GPN-2000-000650.jpeg


How to build a Web start-up Idea

Business model(s)

Size of the Opportunity

Customer Discovery

Customer Validation

Web startups get the Product in front of Customers earlier Image http://xpda.com/junkmail/junk155/GPN-2000-000650.jpeg


Genius is 1% inspiration and 99% perspiration Thomas Edison

Break 10 minutes

Product development/innovation approaches http://kingmagic.files.wordpress.com/2006/11/683_sourism issionimpossibleblog.jpg

Traditional product management Waterfall model

Problem:known

Solution:known

Source: http://en.wikipedia.org/wiki/Waterfall_model From Eric Ries´s presentation on Slideshare.

Agile Unit of progress: code „Product owner“ or in-house customer

Problem:known Solution:unknown

From Eric Ries´s presentation on Slideshare.

Product development at Lean Startup Unit of progress: Validated Learning about customers

From Eric Ries´s presentation on Slideshare.

Business Models

Why are business models important • • • • •

Most important aspect of your venture How do you make money? Why are you better than your competition? Why should your customer buy you? How do you differentiate yourself from the competition? • How do you access the market? • Many start-ups are not clear about that

A business model describes all the parts of the company necessary to make money

What are those parts? What parts is a business model composed of?

9 Building blocks http://youtu.be/QoAOzMTLP5s

Images from http://www.businessmodelgeneration.com/

Customer Segments

http://www.businessmodelgeneration.com

Value propositions


Channels


Customer Relationships


Revenue Streams


Key Resources


Key Activities


Key Partners


Cost structure


key activities

value proposition

customer relationships

key partners

customer segments

cost structure

revenue streams

key resources

www.businessmodelgeneration.com

channels http://www.businessmodelgeneration.com 46

images by JAM

The business model canvas • Systematic way of –designing –challenging –inventing

• business models Created by Alexander Osterwalder and Yves Pigneur

Downlaod http://www.businessmodelgeneration.com/canvas Online http://canvanizer.com/

Categorizing e-commerce Business models • We categorize business models according to: – e-commerce sector (B2C, B2B, C2C) – Type of e-commerce technology; e.g. mobile commerce – Revenue model

• Some companies use multiple business models; e.g., eBay (brokerage, advertising…)

Copyright © 2010 Pearson Education, Inc.

Online revenue models • • • • • • • •

Advertising revenue model Subscription revenue model Freemium model Transaction fee (brokerage) revenue model Sales revenue (merchant) model Infomediary model Utility model Affiliate revenue model

Case study – Dropbox – in groups (1 hour) • •

Fill in the business model canvas for Dropxbox Answer the following questions: – – – – – –

What is the product? What is the target market? Market size? Why is Dropbox better than the competition? What were the problems with other products? What is their business model? • •

What is free? What is paid?

– How did he create initial demand to test the prototype? – Why did search engine advertising not work? •

What were the acquisiton cost per customer?

– What was the most successful marketing program? Why? – Why did they not target business customers? – How did he manage the product regarding updates and innovation? • •

•

Where did/does he get ideas for product improvments from? How did they test improvements to get measurable data?

Present afterwards