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Class 5: From Idea to Business
@cwodtkewww.eleganthack.com
THAT IDEO VIDEO
Business• Dave is alive! Yay!• Feedback response• Email vs Canvas• Review, and Overview• Q&A
REVIEWOur Story So Far
WE BEGIN WITH RESEARCH
WE USE OUR HANDS AND FRAMEWORKS TO UNCOVER INSIGHTS
BRAINSTORMING IS BEST DONE SILENTLY, THEN WORK TOGETHER TO DETERMINE QUALITY
BRAINSTORMING AGAINST EXISTING FRAMEWORKS CAN HELP US THINK BIGGER
Photo credit Wiesław Kotecki
VISUAL THINKING WAKES UP OUR CREATIVITY
PARTICIPATORY ROADMAPS
TO VALIDATE MVP FEATURES
Customer Development
Customer Development
CompanyBuilding
CustomerDiscovery
CustomerValidation
Customer Creation
Steven Gary Blank, Four Steps to the Ephinany
INTRODUCTION TO LEAN
EXPERIENTIAL LEARNINGFrom Ed Batista http://www.edbatista.com/2007/10/experiential.html
Research and synthesize Creative a shared vision with team
Iterate with prospective marketFinally…
TODAY: DESIGN OF BUSINESS
“NEVER WRITE ON THE BUSINESS MODEL CANVAS, THAT’S WHY GOD GAVE US POST-IT NOTES”-ALEX OSTERWALDER
ACQUISITION CHANNELS
Adam NashFive Sources of Content
1. Organic2. Email3. Search4. Ads5. Social
Jherin Miller Sketchnote
FREELIST ALL THE ACQUISITION CHANNELS YOU CAN
Exercise
Relationships
•Personal Assistance•Dedicated Personal Assistance•Self-Service•Automated Service•Communities•Co-Creation•More!
REVENUE STREAMS
• Marketplace Model• Advertising Model• Affiliate Model• Community Model• Subscription Model
I have always been a woman who arranges things,for the pleasure–and the profit–it derives.I have always been a woman who arranges things, like furniture and daffodils and lives.
Marketplaces bring buyers and sellers together and facilitate transactions. They can play a role in business-to-business (B2B), business-to-consumer (B2C), or consumer-to-consumer (C2C) markets. Usually a marketplace charges a fee or commission for each transaction it enables.
I’ll go where the buyers are
I want to find things!
I want the best price!
Can I trust this seller?
Users must find products, evaluate seller, and make a purchase
Advertising ModelThe web advertising model is an update of the one we’re familiar with from broadcast TV. The web “broadcaster” provides content and services (like email, IM, blogs) mixed with advertising messages. The advertising model works best when the volume of viewer traffic is large or highly specialized.
Users must:• Notice advertising• Interact with ad
Preconditions: User must visit advertising location
Share their demographic information
Types:CPMCPCCPA
Community ModelThe viability of the community model is based on user loyalty. Revenue can be based on the sale of ancillary products and services or voluntary contributions; or revenue may be tied to contextual advertising and subscriptions for premium services. The Internet is inherently suited to community business models and today this is one of the more fertile areas of development, as seen in rise of social networking.
Open Source Red Hat, OpenXOpen Content Wikipedia, Freebase
Users need to • Create an identity • Connect with other users • Build a reputation• Create and share
content/work/etc
Users must care
Subscription ModelUsers are charged a periodic—daily, monthly or annual—fee to subscribe to a service. It is not uncommon for sites to combine free content with “premium” (i.e., subscriber- or member-only) content. Subscription fees are incurred irrespective of actual usage rates. Subscription and advertising models are frequently combined. Content ServicesSoftware as a ServiceInternet Services Providers
User must:•Able to evaluate the
offering• Subscribe and
unsubscribe to offering•Realize value offered
Combos
Advertising Community
Combos
Advertising Community
Subscription
Combos
Marketplace Community
Affiliate
HOW DO YOU MAKE MONEY?Exercise
Marketplace ModelAdvertising Model
Affiliate ModelCommunity Model
Subscription Model
PRICING
Pricing
• Part of the business model– How do we make money? How much?– Revenue/profit/shipment forecasts
• Supports core value proposition– “Our product/service saves you $$$$…– …and we want 15% of the savings.”
• Often an obstacle to buying– Too complex– Much too high (sticker shock) or too low
(desperate)– Free (no reason to trade up)
Designing pricing
• What’s the natural unit of exchange?– How do they derive value? – What does the competition do?– Can you split off a profitable segment?
• How much of customer value can you capture?
• Test, trial-close, get your hands dirty
Software Pricing
Models
1. Time-based access (e.g. unlimited/month)2. Transaction (stock trade)3. Metered (seats, CPUs, named users)4. Hardware (appliances, dongles)5. Service (virus updates, support)6. Percentage of incremental revenue/savings7. Data-driven insights
Pricing drives
customer behavior
• What do you want core customers to do?– No-brainer renewals (small monthly fees)– Big up-front license (lock up marketplace)– Lust for upgrades (cool features are
extra)– Freemium model (1% upsold into paid
services)– Install latest version (free updates,
increasing service– fees)
Storium Pricing
1. Interviews with Kickstarter backers
2. Synthesis to discover Value3. Discovered anchors4. New Model5. Validated with mockups
Homework• Build an initial Business Model Canvas• Create a landing page• How many emails can you collect?• Extra-credit: try a pricing exercise
APPENDIX
From Google Vetures Design Sprint http://www.gv.com/lib/the-gv-research-sprint-a-4-day-process-for-answering-important-startup-questions
From Google Vetures Design Sprint http://www.gv.com/lib/the-gv-research-sprint-a-4-day-process-for-answering-important-startup-questions
From Google Vetures Design Sprint http://www.gv.com/lib/the-gv-research-sprint-a-4-day-process-for-answering-important-startup-questions
