and startups · Readings Business models and startups • „The Lean Startup“ – Eric Ries • „The Startup Owner‘s Manual“ – Steve Blank • „Rework“ – Jason Fried,

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

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http://www.slideshare.net/georgsinger

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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

http://digitalenterprise.org/models/models.html

http://businessmodelgeneration.com/

http://businessmodelgeneration.com/

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-business-model-customer-development

Why?

Reasons for failure

• Did not meet customers´needs

• Bad ad predicting the future

• Wrong progress measures

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

Failure is…

..due to a lack of

customers

NOT a product development failure...

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

Image http://www.flickr.com/photos/emmely1/6880611523/

Then why….

• Process to manage product development?

• No process to manage customer development?


Business plans – why?

• Why write a plan?

–VC´s require it

–Planning (strategic, financial, ops)

• What´s wrong with a plan?

–Static

–Execution Oriented


An idea is NOT a Company


It´s just ONE of Many

Hypotheses


What is a company?

Photo by: Shariff Che'Lah

A business organization,

which sells a product or service in exchange for

revenue and profit


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


What about „our“ technology?

Your technology

is one part of the many critical parts needed to

build a company


Customers

don´t care about your technology, they are trying

to solve a problem


Image http://www.brucebucks.com/2011/09/ignore-list/

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


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)

Size of the Opportunity

Customer Discovery

Customer Validation

Theory 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_sourismissionimpossibleblog.jpg

Traditional product management Waterfall model

Source: http://en.wikipedia.org/wiki/Waterfall_model

Problem:known

From Eric Ries´s presentation on Slideshare.

Solution:known

http://www.slideshare.net/startuplessonslearned/eric-ries-lean-startup-presentation-for-web-20-expo-april-1-2009-a-disciplined-approach-to-imagining-designing-and-building-new-products?from=ss_embed


Agile Unit of progress: code


Problem:known

Solution:unknown

„Product owner“ or in-house customer



Product development at Lean Startup Unit of progress: Validated Learning

about customers




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

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

http://youtu.be/QoAOzMTLP5s

http://www.businessmodelgeneration.com/





http://youtu.be/QoAOzMTLP5s

Customer Segments

http://www.businessmodelgeneration.com


Value propositions



Channels



Customer Relationships



Revenue Streams



Key Resources



Key Activities



Key Partners



Cost structure



46 images by JAM

customer

segments

key

partners

cost

structure

revenue

streams

channels

customer

relationships

key activities

key

resources

value

proposition

www.businessmodelgeneration.com http://www.businessmodelgeneration.com


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/

http://www.businessmodelgeneration.com/canvas



http://canvanizer.com/

http://canvanizer.com/

Copyright © 2010 Pearson Education, Inc.

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…)

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

Documents

and startups · Readings Business models and startups • „The Lean Startup“ – Eric Ries • „The Startup Owner‘s Manual“ – Steve Blank • „Rework“ – Jason Fried,