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IDEA GENERATION AND OPPORTUNITY ASSESSMENT Stephen Daze

IDEA GENERATION AND OPPORTUNITY ASSESSMENT Stephen Daze

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Page 1: IDEA GENERATION AND OPPORTUNITY ASSESSMENT Stephen Daze

IDEA GENERATION AND OPPORTUNITY ASSESSMENTStephen Daze

Page 2: IDEA GENERATION AND OPPORTUNITY ASSESSMENT Stephen Daze

• Guy Kawasaki on Innovation:

https://www.youtube.com/watch?v=Mtjatz9r-Vc

Where Ideas Come from:

http://www.ted.com/playlists/20/where_do_ideas_come_from

Page 3: IDEA GENERATION AND OPPORTUNITY ASSESSMENT Stephen Daze

On Ideas

Paul Graham, Co-founder of Y Combinator:

(1) Learn a lot about things that matter, then

(2) Work on problems that interest you

(3) With people you like and respect

Page 4: IDEA GENERATION AND OPPORTUNITY ASSESSMENT Stephen Daze

Idea Generation Principles

1. Good Business Ideas make Money.

They have a value proposition for a critical mass of addressable customers.

- Value Proposition = 1) there is enough pain to pay for a solution and 2) relative to competition.

- Critical Mass = big enough market that can be efficiently addressed.

- Addressable = I can reach them with my revenues greater than expenses.

Page 5: IDEA GENERATION AND OPPORTUNITY ASSESSMENT Stephen Daze

Idea Generation Principles

2. Ideas evolve over time (eg. Facebook, Blackberry) or start as mistakes (eg. 3M Sticky Notes.)

Page 6: IDEA GENERATION AND OPPORTUNITY ASSESSMENT Stephen Daze

IKEA

IKEA- Ingvar Kamprad founded IKEA in 1943 at his Uncle Ernst’s kitchen table. IKEA was basically an acronym of his name Ingvar Kamprad and Elmtaryd, his family farm and the village Agunnaryd. At first the business was typically mail-order and included only small household goods such as picture frames, wallets, nylon stockings, pens and wallets.

Page 7: IDEA GENERATION AND OPPORTUNITY ASSESSMENT Stephen Daze

Nintendo

The Nintendo Corporation’s domination of the gaming industry didn’t start with their first video game console. They have actually established themselves 70 years before the first video game came to life, in the 19th century when they brought back the popularity of card games to Japan.  A new card game, Hanafuda, was invented, by Fusajiro Yamauchi (Nintendo founder) which used images instead of numbers, making it difficult for gambling.

Page 8: IDEA GENERATION AND OPPORTUNITY ASSESSMENT Stephen Daze
Page 9: IDEA GENERATION AND OPPORTUNITY ASSESSMENT Stephen Daze

How Netflix got started(Fortune Magazine) -- The genesis of Netflix came in 1997 when I got this late fee, about $40, for Apollo 13. I remember the fee because I was embarrassed about it. That was back in the VHS days, and it got me thinking that there's a big market out there.

So I started to investigate the idea of how to create a movie-rental business by mail. I didn't know about DVDs, and then a friend of mine told me they were coming. I ran out to Tower Records in Santa Cruz, Calif., and mailed CDs to myself, just a disc in an envelope. It was a long 24 hours until the mail arrived back at my house, and I ripped them open and they were all in great shape. That was the big excitement point. http://money.cnn.com/2009/01/27/news/newsmakers/hastings_netflix.fortune/

Page 10: IDEA GENERATION AND OPPORTUNITY ASSESSMENT Stephen Daze

Idea Generation Principles

3. Ideas can come from anywhere, most often we see good business ideas starting with one (or more) of the following:

Page 11: IDEA GENERATION AND OPPORTUNITY ASSESSMENT Stephen Daze

Personal Pain• I have a problem that needs solving.

100,000 customers in 80 countries and a $1B valuation.

Page 12: IDEA GENERATION AND OPPORTUNITY ASSESSMENT Stephen Daze

Market Gap• A critical mass of customers are looking for solution.

“I had never built a fence or deck before.”

Page 13: IDEA GENERATION AND OPPORTUNITY ASSESSMENT Stephen Daze

Interest• I love this so much, I can see myself working on it 24/7.

Page 14: IDEA GENERATION AND OPPORTUNITY ASSESSMENT Stephen Daze

Insight• I understand the industry and see where it is going.

Page 15: IDEA GENERATION AND OPPORTUNITY ASSESSMENT Stephen Daze

Good Business IdeasNecessary conditions: Can make money (or not loose it): value proposition;

critical mass; and addressable customers.

And: Evolve over time. Usually start with one or a combination of:

• Personal pain (I have a problem that needs solving.)• Market gap/need (Others will pay for a solution.)• Interest (I can see myself doing this 24/7.)• Insight (I understand the industry and the trends.)

The best business ideas satisfy most (or all) conditions- If your current idea doesn’t, look to evolve it sufficiently such that it does.

Page 16: IDEA GENERATION AND OPPORTUNITY ASSESSMENT Stephen Daze

In-class Assignment

Part 11. Generate as many potential business ideas as you can. They

don’t have to be good.

2. Look to combine ideas, eliminate and make existing ideas as good as possible.

3. Pick the best business idea.

4. Prepare to discuss why this is the best idea.

Page 17: IDEA GENERATION AND OPPORTUNITY ASSESSMENT Stephen Daze

Opportunity Assessment

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Opportunity Assessment• http://

ecorner.stanford.edu/authorMaterialInfo.html?mid=1802

Page 19: IDEA GENERATION AND OPPORTUNITY ASSESSMENT Stephen Daze

Opportunity Assessment Considerations

1. Idea• Pain or gap hypothesis• Potential solution (v.1)• Advantage?

2. Market• Typical customer• Size of the market• Competitive Landscape• Advantage?

3. Any Big Issues• Costs?• Resources required?• Rules; regulations; risks: economic, political etc?• Advantage?

4. Revenue Model• How do you get paid; how do you make money? • Advantage?

Page 20: IDEA GENERATION AND OPPORTUNITY ASSESSMENT Stephen Daze

In-class Assignment

Part 21. Consider and record your thoughts related to the main

Opportunity Assessment considerations (see previous slide) – likely guesses at this time.

2. Prepare your thoughts in order to present (informally).

Page 21: IDEA GENERATION AND OPPORTUNITY ASSESSMENT Stephen Daze

Opportunity Assessment Considerations

1. Idea• Pain or gap hypothesis• Potential solution (v.1)• Advantage?

2. Market• Typical customer• Size of the market• Competitive Landscape• Advantage?

3. Any Big Issues• Costs?• Resources required?• Rules; regulations; risks: economic, political etc?• Advantage?

4. Revenue Model• How do you get paid; how do you make money? • Advantage?

Necessary conditions: Can make money (or not loose it): value proposition; critical

mass; and addressable customers.

And: Evolve over time. Usually start with one or a combination of:

• Personal pain (I have a problem that needs solving.)• Market gap/need (Others will pay for a solution.)• Interest (I can see myself doing this 24/7.)• Insight (I understand the industry and the trends.)

The best business ideas satisfy most (or all) conditions- If your current idea doesn’t, look to evolve it sufficiently such that it does.

Page 22: IDEA GENERATION AND OPPORTUNITY ASSESSMENT Stephen Daze

Introduction to Business Models

What are the businesses associated with the coffee?

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Any more?

Page 24: IDEA GENERATION AND OPPORTUNITY ASSESSMENT Stephen Daze
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Business Models• Answer questions such as:

- who are your customers?- how many are there?- how do you access them?

- how do you make money?- what are your costs?- who pays you?

- what are your key activities?- what are your human resource requirements- what are the operational considerations?

- who are your key partners?- etc.

Page 26: IDEA GENERATION AND OPPORTUNITY ASSESSMENT Stephen Daze

Upcoming: September 23rd • Opportunity to pitch an idea to the class (attract a team).

• What’s your idea?• What do you know about the industry, clients, trends etc?• Why could it work?• What skills do you need to round out your team? (marketing,

finance, engineering, arts..)

• Individuals pitching ideas: email me with your name, student number and 1 sentence describing the idea you will pitch before the 30th.

• It must be a real idea and somewhat thought out, but know it doesn’t have to be perfect!