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STARTUP PHILOSOPHYCEMEC BRAZIL
Bob Caspe
The International Entrepreneurship Center
Entrepreneurial Action
3
Exercise – Design a Business
Finish the Olympus Story
$3.2M Loan + 100k Camera Order Actually needed $3.5M Cancelled Contract We Went to CES
Sold to PolaroidUMAXRCA…
Some Q & A?
Exercise
For your Primary Product write down a single sentence which describes the value of your product to your customer
Aesop’s Fables Aesop a Greek Slave and Story Teller lived around
600BC. His collection of fables (or stories) have lived for
thousands of years as tales of morality and wisdom to be shared with children
Bob’s (True) Fables
The Venture Investment The Pizza man The Twins The Firing The Dentist The Lucky The Unlucky The Great Product
The Venture Investment
The Morals to the Story
The Venture Capital Industry is Broken and there needs to be a new way to bring together investors and inventors that has more flexibility and a higher probability of success.
The Habit of Spending Other People’s Money is Hard to Break.
The Pizza Man
Puzant Khatchadourian
The Morals of the Story
Passion can be Dangerous. Don’t be passionate about your product, rather be passionate about being an entrepreneur.
Complexity is NOT a good idea. Listen to your customer.
The Twins
Daniel Cohen & Richard Joffe
The Moral of the Story
Pick a Partner who Compliments your skills.
Pick first on the basis of character. Don’t make Dual CEOs.
The Firing
Eric Andersen & MySeniorCenter.com
The Morals of the Story
Hire Late and Fire Early. Once you achieve positive cash flow
don’t allow yourself to return to losing money.
The Dentist
Ziggy Ziggelbaum
The Morals of the Story
Avoid dishonest people. Life is too short to waste your time.
Learn to Listen to Your Inner Voice.
The Lucky
Bob Caspe
The Morals of the Story
Luck is a Big Part of Success in Business.
Allow yourself the luxury of moving to opportunities when they appear.
Don’t get too Full of Yourself if You Make Money.
The Unlucky
Rick Alessi
The Morals of the Story
Life Sucks. But, get over it. Greed has a Cost.
The Great Product
Sound Vision Inc.
The Morals of the Story
Understand the difference between New and Pre Existing Categories and how to Market Each.
Pay attention to the rest of this lecture.
Some Definitions
Customer Transaction Channel
Customer
Who’sYourCustomer?
Who’s the Customer?
GoogleCell Phone ManufacturerBabson College UndergraduateCoca Cola 10 Points
100 Points
1000 Points
Googol Points
First Transaction
Enio
You Begin by Executing your First (single) TransactionModel Its Cost to See if you have a Business (profitable)Replicate if Profitable (Modify if not)
Channel Partner
Manufacturer or Brand
Channel Partner
End Customer
Value Proposition
Keep it simple Strong Values are easy to sell Most businesses fail because of the high
cost of selling Defines whether a project is worthwhile
Measured on the basis of the customer’s value assessment
Value Proposition
The Value Proposition is the most important opportunity indicator for your business. Western markets are value driven as opposed
to relationship driven.A strong Value Proposition can compensate
for a poor execution. A weak one may require perfection to achieve
success.
Impact of Weak Value
Weak Value implies a more expensive sales process
Most startups fail because the cost of sales is not supportable by the transaction margin
Therefore – Weak Value Decreases Your Likelihood for Success
Therefore – Abandon Businesses with Weak Value Propositions
Risk versus Value
Three Value Systems are commonly used in western business transactions
B2B B2C Channel
Business to Business
Simplest type of business to start. Why?Rational Decision process by the customerAbility to monetize the valueAbility to understand who the decision
makers are
B2B Value Propositions
Make you money
Save you money
Which is Easier?
Selling a CAT Scanner to a hospital
Selling a PACs system to a hospital
Monetizing the Value
Leaf Systems (~1990)Digital Camera Back to
replace a film camera back for shooting commercial images for magazines and print advertising. Attached to a high-end camera like a Hasselblad or Sinar-Bron. Typical cost $45,000 with Macintosh Computer.
Understanding the workflow
Stage ShootProof
Review
Scanretouch
Process
Photographer
PageLayout
Art Director Graphic ArtistPhotographer
Leaf Camera Summary of Values Increase Revenue
Scanning ServicesRapid TurnRetouch
Decrease costsEliminate Film and ProcessingEliminate Re-Shoot LaborEliminate Bracketing Time
Incremental Revenue
Cost Reduction
Leaf Systems
Direct comparison to film photography
Monetized actual value of ownership.
Business to Consumer
B2C Values for Disposable Income?
B2C Value Propositions
Youth Sex Health (lose weight…) Fun Less tangible – all
compete with each other for discretionary spending
Chinese Product Names
New York Times, November 12, 2011
Channel Value Propositions Similar to B2B
Channel Value ExerciseYOU ME
Wal-Mart Film Processing
$6B in revenue out of $285B Average customer spends an additional
$25 when picking up prints Wait time is tuned to 20 minutes to keep
the customer in the store Kiosk is positioned at the back of the
store to increase traffic
The Elevator Pitch
Goals – Succinct and Clear Create a Compelling Narative
1234
Common Pitch Errors
Talk too fast Say too much Not from the frame of reference of the
customer Must Practice With Real Potential
Customers
1234
1234
Category
Determining the Marketing Strategy by starting with the definition of the category.
Defining value within the concept of category
Defining the Category
Pre-Existing New Which way to go?
Pre-Existing Category
The Customer has Pre-ConceptionsAbout the Channel – where to find it?About the Product – what values to
expect?
How to know if it’s a Pre-Existing Category?
Try to position it in retailLook in the Yellow PagesAre there competitors?
For a Pre-Existing Category it must be specific enough
Too Vague FOOD
SnackFood
Pre Existing Category
Must Meet the CustomerEstablished Channel
Meet the ValuesAdd your Incremental
Value Goal is a Share Shift
How do competitors respond?
Pre-Existing Values
CarBrandPowerGas
EfficiencyPrice
•Television▫Size▫Technology▫Price▫Picture
Quality
•Shoes▫Brand▫Style▫Comfort▫Price
Not just Products
ChannelsHair SalonGrocery Store
ServicesHouse CleaningTax Preparation
Competitive Matrix
Price Speed Size Weight
Your Product
$500 55 4 15
Competitor A
$650 55 5 15
Competitor B
$900 60 5 12
The Relative Importance of Each Value to the customer
Price V2 V3 V40
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
Relative Value Importance
Normalized Competitive Values
PriceV2
V3V4
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
P1
P2
P3
Relative Product Value
P1
P2
P3
A Weighted Comparison
PriceV2
V3V4
Sum
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
P1
P2
P3
Weighted Values with Sum
P1
P2
P3
The Decoy Effect
1990’s Experiment in Consumer Choice
Courtesy James Surowiecki, The New Yorker 12 24 07
Product Price Percent Sold
Emerson Microwave $110 57%
Panasonic Microwave $180 43%
Product Price Percent Sold Percent Sold
Emerson Microwave $110 57%
Panasonic Microwave $180 43%
Panasonic Microwave $200
Product Price Percent Sold Percent Sold
Emerson Microwave $110 57% 27%
Panasonic Microwave $180 43% 60%
Panasonic Microwave $200 13%
Huber’s Experiment
Two Values: Convenience and Quality
| --miles-- 3 4 5 6
Courtesy NPR -Vedantam, Shankar, Washington Post re: J. Huber et al 6 82
Retail Pre-Existing Category What is the differentiator? Package design or advertising must
emphasize the innovation
In Category Innovation
Razor bladesSafety razorDisposable safety razor2 blade safety razor3 blade safety razor3 blade with vibrator safety
razor5 blades with battery?
How would you position the Vela-Rosa Candle Holder?
Completely fills the room with scent in 15
minutes!
Fan has safety auto shut-
off!
Candle Holders
ChannelHome furnishing
Retail Pre-existing
ValuesAesthetics
Steps to Enter a Market
Competitive Analysis Channel Analysis
Sometimes a late product can still have success through the development of a critical partnership with a key player
For Each of Your Innovations What is the true Competitive Landscape What additional product development
may be needed Who are the real customers What are the compelling values Who are the proper Channel Partners
Let’s take a break
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