Download - Xmba 296 t lecture 1 course overview
Eng 245 Class 1
The Lean LaunchPadSession 1: Overview/Business Models/Customer Development
Professors Steve Blank,Jon Feiber, Jim Hornthal, Oren Jacobhttps://sites.google.com/site/xmba296t/XMBA296T
AgendaIs This the Right Course for Me?IntroductionsCourse Objectives/teams/projectClass LogisticsBuilding a Lean StartupIdeaSizing the OpportunityBusiness ModelsCustomer DevelopmentClass Culture and Next Steps
Introductions
Steve Blank, Jon Feiber8 startups in Silicon Valley Semiconductors Supercomputers Consumer electronics Video games Enterprise software Military intelligence
[email protected] twitter @sgblankwww.steveblank.com BS CS/Astro Physics U of Colorado VP Networking SUNV.C. @ MDV since 1991
Steve Blank, Jon Feiber8 startups - 32 years in Silicon Valley Semiconductors Supercomputers Consumer electronics Video games Enterprise software Military intelligence
Teach: Stanford, Berkeley, Columbia
Details at www.steveblank.com BS CS/Astro Physics U of Colorado50th employee, VP Networking @ SunV.C. @ MDV since [email protected]
Oren Jacob, Jim Hornthal CEO, stealth startup EIR, August Capita lCTO, Pixar Director, Studio Tools, Pixar Technical Director, Finding Nemo CMEA CapitalTriporati
Oren Jacob, Jim HornthalCTO PixarCMEA CapitalChairman Triporati
Teaching Assistant TAs role: Class/lecture questions, Grading and attendance
Bhavik Joshi 2008 2011: Better Place (13th employee, first non-Israeli, non-Jewish, non ex-SAP, Asian employee) Berkeley/Columbia MBA class of 2008/09 Co-founder: Berkeley Stanford Cleantech Conference Series (since 2007) 2000 2007 Enterprise Software 1998 2000 Tata Motors [email protected]://about.me/bhavikjoshi
MentorsMentors are people with real-world experienceMentors role is to:Help you Get you out of the buildingShare contactsOffer Real-world entrepreneurial adviceCritical feedbackYou arrange your schedule for the mentors, not the other way around
Mentor IntroductionsClick Here for the Mentor Bios
Course ObjectivesUnderstand the real world aspects of Entrepreneurship by getting out of the buildingAnalyze and assess an opportunityBuild the productGet ordersWork with a teamGive you a framework and methodologyLearn what entrepreneurship is to you
What Will you Learn?Opportunity evaluationSearch for a Business ModelCustomer Discovery and ValidationOperating and decision making in chaos with insufficient dataRuthless pursuit of an objective by a team
The Course By the Numbers4 Instructors, 1 TA, 15+ Mentors, 8 Lectures8 10-minute presentations per class1 Final 20 minute presentation2 Textbooks
10-15 hours of work a week outside the classroom
This Class is HardYou cant pass by attending the lecturesYour grade is determined by the work you do outside the classTheres a lot of itYou are dependent on group success communication is criticalYou dont need to be friends you need to be partners
Class Logistics
Course ReadingBusiness Model GenerationFour Steps to the Epiphanywww.steveblank.com
Class ScheduleEight (3 hour) Class Sessions: 1: Sept 1st - Introduction, Business Models, Customer Development2: Sept 2nd Value Proposition/Customer Segment3: Sept 22nd Channels4: Sept 23rd - Demand Creation (Customer Relationships)5: Oct 13th Revenue Model6: Oct 14th Key Resources and Activities7: Nov 11th - Cost Structure 8: Nov 12th Fund Raising9 & 10: Dec 1st / 2nd Lessons Learned Presentations
TeamsSuggested team size is 4 peopleYou chose the roles (hint: no org chart)Present Weekly and for FinalWeekly lessons learnedFinal is demo and summaryClass is about discovery and fast iteration
Team ProjectsAny for-profit scalable startupIf you are a domain expert, thats your best bet (but not required)If you pick a web project, you have to build it (and there needs to be some novelty)
Team Deliverables - PresentationEach WeekLessons Learned presentation 10 minutesUpdated business model canvasUpdate blog/wiki10s of hours of outside the building progress
Final Presentation20 minute Lessons Learned Summary
Team Deliverables - BlogEach WeekBusiness model canvas updatesInterviewsPhotos/VideosA/B testsStrategy
GradingIndividual - 15%Participation in class 15%
Team - 85%40% out-of-the-building progress as measured by blog write-ups each week.
20% weekly team lesson learned summaries
25% team final report Grade is on how much you learn
GradingIndividual - 15%Participation in class 15%
Team - 80%40% out-of-the-building progress as measured by blog write-ups each week.
20% weekly team lesson learned summaries
25% team final report Youre graded on how much learn, not how much you sell
Bhavik Joshi - how much you learn
Office HoursWith your teamBefore and after classLook at availability hereGet on the calendar
Intellectual Property - SuggestionsMake sure your project is OK with your companydisclose to team what IP rights your company has to inventionsYou own what IP you brought to class with you No team member has claim to anything you broughtYour team jointly owns any IP developed for the classIf any of you decide to start a company based on the class, you own only what was developed and completed in the classYou have no claim for work done before or after the class quarterIf a subset of the team decides to start a company they do NOT owe anything to other team members for work done in and during the classAll team members are free to start the same company, without permission of the othersYou are agreeing to this unless the team decides in writing to do something different
Class Disclosure/NDAsSuccessful startups are not about the original idea Its about learning, discovery and executionYou will not be presenting your IP/technical detailsYou get to see how previous teams solved problems by looking at their slides, notes and blogsTherefore:
Your slides, notes and blogs will be publicThis is an open class. No non-disclosures
How to Build A StartupIdeaSize OpportunityBusiness ModelCustomer Development
How to Build A StartupIdeaSize of the OpportunityBusiness Model(s)Customer DiscoveryCustomer Validation
How to Build A StartupIdeaSize of the OpportunityBusiness Model(s)Customer DiscoveryCustomer ValidationTheoryPractice
How to Build A StartupIdeaSize of the OpportunityBusiness Model(s)Customer DiscoveryCustomer Validation Web startups get the product in front of customers earlier
How to Build A StartupIdeaSize of the OpportunityBusiness Model(s)Customer DiscoveryCustomer Validation
Idea
Were Engineers Darn It!Arent companies all about product?I have a great technology ideaTeach me how to make a company around itJust like Facebook and Google (or Intel or Apple)
Sources of Startup Ideas?Technology shiftsMoores LawDisruptive techResearchMarket changesValue chain disruptionDeregulationSocietal changesChanges in ways we live, learn, work, etc.The world is flat (outsourcing)
Dinosaur factorArroganceDeadened reflexes Irrational exuberanceUndervalued assets
An Idea is _Not_ a Company
An Idea is _Not_ a CompanyIts Just One of Many Hypotheses
Size of Opportunity
This Class is about Scalable StartupsNot all startups are designed to scaleSmall business startups have different goalsThey are done by normal peopleScalable startups are designed to grow bigTypically require venture capitalThis means the size of the opportunity needs to be $100s of millions to billions
Small Business Startups
- Business Model found- Profitable business Existing team< $10M in revenue
Small Business Startups5.7 million small businesses in the U.S. $100M/year Total Available Market > $500m Company can grow to $100m/year Business model found Focused on execution and process
Scalable Startup
ScalableStartupLarge Company>$100M/year Total Available Market > $500m Company can grow to $100m/year Business model found Focused on execution and process Typically requires risk capital
Scalable Startup In contrast a scalable startup is designed to grow big Typically needs risk capital What Silicon Valley means when they say Startup
Small BusinessStartup- Business Model found- Profitable business Existing team< $10M
ScalableStartupLarge Company Total Available Market > $500m Company can grow to $100m/year Business model found Focused on execution and process Typically requires risk capital
Very Different Startup Goals
Small BusinessStartupScalableStartupLarge CompanyVenture Firms Invest in Scalable Startups
Market/Opportunity AnalysisHow Big is It?: Market/Opportunity AnalysisIdentify a Customer and Market NeedSize the MarketCompetitorsGrowth Potential
How Big is the Pie?Total Available MarketTotal Available Market How many people would want/need the product?How large is the market be (in $s) if they all bought?
How many units would that be?
How Do I Find Out?Industry Analysts Gartner, ForresterWall Street Analysts Goldman, Morgan
How Big is My Slice?Served Available MarketHow many people need/can use product?How many people have the money to buy the product How large would the market be (in $s) if they all bought?How many units would that be?
How Do I Find Out?Talk to potential customersServed Available MarketTotal Available Market
How Much Can I Eat?Target MarketWho am I going to sell to in year 1, 2 & 3? How many customers is that?How large is the market be (in $s) if they all bought?How many units would that be?
How Do I Find Out?Talk to potential customersIdentify and talk to channel partnersIdentify and talk to competitors
Total Available MarketTarget MarketServed Available Market
SegmentationIdentification of groups most likely to buy*Target Market Geographic Demographic Psychographic variables Behavioral variables Channel etc
Market Size: SummaryMarket Size Questions:How big can this market be? How much of it can we get?Market growth rateMarket structure (Mature or in flux?)Most important: Talk to Customers and Sales ChannelNext important: Market size by competitive approximationWall Street analyst reports are greatAnd : Market research firms Like Forester, Gartner
Business Model
What Is a Business Model?Diagram of flows between company and customersScorecard of hypotheses testingRapid change with each iteration and pivotFounder-driven* Alex Osterwalder
9 building blocks of a business model:
CUSTOMER SEGMENTSwhich customers and users are you serving? which jobs do they really want to get done?
VALUE PROPOSITIONSwhat are you offering them? what is that getting done for them? do they care?
CHANNELShow does each customer segment want to be reached? through which interaction points?
CUSTOMER RELATIONSHIPSwhat relationships are you establishing with each segment? personal? automated? acquisitive? retentive?
REVENUE STREAMSwhat are customers really willing to pay for? how? are you generating transactional or recurring revenues?
KEY RESOURCESwhich resources underpin your business model? which assets are essential?
*KEY ACTIVITIESwhich activities do you need to perform well in your business model? what is crucial?
KEY PARTNERSwhich partners and suppliers leverage your model? who do you need to rely on?
COST STRUCTUREwhat is the resulting cost structure? which key elements drive your costs?
*images by JAMcustomer segmentskey partnerscost structurerevenue streamschannelscustomer relationshipskey activitieskey resourcesvalue proposition
sketch out your business model
But,Realize Theyre Hypotheses
9 GuessesGuessGuessGuessGuessGuessGuessGuessGuessGuess
How Do Startups Search For A Business Model? The Search is called Customer Development The Implementation is called Agile Development
Customer DevelopmentSolving For Customer Risk
Customer DevelopmentGet Out of the Building
More startups fail from a lack of customers than from a failure of product development(focus on who more than what)
Customer Development
Stop selling, start listeningTest your hypothesesContinuous DiscoveryDone by foundersCustomer Discovery
Customer DiscoveryCustomer ValidationCompanyBuildingCustomer CreationPivot
Test Hypotheses: Product Market Type CompetitionTurning Hypotheses to Facts
Test Hypotheses: Problem Customer User Payer
Test Hypotheses: Channel
Test Hypotheses: Problem Customer User PayerTest Hypotheses: Demand CreationTest Hypotheses: ChannelTest Hypotheses: Product Market Type CompetitiveTest Hypotheses: Pricing Model / PricingTest Hypotheses: Size of Opportunity/Market Validate Business ModelTest Hypotheses: Channel (Customer) (Problem)
Test Hypotheses: Problem Customer User PayerTest Hypotheses: Demand CreationTest Hypotheses: ChannelTest Hypotheses: Product Market Type CompetitiveTest Hypotheses: Pricing Model / PricingTest Hypotheses: Size of Opportunity/Market Validate Business ModelTest Hypotheses: Channel (Customer) (Problem)Customer Development TeamAgile Development
Test Hypotheses: Problem Customer User PayerTest Hypotheses: Demand CreationTest Hypotheses: ChannelTest Hypotheses: Product Market Type CompetitiveTest Hypotheses: Pricing Model / PricingTest Hypotheses: Size of Opportunity/Market Validate Business ModelTest Hypotheses: Channel (Customer) (Problem)Customer Development TeamAgile Development
The Minimum Viable Product (MVP) Smallest feature set that gets you the most - orders, learning, feedback, failure
The Pivot The heart of Customer Development Iteration without crisis Fast, agile and opportunistic
The PivotA Pivot is the change of one or more Business Model Canvas Components
Pivot Cycle Time Matters Speed of cycle minimizes cash needs Minimum feature set speeds up cycle timeNear instantaneous customer feedback drives feature set
Tomorrow Team DeliverablesHypotheses for each part ofbusiness modelTest for whetheryourbusiness isworth pursuing(market size)Test for each of the hypotheses - What constitutes a pass/fail signalforthe test (e.g. at whatpoint would yousay your hypotheses wasntevencloseto correct)?
Radiation-freeEarlier detectionNon invasive
Pioneering DoctorsHospitalsDirect Sales to hospitals
Strong clinical dataTrainingMaintenance
Product DevelopmentClinical trialsOperating Costs
Capital Equipment Sales and disposable item
Product DevelopmentIPClinical trialsFDAIP Leading doctorsTechnical Expertise
HospitalsLeading doctors3rd party manufacturersDistributorsMammOpticsBusiness Model Canvas 1
something-something-something.comOriginal ideaSHORT TERM ResearchersLawyersScientists
LONG TERM Avid book readersProfessionals
Import, organize and share thousands of papersFB/TW posts from users you know
Company blog, FB, TW, support forumsAffiliate program
SEO/SEM/SM
IE/FF/Chrome App StoresTargeted marketing
Product development
Constant iteration & testingDevelopersMarketersLibraries, Universities, Research Centers
Bloggers and media targeting customer segment
Academic Database providersAffiliate program feesLicensingSubscription feesAd revenueAWS InfrastructureSEMEng & Marketing OpExInvincible Business Model: Version 1.0
Tomorrow: Team Deliverable BlogEach WeekBusiness model canvas updatesInterviewsPhotos/VideosA/B testsStrategyMust be up and running by TomorrowWe prefer Lean Launchlab
Direct Sales to hospitals
Strong clinical dataTrainingMaintenance
Product DevelopmentClinical trialsOperating Costs
Capital Equipment Sales and disposable item
Product DevelopmentIPClinical trialsFDA
IP Leading doctorsTechnical Expertise
Doctors:Earlier detectionPriceAccuracyImmediate Results
Patients:Radiation FreeNon-Invasive
MammOpticsBusiness Model Canvas 4
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