presentation 4 - entrepreneurship goethe

7/21/2019 Presentation 4 - Entrepreneurship Goethe

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Entrepreneurship

WPMM: EPSHWinter 2015

Sebastian Schä[email protected]

Thomas [email protected]



Good Questions

Did or Do – NEVER

would

Don‘t assumeproblems

Don‘t ask for opinions,

rather let them speakabout

experiences/examples

2Entrepreneurship - WiSe 2015/2016



Opinions are worthless!

Facts about their life!

Commitments!

Think vs. Do!




Validate the problem! The interviews…

Talk to the people! Don‘t be awkward:

- We are looking for expert feedback or we are doing a survey

- Don‘t: We do Customer Development

- Ask open questions- Let them speak

- Let them be the expert

- In Person, No Skype, no phone, no email.

Stop if the responses remain the same!




Validate the solution!

Come back to the interviewees!

- Focus first on their current solution

- Discuss flaws of their current solution- Show mockups, prototypes etc.

- Get improvement feedback

- Get them to commit

- or iterate!




Validate the solution!

If you were wrong, be happy!

… most start-ups started out wrong




Learn & Iterate

Review in the team!

- Use exact customer wording

- Understand their answers and context- Don‘t try to be correct with your assumptions

- See what you learned




The startup process in 24 steps: 12-24




Six key topics

1. Who is your customer?

2. What can you do for them?

3. How do they acquire your product?

4. How do you make money off your

product?

5. How do you design and build your

product?

6. And how do you scale?



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Step 12: Determine the customer’s decision-

making unit (DMU)



Step 13: Map the process to acquire a paying

customer





customer

• Goal: Create a step-by-step timeline ofhow a customer will determine a need for

your product, find out about it, analyze it,acquire it, install it, and pay for it.

• Hint: Estimate how long the sales cycle will be, and any big obstacles you mightencounter in budget, regulations, orcompliance, because selling a product can be more far more difficult than simplymeeting the Persona’s need.





customer


A Long Road from Lead Generation to Sales Conversion

Potential hurdles:

• Negotiations on the

terms and conditions• Approval levels• Education of several

people• Support requirements• Meeting delays• Changes in agendas• Budgetary cycles



Step 14: Calculate the TAM size for follow-on

markets



Step 14: Example Smart Skin Care



Step 15: Design a business model



• Goal: A business model is how you extract value fromcustomers. Take a look at existing business models in theindustry, like subscriptions, upselling, advertising, transaction

fees, and micropayments, and build on previous steps (steps 8,11,12, 13) to brainstorm an innovative business model.

• Hint: Most entrepreneurs don’t spend enough time thinkingabout this. Remember that freemium and “we’ll figure it outlater” aren’t business models.

• Try to pick a business model that differentiates you fromcompetitors. It may provide a competitive advantage, as business models tend to be “sticky” and hard to change (for your competitors).


Step 15: Design a business model



Step 15: Example Mapme




Step 16: Set your pricing framework



• Goal: Estimate a price based not on your costs, but on the value you provide – a good estimate is around 20 percent ofthat value. Also take into consideration key prices in the

DMU (like budget caps) and the price of your competitors’products.

• Hint: Be flexible with pricing for early testers. It’s better tohave a high price and lower it later than vice versa.


Step 16: Set your pricing framework




Step 16: Example SECDASH




Step 17: Calculate the lifetime value (LTV) of

an acquired customer



• Goal: Calculate the LTV based on revenue streams, grossmargins, retention rates, the life of the product, rate of re-purchasing, and the cost of raising funding.

• Hint: The last is crucial and expensive: startups pay a lotin equity in order to raise money. You’ll discover thatfactors like your business model, gross margins, retentionrates, and ability to upsell have a large effect on your LTV.


Step 17: Calculate the lifetime value (LTV) of

an acquired customer



Key Inputs to Calculate the LTV

• One-time revenue stream vs. recurring revenue stream

• Additional revenue opportunities, e.g. “upselling”

• Gross margin by each revenue stream (does not include sales andmarketing expenses or overhead costs and R&D expenses)

• Retention rate vs. churn rate

• Next product purchase rate

• Cost of capital, incase of funding/debt


Step 17: Unit Economics




Step 18: Map the sales process to acquire a

customer



• Goal: Figure out how the sales process will work in the short,medium, and long term. In the short term, you are generatingdemand on your own, often using salespeople or inboundmarketing, email, and social media. In the medium term,

orders flow in regularly and you can focus more on retainingexisting customers; you may use distributors at this stage. Inthe long term, you’re mostly focused on client management.

• Hint: Once you have developed the sales process, discuss it

with experienced professionals in the industry.


Step 18: Map the sales process to acquire a

customer



Step 19: Calculate the cost of customer

acquisition (COCA)




Step 19: Calculate the cost of customer

acquisition (COCA)

• Goal: Determine how much it costs to acquire a customer overthe short term, medium term, and long term, based on your

sales process.

• Hint: COCA is hard to calculate and typically underestimated but crucially important, as a too-high COCA can kill a business.


Step 19 Calc late the cost of c stomer acq isition



Step 19: Calculate the cost of customer acquisition

(COCA)

Entrepreneurship - WiSe 2015/2016 34

= −

=

= = in period t

=



Step 19: Example viral videos


https://www.dollarshaveclub.com/



Steps 20 & 21: Identify & test key assumptions




Steps 20 & 21: Identify & test key assumptions

• Goal: Brainstorm your 5-10 top assumptions thathaven’t been tested.

• Design the cheapest, quickest, easiest tests you canthink of to refute or validate your key assumptions.

• Hint: Review each step of the framework (e.g.Persona’s priorities, full life cycle, value proposition,

next 10 customers, DMU, etc.)




Example: A/B testing




Exercise: Innovation Map


https://mappedinisrael.com/

https://innovation-map.de

http://startupireland.ie/map-irelands-startup-sector/



Steps 22 & 23: Define and test the minimum

viable business product (MVBP)


• Goal: An MVBP is something that the customer gets value out of, pays for, and can provide feedback on. It

should be testing your most key assumptions.

• Take your MVBP to customers and demonstratequantitatively that they will buy it, get engaged with it,and recommend it to their friends. Develop and trackmetrics on all of these.

• Hint: The MVBP is further along than the lean startupmethodology’s “MVP.”



Step 18: Example Software




Step 18: Example Signups




The 24 steps are not linear




Beyond the 24 steps


Some selected topics to be covered during the next sessions:

• Selecting a founding team

• Growing and building the Team and Company Culture

• Selling and Sales Execution

• Building your Financials and Managing Cash Flow• …



Exemplary Questions

As Startup consultant you have been asked to advise the Innovation

Map initiative on how to promote the project (see slide 43;

www.innovation-map.de).

1. As many assumptions have not been identified and tested yet, you

start with listing the key assumptions. Write down 6 key

assumptions!

2. Now that you have identified the key assumptions you design

empirical tests (in the cheapest, quickest, and easiest ways

possible) to validate or refute them. Design for each of the six key

assumptions at least one empirical test/experiment.


presentation 4 - entrepreneurship goethe

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