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
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
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?
http://www.slideshare.net/sblank/customer-development-past-present-future-steve-blank-111909
Business plans – why?
• Why write a plan?
–VC´s require it
–Planning (strategic, financial, ops)
• What´s wrong with a plan?
–Static
–Execution Oriented
Steve Blank http://www.slideshare.net/sblank/lecture-1-business-model-customer-development
An idea is NOT a Company
Steve Blank http://www.slideshare.net/sblank/lecture-1-business-model-customer-development
It´s just ONE of Many
Hypotheses
Steve Blank http://www.slideshare.net/sblank/lecture-1-business-model-customer-development
What is a company?
Photo by: Shariff Che'Lah
A business organization,
which sells a product or service in exchange for
revenue and profit
Steve Blank http://www.slideshare.net/sblank/lecture-1-business-model-customer-development
How are companies organized?
For their organization companies use business
models
Steve Blank http://www.slideshare.net/sblank/lecture-1-business-model-customer-development
What is a business model?
A business model covers and describes all necessary parts of a company to make
money
Steve Blank http://www.slideshare.net/sblank/lecture-1-business-model-customer-development
What about „our“ technology?
Your technology
is one part of the many critical parts needed to
build a company
Steve Blank http://www.slideshare.net/sblank/lecture-1-business-model-customer-development
Customers
don´t care about your technology, they are trying
to solve a problem
Steve Blank http://www.slideshare.net/sblank/lecture-1-business-model-customer-development
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
http://www.slideshare.net/sblank/customer-development-past-present-future-steve-blank-111909
A startup is a temporary organization designed to search
for a repeatable and scalable business model
Steve Blank http://www.slideshare.net/sblank/lecture-1-business-model-customer-development
How to build a start-up
Idea Business model(s)
Size of the Opportunity
Customer Discovery
Customer Validation
Theory Practice
Steve Blank http://www.slideshare.net/sblank/lecture-1-business-model-customer-development
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
Steve Blank http://www.slideshare.net/sblank/lecture-1-business-model-customer-development
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
Agile Unit of progress: code
From Eric Ries´s presentation on Slideshare.
Problem:known
Solution:unknown
„Product owner“ or in-house customer
Product development at Lean Startup Unit of progress: Validated Learning
about customers
From Eric Ries´s presentation on Slideshare.
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
Customer Relationships
http://www.businessmodelgeneration.com
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/
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