Lean Launchpad Tucson - Value Proposition
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The document outlines an entrepreneurship course focusing on developing business models, with topics ranging from value propositions and customer segments to distribution channels, revenue streams, and partnerships. It provides guidance on customer discovery activities like conducting interviews and surveys to validate value propositions. The course aims to help students refine their business ideas based on feedback from potential customers.
Lean Launchpad Tucson - Value Proposition
- 1. Aaron Eden Created by Steve Blank
- 2. » 5/12 – What to Expect » 5/19 – First Pitches » 5/26 – Experiment Day » 6/2 –Value Propositions » 6/9 – Customers, Users, Payers (Andrew) » 6/16 – Distribution Channels (Justin) » 6/23 – Customer Relationships » 6/30 – Revenue Models » 7/7 – Partners » 7/14 – Key Resources & Costs » 7/21 – Lessons Learned Presentations
- 3. » Homework Review » Team Business Model Presentations » Value Propositions ˃ Product ˃ Service ˃ Ecosystem
- 4. » Business Model Generation ˃ Visual Thinking ˃ BMC Prototyping ˃ Environment » Startup Owners Manual ˃ Customer Problem (Need or Passion) ˃ Customer Types ˃ Customer Archetypes ˃ A Day In The Life ˃ Influence Maps
- 5. » How many customers did you talk to? » What were your value proposition hypotheses? » What do customers think about your value proposition hypotheses? » Post updates in the Google group (lessons learned, canvas changes) http://www.youtube.com/watch?v=VZ5rgVgn5qk
- 9. VALUE PROPOSITIONS what are you offering them? what is that getting done for them? do they care? images by JAM
- 10. » Product(s)? » Service(s)? » Ecosystem? » Is it a company or product?
- 11. » Is it just a feature of someone else’s product? » Is it a “nice to have” product? » Is it a “got to have” product? » Can it scale to a company?
- 12. » Product ˃ Long term vision ˃ Features ˃ Benefits ˃ Minimum Viable Product spec » For a web/mobile app ˃ Low fidelity MVP live and running » Understand Customer Problem and Solution » Test Market Type
- 13. » Problem Statement: What is the problem? » Technology / Market Insight: Why is the problem so hard to solve? » Market Size: How big is this problem? » Competition: What do customers do today? » Product: How do you do it?
- 14. » NOW “low fidelity” web/app for customer feedback ˃ First, tests your understanding of the problem » LATER, “high fidelity” web/app tests your understanding of the solution ˃ Proves that it solves a core problem for customers ˃ The minimum set of features needed to learn from earlyvangelists - Avoid building products nobody wants - Maximize the learning per time spent
- 15. » Smoke testing with landing pages using AdWords » In-product split-testing » Prototypes (particularly for hardware) » Removing features » Continued customer discovery and validation » Interviews » Surveys
- 16. » Interview customers ˃ make sure they have a matching core problem » Set up web site landing page to test for conversion ˃ What offers are required to get customers to use the product (e.g. prizes, payment) ˃ Use problem definition as described by customers to identify key word list – plug into Google search traffic estimator - high traffic means there is problem awareness » Drive traffic to site using Google search and see how deep into a registration process customers are willing to go through
- 17. Talked 75 Customers in 8 Weeks
- 19. Weeding Visited two farms in Salinas Valley to better understand problem Interviewed: • Bolthouse Farms, Large Agri-Industry in Bakersfield • White Farms, Large Peanut farmer in Georgia • REFCO Farms, large grower in Salinas Valley • Rincon Farms, large grower in Salinas Valley • Small Organic Corn/Soy grower in Nebraska • Heirloom Organics, small owner/operator, Santa Cruz Mts • Two small organic farmers at farmers market • Ag Services of Salinas, Fertilizer applicator Mowing Interviewed: • Golf: Stanford Golf course • Parks: Stanford Grounds Supervisor, head of maintenance and lead operator (has crew of 6) • Toro dealer (large mower manufacturer) • User of back-yard mowing system • Maintenance Services for City of Los Altos • Colony Landscaping (Mowing service for stadiums)
- 20. - Innovation Dealers sell, installs Mowing - Dealers (Mowing - Customer We reduce operating and supports - Owners of public and Ag) Education cost customer or commercially - Vehicle OEMs - Dealer training - Labor reduction used green spaces (John - Better utilization of Co. trains (e.g. golf courses) Deere, Toro, Jacob assets (mow or dealers, supports - Landscaping sen, etc) weed at nights) dealers service provider - Improved performance (less Weeding - Research labs Engineers on rework, food safety) - Mowing Dealers - Farmers with Autonomous - Ag Dealers manual weeding vehicles, GPS, operations path-planning Dealer discount Asset sale COGS seek a 50-60% Gross Margin Our revenue stream derives from selling the equipment Heavy R&D investment
- 21. Crews of 100s-1000 Back-breaking task (legal) labor harder to get 1-5 weedings per year/field $250-3,500 per acre and increasing Food contamination risk
- 22. - Innovation Dealers - Low density - Ag Dealers - Customer We reduce sell, installs and vegetable - Ag Service Education operating cost supports growers providers - Dealer training - Labor reduction customer - High density (100 to 1) vegetable - Research labs - Reduced risk of Co. trains growers contamination dealers, supports - Thinning - Mitigate labor dealers operations Engineers on availability - Ag Dealers - Conventional Machine Vision concerns - Ag Service vegetables Two problems: providers - Identification - Elimination Dealer discount Asset sale COGS seek a 50-60% Gross Margin Our revenue stream derives from selling the Heavy R&D investment equipment
- 23. 1 Week – 1 CarrotBot Confidential
- 24. » Machine Vision data collection platform ˃ Monochrome & Color Cameras ˃ Laser-line sweep (depth measurement) ˃ Encoders (position/velocity) ˃ Onboard data acquisition & power CarrotBot 1.0
- 25. •Technology •Farming Design conventions. •Marketing •Demo, demo, a •Demo and nd demo!! customer •Cost Reduction •Proximity is •Organic Farmers •Research Labs feedback paramount •Weeding Service •Remove labor •Equipment Providers force pains Manufacturers •Conventional •Eliminate bio- •Distribution Farmers waste hazards Network •Service •IP – Patents Providers •Video Classifier •Dealers Files •Direct Service •Robust •Indirect Service Technology • … then Dealers •Asset Sale Value-Driven •Direct Service with equipment rental •… then Asset Sale
- 26. Above: Organic Carrots, 7wks. Top right: Conventional carrots Bottom Right: Very weedy. Will require multiple passes of hand weeding
- 27. Carrot vs. Weeds Due to small root systems, carrots have no chance against weeds
- 28. Organic Broccoli, closely cultivated. Weeds close to plants are hand-picked
- 29. State of the Art in Weeding Technology for Organic Crops
- 30. Pre-Test Large Growers Us Dealer Industrial Growers Hypothesis Confirmed • Growers interested in own Industrial equipment Growers • Industrial (10,000s of acres) • Large (1,000s of acres) Post-Test • Willing to pay $100k for one Large unit Growers Us Dealer • Smaller growers (100s of acres) Service usually subcontract the labor services Providers or rent equipment Equipment • All purchases through local dealers Rental • Customer service is essential
- 31. Example: Bolthouse Farms – Large Industrial Carrot Producer – 8K acres/yr End User • Equipment Operator Influencer • Local Farm Mgr • Cliff Kirkpatrick, visited Recommender • Director, Ag Equipment Operator Technology • Justin Grove, interviewed Decision Maker • VP, Growing Operations Approver • CFO, CEO (Jeff Dunn) Cliff, Farm Mgr
- 32. Example: Ag Services – Service Provider, Salinas Valley End User • Equipment Operator Influencer • Grower Recommender • Service Mgr Me (left), Marty (middle, Service Mgr), Doug (right, Grower) Decision Maker • ?? (service mgr’s boss) & Approver
- 33. •Technology •Farming Design conventions. •Marketing •Demo, demo, a •Mid/Large •Demo and nd demo!! Organic Farmers customer •Cost Reduction •Proximity is •Agricultural •Research Labs feedback paramount •Remove labor corporations •Equipment Manufacturers force pains •Weeding Service •Eliminate bio- Providers •Distribution waste hazards Network •Service •IP – Patents •Mid/Large Providers •Video Classifier •Direct Service Conventional Files •Indirect Service Farmers •Robust • … then Dealers Technology •Direct Service with equipment rental Value-Driven •($1,500/d; 120d/yr ) •Low density: $1,500/d •High density: $6,000/d
- 34. » 10+ interviews at show ˃ Everyone confirmed the need ˃ Robocrop, UK based, crude competitor sells for $171 K » Revenue Stream ˃ Mid to small growers prefer a service ˃ Large growers prefer to buy, but OK with service until technology is proven ˃ Charging for labor cost saved is OK, as we provide other benefits (food safety, labor availability)
- 35. •Technology •Farming Design conventions. •Marketing •Demo, demo, a •Mid/Large •Research Labs •Demo and nd demo!! Organic Farmers •Equipment customer •Cost •Proximity is •Agricultural Manufacturer feedback Reduction paramount corporations •Distribution •Remove labor •Weeding Service Network force pains Providers •Service •Eliminate bio- Providers •IP – Patents waste hazards •Mid/Large • 2 or 3 Key •Video •Direct Service Conventional Farms Classifier Files •Indirect Service Farmers •Robust • … then Dealers Technology Value-Driven •Direct Service with • R&D equipment rental • Bill of Materials •Low density: $1,500/d • Training & Service •High density: $6,000/d • Sales
- 36. - Innovation Direct - Low density - Ag Service - Customer We reduce - Provide high vegetable growers providers Education operating cost quality service at - High density - Dealer training - Labor reduction competitive price vegetable growers - Research (100 to 1) - Thinning Institutes (eg UC - Reduced risk of operations Davis, Laser contamination - Conventional Zentrum - Mitigate labor vegetables Hannover) availability Engineers on concerns Direct - 3-4 key farms Machine Vision - Alliance with Two problems: service providers - Identification - Eventually sell - Elimination through dealers Costs for service provision Service provision COGS seek a 50-60% Gross Margin - Charge by the acre with modifier according to weed Heavy R&D investment density - Eventually move to asset sale
- 38. Clone Market Existing Market Resegmented New Market Market » Clone Market ˃ Copy of a U.S. business model » Existing Market ˃Faster/Better = High end » Resegmented Market ˃Niche = marketing/branding driven ˃Cheaper = low end » New Market ˃Cheaper/good enough, creates a new class of product/customer ˃Innovative/never existed before
- 39. Existing Resegmented New Customers Known Possibly Known Unknown Customer Performance Better fit Transformational Needs improvement Competitors Many Many if wrong, None few if right Risk Lack of branding, sales Market and Evangelism and and distribution product re- education cycle ecosystem definition Examples Google Southwest Groupon Market Type determines: Rate of customer adoption Sales and Marketing strategies Cash requirements
- 40. » Incumbents exist, customers can name the mkt » Customers want/need better performance » Usually technology driven » Positioning driven by product and how much value customers place on its features » Risks: ˃ Incumbents will defend their turf ˃ Network effects of incumbent ˃ Continuing innovation
- 41. » Low cost provider (Southwest) » Unique niche via positioning (Whole Foods) » What factors can: ˃ you eliminate that your industry has long competed on? ˃ Be reduced well below the industry’s standard? ˃ should be raised well above the industry’s standard? ˃ be created that the industry has never offered? (blue ocean)
- 42. » Customers don’t exist today » How will they find out about you? » How will they become aware of their need? » How do you know the market size is compelling? » Which factors should be created that the industry has never offered? (blue ocean)
- 43. » What were your value proposition hypotheses? » What did potential customers think about your value proposition hypotheses? ˃ Get out of the building and begin to talk to more customers ˃ Talk to 10-15 customers more ˃ Follow-up with Survey Monkey (or similar service) to get more data » Submit interview notes, present results in class. » Update Google Group with progress customers and value prop