Startup 101: finding your business model
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The document provides an agenda and overview for a two-day TiE workshop on best practices and principles for startups. Day 1 focuses on developing business models, including exercises on creating business model canvases (BMCs) and minimum viable products (MVPs). Day 2 involves customer investigation in the field and a retrospective. The workshop teaches entrepreneurs to validate assumptions and learn quickly by talking to customers, developing BMCs and MVPs, and iterating based on customer feedback.
Startup 101: finding your business model
- 1. TiE Workshop Startup 101: Finding your business model Pallav Barah Nagarjun Kandukuru Krishnan Natarajan Manish Govind Pillewar
- 2. Objective A guidebook for startups Experiential, hands on learning Value derived is through your effort
- 3. Agenda Friday Oct 5 Oct 6 - 12 Friday Oct 12 9:30 – 10:00 Customer investigation – in the 9:30 – 10:30 Welcome / agenda / introductions field Retrospective 10:00 – 10:30 10:30 – 1:00 Startup models Team presentations 10:30 – 11:00 1:00 – 2:00 Business Model Canvas (BMC) & Lunch examples 11:00 – 1:00 2:00 – 3:00 Exercise: BMC Guest speaker: VC 1:00 – 1:30 3:00 – 3:30 MVP & examples Summary / wrapup 1:30 – 2:30 Lunch 2:30 – 4:00 Exercise: MVP 4:00 – 5:00 Best practices for customer investigation 5:00 – 5:30 Networking
- 5. Story of the $23 million startup
- 7. 1998 1998 1998 1999 1999 2000 2000 Mar Jun Oct Jan Sep March Jun Analytics No investor Shift to Start Launch Shut down Liquid- platform traction E-commerce company web site ation for Telecom
- 8. 2 focus group sessions Telecom carrier No customer contact negotiations 1998 1998 1998 1999 1999 2000 2000 Mar Jun Oct Jan Sep March Jun Analytics No investor Shift to Start Launch Shut down Liquid- platform traction E-commerce company web site ation for Telecom
- 9. Who was that entrepreneur?
- 10. Traditional start-up model Build product Big-Bang Develop concept Build product Alpha /test Alpha beta Customer test Launch after Shipment Get funding and offering Market test 3 years Write business plan Build the product Test / fix Ship / fix Planning / collateral PR / plan launch Launch / Demand gen. Initial sales rep Build sales team / selling
- 11. “Big Up Front Design” Develop concept Build product Build product Alpha /test Alpha beta Customer Big-Bang Get funding and offering test Market test Shipment Launch Unbridled False sense of Rude Resetting Predictable enthusiasm security awakening expectations disaster
- 12. Traditional start-up practices aren’t working 90-95% of new ventures fail to meet projections
- 13. Story of the Rs. 500 start-up
- 14. Who is this legendary entrepreneur? Karsanbhai Patel Nirma
- 15. How do you compete with a Rs. 200cr brand? Answer: Start on a bicycle!
- 16. Lessons from Karsanbhai and Nirma Start small, but with a strong vision Clear value-prop for untapped segment Constantly validate all assumptions in the market Iterate and learn
- 17. Finding your business model
- 18. 2 stages of start-ups Search Scale Focus on Focus on Experimentation Execution Source: “Startup Owner’s Manual”, Blank & Dorf
- 19. When to use this approach Appropriate Limited value New markets / new product Established categories Bootstrap businesses Capital intensive industries Disruptive businesses Established businesses Examples: web, mobile Examples: retail store, car company
- 20. Search Principle # 1: Business Model Canvas KEY KEY VALUE CUSTOMER CUSTOMER PARTNERS ACTIVITIES RELATIONSHIPS SEGMENTS PROPOSITION KEY RESOURCES CHANNELS COST STRUCTURE REVENUE STREAMS Source: “Business Model Generation”, Osterwalder & Pigneur
- 21. Search Principle #2: Minimum Viable Product Minimum + Viable Fertile area for new products Minimum Viable Too-basic products Incumbent no one wants products
- 22. Excel competitor: Minimum Viable ?
- 23. Minimum Viable ?
- 24. Minimum Viable Product for Google Docs Value prop
- 25. Search Principle #3: Focus on exploration Ideas Learn Build Minimize the total time through the loop Data Offering Measure
- 26. How it all fits together Agile software development
- 28. What are the children carrying? Godrej ChotuKool
- 29. Vision: “Refrigeration for rural India” KEY KEY VALUE CUSTOMER CUSTOMER PARTNERS ACTIVITIES PROPOSITION RELATIONSHIPS SEGMENTS R&D Through Microfinance PR retailers Indian institutions Advertising Economical, households effective, with income Sarpanchs portable KEY of RESOURCES cooling CHANNELS Rs.10,000/m solution o whom Frugal Rural retailers Village traditional engineering (constraints of electricity, ambassadors refrigerators experts space, cost don’t serve solved) COST STRUCTURE REVENUE STREAMS Factory, raw material, SG&A Unit sales
- 30. Competitive BMCs vs.
- 31. Flipkart KEY KEY VALUE CUSTOMER CUSTOMER PARTNERS ACTIVITIES RELATIONSHIPS SEGMENTS PROPOSITION KEY RESOURCES CHANNELS COST STRUCTURE REVENUE STREAMS
- 32. Flipkart: “Online shopping for all Indians” KEY KEY VALUE CUSTOMER CUSTOMER PARTNERS ACTIVITIES RELATIONSHIPS SEGMENTS • Supply chain optimisation PROPOSITION Through email, online Publishers • Delivery optimisation chat and database • Urban Indian • SEO marketing • Convenience book lovers • Auto recommendations • Wide selection • Cheaper • Internet- • Trust (CoD) connected KEY people with no RESOURCES CHANNELS credit cards • Delivery staff Web • Technology • First-time capability online shoppers COST STRUCTURE REVENUE STREAMS Book sales Technology, warehouses, deep discounts
- 33. Crossword KEY KEY VALUE CUSTOMER CUSTOMER PARTNERS ACTIVITIES RELATIONSHIPS SEGMENTS PROPOSITION KEY RESOURCES CHANNELS COST STRUCTURE REVENUE STREAMS
- 34. Crossword: “The best browsing experience” KEY KEY VALUE CUSTOMER CUSTOMER PARTNERS ACTIVITIES RELATIONSHIPS SEGMENTS • Sourcing PROPOSITION In store, Crossword • Publishers • Visual merchandising club • Franchisees • Urban Indian • Book reading sessions • Shopper’s Stop • Browsing book lovers • Crossword Literary (parent co) Award experience • Instant gratification • Companies KEY • Stationery RESOURCES CHANNELS buyers • Real estate • Store • Phone • Casual mall • Web visitors • Institutional COST STRUCTURE REVENUE STREAMS • Book sales • Coffee Real estate, cost of inventory • Advertising • Trinkets
- 35. Mid Day: “Evening gossip companion” KEY KEY VALUE CUSTOMER CUSTOMER PARTNERS ACTIVITIES RELATIONSHIPS SEGMENTS • Brand building PROPOSITION • Distribution • Transactional • Mumbai • PTI, AP etc. • Deep multi-year • Newsgathering English- high-touch • Light speaking mass • Improving ABC numbers relationships market entertainment in key demographics after/during a busy • Office-goers day • Commuters KEY • “2nd newspaper” CHANNELS RESOURCES Advertisers + • Journalists • Mumbai-wide • Railway platforms Agencies: reach of readers in • Kirana shops • Mass market • Salespeople with a relaxed context • Mumbai media-planning in a unique time • Direct • Classified knowhow window • Discount COST STRUCTURE REVENUE STREAMS • Retail offtake (5%) Newsroom, newsprint • Advertising (95%)
- 36. Summary: why BMCs are important Elevator pitch – quick summary Maximize time from your mentors/advisors Compare with your competitors The foundation for your business plans / planning
- 37. Exercise: Develop BMC / vision statement
- 38. Vision statement KEY KEY VALUE CUSTOMER CUSTOMER PARTNERS ACTIVITIES RELATIONSHIPS SEGMENTS PROPOSITION KEY RESOURCES CHANNELS COST STRUCTURE REVENUE STREAMS
- 40. MVP example #1: Demo video
- 41. MVP example #2: Balsamiq mockup
- 42. MVP example #3: Mock brochure “A lot of technology entrepreneurs, confuse shipping and selling. They are two distinct and separate activities. You don’t need a product to try to sell something. Immerse yourself with prospective clients; understand where their pain points are.” - Greg Gianforte, serial enterpreneur
- 44. Definitions • Version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort • Anything that helps validate a market for your product
- 45. Hard for customers to visualise Easy for customers to visualise Ask Commission Mock Balsamiq Demo Real friends/ex market brochure mock-up video product perts research Easy to implement, early Hard to do, late learning learning
- 46. Making your own MVP Market risk Execution risk
- 47. MVP template Identify the #1 market-facing risk for your idea Design 1-week experiment that will help you validate the idea, keeping in mind the risk Define success criteria for the experiment
- 48. Steve Jobs v. Steve Blank Vision is important; so is validation
- 50. MVP Differentiating features / capabilities: • 1 • 2 Features for viability: • 1 • 2
- 51. Best practices: customer investigation “There are no facts inside the building” Source: “Startup Owner’s Manual”, Blank & Dorf
- 52. Customer discovery Assignment ✔ Docu ✔ Document Test Test Proceed ment hypothesis problem solution (or pivot)
- 53. Customer discovery objectives Talk to minimum 10 prospects Validate problem
- 54. Finding customers Target list of 30+ (to get 10) - Identify specific personas Sources: • Email contacts / Friends and family / Social media: Linkedin, Facebook/Quora / Warm Introductions Pitch: • Communicate your idea in 10 seconds or less • “Want to ask for you advice – this is not a sales pitch” • “Have been asked to talked to you by TiE” Should be able to get useful input in 15 min.
- 55. Interview principles Customers are interested in their problem, not necessarily your solution Ask customers to describe problem(s) in their own words Focus on behavior, not preconceived ideas / statements Be inquisitive, don’t challenge Ask open-ended questions Observe the environment of the customer
- 56. Interview questions Poor questions: • “Do you think this is a good idea?” • “Do you like this (proposed) solution?” • “Would you buy this product?” • “How much would you pay for this?” Good questions: • “How do you currently deal with this problem?” • “What alternatives have you considered?” • “How much does this problem cost you today?” • “Would you pay Rs. 1 crore to solve the problem?”
- 57. Suggestions on how to probe Walk me through the last time you faced this problem. What was the impact on you? How did you feel about the situation? How frequently do you encounter this problem? When the problem occurs, how critical / urgent is it? How are you currently solving the problem? What do you like / dislike the current solution? Ask the “Why” behind the “what”.
- 58. What to observe Time spent talking about a particular issue Observe their body language and expressions “Yes” means no; “Where can I buy it?” means maybe; “Here’s $20 dollars” means yes.
- 59. Concluding Thoughts Take notes (as quickly as possible) Be prepared to find new problem(s) Thank them Ask for introductions
- 60. Wrap up
- 61. Acknowledgements http://theleanstartup.com/ www.businessmodelgeneration.com www.steveblank.com
- 62. Thank you! knataraj@thoughtworks.com nag@thoughtworks.com pallavb@thoughtworks.com mpillew@thoughtworks.com
- 63. TiE Workshop: Best practices and practical principles for startups (Day 2) Pallav Barah Krishnan Natarajan Manish Govind Pillewar
- 64. Agenda Friday Oct 5 Oct 6 - 12 Friday Oct 12 9:30 – 10:00 Customer investigation – in the 9:30 – 10:30 Welcome / agenda / introductions field Retrospective 10:00 – 10:30 10:30 – 1:00 Startup models Team presentations 10:30 – 11:00 1:00 – 2:00 Business Model Canvas (BMC) & Lunch examples 11:00 – 1:00 2:00 – 3:00 Exercise: BMC Guest speaker: VC 1:00 – 1:30 3:00 – 3:30 MVP & examples Summary / wrapup 1:30 – 2:30 Lunch 2:30 – 4:00 Exercise: MVP 4:00 – 5:00 Best practices for customer investigation 5:00 – 5:30 Networking
- 65. Retrospective How were you able to find customers? How many assumptions on the BMC were validated? How many BMC assumptions were invalidated? What were your biggest surprises? Was this approach useful?
Editor's Notes
- #2: This deck is a tool for facilitating a discovery conversation between a ThoughtWorker and a prospect.The idea is to draw the prospect into conversation as soon as possible, and get them to share their challenges. This means the ThoughtWorker should spend a good deal of the time asking questions and listening to the answers, i.e. “Does this sound familiar to you?”, “How is your Agile adoption going?”, “Are you doing weekly/monthly releases?”, “How is experience design incorporated into your process?”, etc.The goal is to discover whether or not there is a basis for a potential future relationship (cultural compatibility, good overlap between their needs and our capabilities, etc.) and identify the next steps.
- #64: This deck is a tool for facilitating a discovery conversation between a ThoughtWorker and a prospect.The idea is to draw the prospect into conversation as soon as possible, and get them to share their challenges. This means the ThoughtWorker should spend a good deal of the time asking questions and listening to the answers, i.e. “Does this sound familiar to you?”, “How is your Agile adoption going?”, “Are you doing weekly/monthly releases?”, “How is experience design incorporated into your process?”, etc.The goal is to discover whether or not there is a basis for a potential future relationship (cultural compatibility, good overlap between their needs and our capabilities, etc.) and identify the next steps.