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ABC Workshop #1
Business Models and
Customer Development
Overview
• Start-ups and companies – how they differ• Strategy• Process• Organization• Impact on start-up launches
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Startups search
Companies execute
Instead of creating business plans…
Today we discover business models.
Old definition of entrepreneurial strategy
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Entrepreneurial strategy = Plan + Financial statements
…for startups
Business Model Canvas
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Social Lean Canvas
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Our curriculum
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2Who are your most important customers?What are their archetypes?
What job do they want you to get done for them?
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How will you get, keep, and growcustomers?
What customer problems are you helping to solve ?
What customer needsare you satisfying?
3Through which channels (sales, distribution, support) do your customers want to be reached?
5How will you make money? What is revenue model?
What are pricing tactics?
6Who are your Key Partners?Who are your key suppliers?
What are you gettingfrom them…and givingto them?
What Key Activities do you require?Manufacturing? Software development? Personal concierge service? Etc.
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9What are most important costs inherent in your business model?
What is mix of fixed and variable costs?
What Key Resources do you require?Financial? Physical? Intellectual property? Human resources?
8What are key features of your product/service that match customer problems/needs?
Pivot
Companies vs. startups
A company is a business organization that sells a product or service in exchange for revenue and profit.
A startup is a temporary organizationdesigned to search for a repeatable and scalable business model.
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Organizations and business models
A company organizes itself to deliver value via its business model.
A startup organizes itself to discover opportunities and create a business model.
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Startup’s goal
To become a company!
A startup becomes a company after its customer discovery leads to a repeatable, scalable, and profitable business model.
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“Right side” of canvas
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Marketplace view
• Customers
• Revenue structure
“Left side” of canvas
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Operations view
• Internal activities
• Cost structure
Value propositions
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A company exists to offer a value proposition – thus it is in the center of the model.
Value propositions
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Which customer problems do you solve?
Which customer needs do you satisfy?
Customer segments
• Who are your most important customers?
• What are their archetypes?
• What is the job they need from you?
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Customer segments and customer types
A customer segment is a subset of the marketplace that makes decisions in a defined way.
A customer type defines the role in the marketplace.
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Customer types
• End User• Influencer• Recommender• Decision Maker• Payer• Saboteur
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Relationships
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How will you get, keep, and grow customers?
Channels
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Through which channels do your customers want to be reached?
• Sales
• Distribution
• Support
Revenue streams
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How will you make money?
What is the revenue model?
What are pricing tactics?
Partners
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Who are your key partners and suppliers, and how do you interact with them?
• What do you give them?
• What do you get from them?
Activities
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Which key activities do you conduct?
• Manufacturing?
• Software development?
Resources
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Which key resources do you require?
• Intellectual property
• Human resources
• Physical
• Financial
Cost structures
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What are most important costs inherent in your business model?
What is the mix of fixed and variable costs?
Initial business model canvas
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Guess
Guess
Guess Guess
Guess
Guess
Guess
Guess
Guess
Launching the canvas
We begin with hypotheses
We begin with educated guesses
We urgently need facts!
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Customer Discovery: Four (easy?) steps
1. State your guesses
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Guess
Guess
GuessGuess
Guess
Guess
Guess
Guess
Guess
2. Test your hypotheses
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Identify customer problemsand needs
Test hypotheses about CS and VPs… …iterate and pivot
Gathering data
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What are
your needs
?
Where do you
buy today?
How do you learn
about new products?
What is the solution to your problem worth to you?
3. Test your potential solution
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Test potential minimum viable product features: Do they satisfy problems or needs?
MVP
Audio Middleware Companies
Tracking the changing BMC
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Better Performance
3D immersive sound
Higher gaming scores
More realism
Reduced ear fatigue
Pinpoint sounds
Problem Solving
Refine and improve 3D audio algorithms
Intellectual Property
Proprietary knowledge, brand, patents, trade secrets,
Audio experts, software developers
PC Gamers
PC Game Developers
Audio Middleware Companies
IP License Fee to UMD
Software development tools
SW License, Per Title, Per Seat for Plug-in
Personal Assistance and Self-serviceSmall support staff, emphasize web support
Game Engine Companies
Notechangesfromlastiteration
4. Pivot or proceed
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New Guess New Guess
Fact Fact
Iterations: Pivot or proceed
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Project goal
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Fact Fact
Fact
Fact
Fact
Fact
Fact
FactFact
Relationship: CS and BM
Different customer segments have different needs, and may require different business models to serve them.
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CustomerSegment#1 CustomerSegment#2
CustomerSegment#3
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Customer discovery in a nutshell
We are learning about customer needs…
… not asking them to define a product….
… or asking them to buy!
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The most important skill
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Your customers have needs.
They will be happy to tell you - if you give them the chance.
Acknowledgments
• Thank you to Innovation Node – Los Angeles• Thank you to the National Science Foundation,
award # 1444080
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