Class5 Business Design

transcript

Class 5: From Idea to Business

@cwodtkewww.eleganthack.com

THAT IDEO VIDEO

Business• Dave is alive! Yay!• Feedback response• Email vs Canvas• Review, and Overview• Q&A

REVIEWOur Story So Far

WE BEGIN WITH RESEARCH

WE USE OUR HANDS AND FRAMEWORKS TO UNCOVER INSIGHTS

DISTRIBUTED COGNITION

Photo: woodleywonderworks

BRAINSTORMING IS BEST DONE SILENTLY, THEN WORK TOGETHER TO DETERMINE QUALITY

BRAINSTORMING AGAINST EXISTING FRAMEWORKS CAN HELP US THINK BIGGER

Photo credit Wiesław Kotecki

VISUAL THINKING WAKES UP OUR CREATIVITY

PARTICIPATORY ROADMAPS

TO VALIDATE MVP FEATURES

Customer Development

CompanyBuilding

CustomerDiscovery

CustomerValidation

Customer Creation

Steven Gary Blank, Four Steps to the Ephinany

INTRODUCTION TO LEAN

EXPERIENTIAL LEARNINGFrom Ed Batista http://www.edbatista.com/2007/10/experiential.html

Research and synthesize Creative a shared vision with team

Iterate with prospective marketFinally…

TODAY: DESIGN OF BUSINESS

“NEVER WRITE ON THE BUSINESS MODEL CANVAS, THAT’S WHY GOD GAVE US POST-IT NOTES”-ALEX OSTERWALDER

ACQUISITION CHANNELS

Adam NashFive Sources of Content

1. Organic2. Email3. Search4. Ads5. Social

Jherin Miller Sketchnote

FREELIST ALL THE ACQUISITION CHANNELS YOU CAN

Exercise

Relationships

•Personal Assistance•Dedicated Personal Assistance•Self-Service•Automated Service•Communities•Co-Creation•More!

REVENUE STREAMS

• Marketplace Model• Advertising Model• Affiliate Model• Community Model• Subscription Model

I have always been a woman who arranges things,for the pleasure–and the profit–it derives.I have always been a woman who arranges things, like furniture and daffodils and lives.

Marketplaces bring buyers and sellers together and facilitate transactions. They can play a role in business-to-business (B2B), business-to-consumer (B2C), or consumer-to-consumer (C2C) markets. Usually a marketplace charges a fee or commission for each transaction it enables.

I’ll go where the buyers are

I want to find things!

I want the best price!

Can I trust this seller?

Users must find products, evaluate seller, and make a purchase

Advertising ModelThe web advertising model is an update of the one we’re familiar with from broadcast TV. The web “broadcaster” provides content and services (like email, IM, blogs) mixed with advertising messages. The advertising model works best when the volume of viewer traffic is large or highly specialized.

Users must:• Notice advertising• Interact with ad

Preconditions: User must visit advertising location

Share their demographic information

Types:CPMCPCCPA

Community ModelThe viability of the community model is based on user loyalty. Revenue can be based on the sale of ancillary products and services or voluntary contributions; or revenue may be tied to contextual advertising and subscriptions for premium services. The Internet is inherently suited to community business models and today this is one of the more fertile areas of development, as seen in rise of social networking.

Open Source Red Hat, OpenXOpen Content Wikipedia, Freebase

Users need to • Create an identity • Connect with other users • Build a reputation• Create and share

content/work/etc

Users must care

Subscription ModelUsers are charged a periodic—daily, monthly or annual—fee to subscribe to a service. It is not uncommon for sites to combine free content with “premium” (i.e., subscriber- or member-only) content. Subscription fees are incurred irrespective of actual usage rates. Subscription and advertising models are frequently combined. Content ServicesSoftware as a ServiceInternet Services Providers

User must:•Able to evaluate the

offering• Subscribe and

unsubscribe to offering•Realize value offered

Combos

Advertising Community

Combos

Advertising Community

Subscription

Combos

Marketplace Community

Affiliate

HOW DO YOU MAKE MONEY?Exercise

Marketplace ModelAdvertising Model

Affiliate ModelCommunity Model

Subscription Model

PRICING

Pricing

• Part of the business model– How do we make money? How much?– Revenue/profit/shipment forecasts

• Supports core value proposition– “Our product/service saves you $$$$…– …and we want 15% of the savings.”

• Often an obstacle to buying– Too complex– Much too high (sticker shock) or too low

(desperate)– Free (no reason to trade up)

Designing pricing

• What’s the natural unit of exchange?– How do they derive value? – What does the competition do?– Can you split off a profitable segment?

• How much of customer value can you capture?

• Test, trial-close, get your hands dirty

Software Pricing

Models

1. Time-based access (e.g. unlimited/month)2. Transaction (stock trade)3. Metered (seats, CPUs, named users)4. Hardware (appliances, dongles)5. Service (virus updates, support)6. Percentage of incremental revenue/savings7. Data-driven insights

Pricing drives

customer behavior

• What do you want core customers to do?– No-brainer renewals (small monthly fees)– Big up-front license (lock up marketplace)– Lust for upgrades (cool features are

extra)– Freemium model (1% upsold into paid

services)– Install latest version (free updates,

increasing service– fees)

Storium Pricing

1. Interviews with Kickstarter backers

2. Synthesis to discover Value3. Discovered anchors4. New Model5. Validated with mockups

Homework• Build an initial Business Model Canvas• Create a landing page• How many emails can you collect?• Extra-credit: try a pricing exercise

APPENDIX

From Google Vetures Design Sprint http://www.gv.com/lib/the-gv-research-sprint-a-4-day-process-for-answering-important-startup-questions