Zero to 60 Turning a Good Idea into a Successful Product

Agenda Ideas & Opportunities Markets Exercise Business models Features More exercise

Ideas & Opportunities

Markets

Exercise

Business models

Features

More exercise

One Word: Plastics

Why the one word? Opportunity Brand Completeness Blocking competition Raising money Curiosity

Opportunity

Brand Completeness

Blocking competition

Raising money

Curiosity

Return on Investment All your CEO cares about … Returns (measurable changes) Increased sales Reduced costs Achieving the mission (for a non-profit) Investments (cost of making change happen) Keeping headcount low Using resources more effectively Only bringing in consultants if necessary

All your CEO cares about …

Returns (measurable changes)

Increased sales

Reduced costs

Achieving the mission (for a non-profit)

Investments (cost of making change happen)

Keeping headcount low

Using resources more effectively

Only bringing in consultants if necessary

Types of Opportunities/Ideas Better Cheaper Niche New I can do it better I can do it cheaper I can do it for you You never knew you needed it

How big is the opportunity? Total Available Market (TAM) Total Available Market (TAM) • How many people would want/need the product? • How large is the market be (in $’s) if they all bought? • How many units would that be? How Do I Find Out? • Industry Analysts – Gartner, Forrester • Wall Street Analysts – Goldman, Morgan

Total Available Market (TAM)

• How many people would want/need

the product?

• How large is the market be

(in $’s) if they all bought?

• How many units would that be?

How Do I Find Out?

• Industry Analysts – Gartner, Forrester

• Wall Street Analysts – Goldman, Morgan

How big is my slice? Total Available Market (TAM) Served Available Market (SAM) • How many people need or can use product? • How many people have the money to buy the product • How large would the market be (in $’s) if they all bought? • How many units would that be? How Do I Find Out? • Talk to potential customers Served Available Market (SAM)

Served Available Market (SAM)

• How many people need or can use product?

• How many people have the money to

buy the product

• How large would the market be

(in $’s) if they all bought?

• How many units would that be?

How Do I Find Out?

• Talk to potential customers

Your idea is worthless alone Idea Execution Timing Dumb Luck

MARKETS What business will you be in?

What business will you be in?

Customer Development Customer Development Company Building Customer Discovery Customer Validation Customer Creation Steven Gary Blank, Four Steps to the Ephinany

How many of them are there? Are they price sensitive? How big is their problem? How often do they have the problem? How do they solve it today? Who are your customers?

How many of them are there?

Are they price sensitive?

How big is their problem?

How often do they have the problem?

How do they solve it today?

New Product Conundrum New Product Introductions sometimes work, yet sometimes fail Why? Is it the people that are different? Is it the product that are different? Perhaps there are different “types” of ventures?

New Product Introductions sometimes work, yet sometimes fail

Why?

Is it the people that are different?

Is it the product that are different?

Perhaps there are different “types” of ventures?

Three Types of Markets Who Cares? Type of Market changes EVERYTHING Sales, marketing and business development differ radically by market type Existing Market Resegmented Market New Market

Who Cares?

Type of Market changes EVERYTHING

Sales, marketing and business development differ radically by market type

Existing: founded 1938

Competitor founded 1972

Competing in an Existing Market Faster/Better High end Somewhere else

Faster/Better

High end

Somewhere else

Resegmented

Gap’s new entry

Competing by resegmenting Niche = marketing/branding driven Cheaper = low end

Niche = marketing/branding driven

Cheaper = low end

New Market?

New New Existing Resegmented

New Market Cheaper/good enough can create a new class of product/customer Innovative/never existed before

Cheaper/good enough can create a new class of product/customer

Innovative/never existed before

John Gourville, Eager Sellers and Stony Buyers (2006)

Deadpool

Type of Market Changes Everything Market Market Size Cost of Entry Launch Type Competitive Barriers Positioning Sales Sales Model Margins Sales Cycle Chasm Width Finance Ongoing Capital Time to Profitability Customers Needs Adoption Existing Market Resegmented Market New Market

Market

Market Size

Cost of Entry

Launch Type

Competitive Barriers

Positioning

Sales

Sales Model

Margins

Sales Cycle

Chasm Width

Finance

Ongoing Capital

Time to Profitability

Customers

Needs

Adoption

Choose your idea From Guy Kawasaki, Art of the Start Ability to provide unique product or service Value to customer compete on price stupid bankrupt The holy grail

WHAT IS YOUR IDEA? Exercise Who are your customers? What is your market? How big is the opportunity?

Exercise

BUSINESS MODELS How do we make money?

How do we make money?

WHAT DO YOU USERS HAVE TO DO? Who are you users?

Who are you users?

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 Model The 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: CPM CPC CPA

Users must:

Notice advertising

Interact with ad

Preconditions: User must visit advertising location

Share their demographic information

Types:

CPM

CPC

CPA

Community Model The 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 , OpenX Open 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

Users need to

Create an identity

Connect with other users

Build a reputation

Create and share content/work/etc

Users must care

Subscription Model Users 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 Services Software as a Service Internet Services Providers

User must: Able to evaluate the offering Subscribe and unsubscribe to offering Realize value offered

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

Prioritize and Sequence Pattern: User gets value User returns, gets more value User reciprocates User adds content User contributes money Wikipedia: Looks up content Keeps finding more content Sees error, corrects User donates 1, 2, 3

Pattern:

User gets value

User returns, gets more value

User reciprocates

User adds content

User contributes money

Wikipedia:

Looks up content

Keeps finding more content

Sees error, corrects

User donates

HOW DO YOU MAKE MONEY? Exercise Marketplace Model Advertising Model Affiliate Model Community Model Subscription Model

Exercise

FEATURES And now let’s do less

And now let’s do less

The AOF Method Defining your Activity Identifying your Social Objects Choosing your Features Courtesy of Joshua Porter. Check out bokardo.com!

Defining your Activity

Identifying your Social Objects

Choosing your Features

Business Model Questions Who are your users? What will they pay for? What do you need them to do? Feature Questions What are your users doing? What do people have to do to make you successful? What are you making people better at? What are your users passionate about?

Business Model Questions

Who are your users?

What will they pay for?

What do you need them to do?

Feature Questions

What are your users doing?

What do people have to do to make you successful?

What are you making people better at?

What are your users passionate about?

2. Identifying your Social Objects

What are Social Objects? Social objects can be ideas, people, or physical objects. By interacting through/with social objects, people meet others they might not otherwise know. Social objects can be the reason why people have an interaction or form a relationship. Joshua Porter (bokardo.com)

Social objects can be ideas, people, or physical objects.

By interacting through/with social objects, people meet others they might not otherwise know.

Social objects can be the reason why people have an interaction or form a relationship.

Joshua Porter (bokardo.com)

3. Choosing your Features

LET THE CUSTOMERS CHOOSE The roadmap

The roadmap

Customer Development Customer Development Company Building Customer Discovery Customer Validation Customer Creation Steven Gary Blank, Four Steps to the Ephinany

Voice of the customer Interview What we are doing A lot about you What we’ve heard/Problem statement Solution Overview Demo (clickable mocks!) Limitations Potential roadmap Justifications Procurement Who’s our competitor Who’s not here to decide? How would you describe this to a colleague? Homerun/strikeout? SyncDev http://www.productdevelopment.com/

What we are doing

A lot about you

What we’ve heard/Problem statement

Solution Overview

Demo (clickable mocks!)

Limitations

Potential roadmap

Justifications

Procurement

Who’s our competitor

Who’s not here to decide?

How would you describe this to a colleague?

Homerun/strikeout?

Potential Roadmap Collaboration space Speaker features/video Capability Soon Later Much Later What would you move? Reporting and advanced Admin Community features E(mail) to attendees Version 1.0 Un/Official events list Network notifications Basic Admin

Collaboration space

Speaker features/video

Reporting and advanced Admin

Community features

E(mail) to attendees

Version 1.0

Un/Official events list

Network notifications

Basic Admin

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)

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

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

Time-based access (e.g. unlimited/month)

Transaction (stock trade)

Metered (seats, CPUs, named users)

Hardware (appliances, dongles)

Service (virus updates, support)

Percentage of incremental revenue/savings

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)

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)

WHERE ARE THE USERS? Distribution

Distribution

Why If you build it… they don’t come

If you build it… they don’t come

Charter Clients

SEO & SEM

SEO SEM

Private Betas Works if you know cool people Classic influence concept of Scarcity Good for user feedback

Works if you know cool people

Classic influence concept of Scarcity

Good for user feedback

Think about how you will pull people in… How do people share? With whom do they share? Where and how many of those tools do you place? Distribution Exercise

Think about how you will pull people in…

How do people share?

With whom do they share?

Where and how many of those tools do you place?

10 Questions Exactly what problem will this solve? (value proposition) For whom do we solve that problem? (target market) How big is the opportunity? (market size) What alternatives are out there? (competitive landscape) Why are we best suited to pursue this? (our differentiator) Why now? (market window) How will we get this product to market? (go-to-market strategy) How will we measure success/make money from this product? (metrics/revenue strategy) What factors are critical to success? (solution requirements) Given the above, what’s the recommendation? (go or no-go) Marty Cagen http://www.svpg.com/blog/files/assessing_product_opportunities.html

Exactly what problem will this solve? (value proposition)

For whom do we solve that problem? (target market)

How big is the opportunity? (market size)

What alternatives are out there? (competitive landscape)

Why are we best suited to pursue this? (our differentiator)

Why now? (market window)

How will we get this product to market? (go-to-market strategy)

How will we measure success/make money from this product? (metrics/revenue strategy)

What factors are critical to success? (solution requirements)

Given the above, what’s the recommendation? (go or no-go)

Questions? @cwodtke [email_address]

appendix

Return on Investment All your CEO cares about … Returns (measurable changes) Increased sales Reduced costs Achieving the mission (for a non-profit) Investments (cost of making change happen) Keeping headcount low Using resources more effectively Only bringing in consultants if necessary “ ROI” is just a fancy estimate accountants use to make decisions

All your CEO cares about …

Returns (measurable changes)

Increased sales

Reduced costs

Achieving the mission (for a non-profit)

Investments (cost of making change happen)

Keeping headcount low

Using resources more effectively

Only bringing in consultants if necessary

“ ROI” is just a fancy estimate accountants use to make decisions

About Business Things you should know to have a conversation

Profit and Loss

Investment vs. expense Location Location Location

The Fish Market Stock Location Advertising Differentiation Diversifying Pricing

Got Metrics? Do you know what matters?

Web Experience Metrics Development: Reduce Costs Development Costs Development Time Maintenance Costs Redesign Costs Sales: Increase Revenue Transactions/ purchases Product sales Traffic, audience size Customer retention Appeal Market Share Use: Improve Effectiveness Success rate/user error Efficiency/productivity User Satisfaction Job Satisfaction Ease of use Ease of learning Trust Support costs Training/documentation Return on Investment for Usable User-Interface Design , Aaron Marcus

Development: Reduce Costs

Development Costs

Development Time

Maintenance Costs

Redesign Costs

Sales: Increase Revenue

Transactions/ purchases

Product sales

Traffic, audience size

Customer retention

Appeal

Market Share

Use: Improve Effectiveness

Success rate/user error

Efficiency/productivity

User Satisfaction

Job Satisfaction

Ease of use

Ease of learning

Trust

Support costs

Training/documentation

User Experience Also Influences… Web Metrics Total page views Page views per session Click paths Unique visitors Return visitors Conversion rate (sales, reservations, applications, etc.) Business Metrics Leads Sales Retention Length of sales cycle Productivity Development costs Customer Satisfaction

Web Metrics

Total page views

Page views per session

Click paths

Unique visitors

Return visitors

Conversion rate (sales, reservations, applications, etc.)

Business Metrics

Leads

Sales

Retention

Length of sales cycle

Productivity

Development costs

Customer Satisfaction

What market are you in? Media Advertising Subscription Single purchase Commerce Profit margin Customer retention Broker Transactions Users Liquidity

Media

Advertising

Subscription

Single purchase

Commerce

Profit margin

Customer retention

Broker

Transactions

Users

Liquidity

Why the one word? Opportunity Brand Completeness Blocking competition Raising money Curiosity

Opportunity

Brand Completeness

Blocking competition

Raising money

Curiosity

Business creates value for which they receive money Money allows them the resources to provide value

Everything You Need to Know About ROI (in one slide) ROI Return Investment