Business Modeling for Startups             AIFB Seminar: Developing Business Models                for the Semantic Web (W...
The story   What is a     Design and    Connection     How doesBusiness Model    Testing of    between     Business Modela...
The story   What is a     Design and    Connection     How doesBusiness Model    Testing of    between     Business Modela...
Def.:A business model describes the rationaleof how an organization creates, delivers,and captures value.                 ...
Def.:Or in English: A business model describeshow your company makes money.                  What’s a startup? First Princ...
An ad-based freemium-model.                                      Advertiser                Money                        Le...
A one-sided Match-making plattform.                       Match-making service                                            ...
A marketplace for fund seekers.                                                             Large micro-funding           ...
Def.:A startup is a human institution designedto create a new product or serviceunder conditions of extreme uncertainty.  ...
Def.:[…] a startup is an organization formedto search for a repeatable and scalablebusiness model.  Teaching Entrepreneurs...
business model© kevin dooley, Flickr.com
The story   What is a     Design and    Connection     How doesBusiness Model    Testing of    between     Business Modela...
Design         Testing
Design
“[…] building a product is NOT“the product” of your startup.Your business model is “the product”.                     Runn...
What   Value are we delivering?
Which Customer   are we serving?
Value   Customer
Why is this so important?Life is too short to build somethingnobody wants.               Running Lean (2nd edition), Ash M...
Customer focus should be on theearly adopters in the beginning.                        Technology adoption lifecycle      ...
© Alex Osterwalder, Flickr.com
Goal: Product-Market FitWhich „Jobs“ is my customertrying to get done?(functional, social, emotional, basic …)What are her...
What products/services is the                                              VP built around?                               ...
You are not   alone.© Luix90, Flickr.com
Blue OceanRed Ocean            Blue Ocen Strategy, Kim and Mauborgne, Harvard Business School Press, 2005
The Strategy Canvas             © Kim and Mauborgne, 2012, www.blueoceanstrategy.com
Hows does my VP measure up against competing VPs?Can I fill the „open slot“?                                         © Ale...
Avg. Income:                          $12.50/hr A search saves the                               Savings:  user 6min (avg)...
Design         Testing
Testing
“Get out of the building!”  Steve Blank has preached this for over adecade wherever and whenever he could.                ...
The old way         The Four Steps to the Epiphany, Steve         Blank, printed by Lulu.com, 2006, p. 2.
The new way   Lean Startups Aren’t Cheap Startups, Steve Blank, Blog   article, http://venturebeat.com/2009/11/03/lean-sta...
Customer Development© Steve Blank„s Customer Development by Brant Cooper, www.custdev.com (Retrieved Oct 26, 2012)
Validated Learning                                  A scientific method to                                     build your ...
© Brintam, Flickr.comThe goal is tominimize the total time through the loop.
The story   What is a     Design and    Connection     How doesBusiness Model    Testing of    between     Business Modela...
Where is the connection?Design         Testing
© Alex Osterwalder, Flickr.com
© Alex Osterwalder, Flickr.comMake sure to build stuff people want.
© Alex Osterwalder, Flickr.comBuild a viable business.
The story   What is a     Design and    Connection     How doesBusiness Model    Testing of    between     Business Modela...
How do they fit together?Business PlanModel
Quote:A good plan violently executed now isbetter than a perfect plan executednext week.              US Army General Geor...
A famous Silicon Valley mantra:“Better done than perfect”.                                  Reported by PionierGarage afte...
© Sharon Drummond, Flickr.com“A study recently released by Babson College analyzed 116businesses started by alumni [and] f...
Planning is ok, but we don„t know thefuture, so it has to be appropriate.                                                h...
Today many resources are free or cheap=> we can run experiments.Time is the only resource that will alwaysbe limited => we...
Why is the Business Model Canvas great?  fast.      concise.                      portable.                    Running Lea...
The business modell canvasis a first step towards acomplete business plan.                             © Thomas Leth-Olsen...
A business plan isnecessary in theright stage.                                     © Karthick R., Flickr.comIt should be s...
Inhalte eines Business Plans              Cover Page and Table of Contents              Executive Summary              Bus...
Operations Plan                    Market Analysis                      Business                     Description          ...
Perfect your pitch, then write your plan.Use the business-plan exercise as a way to get your team on thesame page.Keep it ...
Thank you!Julius ParrisiusStartup Manager, Center für Innovation & EntrepreneurshipE-Mail: parrisius@cie-kit.de
Business Modeling for Startups (Semantic Web Seminar, AIFB at KIT)
Business Modeling for Startups (Semantic Web Seminar, AIFB at KIT)
Business Modeling for Startups (Semantic Web Seminar, AIFB at KIT)
Business Modeling for Startups (Semantic Web Seminar, AIFB at KIT)
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Business Modeling for Startups (Semantic Web Seminar, AIFB at KIT)

  1. 1. Business Modeling for Startups AIFB Seminar: Developing Business Models for the Semantic Web (WS 12/13, KIT)Julius Parrisius, Center für Innovation & Entrepreneurship 30.10.2012
  2. 2. The story What is a Design and Connection How doesBusiness Model Testing of between Business Modeland how does Business Design and and Business it relate to Models. Testing. Plan fit startups? together?
  3. 3. The story What is a Design and Connection How doesBusiness Model Testing of between Business Modeland how does Business Design and and Business it relate to Models. Testing. Plan fit startups? together?
  4. 4. Def.:A business model describes the rationaleof how an organization creates, delivers,and captures value. Business Model Generation, A. Osterwalder, Yves Pigneur, Alan Smith, and 470 practitioners from 45 countries, self published, 2010
  5. 5. Def.:Or in English: A business model describeshow your company makes money. What’s a startup? First Principles, Steve Blank, Blog article, www.steveblank.com (Retrieved Oct 26, 2012)
  6. 6. An ad-based freemium-model. Advertiser Money Lead to music fans Free music service Music-fan (free) Subscription fee $9.99/month Music-fan Ad-free premium music (premium) serviceSo far 15mio users are signed up, 4mio of them aspaying customers (at: 08/2012).
  7. 7. A one-sided Match-making plattform. Match-making service Visitor Room to rent Money Match-making service Renter Community 6-12 % commissionMore than 200.000 offers in more than 26.000 cities(192 countries) and over 1mio users (at: 07/2012).
  8. 8. A marketplace for fund seekers. Large micro-funding Small micro-funding exposure exposure member member Fund seeker Crowd of backers 5 % Gebühr Small reward Large reward74.000 projects (success rate of 44%) have beenfunded with roughly $381mio (at: 10/2012).
  9. 9. Def.:A startup is a human institution designedto create a new product or serviceunder conditions of extreme uncertainty. The lean startup, Eric Ries, Crown Business, 2011
  10. 10. Def.:[…] a startup is an organization formedto search for a repeatable and scalablebusiness model. Teaching Entrepreneurship – By Getting Out of the Building, Steve Blank, Blog article, www.steveblank.com (Retrieved Oct 26, 2012)
  11. 11. business model© kevin dooley, Flickr.com
  12. 12. The story What is a Design and Connection How doesBusiness Model Testing of between Business Modeland how does Business Design and and Business it relate to Models. Testing. Plan fit startups? together?
  13. 13. Design Testing
  14. 14. Design
  15. 15. “[…] building a product is NOT“the product” of your startup.Your business model is “the product”. Running Lean (2nd edition), Ash Maurya, O‟Reilly, 2012
  16. 16. What Value are we delivering?
  17. 17. Which Customer are we serving?
  18. 18. Value Customer
  19. 19. Why is this so important?Life is too short to build somethingnobody wants. Running Lean (2nd edition), Ash Maurya, O‟Reilly, 2012
  20. 20. Customer focus should be on theearly adopters in the beginning. Technology adoption lifecycle (Everett Rogers„ bell curve) Early adopters Early majority Refined with „the Chasm“ (Crossing the Chasm, Geoffrey Moore, Harper, 1991)
  21. 21. © Alex Osterwalder, Flickr.com
  22. 22. Goal: Product-Market FitWhich „Jobs“ is my customertrying to get done?(functional, social, emotional, basic …)What are her „Pains“?(emotions, costs, situations, risik …)What „Gains“ is she hoping for?(functional, social, emotional, costs …) All graphics © Alex Osterwalder, Flickr.com
  23. 23. What products/services is the VP built around? (in-/tangible, digital/virtual, financial …) How are they „pain relievers“? (emotions, costs, situations, risks …) How are they producing „Gains“? (functional, social, emotional, costs …)All graphics © Alex Osterwalder, Flickr.com
  24. 24. You are not alone.© Luix90, Flickr.com
  25. 25. Blue OceanRed Ocean Blue Ocen Strategy, Kim and Mauborgne, Harvard Business School Press, 2005
  26. 26. The Strategy Canvas © Kim and Mauborgne, 2012, www.blueoceanstrategy.com
  27. 27. Hows does my VP measure up against competing VPs?Can I fill the „open slot“? © Alex Osterwalder, Flickr.com
  28. 28. Avg. Income: $12.50/hr A search saves the Savings: user 6min (avg). $1.25/search Creating value at $1.25/search Google creates Google in U.S.: $1.5bln value/day 1.2bln searches/day in U.S. Creating value at $1.25/search Cost for Google: Cost to customer 0.2 cents/search value ratio: 625!!!„ [..] a stunning value proposition by any measure.“ IT-Driven Business Models, Kagermann et al., John Wiley & Sons, 2011
  29. 29. Design Testing
  30. 30. Testing
  31. 31. “Get out of the building!” Steve Blank has preached this for over adecade wherever and whenever he could. © iagoarchangel, Flickr.com
  32. 32. The old way The Four Steps to the Epiphany, Steve Blank, printed by Lulu.com, 2006, p. 2.
  33. 33. The new way Lean Startups Aren’t Cheap Startups, Steve Blank, Blog article, http://venturebeat.com/2009/11/03/lean-startups- aren‟t-cheap-startups/ , (Retrieved Oct 26, 2012)
  34. 34. Customer Development© Steve Blank„s Customer Development by Brant Cooper, www.custdev.com (Retrieved Oct 26, 2012)
  35. 35. Validated Learning A scientific method to build your business. 3 1 1. 3.In your mind:1. What do I want to test?2. How can I measure it?3. What do I 2. 2 have to build? © Eric Ries, The Lean Startup, 2011
  36. 36. © Brintam, Flickr.comThe goal is tominimize the total time through the loop.
  37. 37. The story What is a Design and Connection How doesBusiness Model Testing of between Business Modeland how does Business Design and and Business it relate to Models. Testing. Plan fit startups? together?
  38. 38. Where is the connection?Design Testing
  39. 39. © Alex Osterwalder, Flickr.com
  40. 40. © Alex Osterwalder, Flickr.comMake sure to build stuff people want.
  41. 41. © Alex Osterwalder, Flickr.comBuild a viable business.
  42. 42. The story What is a Design and Connection How doesBusiness Model Testing of between Business Modeland how does Business Design and and Business it relate to Models. Testing. Plan fit startups? together?
  43. 43. How do they fit together?Business PlanModel
  44. 44. Quote:A good plan violently executed now isbetter than a perfect plan executednext week. US Army General George S. Patton
  45. 45. A famous Silicon Valley mantra:“Better done than perfect”. Reported by PionierGarage after their Silicon Valley Tour, 2011.
  46. 46. © Sharon Drummond, Flickr.com“A study recently released by Babson College analyzed 116businesses started by alumni [and] found no statistical difference insuccess between those businesses started with formal written plansand those without them...” Enterprise: Do Start-Ups Really Need Formal Business Plans, Wall Street Journal, 1/9/07
  47. 47. Planning is ok, but we don„t know thefuture, so it has to be appropriate. high high Business Plan Waste Waste USE OF USE OFRESOURCES RESOURCES Irresponsible Business Model Irresponsible Planning low Planning low low RISK high low RISK high Both graphics: © Julius Parrsius
  48. 48. Today many resources are free or cheap=> we can run experiments.Time is the only resource that will alwaysbe limited => we have to fail fast. „Fail fast“ concept applied from: Fail Fast, Jim Shore, IEEE Computer Society, 2004, www.martinfowler.com/ieeeSoftware/failFast.pdf
  49. 49. Why is the Business Model Canvas great? fast. concise. portable. Running Lean (2nd edition), Ash Maurya, O‟Reilly, 2012
  50. 50. The business modell canvasis a first step towards acomplete business plan. © Thomas Leth-Olsen, Flickr.com
  51. 51. A business plan isnecessary in theright stage. © Karthick R., Flickr.comIt should be seen as a conversation withstakeholders (employees, partners, investors …).
  52. 52. Inhalte eines Business Plans Cover Page and Table of Contents Executive Summary Business Description Business Environment Analysis Industry Background Competitive Analysis Market Analysis Marketing Plan Operations Plan Management Team Financial Plan Attachments and Milestones
  53. 53. Operations Plan Market Analysis Business Description Marketing Plan Financial Plan
  54. 54. Perfect your pitch, then write your plan.Use the business-plan exercise as a way to get your team on thesame page.Keep it short: ten to twenty pages.Spend no more than two weeks writing it.Don‟t get obsessed with details in your financial forecast because itshould be one page long. Is a business plan necessary, Guy Kawasaki (Silicon Valley VC, bestselling author), blog article, blog.guykawasaki.com (Retrieved Oct 27, 2012)
  55. 55. Thank you!Julius ParrisiusStartup Manager, Center für Innovation & EntrepreneurshipE-Mail: parrisius@cie-kit.de
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