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The Other Side of the Canvas
The Other Side of the Canvas
The Other Side of the Canvas
The Other Side of the Canvas
The Other Side of the Canvas
The Other Side of the Canvas
The Other Side of the Canvas
The Other Side of the Canvas
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The Other Side of the Canvas
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The Other Side of the Canvas

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A look at lean startups for investors, from the other side of the canvas.

A look at lean startups for investors, from the other side of the canvas.

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  • 1. the other sideof the canvasKeith McGreggorDirector, VentureLab at GTLead Instructor, NSF I-Corps Programwhat investors really need to knowabout the new startup philosophy
  • 2. the “new” startup philosophy
  • 3. the new testaments
  • 4. CoherenceClarityContext
  • 5. CoherenceClarityContext
  • 6. What is a Startup?
  • 7. A startup is a temporaryorganization designed to search fora repeatable and scalablebusiness model.- Steve Blank
  • 8. Startup ≠ CompanyA startup is a temporaryorganization designed to search fora repeatable and scalablebusiness model.
  • 9. Startups SearchCompanies Execute
  • 10. Startup Business ModelCompany Product/Service
  • 11. business planvs.business model
  • 12. business plana place to collect all of your(current) hypotheses andyour rationale for themcover pagetable of contentsexecutive summarybusiness descriptionbusiness environment analysisindustry backgroundcompetitor analysismarket analysismarketing planoperations planmanagement summaryfinancial planattachments and milestones
  • 13. Business PlansareFICTION
  • 14. "Everybody hasa plan until theyget punched inthe mouth."
  • 15. Five year forecast?MAGICALTHINKING
  • 16. Crystal ball...2007 2013
  • 17. $time
  • 18. $timeYear 3
  • 19. Planning Plan>
  • 20. business modelthe rationale of how an organizationcreates, delivers, and captures value
  • 21. Offer
  • 22. Offer Customers
  • 23. Offer CustomersInfrastructure
  • 24. Offer CustomersInfrastructureFinancial
  • 25. ?? ??????????????FICTION
  • 26. ✔✔✔?✔✔?✔✔✔✔✔?✔?✔
  • 27. ©2006“innovation”
  • 28. 36the key ideaThere areNO FACTSin the building!
  • 29. 37the big secretConduct100+Interviews
  • 30. 38A manwho carriesa cat by thetail learnssomething hecan learn inno other way.
  • 31. Why do Startups fail?
  • 32. $timeVALLEY OFDEATH
  • 33. $timeVALLEY OFDEATHACTUAL CUSTOMER
  • 34. Startups don’t failbecause theyfail to makesomething.Startups failbecause theyfail to makesomethingsomeonewants to buyfrom them.
  • 35. $timeVALLEY OFDEATH
  • 36. Product / Market Fit
  • 37. Product / Market FitFinancial
  • 38. Product / Market FitCOST < REVENUE
  • 39. $timeTRACTION!
  • 40. $timeTRACTION!Profit
  • 41. $timeoops...Profit = Revenue - Cost
  • 42. COST < REVENUE?
  • 43. METRICSVanity
  • 44. Moneyball!METRICSActionable
  • 45. the Pipeline$$$
  • 46. METRICSAARRR
  • 47. 55the Pirate MetricsAcquisitionActivationRetentionReferralRevenue
  • 48. acquisition activation retention revenuereferral
  • 49. 57SaaS Example
  • 50. $500 / user / month$$$
  • 51. 59Paid Demand @ $1500 / 1k ClicksOrganic Traffic @ $0.00Google Adwords= $1.50 per Visitor= $0.00 per Visitor
  • 52. 60Paid Demand = $1.50 / VisitorOrganic Traffic = $0.00 / Visitor50%50%
  • 53. 61Cost per Visitor = $0.75
  • 54. 62Cost per Visitor = $0.75Visitor to Raw Lead3%
  • 55. 63Cost per Visitor = $0.75Visitor to Raw Lead3%Raw to Qualified Lead20%
  • 56. 64Cost per Visitor = $0.75Visitor to Raw Lead3%Raw to Qualified Lead20%Qualified Lead Cost =0.750.03 * 0.20= $125
  • 57. 65Cost per Visitor = $0.75Visitor to Raw Lead3%Raw to Qualified Lead20%Closed Deal Cost =0.750.03 * 0.20 * 0.10= $1250Qualified Lead to Closed Deal10%
  • 58. 66Cost per Visitor = $0.75Visitor to Raw Lead3%Raw to Qualified Lead20%= $1250Qualified Lead to Closed Deal10%Marketing CostSales CostMarketing Cost Sales Cost = ?
  • 59. 67VisitorsRaw Leads (RLC)50Qualified Leads (QLC)10Closed Deals (CDC)1Sales CostSales Cost = (1,667 * RLC) + (50 * QLC) + (10*CDC)1,667
  • 60. 68VisitorsRaw Leads50Qualified Leads10Closed Deals1Sales CostSales Cost = (1,667 * $2.00) + (50 * $20. 00) + (10 * $200. 00)1,667= $3,334 + $1,000 + $2,000 = $6,334$2.00$20.00$200.00
  • 61. 693%20%$1,250 + $6,33410%Marketing Cost Sales Cost= $7,584CAC =Customer Acquisition Cost (CAC)
  • 62. 70LTV = ?Lifetime Value of a Customer (LTV)
  • 63. 71Lifetime Value of a Customer (LTV)Average Revenue Per User (ARPU)ARPU =Total RevenueCustomers
  • 64. 72Lifetime Value of a Customer (LTV)Average Revenue Per User (ARPU)ARPU =Total RevenueCustomersGross Margin =Revenue - CostRevenue
  • 65. 73Lifetime Value of a Customer (LTV)LTV = ARPU * Gross Marginnot quite...
  • 66. 74Churnchurn =leavestay
  • 67. 75Lifetime Value of a Customer (LTV)LTV=ARPU * Gross MarginChurn
  • 68. 76Lifetime Value of a Customer (LTV)LTV=0.01Suppose ARPU = $500 per month& Gross Margin = 40%& Churn = 1% per month1%$500 * 0.4= $20,000
  • 69. 77$1,250 + $6,334Marketing Cost Sales Cost= $7,584CAC =LTV=0.01$500 * 0.4= $20,000ARPU Gross MarginChurn
  • 70. Balancing a SaaS model3xCAC < LTVrecover CAC < 12 monthswhy?churn < 3%
  • 71. COST < REVENUEthe equation that matters...
  • 72. ... is this one: CAC << LTVacquisition activation retention revenuereferralCAC LTV
  • 73. $timeCAC << LTVProfit
  • 74. ifCAC << LTVCOST < REVENUEandthen COMPANY!
  • 75. CoherenceClarityContext
  • 76. Canvas Flow
  • 77. for each customer segment,one or more value propositions
  • 78. for each value proposition,one or more customer segments
  • 79. indirectfor each customer segment,one or more channelsdirect
  • 80. getfor each customer segment,how to get/keep/growkeepgrow
  • 81. for each customer segment,which revenue stream (and for what value)A$ for AB$ for B
  • 82. for each value proposition,some resources and activities create itABact 1act 2RRRR
  • 83. although an activity might createa resource too...ABactR
  • 84. each customer relationship phasehas its own activities and/or resourcesGetKeepactRGrow
  • 85. channels also require activities or resources...actRindirectdirect
  • 86. revenue streams also need activities or resourcesactRA$ for AB$ for B
  • 87. partners provide missingresources or activitiesact 1???RRRRpartner 1partner 2
  • 88. each activity or resourcehas an associated costact 1act 2RRRRfixed costs variable costs
  • 89. the engine of the business
  • 90. the canvas, pitched
  • 91. Title Team OverviewProblem Solution Value SecretsAdvantage Strategy ModelProjections Requirements Closer
  • 92. Title Team OverviewProblem Solution Value SecretsAdvantage Strategy ModelProjections Requirements Closer
  • 93. Title Team OverviewProblem Solution Value SecretsAdvantage Strategy ModelProjections Requirements Closer
  • 94. Title Team OverviewProblem Solution Value SecretsAdvantage Strategy ModelProjections Requirements Closer
  • 95. Title Team OverviewProblem Solution Value SecretsAdvantage Strategy ModelProjections Requirements Closer
  • 96. Title Team OverviewProblem Solution Value SecretsAdvantage Strategy ModelProjections Requirements Closer
  • 97. Title Team OverviewProblem Solution Value SecretsAdvantage Strategy ModelProjections Requirements Closer
  • 98. Title Team OverviewProblem Solution Value SecretsAdvantage Strategy ModelProjections Requirements Closer
  • 99. Title Team OverviewProblem Solution Value SecretsAdvantage Strategy ModelProjections Requirements Closer
  • 100. Title Team OverviewProblem Solution Value SecretsAdvantage Strategy ModelProjections Requirements CloserCAC << LTVCOST < REVENUE
  • 101. Title Team OverviewProblem Solution Value SecretsAdvantage Strategy ModelProjections Requirements Closer
  • 102. Title Team OverviewProblem Solution Value SecretsAdvantage Strategy ModelProjections Requirements CloserMy company, _______________,is developing ______________to help __________________________________________________________.company namesomethingsomeonesolve some problemwith secret sauce
  • 103. CoherenceClarityContext
  • 104. trendsmacro-economicforcesindustryforcesmarketforces
  • 105. trendsmacro-economicforcesmarketforcesmarket issuesmarket segmentsneeds & demandsswitching costsrevenue attractiveness
  • 106. trendsmacro-econoforcesindustryforcesCompetitionincumbents & insurgentsSubstitutionsSuppliers & value chainStakeholders
  • 107. trendsindustry markettechnologyregulatorysocietal & culturalsocioeconomic
  • 108. macro-economicforcesforces forcesglobal marketconditionscapital marketscommodities & resourceseconomic infrastructure
  • 109. trendsmacro-economicforcesindustryforcesmarketforcestechnologyregulatory societalculturalsocioeconomicsuppliersstakeholdersincumbentsinsurgentssubstitutesglobal marketcapital market commoditieseconomic infrastructuresegmentsneeds and demandsswitching costsrevenue attractiveness
  • 110. trendsmacro-economicforcesindustryforcesmarketforcesforesightmacroeconomicscompetitiveanalysismarketanalysis
  • 111. the other sideof the canvas
  • 112. venturelab.gatech.edu@venturelab / @keithmcgreggorkeith@venturelab.gatech.edu75 Fifth St NW, Suite 202, Atlanta GA 30308

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