Stuff I've learned about Creating Markets. Talk on 22th of November, 2012.

1. NEW
MARKET
CREATION
Kristian Luoma
22.11.2012

3. DISRUPTIVE INNOVATION = MARKET CREATION

4. INCREMENTAL INNOVATION = INCUMBENTS RULE HERE

5. MARKET CREATION
= BEST CHANCE FOR A STARTUP
Act of making something that is
more useful, affordable or better
for someone - than existing
alternatives

7. 3 PARTS:
1 IDEOLOGY
2 TOOLS
3 WORKSHOP

8. 1 IDEOLOGY

9. STARTUP DEFINITION
“STARTUP IS AN
EXPERIMENT FOR CREATING
A SUSTAINABLE BUSINESS”

10. STARTUP REDEFINED
“STARTUP IS A SERIES OF
EXPERIMENTS FOR CREATING
A SUSTAINABLE BUSINESS”

11. OPERATIVE CAPABILITY STARTUP SCORECARD - RECORD OF PROGRESS
MARKET EVOLUTION

12. STARTUP SCORECARD - RECORD OF PROGRESS
WHY?
Grand Vision
HOW?
Resources,
culture and
skills
OPERATIVE CAPABILITY
WHAT?
Scalable
business model
& Product-
MARKET EVOLUTION market fit

13. PRODUCT WITH A MARKET - DEFINITION
PRODUCT THAT SOLVES A
PROBLEM FOR CUSTOMERS THAT
ARE WILLING TO PAY FOR IT

14. PRODUCT WITH A MARKET - DEFINITION
Complete,

15. right

16. features
Targeted
PRODUCT THAT SOLVES A
PROBLEM FOR CUSTOMERS THAT
ARE WILLING TO PAY FOR IT
Makes

17. money
Relevant
Unique

18. right

19. features,
packaging,

20. easy

21. to

22. hire

23. for

24. a

25. job
IS RELEVANT
Stuff

26. I

27. buy
IS UNIQUE
price

28. point,

29. channel,

30. value

31. proposition

32. PROBLEMS WE TRY TO SOLVE 1/3
Scarce resources needs to be
managed.

33. PROBLEMS WE TRY TO SOLVE 2/3
Products are created too soon.

34. PROBLEMS WE TRY TO SOLVE 3/3
Products are created too late.

35. MOTIVATION EXAMPLE #1
Want-button for Wantlet vs.
Pinterest Pin-it-button

37. MOTIVATION EXAMPLE #2
Ubi Oulu

38. GOAL
Make every experiment count,
when it counts.

39. 2 TOOLS

40. MISSION
Find a Systematic Approach for
Market Creation

41. LEAN MOVEMENT by ERIC RIES

42. “SCIENTIFIC METHOD”
OBSERVE
QUESTION
HYPOTHESIZE
EXPERIMENT
CONCLUDE

43. STARTUP EVOLUTION:
MARKET CREATION PERSPECTIVE
PROBLEM /
PRODUCT /
SOLUTION SCALE
MARKET FIT
FIT

44. STARTUP EVOLUTION:
MARKET CREATION PERSPECTIVE
PROBLEM /
PRODUCT /
SOLUTION SCALE
MARKET FIT
FIT
VALIDATED LEARNING GROWTH via OPTIMIZE
via PIVOTS
Experiment-driven

45. decisions

46. PERFECT EXPERIMENT
Fast, Recoverable and Explicit

47. STARTUP SCORECARD: RECORD OF PROOF
PROBLEM /
PRODUCT /
SOLUTION SCALE
OPERATIVE CAPABILITY
MARKET FIT
FIT
VALIDATED LEARNING GROWTH via OPTIMIZE
via PIVOTS
MARKET EVOLUTION

48. TOOLS
#1 Lean Canvas
#2 Progressive Learning Board
Product Hacker Extras: “Jobs to be done”

49. #1: LEAN CANVAS by ASH MAURYA
“FROM BUSINESS PLAN TO BUSINESS MODEL”

50. #3: LEAN CANVAS
PROBLEMS: SOLUTION: UNIQUE VALUE UNFAIR ADVANTAGE: CUSTOMER
PROPOSITION: SEGMENTS:
CURRENT
SOLUTIONS:
METRICS: CHANNELS:
EARLY ADOPTERS
COSTS: REVENUE:

51. #3: LEAN CANVAS
PROBLEMS: SOLUTION: UNIQUE VALUE UNFAIR ADVANTAGE: CUSTOMER
PROPOSITION: SEGMENTS:
Top 3 Problems Top 3 Solutions Can’t be easily bought
Single, clear, compelling or copied Target customers
message that states way
you are different and
worth buying
CURRENT SOLUTIONS:
Competitive solutions for
solving the problem METRICS: CHANNELS: EARLY ADOPTERS:
Key activities you Path to customers Who’s the first to adapt to
your solution?
measure
COSTS: REVENUE:
Customer acquisition costs Revenue model
Distribution costs Life time value
Hosting Revenue
People, etc. Gross margin

52. #3: LEAN CANVAS (EXAMPLE: FACEBOOK)
PROBLEMS: SOLUTION: UNIQUE VALUE UNFAIR ADVANTAGE: CUSTOMER
PROPOSITION: SEGMENTS:
Hard to reach specific Targeted ads
people with specific Targeted advertising 1 Billion users Marketers
demographics Share, Like, Newsfeed, Knows everything
1. Hard to stay in friends and profiles Connect to friends and Consumers at large
touch with all friends family
at once
2. How do I share my
METRICS: CHANNELS:
baby pictures?
EARLY ADOPTERS
CPC/CPM avg. bid Media agencies
CURRENT
pricing Facebook merchant
SOLUTIONS: High schools
# Served ads advertising program
Online ads e.g.
# of conversions
Google
Friend invitations (c2c,
Postcards, Calls, ..
DAU virality)
Facebook like-partners
COSTS: REVENUE:
Development Highly targeted - CPC/CPM advertising (“e.g. pay to display
Hosting an ad to 25 yo old men, that like World of Warcraft in Oulu”)
Lobbying
Free for consumers

53. #3: LEAN CANVAS (FILL ORDER)
PROBLEMS: SOLUTION: UNIQUE VALUE UNFAIR ADVANTAGE: CUSTOMER
PROPOSITION: SEGMENTS:
2 3 9 1
CURRENT
SOLUTIONS:
METRICS:
4 CHANNELS:
EARLY ADOPTERS:
8 5
COSTS: REVENUE:
7 6

54. #2: PROGRESSIVE LEARNING BOARD
“DE-RISKING PRODUCT CREATION”

55. 4 KINDS OF RISK IN MARKET EVOLUTION
(NOT SOLVED LINEARLY, BUT KIND OF APPEAR CHRONOLOGICALLY)
PRODUCT MARKET GROWTH / COMPETITIVENESS
RISK RISK SCALE RISK AND PROFIT RISK

56. (applied from Mark
Suster)
COMPETITIVENESS
AND PROFIT RISK
GROWTH /
Valuation
SCALE RISK
MARKET
RISK
PRODUCT
RISK
Time

57. PRODUCT RISK
How important is the problem for the customer?
Will your solution solve the problem? Can you
build it?
Does your solution deliver a unique value
proposition?

58. MARKET RISK
Who has the pain?
How do they solve problems today?
Will they pay for the problem? If not, who will?

59. GROWTH AND SCALE RISK
How will you find customers?
How will customers find you (at scale)?
How will your growth engine operate (viral, paid,
sticky, ..?)
How will you scale to demand?

60. COMPETITIVENESS AND PROFIT RISK
Are you getting paid?
Do you have a viable business (LTV!)?
Do you have a way to build unfair advantage?

61. LEARNING/DE-RISKING ON LEAN CANVAS
PROBLEMS: SOLUTION: UNIQUE VALUE UNFAIR ADVANTAGE: CUSTOMER
PROPOSITION: SEGMENTS:
2
PRODUCT
RISK:
3
PRODUCT
RISK:
2 9
COMPETITIVE
PROFIT RISK:
3
MARKET RISK:
1
1
CURRENT 1
SOLUTIONS:
METRICS:
4
PRODUCT
RISK:
3
CHANNELS:
GROWTH
EARLY ADOPTERS:
GROWTH
8 5
RISK: RISK:
GROWTH
2 1
RISK:
MARKET RISK:
3
2
COSTS: REVENUE:
MARKET RISK:
7 COMPETITIVE
PROFIT RISK:
2
3
6COMPETITIVE
PROFIT RISK:
1

62. EXAMPLE: LEARNING IN LEAN IN PRACTICE

63. PROGRESSIVE LEARNING BOARD
Before each experiment: Define Choose the fastest
your hypothesis and ways you way to test as an
validate learning experiment
Lean Canvas Experiment 1: Experiment 2: Experiment 3: Experiment 5: e.g.
Experiment 4: e.g. MVP
Module e.g. “Problem Interviews” e.g. Interviews e.g. Prototype v1.0
Problem/Solution Fit - Product Risk
There is a customer segment with the problem CUSTOMER
Problem is important to the customer PROBLEM
segment
Product delivers UVP (is unique and relevant to UVP
customer)
Product/Market Fit - Market Risk
There is a way to build the product to solve the SOLUTION
problem
There is a way to connect with early-adopters CUSTOMER
Customers are willing to pay for the solution to REVENUE
the problem
Growth / Scale Risk
We are able find customers CHANNEL
Customers are able to find us CHANNEL
Engine of growth is operative (viral, sticky or CHANNEL / REVENUE
paid)
We are able to scale on demand SOLUTION / COST /
METRIC
Market / Monetization Risk
We are getting paid REVENUE
We are able to generate revenue from each REVENUE / COST
customer
We have an unfair advantage UNFAIR ADVANTAGE

64. PRODUCT HACKER EXTRAS:
JOBS-TO-BE-DONE
by CLAYTON CHRISTENSEN

65. STORY ABOUT A MILKSHAKE:
WHAT JOB DO YOU
HIRE A MILKSHAKE FOR?

66. JOBS TO BE DONE
EXPERIENCES COMPLEMENTING
INTEGRATED SERVICES OFFERING

67. RECOMMENDATIONS:
READ-WORTHY LITERATURE

68. 3 WORKSHOP

69. #3: LEAN CANVAS (FILL ORDER)
PROBLEMS: SOLUTION: UNIQUE VALUE UNFAIR ADVANTAGE: CUSTOMER
PROPOSITION: SEGMENTS:
2 3 9 1
CURRENT
SOLUTIONS:
METRICS:
4 CHANNELS:
EARLY ADOPTERS:
8 5
COSTS: REVENUE:
7 6

70. CURRENT HYPOTHESIS PLAN TO EXPERIMENT
BUSINESS MODEL AREA PRIORITY CURRENT HYPOTHESIS PLANNED EXPERIMENT

71. PROGRESSIVE LEARNING BOARD
Before each experiment: Define Choose the fastest
your hypothesis and ways you way to test as an
validate learning experiment
Lean Canvas Experiment 1: Experiment 2: Experiment 3: Experiment 5: e.g.
Experiment 4: e.g. MVP
Module e.g. “Problem Interviews” e.g. Interviews e.g. Prototype v1.0
Problem/Solution Fit - Product Risk
There is a customer segment with the problem CUSTOMER
Problem is important to the customer PROBLEM
segment
Product delivers UVP (is unique and relevant to UVP
customer)
Product/Market Fit - Market Risk
There is a way to build the product to solve the SOLUTION
problem
There is a way to connect with early-adopters CUSTOMER
Customers are willing to pay for the solution to REVENUE
the problem
Growth / Scale Risk
We are able find customers CHANNEL
Customers are able to find us CHANNEL
Engine of growth is operative (viral, sticky or CHANNEL / REVENUE
paid)
We are able to scale on demand SOLUTION / COST /
METRIC
Market / Monetization Risk
We are getting paid REVENUE
We are able to generate revenue from each REVENUE / COST
customer
We have an unfair advantage UNFAIR ADVANTAGE

72. MISTAKES ARE PROOF THAT YOU’RE TRYING.
THANKS!
kristian.luoma@gmail.com
@kluoma