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You’ve figured out your value prop and you’ve got a great product under development. Now what? How can you develop a roadmap to build a company? Venture Capitalists often qualify deals as being a......

You’ve figured out your value prop and you’ve got a great product under development. Now what? How can you develop a roadmap to build a company? Venture Capitalists often qualify deals as being a “feature”, a “product” or a “company”. Which do you have and how will you get where you want to go? This presentation addresses how to think about designing your product as a foundational element of your business. This includes thinking beyond UX and Architecture to Whole Product, Ecosystems, and Strategic partners. It also focuses on formulating how to design your go-to-market strategy and business model into your product (with a modular architecture, distinctive packaging and a frictionless approach).

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  • Intelligent line art onlyText in box resizable
  • Messaging goes with twitterEtc.Left side as text, right side as logos
  • Messaging goes with twitterEtc.Left side as text, right side as logos
  • Designed it inReduced frictionLower CARCAccelerate adoption to extend LCVEnabled self service Reducing costs
  • Beware of:Single outliers customers like Fidelity in Finserv in B2BOr in Consumer, of assuming you know the consumer – are you really representative?List resources such as- usertesting.com
  • 5th U - Unique
  • Product shrinks
  • Product shrinks
  • a set of actual or potential customers for a given set of products or services who have a common set of needs or wants, and who reference each other when making a buying decision.Moore, Geoffrey A. (2009-03-17). Crossing the Chasm
  • Alwaysvalidat from customer viewpoint- NPS
  • Alwaysvalidat from customer viewpoint- NPS
  • By Chris Anderson 02.25.08
  • By Chris Anderson 02.25.08
  • “NPG!”
  • Fast path to value
  • Wheel in a build. Spare tire. Warranty.
  • http://www.theregister.co.uk/2008/03/10/ft_first_mp3_player/Saehan's MPMan F10: held up to eight songs
  • http://www.theregister.co.uk/2008/03/10/ft_first_mp3_player/Saehan's MPMan F10: held up to eight songs
  • http://www.theregister.co.uk/2008/03/10/ft_first_mp3_player/Saehan's MPMan F10: held up to eight songs
  • http://www.theregister.co.uk/2008/03/10/ft_first_mp3_player/Saehan's MPMan F10: held up to eight songs
  • But it has to be win/winOEM, relies on upsell
  • Could you find a larger strategic partner who needed you to complete their “whole product” AND that had channels to reach your target customers AND that multiplied your Go-To-Market value and effectiveness?

Transcript

  • 1. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company HiHi Harvard innovation lab #innovationlab @mjskok #startupsecrets www.mjskok.com START UP SECRETS An insider’s guide to unfair competitive advantage Turning Products into Companies by Design & Architecture MICHAEL J SKOK North Bridge Venture Partners twitter: @mjskok mjskok.com 1
  • 2. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Welcome • Gregg Favalora, Principal, Optics for Hire – Founder Actuality Systems – @gfavalora • John McEleney, CEO Belmont Systems – Previously CEO Solidworks – @johnmceleney 2
  • 3. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Startup Secrets - Series • Company Formation – Culture – Hiring • Value Proposition • Go-To-Market Strategy – Strategic (Brand, Positioning, Segmentation etc.) – Tactical (Driving your Marketing and Sales Funnel) • Business Model • Turning Products into Companies • Perfect Pitch • Raising Funding 3
  • 4. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Feature, Product, Company? • Which do you have? • How will you get where you want to go? 4
  • 5. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Feature, Product, Company? Messaging Photo Sharing Check-In Directory 5
  • 6. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Feature -> Product is easier… Messaging Photo Sharing Check-In Directory 6
  • 7. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets It’s just a big iPod… 7
  • 8. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets The problem… Even if we have a product It takes several years to build a company Markets change and Shift happens! We have a GAP… 8
  • 9. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets The Product - Company GAP GAP 9
  • 10. Inventing and almost commercializing 3-D displays: When “tech looking for a market” goes from awesome, to painful, to a patent sale 12 years later April 2013 Gregg Favalora Principal, Optics for Hire * Founder, Actuality Systems (1997 – 2009) gregg@opticsforhire.comClient Confidential
  • 11. Client Confidential
  • 12. Gregg Favalora, re: Actuality Systems Phase 1: $1.5M, Proof-of-concept 1997-2001 • 100 million pixel display • undocumented sole-sourced component (DLP) • only 6 peopleClient Confidential
  • 13. Gregg Favalora, re: Actuality Systems Phase 1: $1.5M, Proof-of-concept Phase 2: $8M, Look for Market 1997-2001 2002 – 2006 • 100 million pixel display • CEO #3 • undocumented sole-sourced • Started selling prototypes component (DLP) • For “whole product” added an API for • only 6 people standard 3D graphics (OpenGL) • Sell products not components • Failed to identify segment with sufficient ROI for a $100k productClient Confidential
  • 14. Gregg Favalora, re: Actuality Systems Phase 1: $1.5M, Proof-of-concept Phase 2: $8M, Look for Market 1997-2001 2002 – 2006 • 100 million pixel display • CEO #3 • undocumented sole-sourced • Started selling prototypes component (DLP) • For “whole product” added an API for • only 6 people standard 3D graphics (OpenGL) • Sell products not components • Failed to identify segment with sufficient ROI for a $100k product Phase 3: $2M, Pivot out of HW 2007 – 2009 • CEO #4 • Good clinical studies, but no VC interest. PIVOT: become a medical software company for prostate cancer • Attend procedures in OR, understand reimbursement, hire VP Clinical, study successful competitors... * recession *Client Confidential
  • 15. Gregg Favalora, re: Actuality Systems Phase 1: $1.5M, Proof-of-concept Phase 2: $8M, Look for Market 1997-2001 2002 – 2006 • 100 million pixel display • CEO #3 • undocumented sole-sourced • Started selling prototypes component (DLP) • For “whole product” added an API for • only 6 people standard 3D graphics (OpenGL) • Sell products not components • Failed to identify segment with sufficient ROI for a $100k product Phase 4: Wind down, asset “sale” Phase 3: $2M, Pivot out of HW 2009 2007 – 2009 • ~70 shareholders (!) approve sale to • CEO #4 [yes, difficult business!] my new employer, OFH • Good clinical studies, but no VC • Patent broker, 150 prospects, sale in interest. PIVOT: became a medical 2010, gave some $ back to investors software company for prostate cancer • Attend procedures in OR, understand INTRIGUED? Find the whole story on reimbursement, hire VP Clinical, study Michael’s website – www.mjskok.com successful competitors... * recession *Client Confidential
  • 16. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets The Product - Company GAP GAP 16
  • 17. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets The Product - Company GAP Go-To-Market Business Model Execution 17
  • 18. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets The Product - Company GAP Solidworks Develop Design Architect 18
  • 19. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Your product… 19
  • 20. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets It’s all about the product right? 20
  • 21. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Your expenses will flip • From all R&D, engineering … Development STARTUP Sales & Marketing 21
  • 22. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Your expenses will flip • From all R&D, engineering … to prove market acceptance, gain repeatability Development Market Sales & Acceptance Marketing 22
  • 23. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Your expenses will flip • From all R&D, engineering … to prove market acceptance, • Then repeat & scale using Sales and Marketing Sales & Marketing SCALE Development 23
  • 24. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Your expenses will flip – Apple… APPLE 2012 2011 2010 R&D $3,381 $2,429 $1,782 % of net sales 2% 2% 3% SG&A $10,040 $7,599 $5,517 % of net sales 6% 7% 8% SG&A = 3x R&D SG&A SCALE Development 24
  • 25. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Target Business Model - Demandware 2010 Q4 2010 2011 Q4 2011 Target Revenue 100% 100% 100% 100% 100% Cost of Revenue 40% 36% 35% 28% 30% Gross Margin 60% 64% 65% 72% 70% R&D 17% 14% 20% 15% 12% Sales and Marketing 30% 27% 35% 30% 25% Sales & Marketing = 2x G&A 11% 9% 11% 11% Development 8% Operating Income 3% 15% (1)% 16% 25% (Loss) 25
  • 26. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Your expenses will flip • From all R&D, engineering … to prove market acceptance, • Then repeat & scale with SG&A SG&A= 2-3x (!) Development Sales & Marketing SCALE Development 26
  • 27. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets What if… You thought like an Architect and planned for this upfront? LET’S DO IT! 27
  • 28. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Closing the Product - Company GAP: Develop, Design & Architect • Develop foundations – Validated Value not just features • Design to fit – Product Go-To-Market Fit • PVP – Primary Value Prop • MVP – Min Viable Product • MVS – Min Viable Sector • MRP – Min Repeatable Product • Architect to attract – Business Model • SLIPPERY Products • Russian Doll Pricing and Packaging • Whole Product • Services 28
  • 29. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Develop foundations Validated Value not just features 29
  • 30. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Developing value • Develop less – Focus on your CORE, partner for whole product • Develop faster – Crowd source • Develop cheaper – Offshore (carefully!) • Develop smarter – Co create… 30
  • 31. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Startup Secret: Co-creating Value • Build on yourself – Eat your own cooking – Be your own customer • Be Open and Extensible (eg Software APIs) – Be Modular – Enable external multipliers to your value • Use Open Source – Leverage through community – Make the customer the product manager • Scratching their own itch 31
  • 32. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets 1,000 people contributed to Drupal 7 32
  • 33. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Value… • BEFORE you build even a feature, let alone a product – What problem are you solving? – How significant is it? 33
  • 34. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets PRIOR to MVP • Check, recheck and triple check your Value Prop – If you’re not solving a valuable problem… – YOU’RE NOT SOLVING A VALUABLE PROBLEM ! – And unsurprisingly you won’t build any value  34
  • 35. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Qualitative Validation Before After Vitamin vs. Penicillin Acute Pain Absolute Joy   35
  • 36. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Agile Validation • Tools – 3D printing See session by Abby Fichtner – Paper prototypes – Web landing pages – Online surveys – In product A/B testing – Kickstarter – Prepay customers (my favorite) – Funding – etc 36
  • 37. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Value Proposition… • See Building a Compelling Value Proposition http://www.mjskok.com/resources/value-proposition 37
  • 38. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Gain/Pain Validation Pain Inertia, RISK Gain >10 38
  • 39. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Start with a Primary Value Prop! (PVP) • Focus on a PRIMARY value prop for a single audience • Multi faceted are harder – Chicken and Egg problems – Serving too many masters 39
  • 40. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Value Prop: Recap & Intersection – 3D Solution • Discontinuous • Defensible • Disruptive Unique – 4U Need • Unworkable • Unavoidable • Urgent For targeting & • Underserved market Segmentation 40
  • 41. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Design to fit: Product Go-To-Market fit MVP and introducting MVS, MRP 41
  • 42. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets The Product Market Fit Product Market Fit 42
  • 43. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets The Product Market Fit MV Market P 43
  • 44. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Adding to Lean Startup thinking… Minimum Viable Product (MVP) MV P 44
  • 45. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets The Product Market Fit Problem Market here? here? here? MVP ++ here? Fit ? stretch ? here? MV 45
  • 46. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets The Product Market Fit Solution Market not here not here not here not here Fit MV 46 P
  • 47. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Adding to Lean Startup thinking… Minimum Viable Product (MVP) + Minimum Viable Segment (MVS) Repeat? MV MV P S 47
  • 48. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Adding to Lean Startup thinking… Minimum Viable Product (MVP) + Minimum Viable Segment (MVS) Repeat for … MV MV = same NEEDS P S 48
  • 49. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Adding to Lean Startup thinking… Minimum Viable Product (MVP) + Minimum Viable Segment (MVS) = Minimum Repeatable Product (MRP) Repeatable  MV MR MR MV = same NEEDS P P P S 49
  • 50. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Adding to Lean Startup thinking… Minimum Viable Product (MVP) + Minimum Viable Segment (MVS) = Minimum Repeatable Product (MRP) Repeatable, Referencable  MV MR MR MV = same NEEDS P P P S Smaller target to reference lead, dominate 50
  • 51. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Minimum Viable Segment… Segment according to the same NEEDS MV MR MR MV = same NEEDS P P P S  Maintains MVProduct footprint • Same functionality needed by all customers  People reference according to the same NEEDS • Customers can compare solutions  Potential for leadership, domination • At least initial Beachhead 51
  • 52. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Targeting, Segmentation + Blatant Critical need if possible: Mobile Professionals vs. Office Worker Field Workers vs. White Collar Services vs. Sales Medical Equipment vs. Office Equipment Hospitals vs. Medical Clinics Critical Care vs. Diagnostics 52
  • 53. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets No longer just Product Market Fit • It’s about Product Go-To-Market Fit – Narrow your target – Segment it by need – Focus your product • Vital for – Positioning, Messaging, Communication – Packaging and Pricing – Channels & Distribution, Partner Alignment • Enables – Reference selling, network effects, virality – Overall Business alignment 53
  • 54. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets NUMBER ONE Startup Secret Don’t be afraid to FOCUS! • Narrow as possible to start! – Think small targets to dominate • Which would you rather… – Expand on success? – Contract on failure? • Balance Vision vs. Execution #1 – See post on mjskok.com 54
  • 55. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company Hi www.mjskok.com #innovationlab @mjskok #startupsecrets Roadmap: Vision -> Execution Vision Demo Team ROI Executio s nTechnologyBreakthrough ? 55
  • 56. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Roadmap: Vision -> Execution Vision Demo Team ROI Executio s n Feature Product Solution Market Company + usability + partners + customers, + segments + product line + services references + beachheads + scalability + whole product (+ product RASS) + repeatability + profitability 56
  • 57. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Roadmap: Vision -> Execution (more likely parallel than literal) Vision Demo Team ROI Executio s n Feature Product Solution Market Company + usability + partners + customers, + segments + product line + services references + beachheads + scalability + whole product (+ product RASS) + repeatability + profitability 57
  • 58. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Roadmap: Vision -> Execution Always validate from Customer viewpoint eg NPS Vision Demo Team ROI Executio s n Feature Product Solution Market Company + usability + partners + customers, + segments + product line + services references + beachheads + scalability + whole product (+ product RASS) + repeatability + profitability Retention, Upsell 58
  • 59. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Closing the Product - Company GAP: Develop, Design & Architect • Develop foundations – Validated Value not just features • Design to fit – Product Go-To-Market Fit • PVP – Primary Value Prop • MVP – Min Viable Product • MVS – Min Viable Sector • MRP – Min Repeatable Product • Architect to attract – Business Model • SLIPPERY Products • Russian Doll Pricing and Packaging • Whole Product • Services 59
  • 60. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Architecting to Attract SLIPPERY Products 60
  • 61. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Gain/Pain ratio • Revenue • Inertia • Find (See) • Cost savings • Switching costs? • Try • Time • Default = do nothing • Buy • People • Alternatives? • Implement • Competitive advantage • Good enough = • Deploy • Reputation good enough! • Own – eg TCO • Etc.. • RISK on a startup Pain Inertia, RISK Gain >10 61
  • 62. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Gain/Pain ratio • Revenue • Inertia • Find (See) • Cost savings • Switching costs? • Try • Time • Default = do nothing • Buy • People • Alternatives? • Implement • Competitive advantage • Good enough = • Deploy • Reputation good enough! • Own – eg TCO • Etc.. • RISK on a startup Pain Inertia, Product RISK Lifecycle Gain >10 62
  • 63. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Get To Market – product facilitation What if you could literally slip into the lead? 63
  • 64. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Friction Free, SLIPPERY products • Simple • Low to no initial cost • Installs easily • Proves value quickly • Plays well with others • Easy to use • ROI is obvious • Your customers can’t live without it – it’s stickY 64
  • 65. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Simple 65
  • 66. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Simple Complexity Simplicity FIRST PRINCIPLES Advantage Disadvantage 66
  • 67. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Simple Advantage = Innovation / Complexity Complexity # Simplicity Advantage = Innovation * Simplicity Advantage # Disadvantage Disadvantage = Innovation * Complexity 67
  • 68. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Even Simpler = Less is More! Microsoft Apple 68
  • 69. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Example Knowledge Management vs. Note Taking 69
  • 70. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Simple • Simplify to your C.O.R.E. value – Create a whole product with partnerships, open source etc • See http://www.mjskok.com/resource/startup-secrets-game-changing- business-models Capabilities Of C.O.R.E. Focus on it! Really Value Exceptional Value 70
  • 71. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Low to no initial cost • Potential for – Frictionless trials – Lower initial CARC – Self identifying Freemium prospects • “Freeconomics” http://www.wired.com/techbiz/it/magazine/16-03/ff_free 71
  • 72. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Low to no initial cost • Potential for – Frictionless trials – Lower initial CARC – Self identifying Freemium prospects • Free-fall, free-fail ? – It’s worth what people are paying for it = nothing = no proof of value – And perceived value can also be zero – Ultimately have to upsell 72
  • 73. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Low to no initial cost – Value – Network – Monetization Design for VIRAL if possible 73
  • 74. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Installs easily, integrates well • Slippery not Trip-up-ery! 74
  • 75. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Installs easily, integrates well • Reducing the Pain for customers to try, adopt, deploy Pain Inertia, RISK Gain >10 75
  • 76. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Installs easily, integrates well • Integrates well: – “Embrace & Extend” Open & Extensible… http://blog.programmableweb.com/2012/11/26/8000-apis-rise-of-the-enterprise/ 76
  • 77. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Installs easily, integrates well • Integrates well – “Embrace & Extend” • Open & Extensible… • Assume http://blog.programmableweb.com/2012/11/26/8000-apis-rise-of-the-enterprise/ – Change = risky, painful, time consuming & costly • Incumbents far and wide – Applications – Operating environments – Business processes – Human skills 77
  • 78. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Products that integrate, play well with others… • Encourage others to play with them… ® LINK Technology Partners LINK program 78
  • 79. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Proves value quickly • Consumer – Instant gratification • Enterprise, – Rapid payback • ≤3 months is great • >12 months is bad 79
  • 80. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Self proving value • For example – If your product is about improving a process… • Provide proof as part of the product! – Baseline current before the product usage – Provide key metrics, visibility into progress – Integrate analytics, dashboards – Clearly surface reports that prove the value 80
  • 81. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Package and progressively disclose value VS. 81
  • 82. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Package and progressively disclose value Example: Acquia, Drupal Gardens 82
  • 83. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Package and progressively disclose value Example: Acquia, Drupal Gardens – Results... 83
  • 84. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Easy to use and apply • “OOBE!” – Out Of the Box Experience – Delight & entrance users – E.G. Templates 84
  • 85. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Easy to use and apply • Example Salesforce.com vs SIEBEL VS. 85
  • 86. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets ROI is Obvious • Quantifiable – Increase revenue – Reduce time, resources, costs • Or – Reduce risk – Drives competitive advantage (ties to fast payback) 86
  • 87. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets ROI is Obvious (Supported by Self Proving Value) • Example: Unidesk 87
  • 88. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets StickY • Your customers can’t live without it! • Fulfills a real need • Leaves customers wanting more ! 88
  • 89. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Friction Free, SLIPPERY products • Simple • Low to no initial cost • Installs easily • Proves value quickly • Plays well with others • Easy to use • ROI is obvious • Your customers can’t live without it – it’s stickY 89
  • 90. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Friction Free, SLIPPERY products • Simple • Low to no initial cost Gain • Installs easily Pain • Proves value quickly • Plays well with others Think of how this improves • Easy to use the Gain/Pain Ratio in our Value Proposition • ROI is obvious Workshop • Your customers can’t live without it – it’s stickY 90
  • 91. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Startup Secret… Disruptive innovation Yet.. NON disruptive adoption 91
  • 92. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Startup Secret… high Disruptive innovation = GAIN Yet.. low NON disruptive adoption = PAIN 92
  • 93. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Example - Apperian • Increase revenue by 40% at counters • Saved $2.5M+ in direct IT costs • Roll out 17,000 iPads • Deliver worldwide no IT touch required 93
  • 94. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Example - Apperian • Increase revenue by 40% at counters PAIN • Saved $2.5M+ in direct IT costs • Roll out 17,000 iPads GAIN • Deliver worldwide no IT touch required 94
  • 95. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Architecting to Attract Russian Doll Packaging & Pricing 95
  • 96. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Build a Russian Doll! • Multi purpose strategy – Packaging – Pricing – Distribution – And more … 96
  • 97. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Incent Free 97
  • 98. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Freemium … Limited Free 98
  • 99. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets OEM Solution… Personal Limited Free 99
  • 100. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Premium … Workgroup Personal Limited Free 100
  • 101. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Sales enabler … Corporate Workgroup Personal Limited Free 101
  • 102. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Adoption … Enterprise Corporate Workgroup Personal Limited Free 102
  • 103. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Russian Doll Packaging enables: “Addiction before Adoption” Gives you, your partners & your customers: • Digestible starting point • Upsell Options • Channel Flexibility … and more 103
  • 104. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Russian Doll Packaging enables: “Addiction before Adoption” Acquia example = increasing LTV “Land & Expand” Upsell LTV On- / Cross $400 board Sell $300 $200 Acquire $100 $0 104
  • 105. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Architecting to Attract WHOLE product 105
  • 106. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Whole Product – Reinventing the wheel 106
  • 107. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Example – MP3 Rip... 107
  • 108. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Whole product… MP3 + Player (Parallel port, ~ 8 songs) 108
  • 109. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Whole product ? MP3 + The iPod “1000 songs in your pocket” 109
  • 110. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Whole product MP3 + The iPod “1000 songs in your pocket” + Firewire + iTunes + Legal Music = WHOLE PRODUCT ! 110
  • 111. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets The ideal whole product • Is a win / win with a partner • Where the partner needs you • And can take you to market 111
  • 112. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Strategic Partnership EG: “Whole Product” Strategic Partnership Multipliers: Levers: • Increase revenue • Reduce time to market through fuller Services • Reduced dev costs solution Multipliers Application s Lever • Increase reach CORE Database through their sales Storage force, channel etc. • Credibility Integrate your CORE into their technology stack 112
  • 113. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets What makes a partner strategic? • Symbiotic multipliers & levers (win-win) + Product + Distribution + other • 1+1 > 2 in joint market leverage – Ousting competitors, driving share • Can create potential exit 113
  • 114. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets An ideal ideal (win-win) Strategic Partner Example What You Get What They Get • Complete your • Competitive advantage “WHOLE Product” • Increased ARPU - Increase Value (LCV) • Faster Time to Market • Channels to reach YOUR target customer - Reduce Selling Cost (CARC) • Credibility 114
  • 115. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Architecting to Attract Services 115
  • 116. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Services can be a lethal weapon “One of the most controversial subjects I hear raised between Entrepreneurs and Investors is the use of Professional Services in a product company. “ 116
  • 117. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Startup Secret: Professional Services – 7 golden nuggets 1. Pre-sales facilitation 2. Post- sales implementation & support 3. Customer breadth of deployment & growth 4. Predictable revenue and contribution 5. Free Product Management 6. Best practices buildup 7. Upgrade acceptance, deployment 117
  • 118. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Startup Secret: Professional Services – 7 Deadly Sins Wrath Customers get angry, thinking your product should work without services Greed You start gouging customers for extra revenue Sloth You get lazy in fixing product issues in the product versus covering them up with PS Pride You become so proud of the revenue PS is adding to your top line, that you forget to pay attention to your business model Lust You Lust after acquiring more customers instead of partners. Ultimately partners that can take services on for you are a much more scalable way to grow your business. Envy Envy between sales and services builds divided loyalty. Gluttony You get hooked on a services model. This is a real risk that I’ve seen from startups who get too used to the predictable services revenues. 118
  • 119. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Closing the Product - Company GAP: Develop, Design & Architect • Develop foundations – Value not just features • Design to fit – Product Go-To-Market Fit • PVP – Primary Value Prop • MVP – Min Viable Product • MVS – Min Viable Sector • MRP – Min Repeatable Product • Architect to attract – Business Model • SLIPPERY Products • Russian Doll Pricing and Packaging • Whole Product • Services 119
  • 120. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Blueprint for success: Develop, Design & Architect a COMPANY 1. Develop foundations 2. Design to fit 3. Architect to attract 120
  • 121. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets What we did we NOT cover: materials & cases on www.mjskok.com • Product Branding • How to develop a compelling Value Proposition • Co-creation • Distribution • Product lifecycle, • Supportability and more… … let us know what you feel is important @mjskok #innovationlab #startupsecrets 121
  • 122. 4/1/13 Belmont Technology ConfidentialTurning Products Into CompaniesJ. McEleney, CEO Belmont Technology Inc.April 2013 122
  • 123. Background• Former CEO of SolidWorks (2001-2007): • $600M supplier of Windows 3D CAD software • Acquired by Dassault Systemes 4/1/13• Former CEO of CloudSwitch (2009-2012) Belmont Technology Confidential • Enterprise cloud software • Acquired by Verizon• CEO of Belmont Technology (2012) • $9 M Series A (North Bridge, Commonwealth) • $25 M Series B (NEA) • Based in Cambridge 123
  • 124. CAD is the Basis of Every Product Belmont Technology Confidential 4/1/13124
  • 125. Does anyone know what this is? 4/1/13 1-5-0-3 Belmont Technology Confidential 125
  • 126. Where to sell? 11+ 1 2 4/1/13 Belmont Technology Confidential # Units 6-10 1-5 3 0-3 4-6 126 # Months
  • 127. Why did we care where VARs sold?• Under-capitalized +$• Need profitable, quick 4/1/13 sales Making Money Belmont Technology Confidential• New account penetration Losing Money was critical to our long term success - $ 127
  • 128. “1503” = Execution Philosophy• From 1st customer touch -> product delivery: • Minimize friction • High touch, low cost 4/1/13• Broad, stable revenue predictability Belmont Technology Confidential• Upgrades became an optimization challenge • >500K boxes to be shipped • 15.9 oz vs 16 oz (different UPS pricing schedule)• “Land and Expand” sales strategy for major accounts 128
  • 129. Eco-system “CATCH-22”: 4/1/13Partners only want your customers, but…You can’t get customers without partners Belmont Technology Confidential 129
  • 130. So how did we break the cycle? Step # 1 Step # 2 Step # 3 4/1/13 Belmont Technology Confidential Marketing Cold Leaders Set The Followers Will Fusion Pace FollowCredibility through #’s Get one partner, make The others (including them successful leaders will join) 130
  • 131. Meet your enemy: 4/1/13 Belmont Technology Confidential 1. Events force action 131 2. The perfect is the enemy of the good
  • 132. What you think vs. What you know 4/1/13 Belmont Technology Confidential 132 Important MORE Important
  • 133. Subscription: What price to charge? • Situation: • Competitors charged 18% • Wanted VAR’s to provide end user support 4/1/13 • SolidWorks always wanted to take calls->help customers get into production Belmont Technology Confidential • Action: • Start with the VAR: • How many customers could a support person handle? • How much would they cost? • What % margin does VAR expect? • How do we make sure they call VAR first? • Statistical Process Control 133 • Today this generates $300M (all of the profit of the company)
  • 134. Some Other Things I have Learned:• It’s easy to start a company, it’s hard to build a business• Events force actions• The perfect is the enemy of the good• 4/1/13 Hiring is the most important thing we do • It should be part of your culture • You are going to make mistakes, fire quickly Belmont Technology Confidential• Sales people: • Look for the coin slot • Look for people who want recognition• Your job as the CEO: create the culture • Hand written notes – go a lot further than you think • Celebrate victories, anniversaries… • As a leader NEVER take credit, give it to the team • You will get enough, don’t worry • If you’re doing your job, they did the work 134• Have Fun – it’s the journey NOT just the outcome!
  • 135. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to CompanyHi www.mjskok.com #innovationlab @mjskok #startupsecrets Thank you! • Gregg Favalora, Principal, Optics for Hire – Founder Actuality Systems – @gfavalora • John McEleney, CEO Belmont Systems – Previously CEO Solidworks – @johnmceleney 135
  • 136. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company HiHi Harvard innovation lab #innovationlab @mjskok #startupsecrets www.mjskok.com Thank you ! START UP SECRETS An insider’s guide to unfair competitive advantage Turning Products into Companies by Design & Architecture MICHAEL J SKOK North Bridge Venture Partners twitter: @mjskok mjskok.com 136
  • 137. Tweet your takeaways from tonight’s workshop! @innovationlab