• Like

Customer Development Class 1 And 2 090409

  • 4,658 views
Uploaded on

Steve Blank's Berkeley/Columbia 2009 Customer Development Class 1 and 2

Steve Blank's Berkeley/Columbia 2009 Customer Development Class 1 and 2

  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Be the first to comment
No Downloads

Views

Total Views
4,658
On Slideshare
0
From Embeds
0
Number of Embeds
0

Actions

Shares
Downloads
644
Comments
0
Likes
28

Embeds 0

No embeds

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
    No notes for slide

Transcript

  • 1. Advanced Entrepreneurship: Customer Development in High Tech Introduction to the Course Steve Blank sblank@kandsranch.com www.steveblank.com
  • 2. You Are Here Plan Liquidity Company Timeline Idea 1st Round Customer Development in the High-Tech Enterprise Fall 2009
  • 3. You Are Here Plan Liquidity Company Timeline Idea 1st Round Customer Development in the High-Tech Enterprise Fall 2009
  • 4. How do You Get Here Plan Liquidity Company Timeline Idea 1st Round Customer Development in the High-Tech Enterprise Fall 2009
  • 5. Entrepreneurship Logical Process Customer Development in the High-Tech Enterprise Fall 2009
  • 6. Entrepreneurship Logical Process Intuitive Passion Customer Development in the High-Tech Enterprise Fall 2009
  • 7. Today Part 1: Introduction to the Course Part 2: Key Concepts
  • 8. Course Introduction ! Course Objectives ! Intro and Backgrounds ! How the Class Works ! Customer Development Customer Development in the High-Tech Enterprise Fall 2009
  • 9. Course Objectives ! Learn how to: " Reduce product/market risk " Organize sales, marketing and business development when bringing a product to market " Understand its relationship with engineering ! Have Fun ! Learn from Each Other Customer Development in the High-Tech Enterprise Fall 2009
  • 10. Course Prerequisites ! Officially – none ! Realistically: " Experience in bringing a new product to market " Entrepreneurship 295 or equivalent " Have written a business plan Customer Development in the High-Tech Enterprise Fall 2009
  • 11. Introduction and Backgrounds ! Steve Blank ! Guest Speakers ! Class Customer Development in the High-Tech Enterprise Fall 2009
  • 12. Introduction: Steve Blank 8 startups in 25 years 2 strikeouts Rocket Science, Ardent 2 walks ESL, Zilog 2 singles Convergent, MIPS 1 double SuperMac 1 home run E.piphany Non profits: Audubon, POST, Coastal Commission Blog: www.steveblank.com Twitter: sgblank Customer Development in the High-Tech Enterprise Fall 2009
  • 13. Introduction: Class Why are you taking the class? ! How many of you have: " Been in start-ups? " Been in a startup that failed? " Raised or tried to raise money? ! How many are: " Sales, marketing or business development? " Engineers? Customer Development in the High-Tech Enterprise Fall 2009
  • 14. How the Class Works ! Syllabus ! 3 Application Exercises " Individual projects " Max 2-pages " Use different company than the research project " Syllabus has assignment dates, due the week after " Electronic copy gets graded ! Research Project " Teams of 4 to 6 " Using customer development model analyze company success/failure, propose alternatives " Electronic copy gets graded ! Grading " Research Project (50%) " Application Exercises (25%) " Class Participation (25%) Customer Development in the High-Tech Enterprise Fall 2009
  • 15. Class Issues ! “Tech-heavy” ! “Enterprise-heavy” ! For-profit versus non-profit ! Startups versus existing companies ! Methodology focused on product/customer risk reduction " Doesn’t work for technology risks (i.e Biotech) ! Doesn’t match your experience or opinion Customer Development in the High-Tech Enterprise Fall 2009
  • 16. Customer Development in the High Tech Enterprise Logistics Steve Blank sblank@kandsranch.com
  • 17. How the Class Works Part 1 Class Case Application Research Exercise Project Sept 4th Key Concepts: Mkt In & Out Class 1 & 2 Risk/Tech Risk, Vertical Mkts, Types of Startups Customer Development in the High-Tech Enterprise Fall 2009
  • 18. How the Class Works Part 1 Class Case Application Research Exercise Project Sept 4th Key Concepts: Mkt In & Out Class 1 & 2 Risk/Tech Risk, Vertical Mkts, Types of Startups Sept 5th Customer Development IMVU Think! Class 3 & 4 & Discovery - Part 1 WebVan Customer Development in the High-Tech Enterprise Fall 2009
  • 19. How the Class Works Part 1 Class Case Application Research Exercise Project Sept 4th Key Concepts: Mkt In & Out Class 1 & 2 Risk/Tech Risk, Vertical Mkts, Types of Startups Sept 5th Customer Development IMVU Think! Class 3 & 4 & Discovery - Part 1 WebVan Sept 24th Discovery - Parts 2 & 3 E-Ink Market Type Team Class 5 & 6 Selection Draft Concept Customer Development in the High-Tech Enterprise Fall 2009
  • 20. How the Class Works Part 1 Class Case Application Research Exercise Project Sept 4th Key Concepts: Mkt In & Out Class 1 & 2 Risk/Tech Risk, Vertical Mkts, Types of Startups Sept 5th Customer Development IMVU Think! Class 3 & 4 & Discovery - Part 1 WebVan Sept 24th Discovery - Parts 2 & 3 E-Ink Market Type Team Class 5 & 6 Selection Draft Concept Sept 26th Validation– Parts 1 & 2 Wildfire Approved Class 7 & 8 Kittyhawk Concept Customer Development in the High-Tech Enterprise Fall 2009
  • 21. How the Class Works Part 1 Class Case Application Research Exercise Project Sept 4th Key Concepts: Mkt In & Out Class 1 & 2 Risk/Tech Risk, Vertical Burger Mkts, Types of Startups Sept 5th Customer Development IMVU Think! Class 3 & 4 & Discovery - Part 1 Webvan Sept 24th Discovery - Parts 2 & 3 E-Ink Market Type Team Class 5 & 6 Selection Draft Concept Sept 26th Validation– Parts 1 & 2 Wildfire Approved Class 7 & 8 Kittyhawk Concept Oct 16th Validation– Part 3 Motive Customer Class 9 & 10 Discovery Customer Development in the High-Tech Enterprise Fall 2009
  • 22. How the Class Works Part 2 Class Case Application Research Exercise Project Oct 17th ! Creation – Part 2 Priceline Team Meeting Class 11 & 12 ! Creation Cases Customer Development in the High-Tech Enterprise Fall 2009
  • 23. How the Class Works Part 2 Class Case Application Research Exercise Project Oct 17th ! Creation – Part 2 Priceline Team Meeting Class 11 & 12 ! Creation Cases Nov 13th ! Company Building Peppers & Customer Team Draft Class 14 Part 1 Rogers Validation Customer Development in the High-Tech Enterprise Fall 2009
  • 24. How the Class Works Part 2 Class Case Application Research Exercise Project Oct 17th ! Creation – Part 2 Priceline Team Meeting Class 11 & 12 ! Creation Cases Nov 13th ! Company Building Peppers & Customer Team Draft Class 14 Part 1 Rogers Validation Nov 14th ! Company Building Class 15 Part 2 Customer Development in the High-Tech Enterprise Fall 2009
  • 25. How the Class Works Part 2 Class Case Application Research Exercise Project Oct 17th ! Creation – Part 2 Priceline Team Meeting Class 11 & 12 ! Creation Cases Nov 13th ! Company Building Peppers & Customer Team Draft Class 14 Part 1 Rogers Validation Nov 14th ! Company Building Class 15 Part 2 Dec 3rd Summary Customer Creation Customer Development in the High-Tech Enterprise Fall 2009
  • 26. How the Class Works Part 2 Class Case Application Research Exercise Project Oct 17th ! Creation – Part 2 Priceline Team Meeting Class 11 & 12 ! Creation Cases Nov 13th ! Company Building Peppers & Customer Team Draft Class 14 Part 1 Rogers Validation Nov 14th ! Company Building Class 15 Part 2 Dec 3rd Summary Customer Creation Dec 6th Research Pescadero Research Conference Paper Due Customer Development in the High-Tech Enterprise Fall 2009
  • 27. Reading Class Text: Four Steps to the Epiphany Assigned Reading: In Reader Blogs: www.steveblank.com http://startuplessonslearned.blogspot.com/ Presentations: www.slideshare.net/ Google Group: http://groups.google.com/group/lean-startup-circle Twitter: sgblank ericries watch http://www.youtube.com/watch?v=R2lE3fgj7QA for what you could be in store for Customer Development in the High-Tech Enterprise Fall 2009
  • 28. Angel/Study.net http://bcangel.gsb.columbia.edu ! All materials are on Angel/Study.net " Syllabus " Reading " Assignments " Presentations (after each class) Customer Development in the High-Tech Enterprise Fall 2009
  • 29. Customer Development in the High Tech Enterprise The Course Steve Blank sblank@kandsranch.com
  • 30. Customer Development ! Business Plans ! The Value of “Models” for an Entrepreneur ! Key Concepts " Market versus Technology Risks " Vertical Markets " Three Types of Startups Customer Development in the High-Tech Enterprise Fall 2009
  • 31. The Top Lies of Venture Capitalists 1. “I liked your company, but my partners didn't.” 2. “If you get a lead, we will follow.” 3. “Show us some traction, and we'll invest.” 4. “We love to co-invest with other venture capitalists.” 5. “We're investing in your team.” 6. “I have lots of bandwidth to dedicate to your company.” 7. “This is a vanilla term sheet.” 8. “We can open up doors for you at our client companies.” 9. “We like early-stage investing.” Source: Guy Kawasaki Customer Development in the High-Tech Enterprise Fall 2009
  • 32. The Top Lies of Entrepreneurs 1. “Our projections are conservative.” 2. “(Big name research firm) says our market will be $50 billion in 2010.” 3. “(Big name company) is going to sign our purchase order next week.” 4. “Key employees are set to join us as soon as we get funded.” 5. “No one is doing what we're doing.”. 6. “No one can do what we're doing.” 7. “Hurry because several other venture capital firms are interested.” 8. “Oracle is too big/dumb/slow to be a threat.” 9. “We have a proven management team.” 10. “Patents make our product defensible.” 11. “All we have to do is get 1% of the market.” Customer Development in the High-Tech Enterprise Fall 2009 Source: Guy Kawasaki
  • 33. One Way to Plan a Startup Customer Development in the High-Tech Enterprise Fall 2009
  • 34. Business Plans – Why? ! Why write a plan? " VC’s require it " Planning (Strategic/Financial/Ops) " Articulate Bus Model/Assumptions ! What’s wrong with a plan? " Static " Execution Oriented Customer Development in the High-Tech Enterprise Fall 2009
  • 35. The Value of “Models” ! Model = shorthand for complicated idea " Check to see if the results are static or dynamic ! For example, … Customer Development in the High-Tech Enterprise Fall 2009
  • 36. Timmons Model of Entrepreneurship (The Business Plan) Communication Resources Opportunity Business Plan Creativity Leadership Team Customer Development in the High-Tech Enterprise Fall 2009
  • 37. Moore Model of Entrepreneurship (Chasm + Life Cycle) Customer Development in the High-Tech Enterprise Fall 2009
  • 38. New Product Introductions What’s the Model? ! New Product introduction models " Checklist of what to and when to do it " Market size and business case " Models try to ensure that product matches market " Technology and development “gates” Customer Development in the High-Tech Enterprise Fall 2009
  • 39. StageGate™ Model (New Product Introduction) Customer Development in the High-Tech Enterprise Fall 2009
  • 40. Customer Development in the High-Tech Enterprise Fall 2009
  • 41. Steve Blank Model of Entrepreneurship) Customer Development in the High-Tech Enterprise Fall 2009
  • 42. Venture Capital Model of a Startup (Execution) Concept/ Product Alpha Test/ Launch/ Bus. Plan Development Beta Test 1st Ship Customer Development in the High-Tech Enterprise Fall 2009
  • 43. New Product Introduction It Doesn’t Always Work ! New Product Development Process " Works great for some new products, fails miserably for others " Products usually are late, over cost " Typically fails to understand and satisfy customer needs ! Why? Customer Development in the High-Tech Enterprise Fall 2009
  • 44. Issues in New Product Intros ! Current models: " Confuse product development process with customer needs " Treat all startups as the same ! We need a New Product Intro Process " Reduces Market RiskSimple, understood by all " Founders commitment " Cross function organization " Solid homework Customer Development in the High-Tech Enterprise Fall 2009
  • 45. Product Development - Microsoft Unit of progress: Advance to Next Stage Waterfall Problem: known Solution: known Customer Development in the High-Tech Enterprise Fall 2009
  • 46. Product Development - Startup Assumes Customers and Markets are Understood Agile (XP)! “Product Owner” or in-house customer Problem: known Solution: unknown Customer Development in the High-Tech Enterprise Fall 2009
  • 47. Product Development - Lean Startup Assumes Customers and Markets are Unknown Customer Development Engineering Customer Customer Customer Scale Discovery Validation Creation Company Data, feedback, insights Problem: unknown Solution: unknown Hypotheses, experiments, insights Customer Development in the High-Tech Enterprise Fall 2009
  • 48. The Lean Startup Model Agile Product Development ! Continuous cycle of Product Development " Product release cycle in hours not years " Tightly coupled with customer development " Minimum feature sets, Agile maximum customer Product Development coverage Customer Development in the High-Tech Enterprise Fall 2009
  • 49. The Lean Startup Model Customer Development ! Continuous cycle of Customer customer interaction Development " Rapid hypothesis testing about market, pricing, customers, … " Extreme low cost, low burn, tight focus " Measurable gates for investors Customer Development in the High-Tech Enterprise Fall 2009
  • 50. Lean Startup Principles Extraordinary Value at Low cost in Little Time ! Leverages: Customer Development " Commodity Technology " Agile management " Customer Development ! Designed to test hypothesis and answer the unknowns Agile Product Development Customer Development in the High-Tech Enterprise Fall 2009
  • 51. The Lean Startup Model Customer Development Parallels Agile Development Agile Development Concept / Agile Continuous Continuous Business Plan Development Test Ship Customer Development Customer Customer Customer Company Discovery Validation Creation Building Customer Development in the High-Tech Enterprise Fall 2009
  • 52. Customer Development Turns Market Risk/Product Fit Hypothesis into Facts Customer Customer Customer Company Discovery Validation Creation Building ! Discovery: Test hypotheses i.e. problem and product ! Validation: Build a repeatable and scalable sales process ! Creation: Create end-user demand and fill the sales pipeline ! Building: Scale via relentless execution Customer Development in the High-Tech Enterprise Fall 2009
  • 53. Lean Startup Advantages Customer Development ! Builds low-burn companies by design " Low cost market risk testing Agile ! Organized around learning and Product Development discovery ! Right model for current conditions The next wave of capital efficient startups Customer Development in the High-Tech Enterprise Fall 2009
  • 54. The Value of “Models” ! Model = shorthand for complicated idea ! This class teaches a “model” for product introduction ! How to reduce risk for customer/market fit ! Side effect is rethinking timing in Sales, Marketing & Business Development Customer Development in the High-Tech Enterprise Fall 2009
  • 55. Customer Development Product Development Concept/ Product Alpha/Beta Launch/ Bus. Plan Dev. Test 1st Ship Customer Development Customer Customer Customer Scale Discovery Validation Creation Company Customer Development in the High-Tech Enterprise Fall 2009
  • 56. Customer Development This is what our class is about Customer Customer Customer Scale Discovery Validation Creation Company Customer Development in the High-Tech Enterprise Fall 2009
  • 57. Customer Development in the High Tech Enterprise Key Concepts Steve Blank sblank@kandsranch.com www.steveblank.com
  • 58. Class 2: Agenda ! Vertical Markets ! Market Risk vs. Invention Risk ! Case: In N Out ! Three Types of Startups ! Customer Development " Definitions " Market Type effects Customer Development in the High-Tech Enterprise Fall 2009
  • 59. New Product Conundrum ! New Product Introduction methodologies 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 startups? Customer Development in the High-Tech Enterprise Fall 2009
  • 60. Startup Checklist – 1 What Vertical Market am I In? ! Web 2.0 ! Semiconductors ! Enterprise Software ! Electronic Design ! Enterprise Hardware Automation ! Communication Hdw ! Cleantech ! Communication Sftw ! Med Dev / Health Care ! Consumer Electronics ! Life Science / Biotech ! Game Software ! Personalized Medicine Customer Development in the High-Tech Enterprise Fall 2009
  • 61. A Plethora of Opportunities Customer Development in the High-Tech Enterprise Fall 2009
  • 62. Market Risk vs. Invention Risk Customer Development in the High-Tech Enterprise Fall 2009
  • 63. Startup Checklist - 2 ! Market Risk? ! Technical Risk? ! Both? Customer Development in the High-Tech Enterprise Fall 2009
  • 64. Startup Checklist - 3 ! Opportunity Where does the idea come from? ! Innovation Where is the innovation? ! Customer Who is the User/Payer? ! Competition Who is the competitor/complementor? ! Sales What is the Channel to reach the customer? ! Marketing: How do you create end user demand? ! What does Biz Dev do? Deals? Partnerships? Sales? ! Business/Revenue Model(s) How do we organize to make money? ! IP/PatentsRegulatory Issues? How and how long? ! Time to Market How long does it take to get to market? ! Product Development Model How to you engineer it? ! Manufacturing What does it take to build it? ! Seed Financing How much? When? ! Follow-on Financing How much? When? ! Liquidity How much? When? Customer Development in the High-Tech Enterprise Fall 2009
  • 65. Execution: Lots to Worry About Customer Development in the High-Tech Enterprise Fall 2009
  • 66. Execution: Very Different by Vertical Customer Development in the High-Tech Enterprise Fall 2009
  • 67. Market Risk Reduction Strategy Customer Development in the High-Tech Enterprise Fall 2009
  • 68. In-N-Out Case
  • 69. In-N-Out Secret Menu ! X by Y ! Grilled Cheese " X meat patties and Y slices of cheese " Two slices of melted cheese, tomato, (for example, a 3 by 3 or a 2 by 4) lettuce and spread on a bun, with no meat. ! Double Meat ! Extra Everything " Two meat patties without cheese. " Adds extra spread, tomato, lettuce, and ! Triple Meat onions (regular or grilled). " Three meat patties without cheese. ! Fries "Light" ! Animal Style " Almost raw fries that are cooked for less time. " A mustard cooked beef patty served on a bun with pickles, lettuce, tomatoes, extra ! Fries "Well" (aka "Wellies") spread and grilled onions. Any burger " Fries that are cooked longer to be extra (including veggie and grilled cheeses) may crisp. be made this way. ! Cheese Fries ! Flying Dutchman " Fries with two slices of melted cheese " Two meat patties, two slices of melted placed on top. cheese and nothing else. ! Animal Style Fries ! Protein Style " Fries with cheese, spread, and grilled " Instead of a bun, the burger is wrapped in onions. lettuce. Any burger (including veggie and ! Neapolitan Shake grilled cheeses) may be made this way. " All three shake flavors (strawberry, vanilla ! Veggie Burger (Wish Burger) and chocolate) combined in one shake. " A burger without the meat and cheese. Customer Development in the High-Tech Enterprise Fall 2009
  • 70. In-N-Out Meat Factory Customer Development in the High-Tech Enterprise Fall 2009
  • 71. So Why Are We Talking About This? Existing Market Resegmented New Market Market Customer Development in the High-Tech Enterprise Fall 2009
  • 72. Three Types of Markets Existing Market Resegmented New Market Market Customer Development in the High-Tech Enterprise Fall 2009
  • 73. Three Types of Markets Existing Market Resegmented New Market Market ! Who Cares? ! Type of Market changes EVERYTHING ! Sales, marketing and business development differ radically by market type Customer Development in the High-Tech Enterprise Fall 2009
  • 74. Definitions: Three Types of Markets Existing Market Resegmented New Market Market ! Existing Market " Faster/Better = High end ! Resegmented Market " Niche = marketing/branding driven " Cheaper = low end ! New Market " Cheaper/good enough can create a new class of product/customer " Innovative/never existed before Customer Development in the High-Tech Enterprise Fall 2009
  • 75. Existing Market Definition ! Are there current customers who would: " Need the most performance possible? ! Is there a scalable business model at this point? ! Is there a defensible business model " Are there sufficient barriers to competition from incumbents? Customer Development in the High-Tech Enterprise Fall 2009
  • 76. Existing Market Performance Our Company Existing Companies Customer Development in the High-Tech Enterprise Fall 2009
  • 77. Oops, forgot about Time Performance Our Company Existing wt h c e G ro Companies Today rfo rm an Co mp any Pe g E x is t in Time Customer Development in the High-Tech Enterprise Fall 2009
  • 78. Existing Market Risks ! “Better/Faster” is an engineering driven axiom ! Incumbents defend high-end, high-margin businesses ! Factor in: " Network effect of incumbent " Sustaining innovation of incumbent " Industry (or you own) “standards” ! “They’ll never catch up” is not a business strategy ! Established companies almost always win Customer Development in the High-Tech Enterprise Fall 2009
  • 79. Resegmented Market Definition (1) Low End ! Are there customers at the low end of the market who would: " buy less (but good enough) performance " if they could get it at a lower price? ! Is there a business profitable at this low-end? ! Are there sufficient barriers to competition from incumbents? Customer Development in the High-Tech Enterprise Fall 2009
  • 80. Low-end Resegmentation “Good Enough” Performance Performance Existing wt h Companies rm an c e G ro rfo any Pe Today g Co mp E x is t in Our Company At the Low-end Time Customer Development in the High-Tech Enterprise Fall 2009
  • 81. Resegmented Market Definition (2) Niche ! Are there customers in the current market who would: " buy if it addressed their specific needs " if it was the same price? " If it cost more? ! Is there a defensible business model at this point? ! Are there barriers to competition from incumbents? Customer Development in the High-Tech Enterprise Fall 2009
  • 82. Niche Resegmentation “Branding” has its place Existing Customers Performance New Niches a ny N ew C om p a N ic h e fo r a ny N ew C om p a N ic h e fo r n y n gC om pa E x is t i Time Customer Development in the High-Tech Enterprise Fall 2009
  • 83. Resegmented Market Risks ! “Cheaper” is a sales-driven axiom ! Incumbents abandon low-end, low-margin businesses " For sometimes the right reasons ! Low-end must be coupled with a profitable business model " Up migration Customer Development in the High-Tech Enterprise Fall 2009
  • 84. New Market Definition ! Is there a large customer base who couldn’t do this before? " Because of cost, availability, skill…? ! Did they have to go to an inconvenient, centralized location? ! Are there barriers to competition from incumbents? Customer Development in the High-Tech Enterprise Fall 2009
  • 85. New Market Customers That Don’t Yet Exist Existing Customers New Niches Performance New Customers New Markets a ny ng Com p E x is t i t M arke N ew Time Customer Development in the High-Tech Enterprise Fall 2009
  • 86. New Market Risks ! “New” is a marketing-driven axiom ! New has to be unique enough that: " There is a large customer base who couldn’t do this before " They want/need/can be convinced " Adoption occurs in your lifetime ! Company manages adoption burn rate " Investors are patient and have deep pockets Customer Development in the High-Tech Enterprise Fall 2009
  • 87. Hybrid Markets ! Some products fall into Hybrid Markets ! Combine characteristics of both a new market and low-end resegmentation " SouthWest Airlines " Dell Computers " Cell Phones " Apple iPhone? Customer Development in the High-Tech Enterprise Fall 2009
  • 88. Extra What’s a Startup Business Model?
  • 89. Business Model 1. A diagram that shows all the flows between your company and its customers Customer Development in the High-Tech Enterprise Fall 2009
  • 90. Clean Tech Markets Air, Water Energy Green Renewables Smart Transport & Waste Efficiency Building Power Customer Development in the High-Tech Enterprise Fall 2009
  • 91. Clean Tech Markets - Risk Air, Water Energy Green Renewables Smart Transport & Waste Efficiency Building Power ! Which markets have technology risk? ! Which markets have customer risk? ! Which have both? Customer Development in the High-Tech Enterprise Fall 2009
  • 92. Clean Tech Markets - Risk Definitions Air, Water Energy Green Renewables Smart Transport & Waste Efficiency Building Power ! Technology Risk " risk is in development of the product (i.e. fuel cells, thin-film arrays, etc.) then customers automatically adopt ! Customer risk " risk is in customer and market adoption ! Which have both? ! You spend your time differently depending on risk Customer Development in the High-Tech Enterprise Fall 2009
  • 93. Business Plan Hypothesis Next…
  • 94. Clean Tech Markets - Hypotheses Size of Opportunity Customer Competition Sales ! Your business plan is a set of untested Marketing hypothesis Biz Dev Customer Dev ! What are they? Bus/Rev Model ! How do you test them? IP/Patents Regulatory ! How do you execute them? Time to Market Prod Dev Model Manufacturing Team Seed Financing Follow-on Liquidity Customer Development in the High-Tech Enterprise Fall 2009
  • 95. Clean Tech Markets - Hypotheses Size of Opportunity Customer ! Size of Opportunity Competition " TAM, SAM Sales ! Customer Marketing " Who’s the end user? Economic buyer? Biz Dev Reimburser? Customer Dev ! Sales Bus/Rev Model " What’s the distribution channel? IP/Patents ! Marketing " How do you create end-user demand Regulatory Time to Market ! Customer Development " How do you test your hypothesis Prod Dev Model ! Business Model Manufacturing " How do all the parts work to create profits? Team ! Financing Seed Financing " What is the path to cash flow positive Follow-on Liquidity Customer Development in the High-Tech Enterprise Fall 2009
  • 96. Your Hypothesis Go Here Finally…
  • 97. Clean Tech Markets Air, Water Energy Green Renewables Smart Transport Waste Efficiency Building Power Size of Opportunity Customer Competition Sales Marketing Biz Dev Customer Dev Bus/Rev Model IP/Patents Regulatory Time to Market Prod Dev Model Manufacturing Team Seed Financing Follow-on Liquidity Customer Development in the High-Tech Enterprise Fall 2009
  • 98. Clean Tech Markets Air, Water Energy Green Renewables Smart Transport Waste Efficiency Building Power Size of Opportunity Customer Competition Sales Marketing Biz Dev Customer This Is Important Development Bus/Rev Model IP/Patents Regulatory Time to Market Prod Dev Model Manufacturing Team Seed Financing Follow-on Liquidity Customer Development in the High-Tech Enterprise Fall 2009
  • 99. Business Plan - Sum of Hypotheses ! Business plan collects your hypothesis ! Adds facts as you know them today ! Contains a plan of how to turn hypothesis into facts ! Extrapolates results if hypothesis turn into facts ! Has a business model which is clearly articulated Customer Development in the High-Tech Enterprise Fall 2009
  • 100. Start with the Pieces Business Model…
  • 101. Business Model ! Goal is to get to a single diagram of your business ! Start by drawing pieces of your business " Problem/Opportunity " Market Size " Distribution Channel " Demand Creation " Financial assumptions ! Then put it all together Customer Development in the High-Tech Enterprise Fall 2009
  • 102. Why Are You in Business? Problem/Opportunity
  • 103. Pain Points in Inter-District Development of Curricula
  • 104. Can Save a Ton of Dollars Recognize Your Market Type
  • 105. Market Type? ! Existing Market ! Resegment a Niche ! Resegment on Low Cost ! New Market Customer Development in the High-Tech Enterprise Fall 2009
  • 106. Definitions: Types of Markets Existing Market Resegmented New Market Market ! Existing Market " Faster/Better = High end ! Resegmented Market " Niche = marketing/branding driven " Cheaper = low end ! New Market " Cheaper/good enough can create a new class of product/customer " Innovative/never existed before Customer Development in the High-Tech Enterprise Fall 2009
  • 107. Type of Market Changes Everything Existing Market Resegmented New Market Market ! Market " Market Size ! Sales • Customers " Cost of Entry " Sales Model - Needs " Launch Type " Margins - Adoption " Competitive " Sales Cycle Barriers " Chasm Width " Positioning • Finance - Ongoing Capital - Time to Profitability Customer Development in the High-Tech Enterprise Fall 2009
  • 108. So if You Succeed Do I Care? How Big is It?
  • 109. Total Available Market, Served Available Market, Target Market TAM = how big is the universe Total Available Market Served Available Market Target SAM = how many can I reach Market with my sales channel Target Market (for a startup) = who will be the most likely buyers Customer Development in the High-Tech Enterprise Fall 2009 10 9
  • 110. sizing up the market $123 billion tourism industry inside the U.S. $1 billion English travel guides sold annually $210 million 20-35 year old travelers SF (Initial test market)
  • 111. OLED’s - Billion Dollar Opportunity -./0&1+234&5*+67'43&4)4583*+(56&'93:48 Our target market is the Flat !"#$%&'())(*+, ;./0&;(<4&*=&->&'93:48 Panel display market. !"A%%&'())(*+B, Target products: Camcorders, DVD -93?48&/:80&"@AA players and recorder, digital cameras, '())(*+B computer monitors, LCD and Plasma TV Apex: ! 3.5M OLED TV market will grow to $15.29 billion by 2015 YEAR 1 PROJECTIONS Units sold : 1,000,000 Price per unit : $700 - $1,000 Revenue from Royalties (assuming .5-1.0% of shelf price): Worst case = $3,500,000 Best Case = $10,000,000 Customer Development in the High-Tech Enterprise Fall 2009
  • 112. Distribution Channel How Does Your Product Get to Your Customer?
  • 113. Sales Ecosystem Discussion channel Mandate channel Sale Superintendant Another District district IT Director Engagement (Early Stages) School Dept. Head Another school in the district Teacher Teacher
  • 114. Distribution Channel Licensed Partners: • Sony Consumer electronics • Samsung • Flat Screen TVs through (Other possibilities - LG, Toshiba, Panasonic, DuPont) Fry’s, Best Buy, Magnolia, etc IP . C Patents !"#$%"&'$()#* +),'()-$./# 01'")2 1 D 2 patents owned by Apex! Partners’ distribution channels • Technology patent - SOLED • Sony • Long-Brite and inkjet printing process • Samsung (Other possibilities - LG, Toshiba, Panasonic, DuPont) Dollar flows: Wages: founders & Consultants IP Costs: Lawyer . C License fees C.E-F1E; & Patent costs. 1 Royalties Premises: Dev’t labs. D
  • 115. Demand Creation How Do You Drive Demand Into Your Channel?
  • 116. Demand Creation ! State-by-state rollout: educational standards ! Continuous iteration of feedback CA Pilot Broad Grow Adoption Adoption ! Hypotheses: Will ! Hypotheses: Will ! Hypothesis: How they adopt, use, they buy hands- well does it sell and pay? off? Can it scale? itself? ! 10 schools f2f: ! CA telemarket ! All telemarket ! Sales: $1,066 ! F2f elsewhere ! $533/dist ! Travel: $1,000
  • 117. distribution and demand creation ! Unique Idea: website and iPhone app form symbiotic relationship Travel AdWords App traffic Listing TravelSpy.com iPhone App traffic Blogs (ex. Magazines Travelblog.org)
  • 118. Financial Assumptions What are the Ten Numbers that Matter?
  • 119. Financial Assumptions ! Ten Numbers that matter depends on your business " Average selling price " Life time value " Material cost " Distribution channel cost " Customer Acquisition cost " Time to market " Time to cash flow positive " Etc. ! Do this before 45 pages of financials Customer Development in the High-Tech Enterprise Fall 2009
  • 120. Business Model How Do The Pieces Work Together?
  • 121. Bird’s Eye View of our Business Hardware Model ($155) Online Distribution • Own website ($208+.3x) Customer • Amazon.com ($40+32x) • eBay ($300+25x) Acquisition Target Market Cost: ($41) Demand Creation Viral MyNote • SEO/SEM ($156.00) Marketing • Blogs • Forums • Bookstore promotion • Sales force • Viral marketing Offline Distribution • Website $399.99 • College bookstores ($0.02) Software (in-house) ($1.00)
  • 122. BUSINESS MODEL iPhone Application Subscription Based Service $ 2.99 (x.7) $ 5/month Year 1: $ 40K END-USERS END-USERS Year 1: $ 50K Year 2: $1M Year 2: $1.2 M E IC SE E RV NU RV RE SE VE IC VE E RE Third NU Nightlife E party venues affiliates CITYBEATS.COM Two Revenue Streams March | 2011 Total Revenue (year 1) = $ 90 K Critical Mass: 500,000 users Total Revenue (year 2) = $ 2.2 M
  • 123. ''';!'"*0%$+%'G1)'H*(#& &%0?$1"12@ F#$3G#0&3)%- 4=#""%)'C13&%) !)1-30& 5I/J6 01=:#$*%+ M*+&)*N3&1)+ *%'D%&2%#)E 5OJ/6P *%'H*$-+1) F%)3 !)1-30& M%"*<%)@ !"#$%&'(#&&%)*%+ 5PI/S8 C%&#*"'4&1)%+ */%/'(%+&'(3@E'Q)@R+ ,$- .+%) 5678 4#"% 91):1)#&%';$<%+&1)+ •!#)&$%)')13&%)'01=:#$*%+ •;$&%"'>&?%@'#)%'*$&%)%+&%-'*$ ,$-'.+%)+ A*)%"%++'&%0?$1"12@B */%/'01""%2%'+&3-%$&+ >4%%'#::%$-*K','G1)'L23)%+B