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How to Build a Startup




        Steve Blank
     www.steveblank.com
      Twitter: @sgblank
This Talk is Based On
• Business Model Generation
 • Four Steps to to Epiphany
•The Four Stepsthe Epiphany
This Talk is Based On
• Business Model Generation
 • Four Steps Owners Manual
•The Startup to the Epiphany
But First,…
Lesson 1




  WHAT’S A STARTUP?
Lifestyle Startups
               Work to Live their Passion




     Startup




• Serve known customer with
  known product
• Work for their passion
Small Business Startups
               Work to Feed the Family



                                          Small
     Startup
                                         Business



• Serve known customer with
  known product
• Feed the family
Small Business Startups
                    Work to Feed the Family



                                                 Small
      Startup
                                                Business


                       Exit Criteria
• known customer       - Business Model found
  known product
                       - Profitable business
• Feed the family
                       - Existing team
                       < $500K in revenue
Social Entrepreneurship Startups



      Social                            Large
     Startup                          Non-Profit



• Solve pressing social problems
• Social Enterprise: Profitable
• Social Innovation: New Strategies
Scalable Startup

    Search                        Execute

    Scalable                        Large
    Startup                       Company



Goal is to solve for:
 unknown customer and
 unknown features
Scalable Startup

    Search                              Execute

    Scalable                              Large
    Startup                             Company



Goal is to solve for:   Exit Criteria
 unknown customer and   - Business model found
 unknown features       - Total Available Market > $500m
                        - Can grow to $100m/year
Buyable Startup
                    Born to Be Big

     Search                                Sell
     Scalable                           $2 to $50M
     Startup                            Acquisition




Goal is to solve for:            Sell to larger company
 Internet, Mobile, Gaming Apps
Lesson 2




  THE DELUSIONS OF
  ENTREPRENEURSHIP
I Have a Vision
I Have the “Right Stuff”
I Know What Needs to Be Done
Lets Start A Company!
#1
I Know Who The Customer Is
#2
I Know Exactly the Product They Need
#3
I Know the Problem They Have
#4
All I Need to Do is Execute the Plan
#5
Now Let’s Raise Money
#6
Let’s Do It Like a Large Company
#7
We Can Fix It After We Ship It All
Lesson 3




  HOW TO GET STARTUPS
  WRONG
Large Company
    Product Introduction Model


 Concept/    Product   Alpha/Beta   Launch/
Seed Round    Dev.        Test      1st Ship
When Adopted by Startups =

The Leading Cause of Startup Death

 Concept/    Product   Alpha/Beta   Launch/
Seed Round    Dev.        Test      1st Ship
Product Introduction Model:
             Two Implicit Assumptions

  Customer Problem: known

 Concept/        Product     Alpha/Beta     Launch/
Seed Round        Dev.          Test        1st Ship



                     Product Features:    known
Execute the Business Plan
Large Company Method –
                 Hire Marketing


     Concept/          Product             Alpha/Beta         Launch/
    Seed Round          Dev.                  Test            1st Ship


                 - Create Marcom        - Hire PR Agency   - Create Demand
Marketing          Materials            - Early Buzz       - Launch Event
                 - Create Positioning                      - “Branding”
Large Company Method –
                   Hire Sales


     Concept/          Product               Alpha/Beta              Launch/
    Seed Round          Dev.                    Test                 1st Ship


                 - Create Marcom          - Hire PR Agency       - Create Demand
Marketing          Materials              - Early Buzz           - Launch Event
                 - Create Positioning                            - “Branding”


                                        • Hire Sales VP          • Build Sales
Sales                                   • Hire 1st Sales Staff    Organization
Large Company Method –
             Hire Business Development

      Concept         Product                 Alpha/Beta           Launch/
                       Dev.                      Test              1st Ship


                - Create Marcom            - Hire PR Agency   - Create Demand
 Marketing        Materials                - Early Buzz       - Launch Event
                - Create Positioning                          - “Branding”


                                       • Hire Sales VP        • Build Sales Channel /
  Sales                                • Pick distribution     Distribution
                                        Channel

 Business                                • Hire First         • Do deals for FCS
Development                                Bus Dev
Large Company Method –
                  Hire Engineering


      Concept             Product                 Alpha/Beta             Launch/
                           Dev.                      Test                1st Ship


                    - Create Marcom            - Hire PR Agency     - Create Demand
 Marketing            Materials                - Early Buzz         - Launch Event
                    - Create Positioning                            - “Branding”


                                           • Hire Sales VP          • Build Sales Channel /
  Sales                                    • Pick distribution       Distribution
                                            Channel

 Business                                    • Hire First           • Do deals for FCS
Development                                    Bus Dev


Engineering     • Write MRD      • Waterfall                • Q/A         •Tech Pubs
Lesson 4




  WHAT DO WE NEED TO GET
  STARTUPS RIGHT?
Is It Big Enough?
Is It Big Enough?

How Do You Know?
Do You Have What it Takes?
Do You Have What it Takes?

         Resilient
        Relentless
          Agile
         Curious
        Passionate
          Driven
Do You Know Why Startups Fail?
More startups fail from
a lack of customers than from a
failure of product development
Do You Know What a Startup Is?
A Startup is a temporary organization
A Startup is a temporary organization
         designed to search
A Startup is a temporary organization
designed to search for a repeatable and
       scalable business model
Startups Are Not Smaller Versions
       of Large Companies
Startups Are Not Smaller Versions
       of Large Companies
Startups Are Not Smaller Versions
       of Large Companies

    Large Companies Execute
     Known Business Models
Startups Are Not Smaller Versions
       of Large Companies

   Startups Search for Unknown
         Business Models
Startups Fail Because They
Confuse Search with Execute
Startups need their own tools,
  different from those used
    in existing companies
Startups need their own tools,
  different from those used
    in existing companies
Lesson 5




  THE 3 TOOLS FOR STARTUPS
Startup Tool #1:
The Business Model
All I Need to Do is Execute the Plan
No Business Plan Survives First
   Contact With Customers
CUSTOMER SEGMENTS




 which customers and users are you serving?
 which jobs do they really want to get done?
VALUE PROPOSITIONS




 what are you offering them? what is that
  getting done for them? do they care?
CHANNELS




how does each customer segment want to be reached?
          through which interaction points?
CUSTOMER RELATIONSHIPS




what relationships are you establishing with each segment?
       personal? automated? acquisitive? retentive?
REVENUE STREAMS




   what are customers really willing to pay for? how?
are you generating transactional or recurring revenues?
KEY RESOURCES




which resources underpin your business model? which
                assets are essential?
KEY ACTIVITIES




which activities do you need to perform well in your
        business model? what is crucial?
                                                   62
KEY PARTNERS




which partners and suppliers leverage your model?
           who do you need to rely on?
COST STRUCTURE




 what is the resulting cost structure?
which key elements drive your costs?
key activities   value             customer
                         proposition       relationships




     key                                               customer
partners                                               segments




     cost                                              revenue
structure         key                                  streams
            resources                  channels
                                                            65
                                                       images by JAM
sketch out your
business model
Business Model Canvas – Any Business
KEY          KEY             OFFER                      CUSTOMER        CUSTOMER
PARTNERS     ACTIVITIES                                 RELATIONSHIPS   SEGMENTS




             KEY                                        CHANNELS
             RESOURCES




COST STRUCTURE                            REVENUE STREAMS



                          (c)2010 K+S Ranch Consulting Inc.
                                                                               67
                                                                               67
                                 www.steveblank.com
9 Guesses


                            Guess
Guess    Guess
                                     Guess

                  Guess
        Guess               Guess



        Guess                Guess
Startup Tool #2:
The Agile Development
Agile Development is How
    We Build Startups
Startup Tool #3:
Customer Development
Customer Development is How We
 Search for the Business Model
Lesson 5




  CUSTOMER DEVELOPMENT
Customer Development

There are no facts inside your building
         So get the heck out
Customer Development is
   how you search for the model
        Search                          Execution



Customer            Customer     Customer      Company
Discovery           Validation   Creation      Building



            Pivot
Customer Development
     The Search For the Business Model


            Search


Customer             Customer
Discovery            Validation



            Pivot
Customer Development

                                        Execution



Customer            Customer     Customer      Company
Discovery           Validation   Creation      Building



            Pivot
Customer Discovery
           Search

    Customer            Customer     Customer         Company
    Discovery           Validation   Creation          Building


                Pivot
                                                Execution


•   Articulate and Test your hypotheses
•   Design experiments, start listening
•   Continuous Discovery
•   Done by founders
Discovery

• How big is the market?
• Who’s the customer?
  – What’s their problem/need
• What’s the product/service/need?
  – Does it solve the customers problem?
• How do you create demand?
• How do you deliver the product?
• How do you make money?
Customer Development =
     process to search

Business Model Canvas =
     the Scorecard

Agile Engineering is How
•Research
Labs
               •Technology
               Design
               •Marketing    •Cost
                                           •Farming
                                           conventions.
                                           •Demo, dem
                                           o, and                 •Organic
               •Demo and     Reduction
   We Build Startups
•Equipment
Manufactur
ers
               customer
               feedback
                             •Remove
                             labor force
                                           demo!!
                                           •Proximity is
                                           paramount
                                                                  Farmers
                                                                  •Weeding
                                                                  Service
•Distributio                 pains
                •IP –                                             Providers
n Network                    •Eliminate
                Patents                                           •Conventio
•Service        •Video       bio-waste     •Dealers               nal Farmers
Providers       Classifier   hazards       •Direct Service
                Files                      •Indirect Service
                                           • … then Dealers
                •Robust
                Technology



               Value-                      •Asset Sale
               Driven                      •Direct Service with
                                           equipment rental
                                           •… then Asset Sale
Customer Validation

           Search


      Customer            Customer     Customer     Company
      Discovery           Validation   Creation      Building


                  Pivot                       Execution


• Repeatable and scalable business model?
• Passionate earlyvangelists?
• Pivot back to Discovery if no customers
The Minimum Viable Product (MVP)




 •Smallest feature set that gets you the most …
    - orders, learning, feedback, failure…
    - incremental and iterative
Hypotheses Testing and Insight
The Pivot

                       Search


           Customer             Customer
           Discovery            Validation



                   Pivot

•The heart of Customer Development
•Iteration without crisis
•Fast, agile and opportunistic
Pivot Cycle Time Matters

        Search                     Execution

Customer        Customer     Customer     Company
Discovery       Validation   Creation      Building

            Pivot




•Speed of cycle minimizes cash needs
•Minimum feature set speeds up cycle time
• Near instantaneous customer feedback
  drives feature set
Web/Mobile Versus Physical


                 Customer            Customer
                 Discovery           Validation



                             Pivot




•Web/Mobile startups run faster
•Different process steps for web vs. physical
•Customer Relationships are radically different
Customer Discovery Phase 1 & 2
Customer Relationships
Customer Relationships
Physical Products – Get Customers
Customer Relationships
Physical Products – Keep Customers
Customer Relationships
Physical Products – Grow Customers
Customer Relationships
Physical Products – Get/Keep/Grow
Customer Relationships
Web/Mobile Products– Get Customers
Customer Relationships
Web/Mobile Products– Keep Customers
Customer Relationships
Web/Mobile Products– Grow Customers
Customer Relationships
Web/Mobile Products Get/Keep/Grow
Customer Relationships
Physical & Web Mobile Are Different
Lesson 6




 HOW DOES THIS REALLY
 WORK?

 LEAN LAUNCHPAD CLASS
How Does This Really Work?

    Lean LaunchPad Class




 National Science Foundation
Pivot Example
    Robotic Weeding
Talked 75 Customers in 8 Weeks
Our initial plan




                   Confidential
20 interviews, 6 site visits…
                                We got OUR Boots dirty
Mowing
Interviewed:
• Golf: Stanford Golf course
• Parks: Stanford Grounds Supervisor, head of maintenance and
    lead operator (has crew of 6)
• Toro dealer (large mower manufacturer)
• User of back-yard mowing system
• Maintenance Services for City of Los Altos
• Colony Landscaping (Mowing service for stadiums)


Weeding
Visited two farms in Salinas Valley to better understand problem

Interviewed:
• Bolthouse Farms, Large Agri-Industry in Bakersfield
• White Farms, Large Peanut farmer in Georgia
• REFCO Farms, large grower in Salinas Valley
• Rincon Farms, large grower in Salinas Valley
• Small Organic Corn/Soy grower in Nebraska
• Heirloom Organics, small owner/operator, Santa Cruz Mts
• Two small organic farmers at farmers market
• Ag Services of Salinas, Fertilizer applicator
Business Plan
      Autonomous Vehicles for Mowing & Weeding


                   - Innovation                            Dealers              Mowing
- Dealers          - Customer          We reduce           sell, installs and   - Owners of
(Mowing and        Education           operating cost      supports             public or
Ag)                - Dealer training   - Labor reduction   customer             commercially
- Vehicle OEMs                         - Better                                 used green
(John                                  utilization of      Co. trains           spaces (e.g. golf
Deere, Toro, Jac                       assets (eg mow      dealers, supports    courses)
obsen, etc)                            or weed at          dealers              - Landscaping
                   Engineers on        nights)              - Mowing
                                                                                service provider
- Research labs    Autonomous          - Improved           Dealers
                   vehicles, GPS,      performance          - Ag Dealers        Weeding
                   path-planning       (less                                    - Farmers with
                                       rework, food                             manual weeding
                                       safety)                                  operations


Dealer discount                                 Asset sale
COGS seek a 50-60% Gross Margin                 Our revenue stream derives from selling the
Heavy R&D investment                            equipment
Found weeding in organic crops is HUGE
      problem; 50 - 75% of costs

                        Crews of 100s-1000

                        Back-breaking task

                        (Ilegal) labor harder to get

                        1-5 weedings per year/field

                        $250-3,500 per acre and
                        increasing

                        Food contamination risk
Decision to make – mowing vs weeding



Application     If ROI is < 1   Labor costs     Autonomous             TAM
                yr they will    significant?    would solve
                    buy                          problem?

Mowing of           Yes.            Yes              Yes          Adjusted up to
               Professionally                                          xxx
large fields        run
               organizations
Weeding in     Agri Industry:      YES! for                       TAM increased
                    YES!        organic crops   Not necessarily   to $2.6 B (Total
Agriculture                                                           organic)
                  Large           They are       Key need is
               Growers: Yes       spending      weed vs. crop     Target Market
                                  $500/ac!      differentiation      (organic
                  Small                                             specialty)
               Growers: No                                          162 M/yr
                                                                  18%/yr growth
Autonomous vehiclesWEEDING

                  - Innovation                            Dealers              - Low density
- Ag Dealers      - Customer          We reduce           sell, installs and   vegetable
- Ag Service      Education           operating cost      supports             growers
providers         - Dealer training   - Labor reduction   customer             - High density
                                      (100 to 1)                               vegetable
- Research labs                       - Reduced risk of   Co. trains           growers
                                      contamination       dealers, supports    - Thinning
                                      - Mitigate labor    dealers              operations
                  Engineers on        availability         - Ag Dealers
                                                                               - Conventional
                  Machine Vision      concerns             - Ag Service
                                                                               vegetables
                  Two problems:                            providers
                  - Identification
                  - Elimination



Dealer discount                                Asset sale
COGS seek a 50-60% Gross Margin                Our revenue stream derives from selling the
Heavy R&D investment                           equipment
1 Week – 1 CarrotBot




        Confidential
CarrotBot

• Machine Vision data
  collection platform
  – Monochrome & Color
    Cameras
  – Laser-line sweep (depth
    measurement)
  – Encoders
                                  CarrotBot 1.0
    (position/velocity)
  – Onboard data acquisition
    & power
The Business Plan Canvas Updated

                 •Technology                            •Farming
                 Design                                 conventions.
                 •Marketing                             •Demo, demo, a
                 •Demo and                              nd demo!!
                 customer             •Cost             •Proximity is       •Organic
•Research Labs   feedback                               paramount           Farmers
                                      Reduction
•Equipment                                                                  •Weeding
                                      •Remove labor
Manufacturers                                                               Service
                                      force pains
•Distribution                                                               Providers
                                      •Eliminate bio-
Network                                                                     •Conventional
                                      waste hazards
•Service         •IP – Patents                                              Farmers
Providers        •Video                                 •Dealers
                 Classifier Files                       •Direct Service
                 •Robust                                •Indirect Service
                 Technology                             • … then Dealers


                                                                 •Asset Sale
                       Value-Driven                              •Direct Service with
                                                                 equipment rental
                                                                 •… then Asset Sale
Visit Highlights




                    Carrot vs. Weeds
Due to small root systems, carrots have no chance against weeds
Visit Highlights




Organic Broccoli, closely
cultivated. Weeds close to
plants are hand-picked
Visit Highlights




State of the Art in Weeding Technology for Organic
Crops
Customer Hypothesis
Pre-Test
                                               Large
                                              Growers
             Us            Dealer
                                             Industrial
                                              Growers

                                        Hypothesis Confirmed
                                        • Growers interested in own
                           Industrial   equipment
                            Growers     • Industrial (10,000s of acres)
 Post-Test                              • Large (1,000s of acres)
                             Large      • Willing to pay $100k for one unit
                            Growers
       Us         Dealer                • Smaller growers (100s of acres)
                            Service     usually subcontract the labor
                           Providers    services or rent equipment

                           Equipment    • All purchases through local dealers
                             Rental            •Customer service is essential
Customer Map #1 – Industrial Growers
Example: Bolthouse Farms – Large Industrial Carrot Producer – 8K acres/yr

      End User      • Equipment Operator




      Influencer    • Local Farm Mgr
                      • Cliff Kirkpatrick, visited



    Recommender     • Director, Ag                    Equipment Operator
                    Technology
                      • Justin
                      Grove, interviewed
      Decision
                    • VP, Growing
       Maker
                    Operations


      Approver      • CFO, CEO (Jeff Dunn)

                                                        Cliff, Farm Mgr
Customer Map #2 – Service Providers
Example: Ag Services – Service Provider, Salinas Valley


  End User       • Equipment Operator




  Influencer      • Grower




Recommender      • Service Mgr

                                 Me (left), Marty (middle, Service Mgr), Doug
                                                 (right, Grower)

Decision Maker   • ?? (service mgr’s
 & Approver      boss)
The Business Plan Canvas Updated

                 •Technology                            •Farming
                 Design                                 conventions.
                 •Marketing                             •Demo, demo, a      •Mid/Large
                 •Demo and                              nd demo!!           Organic Farmers
                 customer             •Cost             •Proximity is       •Agricultural
•Research Labs   feedback                               paramount
                                      Reduction                             corporations
•Equipment
                                      •Remove labor                         •Weeding Service
Manufacturers
                                      force pains                           Providers
•Distribution
                                      •Eliminate bio-
Network
•Service         •IP – Patents
                                      waste hazards                         •Mid/Large
Providers        •Video                                 •Direct Service     Conventional
                 Classifier Files                       •Indirect Service   Farmers
                 •Robust                                • … then Dealers
                 Technology

                                                               •Direct Service with
                                                               equipment rental
                       Value-Driven                            •($1,500/d; 120d/yr )
                                                               •Low density: $1,500/d
                                                               •High density: $6,000/d
World Ag Expo interviews:
the need is real and wide spread
                    • 10+ interviews at show
                           – Everyone confirmed the need
                           – Robocrop, UK based, crude
                             competitor sells for $171 K

                    • Revenue Stream
                           – Mid to small growers prefer a
                             service
                           – Large growers prefer to buy, but
                             OK with service until technology
                             is proven
                           – Charging for labor cost saved is
                             OK, as we provide other benefits
                             (food safety, labor availability)


            Confidential
The Business Plan Canvas Updated

                 •Technology                              •Farming
                 Design                                   conventions.
                 •Marketing                               •Demo, demo, a      •Mid/Large
•Research Labs   •Demo and                                nd demo!!           Organic Farmers
•Equipment       customer               •Cost             •Proximity is       •Agricultural
Manufacturer     feedback               Reduction         paramount           corporations
•Distribution                           •Remove labor                         •Weeding Service
Network                                 force pains                           Providers
•Service                                •Eliminate bio-
Providers
                 •IP – Patents
                                        waste hazards                         •Mid/Large
•2 or 3 Key
                 •Video                                   •Direct Service     Conventional
Farms
                 Classifier Files                         •Indirect Service   Farmers
                 •Robust                                  • … then Dealers
                 Technology

                 Value-Driven                                    •Direct Service with
                 • R&D                                           equipment rental
                 • Bill of Materials                             •Low density: $1,500/d
                 • Training & Service                            •High density: $6,000/d
                 • Sales
Autonomous weeding - Final


                  - Innovation                            Direct               - Low density
- Ag Service      - Customer          We reduce           - Provide high       vegetable
providers         Education           operating cost      quality service at   growers
                  - Dealer training   - Labor reduction   competitive price    - High density
- Research                            (100 to 1)                               vegetable
Institutes (eg                        - Reduced risk of                        growers
UC Davis, Laser                       contamination                            - Thinning
Zentrum                               - Mitigate labor                         operations
Hannover)         Engineers on        availability        Direct
                                                                               - Conventional
                  Machine Vision      concerns            - Alliance with
                                                                               vegetables
- 3-4 key farms   Two problems:                           service
                  - Identification                        providers
                  - Elimination                           - Eventually sell
                                                          through dealers


Costs for service provision                    Service provision
COGS seek a 50-60% Gross Margin                - Charge by the acre with modifier according to
Heavy R&D investment                           weed density
                                               - Eventually move to asset sale
Pivot Example
   Autonomous Robot
Talked 75 Customers in 8 Weeks
Our initial plan
Business Plan
                  Autonomous Vehicles for Mowing


                   - Innovation                            Dealers              Mowing
- Dealers (Mowing - Customer           We reduce           sell, installs and   - Owners of
and Ag)            Education           operating cost      supports customer    public or
- Vehicle OEMs     - Dealer training   - Labor reduction                        commercially
(John                                  - Better            Co. trains           used green
Deere, Toro, Jacob                     utilization of      dealers, supports    spaces (e.g. golf
sen, etc)                              assets (eg mow      dealers              courses)
                                       or weed at                               - Landscaping
- Research labs     Engineers on       nights)             - Mowing
                                                                                service provider
                    Autonomous         - Improved          Dealers
                    vehicles, GPS,     performance         - Ag Dealers         Weeding
                    path-planning      (less                                    - Farmers with
                                       rework, food                             manual weeding
                                       safety)                                  operations


Dealer discount                                 Asset sale
COGS seek a 50-60% Gross Margin                 Our revenue stream derives from selling the
Heavy R&D investment                            equipment
20 interviews, 6 site visits…
                                We got OUR Boots dirty
Mowing
Interviewed:
• Golf: Stanford Golf course
• Parks: Stanford Grounds Supervisor, head of maintenance and
    lead operator (has crew of 6)
• Toro dealer (large mower manufacturer)
• User of back-yard mowing system
• Maintenance Services for City of Los Altos
• Colony Landscaping (Mowing service for stadiums)


Weeding
Visited two farms in Salinas Valley to better understand problem

Interviewed:
• Bolthouse Farms, Large Agri-Industry in Bakersfield
• White Farms, Large Peanut farmer in Georgia
• REFCO Farms, large grower in Salinas Valley
• Rincon Farms, large grower in Salinas Valley
• Small Organic Corn/Soy grower in Nebraska
• Heirloom Organics, small owner/operator, Santa Cruz Mts
• Two small organic farmers at farmers market
• Ag Services of Salinas, Fertilizer applicator
Decision to make – mowing vs weeding



Application     If ROI is < 1   Labor costs     Autonomous             TAM
                yr they will    significant?    would solve
                    buy                          problem?

Mowing of           Yes.            Yes              Yes          Adjusted up to
               Professionally                                          xxx
large fields        run
               organizations
Weeding in     Agri Industry:      YES! for                       TAM increased
                    YES!        organic crops   Not necessarily   to $2.6 B (Total
Agriculture                                                           organic)
                  Large           They are       Key need is
               Growers: Yes       spending      weed vs. crop     Target Market
                                  $500/ac!      differentiation      (organic
                  Small                                             specialty)
               Growers: No                                          162 M/yr
                                                                  18%/yr growth
Autonomous vehiclesWEEDING

                  - Innovation                            Dealers              - Low density
- Ag Dealers      - Customer          We reduce           sell, installs and   vegetable
- Ag Service      Education           operating cost      supports customer    growers
providers         - Dealer training   - Labor reduction                        - High density
                                      (100 to 1)          Co. trains           vegetable
- Research labs                       - Reduced risk of   dealers, supports    growers
                                      contamination       dealers              - Thinning
                                      - Mitigate labor                         operations
                  Engineers on        availability        - Ag Dealers
                                                                               - Conventional
                  Machine Vision      concerns            - Ag Service
                                                                               vegetables
                  Two problems:                           providers
                  - Identification
                  - Elimination



Dealer discount                                Asset sale
COGS seek a 50-60% Gross Margin                Our revenue stream derives from selling the
Heavy R&D investment                           equipment
1 Week – 1 CarrotBot




        Confidential
CarrotBot

• Machine Vision data
  collection platform
  – Monochrome & Color
    Cameras
  – Laser-line sweep (depth
    measurement)
  – Encoders
                                  CarrotBot 1.0
    (position/velocity)
  – Onboard data acquisition
    & power
Visit Highlights




                    Carrot vs. Weeds
Due to small root systems, carrots have no chance against weeds
Visit Highlights




Organic Broccoli, closely
cultivated. Weeds close to
plants are hand-picked
The Business Plan Canvas Updated

                 •Technology                            •Farming
                 Design                                 conventions.
                 •Marketing                             •Demo, demo, a
                 •Demo and                              nd demo!!
                 customer             •Cost             •Proximity is       •Organic
•Research Labs   feedback                               paramount           Farmers
                                      Reduction
•Equipment                                                                  •Weeding
                                      •Remove labor
Manufacturers                                                               Service
                                      force pains
•Distribution                                                               Providers
                                      •Eliminate bio-
Network                                                                     •Conventional
                                      waste hazards
•Service         •IP – Patents                                              Farmers
Providers        •Video                                 •Dealers
                 Classifier Files                       •Direct Service
                 •Robust                                •Indirect Service
                 Technology                             • … then Dealers


                                                                 •Asset Sale
                       Value-Driven                              •Direct Service with
                                                                 equipment rental
                                                                 •… then Asset Sale
Customer Hypothesis
Pre-Test
                                               Large
                                              Growers
             Us            Dealer
                                             Industrial
                                              Growers

                                        Hypothesis Confirmed
                                        • Growers interested in own
                           Industrial   equipment
                            Growers     • Industrial (10,000s of acres)
 Post-Test                              • Large (1,000s of acres)
                             Large      • Willing to pay $100k for one unit
                            Growers
       Us         Dealer                • Smaller growers (100s of acres)
                            Service     usually subcontract the labor
                           Providers    services or rent equipment

                           Equipment    • All purchases through local dealers
                             Rental            •Customer service is essential
Customer Map #1 – Industrial Growers
Example: Bolthouse Farms – Large Industrial Carrot Producer – 8K acres/yr

      End User      • Equipment Operator




      Influencer    • Local Farm Mgr
                      • Cliff Kirkpatrick, visited



    Recommender     • Director, Ag                    Equipment Operator
                    Technology
                      • Justin
                      Grove, interviewed
      Decision
                    • VP, Growing
       Maker
                    Operations


      Approver      • CFO, CEO (Jeff Dunn)

                                                        Cliff, Farm Mgr
Customer Map #2 – Service Providers
Example: Ag Services – Service Provider, Salinas Valley


  End User       • Equipment Operator




  Influencer      • Grower




Recommender      • Service Mgr

                                 Me (left), Marty (middle, Service Mgr), Doug
                                                 (right, Grower)

Decision Maker   • ?? (service mgr’s
 & Approver      boss)
The Business Plan Canvas Updated

                 •Technology                            •Farming
                 Design                                 conventions.
                 •Marketing                             •Demo, demo, a      •Mid/Large
                 •Demo and                              nd demo!!           Organic Farmers
                 customer             •Cost             •Proximity is       •Agricultural
•Research Labs   feedback                               paramount
                                      Reduction                             corporations
•Equipment
                                      •Remove labor                         •Weeding Service
Manufacturers
                                      force pains                           Providers
•Distribution
                                      •Eliminate bio-
Network
•Service         •IP – Patents
                                      waste hazards                         •Mid/Large
Providers        •Video                                 •Direct Service     Conventional
                 Classifier Files                       •Indirect Service   Farmers
                 •Robust                                • … then Dealers
                 Technology

                                                               •Direct Service with
                                                               equipment rental
                       Value-Driven                            •($1,500/d; 120d/yr )
                                                               •Low density: $1,500/d
                                                               •High density: $6,000/d
World Ag Expo interviews:
the need is real and wide spread
                 • 10+ interviews at show
                    – Everyone confirmed the need
                    – Robocrop, UK based, crude
                      competitor sells for $171 K

                 • Revenue Stream
                    – Mid to small growers prefer a
                      service
                    – Large growers prefer to buy, but
                      OK with service until technology
                      is proven
                    – Charging for labor cost saved is
                      OK, as we provide other benefits
                      (food safety, labor availability)
The Business Plan Canvas Updated

                 •Technology                              •Farming
                 Design                                   conventions.
                 •Marketing                               •Demo, demo, a      •Mid/Large
•Research Labs   •Demo and                                nd demo!!           Organic Farmers
•Equipment       customer               •Cost             •Proximity is       •Agricultural
Manufacturer     feedback               Reduction         paramount           corporations
•Distribution                           •Remove labor                         •Weeding Service
Network                                 force pains                           Providers
•Service                                •Eliminate bio-
Providers
                 •IP – Patents
                                        waste hazards                         •Mid/Large
•2 or 3 Key
                 •Video                                   •Direct Service     Conventional
Farms
                 Classifier Files                         •Indirect Service   Farmers
                 •Robust                                  • … then Dealers
                 Technology

                 Value-Driven                                    •Direct Service with
                 • R&D                                           equipment rental
                 • Bill of Materials                             •Low density: $1,500/d
                 • Training & Service                            •High density: $6,000/d
                 • Sales
Autonomous weeding - Final


                  - Innovation                            Direct               - Low density
- Ag Service      - Customer          We reduce           - Provide high       vegetable
providers         Education           operating cost      quality service at   growers
                  - Dealer training   - Labor reduction   competitive price    - High density
- Research                            (100 to 1)                               vegetable
Institutes (eg                        - Reduced risk of                        growers
UC Davis, Laser                       contamination                            - Thinning
Zentrum                               - Mitigate labor                         operations
Hannover)         Engineers on        availability        Direct
                                                                               - Conventional
                  Machine Vision      concerns            - Alliance with
                                                                               vegetables
- 3-4 key farms   Two problems:                           service
                  - Identification                        providers
                  - Elimination                           - Eventually sell
                                                          through dealers


Costs for service provision                    Service provision
COGS seek a 50-60% Gross Margin                - Charge by the acre with modifier according to
Heavy R&D investment                           weed density
                                               - Eventually move to asset sale
Maine "Top Gun" Customer Development Broadcast  021512
Genesis of the Idea
Business Model Canvas
Assumption of Customer Pain
                       200+                                              People were
Parking is a pain!   customers       People DO want      Bigger Pain      even more
 People want a                         a guaranteed                    frustrated with
   guaranteed                          spot & would                     parking at big
  parking spot.                       reserve online.                      events.
                                 80% positive response
Business Model Canvas
Assumption of Customer Pain
                        200+                                           People were
Parking is a pain!    customers     People DO want     Bigger Pain      even more
 People want a                        a guaranteed                   frustrated with
   guaranteed                         spot & would                    parking at big
  parking spot.                      reserve online.                     events.


 People will pay     Surveyed 75+
 extra to have a      Customers     People will not
      great,                           only pay
                                    more, they will                    Validated!
   guaranteed
  parking spot.                     pay a lot more!
                                         ($9+)
Business Model Canvas
Customer Survey/Validation
• How much more would you be willing to pay
  to have a guaranteed close parking spot in the
  arena's lot or near the arena?
  – On average- $9.33
  – Max of $27.00




                                               145
Assumption of Pain
                        200+                                             People were
Parking is a pain!    customers     People DO want       Bigger Pain      even more
 People want a                        a guaranteed                     frustrated with
   guaranteed                         spot & would                      parking at big
  parking spot.                      reserve online.                       events.


 People will pay     Surveyed 75+
 extra to have a      Customers     People will not
great, guarantee                       only pay
                                    more, they will                      Validated!
 d parking spot.
                                    pay a lot more!
                                         ($9+)


                      30+ People    It is difficult to
People who have
                                       get a mass                      We needed to
extra spaces will
                                       number of                        find a new
 post spots and
                                    people to post                       solution.
  make money.
                                    enough parking
                                          spots.
Expert Validation
• Tom Lombardi and Greg Bessoni
  – Online parking reservation experts


     Partnered
    with me and
       put up
       capital.
Business Model Canvas
New Assumptions
                    30+ Parking
Parking lots will      Lots           Yes! Lots have      Bigger Pain
post spots online                    been looking for
 so that people                      ways to increase
  can reserve                        revenue and fill
      them.                              up lots.

                                  75% positive response
                                                                         20% of cash
                                                                        goes missing.


   Electronic       30+ Parking
  payments in          Lots
advance through                      Loved it! Would
   an online                        pay about 15% of                    Validated!
  reservation                         posted price.
    system.
Industry Validation
Business Model Canvas
Business Model Canvas
MVP Validation
                         All Pro
                         Parking                      30+ person
Started with a                      Easier ways to                  Search process
  very basic            (30 lots)                     focus group
                                    post parking &                   was too hard.
 reservation                             track                      Wanted mobile
   system.                           reservations.                    site as well.
                                                        All Pro
                                                       Parking’s
                                                      Customers




         With no
        marketing-                   Made it even                          Fixed
      50 reservations                easier to post                  search, cleaned
       in just a few                   and track                     up site, mobile
         months.                       parking.                     site in the works.
Business Model Canvas
Business Model Canvas
Our Model




                                                     15% of Price
$5 Reservation                                          Paid
     Fee                                              XoomPark


    We estimate being able to collect about $8 per reservation
Go to Market Strategy & Validation
                    25+ years
 Talked to Tom
Lombardi, indust   experience
   ry expert.



                                Over 250 lots throughout        Lots located all over West
                                      Eastern US.                    Coast and Texas




                                                                  Lots located throughout
                                Parking lots in all 50 states
                                                                  Florida and in Dallas,TX
Go to Market Strategy & Validation



 Tom and Greg’s
Affilate Networks
                               3,000 Affiliates
Go to Market Strategy & Validation


                     Focus
                    group of
                   30+ people
   Customer’s
recommendations
  for the future
Market Size

               $8.2 Billion USA Parking Industry
TAM
SAM                $4.5 Billion Parking
                   Facility/Management

Target
Market            $1.4 Billion Event Parking



Apex              $240,000 Buffalo and
                  Atlanta
Competitors
      High




                   ParkingCarma
                                   ClickandPark
Usability                                GottaPark

                                          Parkwhiz



      Low


             Low                                     High

                           Reliability
Revenue Projections
                               Revenue
           $20
           $18
           $16
           $14
           $12
Revenue in
           $10
 Millions
            $8
            $6
            $4
            $2
            $0
                   Year 1        Year 2      Year 3   Year 4

                            70% Gross Profit Margin
•2 Partners
      •30+ Parking lots
     •50+ Reservations
     •Working Website
•Validated Revenue Model
How Does This Really Work?

The National Science Foundation
  8 Weeks From an Idea to a Business
Maine "Top Gun" Customer Development Broadcast  021512
Maine "Top Gun" Customer Development Broadcast  021512
I Write a Blog
www.steveblank.com
Thanks

www.steveblank.com

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Maine "Top Gun" Customer Development Broadcast 021512

  • 1. How to Build a Startup Steve Blank www.steveblank.com Twitter: @sgblank
  • 2. This Talk is Based On • Business Model Generation • Four Steps to to Epiphany •The Four Stepsthe Epiphany
  • 3. This Talk is Based On • Business Model Generation • Four Steps Owners Manual •The Startup to the Epiphany
  • 5. Lesson 1 WHAT’S A STARTUP?
  • 6. Lifestyle Startups Work to Live their Passion Startup • Serve known customer with known product • Work for their passion
  • 7. Small Business Startups Work to Feed the Family Small Startup Business • Serve known customer with known product • Feed the family
  • 8. Small Business Startups Work to Feed the Family Small Startup Business Exit Criteria • known customer - Business Model found known product - Profitable business • Feed the family - Existing team < $500K in revenue
  • 9. Social Entrepreneurship Startups Social Large Startup Non-Profit • Solve pressing social problems • Social Enterprise: Profitable • Social Innovation: New Strategies
  • 10. Scalable Startup Search Execute Scalable Large Startup Company Goal is to solve for: unknown customer and unknown features
  • 11. Scalable Startup Search Execute Scalable Large Startup Company Goal is to solve for: Exit Criteria unknown customer and - Business model found unknown features - Total Available Market > $500m - Can grow to $100m/year
  • 12. Buyable Startup Born to Be Big Search Sell Scalable $2 to $50M Startup Acquisition Goal is to solve for: Sell to larger company Internet, Mobile, Gaming Apps
  • 13. Lesson 2 THE DELUSIONS OF ENTREPRENEURSHIP
  • 14. I Have a Vision
  • 15. I Have the “Right Stuff”
  • 16. I Know What Needs to Be Done
  • 17. Lets Start A Company!
  • 18. #1 I Know Who The Customer Is
  • 19. #2 I Know Exactly the Product They Need
  • 20. #3 I Know the Problem They Have
  • 21. #4 All I Need to Do is Execute the Plan
  • 23. #6 Let’s Do It Like a Large Company
  • 24. #7 We Can Fix It After We Ship It All
  • 25. Lesson 3 HOW TO GET STARTUPS WRONG
  • 26. Large Company Product Introduction Model Concept/ Product Alpha/Beta Launch/ Seed Round Dev. Test 1st Ship
  • 27. When Adopted by Startups = The Leading Cause of Startup Death Concept/ Product Alpha/Beta Launch/ Seed Round Dev. Test 1st Ship
  • 28. Product Introduction Model: Two Implicit Assumptions Customer Problem: known Concept/ Product Alpha/Beta Launch/ Seed Round Dev. Test 1st Ship Product Features: known
  • 30. Large Company Method – Hire Marketing Concept/ Product Alpha/Beta Launch/ Seed Round Dev. Test 1st Ship - Create Marcom - Hire PR Agency - Create Demand Marketing Materials - Early Buzz - Launch Event - Create Positioning - “Branding”
  • 31. Large Company Method – Hire Sales Concept/ Product Alpha/Beta Launch/ Seed Round Dev. Test 1st Ship - Create Marcom - Hire PR Agency - Create Demand Marketing Materials - Early Buzz - Launch Event - Create Positioning - “Branding” • Hire Sales VP • Build Sales Sales • Hire 1st Sales Staff Organization
  • 32. Large Company Method – Hire Business Development Concept Product Alpha/Beta Launch/ Dev. Test 1st Ship - Create Marcom - Hire PR Agency - Create Demand Marketing Materials - Early Buzz - Launch Event - Create Positioning - “Branding” • Hire Sales VP • Build Sales Channel / Sales • Pick distribution Distribution Channel Business • Hire First • Do deals for FCS Development Bus Dev
  • 33. Large Company Method – Hire Engineering Concept Product Alpha/Beta Launch/ Dev. Test 1st Ship - Create Marcom - Hire PR Agency - Create Demand Marketing Materials - Early Buzz - Launch Event - Create Positioning - “Branding” • Hire Sales VP • Build Sales Channel / Sales • Pick distribution Distribution Channel Business • Hire First • Do deals for FCS Development Bus Dev Engineering • Write MRD • Waterfall • Q/A •Tech Pubs
  • 34. Lesson 4 WHAT DO WE NEED TO GET STARTUPS RIGHT?
  • 35. Is It Big Enough?
  • 36. Is It Big Enough? How Do You Know?
  • 37. Do You Have What it Takes?
  • 38. Do You Have What it Takes? Resilient Relentless Agile Curious Passionate Driven
  • 39. Do You Know Why Startups Fail?
  • 40. More startups fail from a lack of customers than from a failure of product development
  • 41. Do You Know What a Startup Is?
  • 42. A Startup is a temporary organization
  • 43. A Startup is a temporary organization designed to search
  • 44. A Startup is a temporary organization designed to search for a repeatable and scalable business model
  • 45. Startups Are Not Smaller Versions of Large Companies
  • 46. Startups Are Not Smaller Versions of Large Companies
  • 47. Startups Are Not Smaller Versions of Large Companies Large Companies Execute Known Business Models
  • 48. Startups Are Not Smaller Versions of Large Companies Startups Search for Unknown Business Models
  • 49. Startups Fail Because They Confuse Search with Execute
  • 50. Startups need their own tools, different from those used in existing companies
  • 51. Startups need their own tools, different from those used in existing companies
  • 52. Lesson 5 THE 3 TOOLS FOR STARTUPS
  • 53. Startup Tool #1: The Business Model
  • 54. All I Need to Do is Execute the Plan
  • 55. No Business Plan Survives First Contact With Customers
  • 56. CUSTOMER SEGMENTS which customers and users are you serving? which jobs do they really want to get done?
  • 57. VALUE PROPOSITIONS what are you offering them? what is that getting done for them? do they care?
  • 58. CHANNELS how does each customer segment want to be reached? through which interaction points?
  • 59. CUSTOMER RELATIONSHIPS what relationships are you establishing with each segment? personal? automated? acquisitive? retentive?
  • 60. REVENUE STREAMS what are customers really willing to pay for? how? are you generating transactional or recurring revenues?
  • 61. KEY RESOURCES which resources underpin your business model? which assets are essential?
  • 62. KEY ACTIVITIES which activities do you need to perform well in your business model? what is crucial? 62
  • 63. KEY PARTNERS which partners and suppliers leverage your model? who do you need to rely on?
  • 64. COST STRUCTURE what is the resulting cost structure? which key elements drive your costs?
  • 65. key activities value customer proposition relationships key customer partners segments cost revenue structure key streams resources channels 65 images by JAM
  • 67. Business Model Canvas – Any Business KEY KEY OFFER CUSTOMER CUSTOMER PARTNERS ACTIVITIES RELATIONSHIPS SEGMENTS KEY CHANNELS RESOURCES COST STRUCTURE REVENUE STREAMS (c)2010 K+S Ranch Consulting Inc. 67 67 www.steveblank.com
  • 68. 9 Guesses Guess Guess Guess Guess Guess Guess Guess Guess Guess
  • 69. Startup Tool #2: The Agile Development
  • 70. Agile Development is How We Build Startups
  • 72. Customer Development is How We Search for the Business Model
  • 73. Lesson 5 CUSTOMER DEVELOPMENT
  • 74. Customer Development There are no facts inside your building So get the heck out
  • 75. Customer Development is how you search for the model Search Execution Customer Customer Customer Company Discovery Validation Creation Building Pivot
  • 76. Customer Development The Search For the Business Model Search Customer Customer Discovery Validation Pivot
  • 77. Customer Development Execution Customer Customer Customer Company Discovery Validation Creation Building Pivot
  • 78. Customer Discovery Search Customer Customer Customer Company Discovery Validation Creation Building Pivot Execution • Articulate and Test your hypotheses • Design experiments, start listening • Continuous Discovery • Done by founders
  • 79. Discovery • How big is the market? • Who’s the customer? – What’s their problem/need • What’s the product/service/need? – Does it solve the customers problem? • How do you create demand? • How do you deliver the product? • How do you make money?
  • 80. Customer Development = process to search Business Model Canvas = the Scorecard Agile Engineering is How •Research Labs •Technology Design •Marketing •Cost •Farming conventions. •Demo, dem o, and •Organic •Demo and Reduction We Build Startups •Equipment Manufactur ers customer feedback •Remove labor force demo!! •Proximity is paramount Farmers •Weeding Service •Distributio pains •IP – Providers n Network •Eliminate Patents •Conventio •Service •Video bio-waste •Dealers nal Farmers Providers Classifier hazards •Direct Service Files •Indirect Service • … then Dealers •Robust Technology Value- •Asset Sale Driven •Direct Service with equipment rental •… then Asset Sale
  • 81. Customer Validation Search Customer Customer Customer Company Discovery Validation Creation Building Pivot Execution • Repeatable and scalable business model? • Passionate earlyvangelists? • Pivot back to Discovery if no customers
  • 82. The Minimum Viable Product (MVP) •Smallest feature set that gets you the most … - orders, learning, feedback, failure… - incremental and iterative
  • 84. The Pivot Search Customer Customer Discovery Validation Pivot •The heart of Customer Development •Iteration without crisis •Fast, agile and opportunistic
  • 85. Pivot Cycle Time Matters Search Execution Customer Customer Customer Company Discovery Validation Creation Building Pivot •Speed of cycle minimizes cash needs •Minimum feature set speeds up cycle time • Near instantaneous customer feedback drives feature set
  • 86. Web/Mobile Versus Physical Customer Customer Discovery Validation Pivot •Web/Mobile startups run faster •Different process steps for web vs. physical •Customer Relationships are radically different
  • 97. Customer Relationships Physical & Web Mobile Are Different
  • 98. Lesson 6 HOW DOES THIS REALLY WORK? LEAN LAUNCHPAD CLASS
  • 99. How Does This Really Work? Lean LaunchPad Class National Science Foundation
  • 100. Pivot Example Robotic Weeding Talked 75 Customers in 8 Weeks
  • 101. Our initial plan Confidential
  • 102. 20 interviews, 6 site visits… We got OUR Boots dirty Mowing Interviewed: • Golf: Stanford Golf course • Parks: Stanford Grounds Supervisor, head of maintenance and lead operator (has crew of 6) • Toro dealer (large mower manufacturer) • User of back-yard mowing system • Maintenance Services for City of Los Altos • Colony Landscaping (Mowing service for stadiums) Weeding Visited two farms in Salinas Valley to better understand problem Interviewed: • Bolthouse Farms, Large Agri-Industry in Bakersfield • White Farms, Large Peanut farmer in Georgia • REFCO Farms, large grower in Salinas Valley • Rincon Farms, large grower in Salinas Valley • Small Organic Corn/Soy grower in Nebraska • Heirloom Organics, small owner/operator, Santa Cruz Mts • Two small organic farmers at farmers market • Ag Services of Salinas, Fertilizer applicator
  • 103. Business Plan Autonomous Vehicles for Mowing & Weeding - Innovation Dealers Mowing - Dealers - Customer We reduce sell, installs and - Owners of (Mowing and Education operating cost supports public or Ag) - Dealer training - Labor reduction customer commercially - Vehicle OEMs - Better used green (John utilization of Co. trains spaces (e.g. golf Deere, Toro, Jac assets (eg mow dealers, supports courses) obsen, etc) or weed at dealers - Landscaping Engineers on nights) - Mowing service provider - Research labs Autonomous - Improved Dealers vehicles, GPS, performance - Ag Dealers Weeding path-planning (less - Farmers with rework, food manual weeding safety) operations Dealer discount Asset sale COGS seek a 50-60% Gross Margin Our revenue stream derives from selling the Heavy R&D investment equipment
  • 104. Found weeding in organic crops is HUGE problem; 50 - 75% of costs Crews of 100s-1000 Back-breaking task (Ilegal) labor harder to get 1-5 weedings per year/field $250-3,500 per acre and increasing Food contamination risk
  • 105. Decision to make – mowing vs weeding Application If ROI is < 1 Labor costs Autonomous TAM yr they will significant? would solve buy problem? Mowing of Yes. Yes Yes Adjusted up to Professionally xxx large fields run organizations Weeding in Agri Industry: YES! for TAM increased YES! organic crops Not necessarily to $2.6 B (Total Agriculture organic) Large They are Key need is Growers: Yes spending weed vs. crop Target Market $500/ac! differentiation (organic Small specialty) Growers: No 162 M/yr 18%/yr growth
  • 106. Autonomous vehiclesWEEDING - Innovation Dealers - Low density - Ag Dealers - Customer We reduce sell, installs and vegetable - Ag Service Education operating cost supports growers providers - Dealer training - Labor reduction customer - High density (100 to 1) vegetable - Research labs - Reduced risk of Co. trains growers contamination dealers, supports - Thinning - Mitigate labor dealers operations Engineers on availability - Ag Dealers - Conventional Machine Vision concerns - Ag Service vegetables Two problems: providers - Identification - Elimination Dealer discount Asset sale COGS seek a 50-60% Gross Margin Our revenue stream derives from selling the Heavy R&D investment equipment
  • 107. 1 Week – 1 CarrotBot Confidential
  • 108. CarrotBot • Machine Vision data collection platform – Monochrome & Color Cameras – Laser-line sweep (depth measurement) – Encoders CarrotBot 1.0 (position/velocity) – Onboard data acquisition & power
  • 109. The Business Plan Canvas Updated •Technology •Farming Design conventions. •Marketing •Demo, demo, a •Demo and nd demo!! customer •Cost •Proximity is •Organic •Research Labs feedback paramount Farmers Reduction •Equipment •Weeding •Remove labor Manufacturers Service force pains •Distribution Providers •Eliminate bio- Network •Conventional waste hazards •Service •IP – Patents Farmers Providers •Video •Dealers Classifier Files •Direct Service •Robust •Indirect Service Technology • … then Dealers •Asset Sale Value-Driven •Direct Service with equipment rental •… then Asset Sale
  • 110. Visit Highlights Carrot vs. Weeds Due to small root systems, carrots have no chance against weeds
  • 111. Visit Highlights Organic Broccoli, closely cultivated. Weeds close to plants are hand-picked
  • 112. Visit Highlights State of the Art in Weeding Technology for Organic Crops
  • 113. Customer Hypothesis Pre-Test Large Growers Us Dealer Industrial Growers Hypothesis Confirmed • Growers interested in own Industrial equipment Growers • Industrial (10,000s of acres) Post-Test • Large (1,000s of acres) Large • Willing to pay $100k for one unit Growers Us Dealer • Smaller growers (100s of acres) Service usually subcontract the labor Providers services or rent equipment Equipment • All purchases through local dealers Rental •Customer service is essential
  • 114. Customer Map #1 – Industrial Growers Example: Bolthouse Farms – Large Industrial Carrot Producer – 8K acres/yr End User • Equipment Operator Influencer • Local Farm Mgr • Cliff Kirkpatrick, visited Recommender • Director, Ag Equipment Operator Technology • Justin Grove, interviewed Decision • VP, Growing Maker Operations Approver • CFO, CEO (Jeff Dunn) Cliff, Farm Mgr
  • 115. Customer Map #2 – Service Providers Example: Ag Services – Service Provider, Salinas Valley End User • Equipment Operator Influencer • Grower Recommender • Service Mgr Me (left), Marty (middle, Service Mgr), Doug (right, Grower) Decision Maker • ?? (service mgr’s & Approver boss)
  • 116. The Business Plan Canvas Updated •Technology •Farming Design conventions. •Marketing •Demo, demo, a •Mid/Large •Demo and nd demo!! Organic Farmers customer •Cost •Proximity is •Agricultural •Research Labs feedback paramount Reduction corporations •Equipment •Remove labor •Weeding Service Manufacturers force pains Providers •Distribution •Eliminate bio- Network •Service •IP – Patents waste hazards •Mid/Large Providers •Video •Direct Service Conventional Classifier Files •Indirect Service Farmers •Robust • … then Dealers Technology •Direct Service with equipment rental Value-Driven •($1,500/d; 120d/yr ) •Low density: $1,500/d •High density: $6,000/d
  • 117. World Ag Expo interviews: the need is real and wide spread • 10+ interviews at show – Everyone confirmed the need – Robocrop, UK based, crude competitor sells for $171 K • Revenue Stream – Mid to small growers prefer a service – Large growers prefer to buy, but OK with service until technology is proven – Charging for labor cost saved is OK, as we provide other benefits (food safety, labor availability) Confidential
  • 118. The Business Plan Canvas Updated •Technology •Farming Design conventions. •Marketing •Demo, demo, a •Mid/Large •Research Labs •Demo and nd demo!! Organic Farmers •Equipment customer •Cost •Proximity is •Agricultural Manufacturer feedback Reduction paramount corporations •Distribution •Remove labor •Weeding Service Network force pains Providers •Service •Eliminate bio- Providers •IP – Patents waste hazards •Mid/Large •2 or 3 Key •Video •Direct Service Conventional Farms Classifier Files •Indirect Service Farmers •Robust • … then Dealers Technology Value-Driven •Direct Service with • R&D equipment rental • Bill of Materials •Low density: $1,500/d • Training & Service •High density: $6,000/d • Sales
  • 119. Autonomous weeding - Final - Innovation Direct - Low density - Ag Service - Customer We reduce - Provide high vegetable providers Education operating cost quality service at growers - Dealer training - Labor reduction competitive price - High density - Research (100 to 1) vegetable Institutes (eg - Reduced risk of growers UC Davis, Laser contamination - Thinning Zentrum - Mitigate labor operations Hannover) Engineers on availability Direct - Conventional Machine Vision concerns - Alliance with vegetables - 3-4 key farms Two problems: service - Identification providers - Elimination - Eventually sell through dealers Costs for service provision Service provision COGS seek a 50-60% Gross Margin - Charge by the acre with modifier according to Heavy R&D investment weed density - Eventually move to asset sale
  • 120. Pivot Example Autonomous Robot Talked 75 Customers in 8 Weeks
  • 122. Business Plan Autonomous Vehicles for Mowing - Innovation Dealers Mowing - Dealers (Mowing - Customer We reduce sell, installs and - Owners of and Ag) Education operating cost supports customer public or - Vehicle OEMs - Dealer training - Labor reduction commercially (John - Better Co. trains used green Deere, Toro, Jacob utilization of dealers, supports spaces (e.g. golf sen, etc) assets (eg mow dealers courses) or weed at - Landscaping - Research labs Engineers on nights) - Mowing service provider Autonomous - Improved Dealers vehicles, GPS, performance - Ag Dealers Weeding path-planning (less - Farmers with rework, food manual weeding safety) operations Dealer discount Asset sale COGS seek a 50-60% Gross Margin Our revenue stream derives from selling the Heavy R&D investment equipment
  • 123. 20 interviews, 6 site visits… We got OUR Boots dirty Mowing Interviewed: • Golf: Stanford Golf course • Parks: Stanford Grounds Supervisor, head of maintenance and lead operator (has crew of 6) • Toro dealer (large mower manufacturer) • User of back-yard mowing system • Maintenance Services for City of Los Altos • Colony Landscaping (Mowing service for stadiums) Weeding Visited two farms in Salinas Valley to better understand problem Interviewed: • Bolthouse Farms, Large Agri-Industry in Bakersfield • White Farms, Large Peanut farmer in Georgia • REFCO Farms, large grower in Salinas Valley • Rincon Farms, large grower in Salinas Valley • Small Organic Corn/Soy grower in Nebraska • Heirloom Organics, small owner/operator, Santa Cruz Mts • Two small organic farmers at farmers market • Ag Services of Salinas, Fertilizer applicator
  • 124. Decision to make – mowing vs weeding Application If ROI is < 1 Labor costs Autonomous TAM yr they will significant? would solve buy problem? Mowing of Yes. Yes Yes Adjusted up to Professionally xxx large fields run organizations Weeding in Agri Industry: YES! for TAM increased YES! organic crops Not necessarily to $2.6 B (Total Agriculture organic) Large They are Key need is Growers: Yes spending weed vs. crop Target Market $500/ac! differentiation (organic Small specialty) Growers: No 162 M/yr 18%/yr growth
  • 125. Autonomous vehiclesWEEDING - Innovation Dealers - Low density - Ag Dealers - Customer We reduce sell, installs and vegetable - Ag Service Education operating cost supports customer growers providers - Dealer training - Labor reduction - High density (100 to 1) Co. trains vegetable - Research labs - Reduced risk of dealers, supports growers contamination dealers - Thinning - Mitigate labor operations Engineers on availability - Ag Dealers - Conventional Machine Vision concerns - Ag Service vegetables Two problems: providers - Identification - Elimination Dealer discount Asset sale COGS seek a 50-60% Gross Margin Our revenue stream derives from selling the Heavy R&D investment equipment
  • 126. 1 Week – 1 CarrotBot Confidential
  • 127. CarrotBot • Machine Vision data collection platform – Monochrome & Color Cameras – Laser-line sweep (depth measurement) – Encoders CarrotBot 1.0 (position/velocity) – Onboard data acquisition & power
  • 128. Visit Highlights Carrot vs. Weeds Due to small root systems, carrots have no chance against weeds
  • 129. Visit Highlights Organic Broccoli, closely cultivated. Weeds close to plants are hand-picked
  • 130. The Business Plan Canvas Updated •Technology •Farming Design conventions. •Marketing •Demo, demo, a •Demo and nd demo!! customer •Cost •Proximity is •Organic •Research Labs feedback paramount Farmers Reduction •Equipment •Weeding •Remove labor Manufacturers Service force pains •Distribution Providers •Eliminate bio- Network •Conventional waste hazards •Service •IP – Patents Farmers Providers •Video •Dealers Classifier Files •Direct Service •Robust •Indirect Service Technology • … then Dealers •Asset Sale Value-Driven •Direct Service with equipment rental •… then Asset Sale
  • 131. Customer Hypothesis Pre-Test Large Growers Us Dealer Industrial Growers Hypothesis Confirmed • Growers interested in own Industrial equipment Growers • Industrial (10,000s of acres) Post-Test • Large (1,000s of acres) Large • Willing to pay $100k for one unit Growers Us Dealer • Smaller growers (100s of acres) Service usually subcontract the labor Providers services or rent equipment Equipment • All purchases through local dealers Rental •Customer service is essential
  • 132. Customer Map #1 – Industrial Growers Example: Bolthouse Farms – Large Industrial Carrot Producer – 8K acres/yr End User • Equipment Operator Influencer • Local Farm Mgr • Cliff Kirkpatrick, visited Recommender • Director, Ag Equipment Operator Technology • Justin Grove, interviewed Decision • VP, Growing Maker Operations Approver • CFO, CEO (Jeff Dunn) Cliff, Farm Mgr
  • 133. Customer Map #2 – Service Providers Example: Ag Services – Service Provider, Salinas Valley End User • Equipment Operator Influencer • Grower Recommender • Service Mgr Me (left), Marty (middle, Service Mgr), Doug (right, Grower) Decision Maker • ?? (service mgr’s & Approver boss)
  • 134. The Business Plan Canvas Updated •Technology •Farming Design conventions. •Marketing •Demo, demo, a •Mid/Large •Demo and nd demo!! Organic Farmers customer •Cost •Proximity is •Agricultural •Research Labs feedback paramount Reduction corporations •Equipment •Remove labor •Weeding Service Manufacturers force pains Providers •Distribution •Eliminate bio- Network •Service •IP – Patents waste hazards •Mid/Large Providers •Video •Direct Service Conventional Classifier Files •Indirect Service Farmers •Robust • … then Dealers Technology •Direct Service with equipment rental Value-Driven •($1,500/d; 120d/yr ) •Low density: $1,500/d •High density: $6,000/d
  • 135. World Ag Expo interviews: the need is real and wide spread • 10+ interviews at show – Everyone confirmed the need – Robocrop, UK based, crude competitor sells for $171 K • Revenue Stream – Mid to small growers prefer a service – Large growers prefer to buy, but OK with service until technology is proven – Charging for labor cost saved is OK, as we provide other benefits (food safety, labor availability)
  • 136. The Business Plan Canvas Updated •Technology •Farming Design conventions. •Marketing •Demo, demo, a •Mid/Large •Research Labs •Demo and nd demo!! Organic Farmers •Equipment customer •Cost •Proximity is •Agricultural Manufacturer feedback Reduction paramount corporations •Distribution •Remove labor •Weeding Service Network force pains Providers •Service •Eliminate bio- Providers •IP – Patents waste hazards •Mid/Large •2 or 3 Key •Video •Direct Service Conventional Farms Classifier Files •Indirect Service Farmers •Robust • … then Dealers Technology Value-Driven •Direct Service with • R&D equipment rental • Bill of Materials •Low density: $1,500/d • Training & Service •High density: $6,000/d • Sales
  • 137. Autonomous weeding - Final - Innovation Direct - Low density - Ag Service - Customer We reduce - Provide high vegetable providers Education operating cost quality service at growers - Dealer training - Labor reduction competitive price - High density - Research (100 to 1) vegetable Institutes (eg - Reduced risk of growers UC Davis, Laser contamination - Thinning Zentrum - Mitigate labor operations Hannover) Engineers on availability Direct - Conventional Machine Vision concerns - Alliance with vegetables - 3-4 key farms Two problems: service - Identification providers - Elimination - Eventually sell through dealers Costs for service provision Service provision COGS seek a 50-60% Gross Margin - Charge by the acre with modifier according to Heavy R&D investment weed density - Eventually move to asset sale
  • 139. Genesis of the Idea
  • 141. Assumption of Customer Pain 200+ People were Parking is a pain! customers People DO want Bigger Pain even more People want a a guaranteed frustrated with guaranteed spot & would parking at big parking spot. reserve online. events. 80% positive response
  • 143. Assumption of Customer Pain 200+ People were Parking is a pain! customers People DO want Bigger Pain even more People want a a guaranteed frustrated with guaranteed spot & would parking at big parking spot. reserve online. events. People will pay Surveyed 75+ extra to have a Customers People will not great, only pay more, they will Validated! guaranteed parking spot. pay a lot more! ($9+)
  • 145. Customer Survey/Validation • How much more would you be willing to pay to have a guaranteed close parking spot in the arena's lot or near the arena? – On average- $9.33 – Max of $27.00 145
  • 146. Assumption of Pain 200+ People were Parking is a pain! customers People DO want Bigger Pain even more People want a a guaranteed frustrated with guaranteed spot & would parking at big parking spot. reserve online. events. People will pay Surveyed 75+ extra to have a Customers People will not great, guarantee only pay more, they will Validated! d parking spot. pay a lot more! ($9+) 30+ People It is difficult to People who have get a mass We needed to extra spaces will number of find a new post spots and people to post solution. make money. enough parking spots.
  • 147. Expert Validation • Tom Lombardi and Greg Bessoni – Online parking reservation experts Partnered with me and put up capital.
  • 149. New Assumptions 30+ Parking Parking lots will Lots Yes! Lots have Bigger Pain post spots online been looking for so that people ways to increase can reserve revenue and fill them. up lots. 75% positive response 20% of cash goes missing. Electronic 30+ Parking payments in Lots advance through Loved it! Would an online pay about 15% of Validated! reservation posted price. system.
  • 153. MVP Validation All Pro Parking 30+ person Started with a Easier ways to Search process very basic (30 lots) focus group post parking & was too hard. reservation track Wanted mobile system. reservations. site as well. All Pro Parking’s Customers With no marketing- Made it even Fixed 50 reservations easier to post search, cleaned in just a few and track up site, mobile months. parking. site in the works.
  • 156. Our Model 15% of Price $5 Reservation Paid Fee XoomPark We estimate being able to collect about $8 per reservation
  • 157. Go to Market Strategy & Validation 25+ years Talked to Tom Lombardi, indust experience ry expert. Over 250 lots throughout Lots located all over West Eastern US. Coast and Texas Lots located throughout Parking lots in all 50 states Florida and in Dallas,TX
  • 158. Go to Market Strategy & Validation Tom and Greg’s Affilate Networks 3,000 Affiliates
  • 159. Go to Market Strategy & Validation Focus group of 30+ people Customer’s recommendations for the future
  • 160. Market Size $8.2 Billion USA Parking Industry TAM SAM $4.5 Billion Parking Facility/Management Target Market $1.4 Billion Event Parking Apex $240,000 Buffalo and Atlanta
  • 161. Competitors High ParkingCarma ClickandPark Usability GottaPark Parkwhiz Low Low High Reliability
  • 162. Revenue Projections Revenue $20 $18 $16 $14 $12 Revenue in $10 Millions $8 $6 $4 $2 $0 Year 1 Year 2 Year 3 Year 4 70% Gross Profit Margin
  • 163. •2 Partners •30+ Parking lots •50+ Reservations •Working Website •Validated Revenue Model
  • 164. How Does This Really Work? The National Science Foundation 8 Weeks From an Idea to a Business
  • 167. I Write a Blog www.steveblank.com

Editor's Notes

  1. 80% positive response
  2. 75% positive response
  3. 20% response rate