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  • 1. New Rules for the New Internet Bubble
    Steve Blank
    Stanford - School of Engineering
    www.steveblank.com
    Twitter: @sgblank
  • 2. I Write a Blog
    www.steveblank.com
  • 3. This Talk is Based On
    Business Model Generation
    Four Steps to the Epiphany
    Lean Startup
  • 4. First -What’s A Startup?
    Five Types of Startups
  • 5. Small Business
    Startup
    Small Business Startups
    • Serve known customer with known product
    • 6. Feed the family
  • Small Business
    Startup
    Exit Criteria
    • Business Model found
    - Profitable business
    • Existing team
    < $1M in revenue
    Small Business Startups
    • known customer known product
    • 7. Feed the family
  • Small Business
    Startup
    - Business Model found
    - Profitable business
    • Existing team
    < $10M in revenue
    Small Business Startups
    • 5.7 million small businesses in the U.S. <500 employees
    • 8. 99.7% of all companies
    • 9. ~ 50% of total U.S. workers
    http://www.sba.gov/advo/stats/sbfaq.pdf
  • 10. Large Non-Profit
    Social Startup
    Social Entrepreneurship Startups
    • Solve pressing social problems
    • 11. Social Enterprise: Profitable
    • 12. Social Innovation: New Stratagies
  • Large Company Sustaining Innovation
    Sustaining Innovation
    Transition
    Scalable
    Startup
    Large Company
    • Existing Market / Known customer
    • 13. Known product feature needs
  • Large Company Disruptive Innovation
    New Division
    Transition
    Large Company
    Disruptive Innovation
    • New Market
    • 14. New tech, customers, channels
  • Large Company Disruptive Innovation
    New Division
    Transition
    Large Company
    Disruptive Innovation
    - IP- Talent
    - Product
    - Customers
    - Business
  • 16. Scalable
    Startup
    Large Company
    Scalable Startup
    Search
    Goal is to solve for:
    unknown customer and unknown features
  • 17. Execute
    Search
    Scalable
    Startup
    Large Company
    Exit Criteria
    • Business model found
    • 18. Total Available Market > $500m -$1B
    • 19. Can grow to $100m/year
    Scalable Startup
  • 20. Scalable
    Startup
    Large Company
    • Total Available Market > $500m
    • 21. Company can grow to $100m/year
    • 22. Business model found
    • 23. Focused on execution and process
    • 24. Typically requires “risk capital”
    Scalable Startup
    Execute
    Search
    • In contrast a scalable startup is designed to grow big
    • 25. Typically needs risk capital
    • 26. What Silicon Valley means when they say “Startup”
  • Scalable
    Startup
    Large Company
    Exit Criteria
    • Business model found
    • 27. Total Available Market > $500m -$1B
    • 28. Can grow to $100m/year
    Scalable Startup
    Execute
    Search
    • VC-backed scalable startups:
    • 29. 13% of all public companies
    • 30. 4% of total sales of all U.S. public companies ~$1 trillion
    Source: Josh Lerner, Harvard: VC and Innovation in Energey
  • 31. Buyable Startup
    Search
    Sell
    Scalable
    Startup
    $5 to 50M Acquisition
    Goal is to solve for:
    Internet and Mobile Apps
  • 32. Buyable Startup
    Search
    Sell
    Scalable
    Startup
    $5 to 50M Acquisition
    Goal is to solve for:
    Internet and Mobile Apps
    Sell to larger company
  • 33. Scalable
    Startup
    Large Company
    • Business Model found
    • 34. i.e. Product/Market fit
    - Repeatable sales model
    - Managers hired
    What’s A Startup?
    Search
    Execute
    A Startup is a temporary organization used to search for a repeatable and scalable business model
  • 35. Next,What’s A Founder?
  • 36. What You and I Saw
  • 37. What Michelangelo Saw
  • 38. What You and I Saw
  • 39. What Van Gogh Saw
  • 40. Founders See Things Others Don’t
  • 41. Founders See Things Others Don’t
    Founders are Artists.
    Actually They are Composers.
    They Create Something From Nothing
  • 42. Founders See Things Others Don’t
    They Build a Company By Convincing Others To See What They Do
  • 43. Founders See Things Others Don’t
    The Early Employees Who Join Them
    Are the Performers
  • 44. A Few Short Stories
  • 45. How Did We Get Here?
  • 46. Paths to Building a Startup
    1970 – 1995 build a business (revenue)
    1995 – 2000 flip the business (concept IPO)
    2001 – 2011 build a business (M&A)
    2011 – 2014 flip a built business (M&A / IPO)
  • 47. 1970 – 1995Building a BusinessStartups Are Small Versions of A Large Company
  • 48. 1970 - 1995 Building a Startup the Hard Way
    $Millions’sto start(Proprietary hdwr/sftwr)
    Long product dev cycle (Waterfall)
    Thousands customers (Businesses)
    How you made Money= IPO(5 qtrsrevenue/profit)
    No repeatable methodology(Smaller big company)
  • 49. 1970 – 1995 Playbook
  • 50. Product Introduction Model
    Concept/Seed Round
    Product Dev.
    Alpha/Beta Test
    Launch/
    1st Ship
  • 51. Product Introduction Model
    The Leading Cause of Startup Death
    Concept/Seed Round
    Product Dev.
    Alpha/Beta Test
    Launch/
    1st Ship
  • 52. Product Introduction Model:Two Implicit Assumptions
    Customer Problem: known
    Concept/Seed Round
    Product Dev.
    Alpha/Beta Test
    Launch/
    1st Ship
    Product Features: known
  • 53. Tradition – Hire Marketing
    Concept/Seed Round
    Product Dev.
    Alpha/Beta Test
    Launch/
    1st Ship
    - Create Demand
    - Launch Event
    - “Branding”
    - Hire PR Agency
    - Early Buzz
    • Create Marcom
    Materials
    - Create Positioning
    Marketing
  • 54. Tradition – Hire Sales
    Concept/Seed Round
    Product Dev.
    Alpha/Beta Test
    Launch/
    1st Ship
    - Create Demand
    - Launch Event
    - “Branding”
    - Hire PR Agency
    - Early Buzz
    • Create Marcom
    Materials
    - Create Positioning
    Marketing
    • Build Sales Organization
    • 55. Hire Sales VP
    • 56. Hire 1st Sales Staff
    Sales
  • 57. Tradition – Hire Bus Development
    Concept
    Product Dev.
    Alpha/Beta Test
    Launch/
    1st Ship
    - Create Demand
    - Launch Event
    - “Branding”
    - Hire PR Agency
    - Early Buzz
    • Create Marcom
    Materials
    - Create Positioning
    Marketing
    • Build Sales Channel / Distribution
    • 58. Hire Sales VP
    • 59. Pick distribution Channel
    Sales
    Business
    Development
    • Hire First Bus Dev
    • 60. Do deals for FCS
  • Tradition – Hire Engineering
    Concept
    Product Dev.
    Alpha/Beta Test
    Launch/
    1st Ship
    - Create Demand
    - Launch Event
    - “Branding”
    - Hire PR Agency
    - Early Buzz
    • Create Marcom
    Materials
    - Create Positioning
    Marketing
    • Build Sales Channel / Distribution
    • 61. Hire Sales VP
    • 62. Pick distribution Channel
    Sales
    Business
    Development
    • Hire First Bus Dev
    • 63. Do deals for FCS
    Engineering
  • More startups fail from a lack of customers than from a failure of product development
  • 67. 1995 – 2000Flipping A BusinessThe Dot.comBubble
  • 68. 1995 - 2000The Dot-com Bubble
    10’s $millions to start (get big fast, create a brand)
    Long product dev cycle (ship beta, 1st mover adv)
    Millions customers (1st consumer internet wave)
    How you made money= IPO(Little/no revenue, no profits)
    Repeatable methodology (brand, hype, flip or IPO)
  • 69. 1995 – 2000 Playbook
    Netscape
  • 70. 2001 – 2010Why Startups Are Not Small Versions of A Large Company
  • 71. 2001 - 2010The Lean Startup
    ≤ $½ million to start(open source, commodity hdwr)
    Short product dev cycle (Agile Development)
    100’s millions Customers (Social networks, consumer)
    Liquidity -M&A(revenue & network of users)
    Repeatable methodology (Agile + Cust Dev)
  • 72. Startups Search and Pivot
    The Search for the Business Model
    Scalable
    Startup
    Transition
    Large Company
    Business Model found by founders
    • customer needs/product features found
    i.e. Product/Market fit
    • Repeatable sales model
    - Managers hired
  • 73. Startups Search, Companies Execute
    The Execution of the Business Model
    The Search for the Business Model
    Scalable
    Startup
    Transition
    Large Company
    - Cash-flow breakeven
    - Profitable
    - Rapid scale
    - New Senior Mgmt
    ~ 150 people
    • Business Model found
    • 74. Product/Market fit
    - Repeatable sales model
    - Managers hired
  • 75. Metrics Versus Accounting
    The Execution of the Business Model
    Scalable
    Startup
    Transition
    Large
    Company
    Traditional Accounting
    • Balance Sheet
    • 76. Cash Flow Statement
    • 77. Income Statement
  • Metrics Versus Accounting
    The Search for the Business Model
    The Execution of the Business Model
    Scalable
    Startup
    Transition
    Large
    Company
    Startup Metrics
    • Customer Acquisition Cost
    • 78. Viral coefficient
    • 79. Customer Lifetime Value
    • 80. Average Selling Price/Order Size
    • 81. Monthly burn rate
    • 82. etc.
    Traditional Accounting
    • Balance Sheet
    • 83. Cash Flow Statement
    • 84. Income Statement
  • Customer Validation Versus Sales
    The Execution of the Business Model
    Scalable
    Startup
    Transition
    Large
    Company
    Sales
    • Sales Organization
    • 85. Scalable
    • 86. Price List/Data Sheets
    • 87. Revenue Plan
  • Customer Validation Versus Sales
    The Search for the Business Model
    The Execution of the Business Model
    Scalable
    Startup
    Transition
    Large
    Company
    Customer Validation
    • Early Adopters
    • 88. Pricing/Feature unstable
    • 89. Not yet repeatable
    • 90. “One-off’s”
    Sales
    • Sales Organization
    • 91. Scalable
    • 92. Price List/Data Sheets
    • 93. Revenue Plan
  • Engineering Versus Agile Development
    The Execution of the Business Model
    Scalable
    Startup
    Transition
    Large Company
    Engineering
  • Engineering Versus Agile Development
    The Search for the Business Model
    The Execution of the Business Model
    Scalable
    Startup
    Transition
    Large Company
    Engineering
    Agile Development
  • Startups Model, Companies Plan
    The Execution of the Business Model
    Scalable
    Startup
    Transition
    Large Company
    Business Plan
  • Startups Model, Companies Plan
    The Search for the Business Model
    The Execution of the Business Model
    Scalable
    Startup
    Transition
    Large Company
  • 2001 - 2011The Lean Startup
    IPO market ~closed, M&A liquidity path
    Build for long term but take short term sale
    Founders learn Lean skills
    Focus on building customers
    Minimum hype
  • 116. 2001 - 2011 Playbook
    Four Steps to the Epiphany
    Many Agile Texts
  • 117. But We Were Still Using This
  • 118. No Business Plan survives first contact with customers
  • 119. So Search for a Business Model
  • 120. The Business Model:
    Any company can be described in 9 building blocks
  • 121. CUSTOMER SEGMENTS
    which customers and users are you serving?
    which jobs do they really want to get done?
  • 122. VALUE PROPOSITIONS
    what are you offering them? what is that
    getting done for them? do they care?
  • 123. CHANNELS
    how does each customer segment want to be reached? through which interaction points?
  • 124. CUSTOMER RELATIONSHIPS
    what relationships are you establishing with each segment? personal? automated? acquisitive? retentive?
  • 125. REVENUE STREAMS
    what are customers really willing to pay for? how?
    are you generating transactional or recurring revenues?
  • 126. KEY RESOURCES
    which resources underpin your business model? which assets are essential?
  • 127. KEY ACTIVITIES
    which activities do you need to perform well in your business model? what is crucial?
    69
  • 128. KEY PARTNERS
    which partners and suppliers leverage your model?
    who do you need to rely on?
  • 129. COST STRUCTURE
    what is the resulting cost structure?
    which key elements drive your costs?
  • 130. value proposition
    customer relationships
    key activities
    customer segments
    key partners
    cost structure
    revenue streams
    key
    resources
    channels
    72
    images by JAM
  • 131. sketch out your business model
  • 132. But,Realize They’re Hypotheses
  • 133. 9 Guesses
    Guess
    Guess
    Guess
    Guess
    Guess
    Guess
    Guess
    Guess
    Guess
  • 134. How Do Startups Search For A Business Model?
    • The Search is Customer Development
    • 135. The Implementation is Agile Development
    • 136. The Sum is the Lean Startup
  • Customer Development
  • 137. Customer Development
    The founders
    ^
    Get Out of the Building
  • 138. Customer DevelopmentThe Search For the Business Model
    Company
    Building
    CustomerDiscovery
    CustomerValidation
    Customer Creation
    Pivot
  • 139. Customer Discovery
    CustomerDiscovery
    CustomerValidation
    Company
    Building
    CustomerCreation
    Stop selling, start listening
    Test your hypotheses
    Continuous Discovery
    Done by founders
  • 140. Test Hypotheses:
    Turning Hypotheses to Facts
  • 143. Test Hypotheses:
  • Test Hypotheses:
    • Channel
  • Test Hypotheses:
    • Demand Creation
    Test Hypotheses:
    Test Hypotheses:
    Test Hypotheses:
    Test Hypotheses:
    • Channel
    Test Hypotheses:
    • Pricing Model / Pricing
    Test Hypotheses:
    • Size of Opportunity/Market
    • 154. Validate Business Model
  • Test Hypotheses:
    • Demand Creation
    Test Hypotheses:
    Agile Development
    Test Hypotheses:
    Test Hypotheses:
    Customer Development Team
    Test Hypotheses:
    • Channel
    Test Hypotheses:
    • Pricing Model / Pricing
    Test Hypotheses:
    • Size of Opportunity/Market
    • 162. Validate Business Model
  • The Minimum Viable Product (MVP)
    • Smallest feature set that gets you the most …orders, learning, feedback, failure…
    • 163. MVP + Customer are the first two you need to nail
    • 164. MVP is just 1 of the 9 parts of your model
  • The Pivot
    • The heart of Customer Development
    • 165. Iteration without crisis
    • 166. Fast, agile and opportunistic
  • How Does This Really Work?Stanford Lean LaunchPad Class
  • 167. OURCRAVE is an online social shopping platform where customers can make their own deals on products or services of their choosing with sellers who can offer them in bulk at a discounted price.
  • 168. Business Canvas #1
    Seller: - Access to large online customer pool
    - Bulk sales with reduced commission
    Buyer: - Better discounts
    - Maintainingonline buyer/seller communities and credibilityof transactions- Promotionof website and brand
    - Powerful sellers
    - Server providers
    - Automated services- Communities of buyers and sellers- Co-creation of value through customer feedback
    Multi-sided platformSeller:
    Pro-sellers in Amazon and eBay who sell electronicsBuyer:
    Online shoppers
    • Web & App sales
    -Online social networks
    - Physical resources (IT infrastructure)- Existing social networks -Buyer and seller communities,- Brand awareness
    Seller side:- transaction fees
    Buyer side:- targeted ads
    - Variable costs: server and traffic maintenance costs- Fixed Cost: rent, salaries
  • 169. Key Question for Business Canvass #1
    WHO WILL BE OUR CUSTOMERS?
    DO THEY FEEL ENOUGH VALUE?
  • 170. Seller Side Test with a fake E-MAIL
    Give me a quote
    for a bulk sale!
    Electronics Sellers on Amazon/Ebay
    FAKE CEO
    (Steve Feiberg)
    57%
    showed interest
    90%
    sell products
    on Amazon
    • 56% paid 10~20% transaction fee
    • 171. 22% paid 5~10% transaction fee
    • 172. 78% agreed it was too much
    • 173. 33% actually provided discount proportional to group size
  • Seller Side
    Interview with Industry Specialist (LG Electronics)
    Main Target
    Bestbuy
    Target,
    Walmart
    25%
    Associations of
    RegionalBig Sellers
    25%
    40%
  • 174. Seller Side
    Interview with Industry Specialist (eBay)
    • Smaller sellers
    Large sellers already have sufficient traffic
    • Older products
    Sellers may want to clear the out-of-date products with huge discount
  • 175. User Side
    : Online User Survey
    Power to choose products
    Discount on products
    Buyer community feedback
  • 176. Business Canvas #2
    Seller: - More customer traffic
    - Bulk sales with reduced commission
    Buyer: - Better discounts
    - Power to choose product deal
    - Buyer community feedback on products and sellers
    - Maintainingonline buyer/seller communities and credibilityof transactions- Promotionof website and brand
    • Powerful sellers
    • 177. Sellers who need more traffic
    - Server providers
    - Automated services- Communities of buyers and sellers- Co-creation of value through customer feedback
    Multi-sided platformSeller:
    Trustworthy online sellers with verifiable websitesBuyer:
    Online shoppers who are willing to wait to get significant discounts on products
    • Web & App sales
    -Online social networks
    - Physical resources (IT infrastructure)- Existing social networks -Buyer and seller communities,- Brand awareness
    Seller side:- transaction fees
    Buyer side:- targeted ads
    - Variable costs: server and traffic maintenance costs- Fixed Cost: rent, salaries
  • 178. Key Question for Business Canvass #2
    HOW CAN WE ATTRACT BUYERS?
    CUSTOMER ACQUISITION COST?
  • 179. Buyer Demand Test
    Best Marketing Channel for having buyers is Facebook Wall
    : 144 Unique Visits,10 e-mail subscriptions for 3 days
    Facebook Wall
    Google Adwords
    Facebook Ads
    5%
    0.08%
    0.005%
    (CTR)
    $7.52
    $4.88
    $0
    (COST)
  • 180. Business Canvas #3
    Seller: - More customer traffic
    - Bulk sales with reduced commission
    Buyer: - Better discounts
    - Power to choose product deal
    - Buyer community feedback on products and sellers
    - Maintainingonline buyer/seller communities and credibilityof transactions- Promotionof website and brand
    • Sellers who need more traffic
    • 181. Server providers
    Established services- Online Marketing : Google/Facebook
    - Automated services- Communities of buyers and sellers- Co-creation of value through customer feedback
    Multi-sided platformSeller:
    Trustworthy online sellers with verifiable websitesBuyer:
    Online shoppers who are willing to wait to get significant discounts on products
    • Web & App sales
    • 182. Online social networks
    • 183. Online advertising
    - Physical resources (IT infrastructure)- Existing social networks -Buyer and seller communities,- Brand awareness
    Seller side:- transaction fees
    Buyer side:- targeted ads
    • Variable costs: server and traffic maintenance costs- Fixed Cost: rent, salaries
    - Online ad campaigns
  • 184. Key Question for Business Canvass #3
    HOW CAN WE ATTRACT SELLERS?
    COOPERATE WITH SELLERS?
  • 185. Seller Contact
    Deal with sellers failed because no group pricing or discount too low.
    Organize Real Group Deal
    • Contact popular online sellers
    • 186. 3 products: HD camera, protein drink, videogame
    • 187. Videogame was for pre-order
    Result
    • Most sellers: no group discounts
    • 188. Discounts offered < 10%
    • 189. With shipping and tax still >= Amazon price
    • 190. David vs. Goliath problem
  • To Pivot or Not to Pivot?
    Although dismayedat seller response, we did not give up.
    What do do?
    • Deal with sellers disappointing
    • 191. Seller problem intractable?
    • 192. Teaching staff: Pivot or else…
    Beaten, but not defeated
    • Lost one battle, but not the war!
    • 193. Only contacted larger sellers
    • 194. Sellers need more value
    • 195. Show them a real website
    Filter advice and stay determined!
    No Pivot Yet
  • 196. Solution 1 : Rapid Implementation
    Implement seller & buyer side features to give sellers fuller experience.
    Site Upgrade Frenzy
    • Improved site design
    • 197. Buyer facebook login
    • 198. Online social networking integration
    • 199. Seller login and registration
    • 200. Seller bidding
    • 201. Seller group deal creation page
  • Solution 1 : Rapid Implementation
    Humble beginnings
  • 202. Solution 1 : Rapid Implementation
    The Real Deal
  • 203. Solution 1 : Rapid Implementation
    Main page
    Facebook connect
    Deal creation by sellers
    Bidding dialog
  • 204. Solution 2 : More seller value & spamming
    Add value for sellers based on mentor and industry expert interviews
    Add Seller Value
    • Low transaction fees
    • 205. Customer contact information
    • 206. Cross-selling products
    • 207. Ad banners
    • 208. Power to create group deal
    The Art of Spam
    • Massive seller e-mail campaign (16,000 in total)
    • 209. Stanford takes notice and issues warning (oops)
    • 210. Enumerate value propositions
    • 211. Show live website
    • 212. Hand out registration codes
  • Seller Invitation Result
    180 sellers
    # of sellers who signed up
    # of deals made by sellers
    80 deals
    (below Amazon price)
  • 213. Seller Invitation Result
    # of sellers who replied to our email
    200 sellers
    # of sellers who made suggestions on OURCRAVE
    50 sellers
  • 214. Seller Invitation Feedback
    We’ve got two major pieces of feedback
    Who will be in charge of
    Shipping Cost & Sales Tax ?
    There are
    too diverse
    Product Categories
  • 215. Business Canvas #4
    - Maintainingonline buyer/seller communities and credibilityof transactions- Promotionof website and brand
    Seller: - More customer traffic
    • Bulk sales with reduced commission
    - Access to customer contact information
    • Cross-sell their products.- Site advertising- Power to create deals
    Buyer: - Better discounts
    - Power to choose product deal
    - Buyer community feedback on products and sellers
    • Sellers who need more traffic
    • 216. Server providers
    Established services- Online Marketing : Google/Facebook
    -Payment Gateway : Paypal- Customer Service (Front side webservice) : Self- Customer Service (Product side) : Sellers- Delivery : Sellers
    - Automated services- Communities of buyers and sellers- Co-creation of value through customer feedback
    Multi-sided platformSeller:
    Trustworthy online sellers with verifiable websitesBuyer:
    Online shoppers who are willing to wait to get significant discounts on products
    • Web & App sales
    • 217. Online social networks
    • 218. Online advertising
    - Physical resources (IT infrastructure)- Existing social networks -Buyer and seller communities,- Brand awareness
    Seller side:- transaction fees
    Buyer side:- targeted ads
    • Variable costs: server and traffic maintenance costs- Fixed Cost: rent, salaries
    - Online ad campaigns
  • 219. Key Question for Business Canvass #4
    Key Activities for Next Stage
    Can we make enough money?
  • 220. Key Activity – Seller Management
    We should manage main feedbacks from sellers by making basic function,
    1. Convenient System
    • Auto Sales Tax Calculator
    • 221. Bulk List Uploading Function
    • 222. Notification to Sellers
    for relevant cravebags
    2. Building credibility
    • FAQ List for Sellers
    • 223. Share buyer information
    • 224. F2F meeting with big sellers
    3. More Incentives
    • Cross selling Option
    • 225. Seller Advertisement Feature
  • Key Activity – Initial Advertisement
    By price comparison site and online ads, test our early service model. Then, Crazy deals needed for jumping
    2nd Active : Crazy Deals
    • 20~30 % sales for Promotion Deals
    • 226. Very very very famous products
    1st Passive : Online Ads
    • Google / Facebook / Yahoo Ads
    • 227. Price Comparison Site ( very important)
  • Key Activity – Encouraging Buyer’s Viral
    We will implement incentive system for sharing deals and help buyers communicate with each other in our service
    Incentive for sharing
    Buyer Community
    14%
    22%
    People who willing to share deals in FB*
    People who shared deals
    In FB*
    • OurCrave Point
    • 228. Extra Discount
    • 229. Free shipping or tax Coupon
    • 230. Live comment on cravebags
    • 231. Weekly Best cravebag vote
    • 232. Youtube Ads Competition
    * OurCrave User Survey in 2/3 weeks
  • 233. Revenue / Cost Source
    Revenue
    Cost
    Product Ads
    Transaction Fee ( Main )
    Float Money
    Site Maintenance
    Marketing ( Main )
    Customer Support
    Server/Traffic
    /Mobie Apps
    15% of transaction
    Ads for buyer
    Seller Management
    3~5% ( paypal)
    Outsourcing
    20%/60days*
    * google/groupon’s rule, we are asking sellers about this rule.
  • 234. Income Estimation
    *
    • TRANSACTION FEE IS MAIN REVENUE
    • 235. MARKETING COEST IS MAIN COST
    • 236. BREAK-EVEN IS 3 DEALS/DAY
    *Appendix in Blogs
  • 237. Business Canvas Final
    Seller: - More customer traffic
    • Bulk sales with reduced commission
    - Access to customer contact information
    • Cross-sell their products.- Site advertising- Power to create deals
    Buyer: - Better discounts
    - Power to choose product deal
    - Buyer community feedback on products and sellers
    • Sellers who need more traffic
    • 238. Server providers
    Established services- Online Marketing : Google/Facebook
    - Payment Gateway : Paypal- Customer Service (Front side webservice) : Self- Customer Service (Product side) : Sellers- Delivery : Sellers
    - Automated services- Communities of buyers and sellers- Co-creation of value through customer feedback
    • Growing and maintaining online buyer/seller communities and credibilityof transactions- Promotionof website and brand
    - Establishing credibility
    Multi-sided platformSeller:
    Trustworthy online sellers with verifiable websitesBuyer:
    Online shoppers who are willing to wait to get significant discounts on products
    • Web & App sales
    • 239. Online social networks
    • 240. Online advertising
    - Physical resources (IT infrastructure)- Existing social networks -Buyer and seller communities,- Brand awareness
    Seller side:- transaction fees
    Buyer side:- targeted ads
    - float money
    • Variable costs: server and traffic maintenance costs- Fixed Cost: rent, salaries
    - Online ad campaigns
  • 241. Key Lessons
  • 242. Business Canvas – Week 1
    Seller : - More customer traffic
    - Bulk sales- Lower transaction feesBuyer : - Better discounts
    - Platform/Networkmanagement (maintaining online buyer/seller communities and credibility)- promotion of website and brand
    - Powerful sellers
    - Server providers
    - Automated services- Communities of buyers and sellers- Co-creation of value through customer feedback
    Multi-sided platformSeller :pro-sellers on Amazon and eBayBuyer :Online shoppers
    - Web & App sales
    - Online social networks
    - Physical resources (IT infrastructure)- Existing social networks - Buyer and seller communities,- Brand awareness
    - Variable costs: server and traffic maintenance costs- Fixed costs: rent, salaries
    Seller side:- transaction fees
    Buyer side:- targeted ads
  • 243. Business Canvas – Week 2
    Seller : - More customer traffic
    - Bulk sales- Lower transaction fees- Brand name marketingBuyer : - Better discounts
    - Power to choose product deal
    - Platform/Networkmanagement (maintaining online buyer/seller communities and credibility)- promotion of website and brand
    - Powerful sellers
    - Server providers
    - Automated services- Communities of buyers and sellers- Co-creation of value through customer feedback
    Multi-sided platformSeller :pro-sellers on Amazon and eBayBuyer :Online shoppers
    - Web & App sales
    - Online social networks
    - Physical resources (IT infrastructure)- Existing social networks - Buyer and seller communities,- Brand awareness
    - Variable costs: server and traffic maintenance costs- Fixed costs: rent, salaries
    Seller side:- transaction fees
    Buyer side:- targeted ads
  • 244. Business Canvas – Week 3
    Seller : - More customer traffic
    - Bulk sales- Lower transaction fees- Brand name marketingBuyer : - Better discounts
    - Power to choose product deal
    - Buyer community feedback on products and sellers
    - Platform/Networkmanagement (maintaining online buyer/seller communities and credibility)- promotion of website and brand
    - Powerful sellers
    -Regionalsellers
    - Server providers
    - Automated services- Communities of buyers and sellers- Co-creation of value through customer feedback
    Multi-sided platformSeller :
    Sellers on Amazon and eBayBuyer :Online shoppers who are willing to waitto get significant discounts on products
    - Web & App sales
    - Online social networks
    - Physical resources (IT infrastructure)- Existing social networks - Buyer and seller communities,- Brand awareness
    - Variable costs: server and traffic maintenance costs- Fixed costs: rent, salaries
    Seller side:- transaction fees
    Buyer side:- targeted ads
  • 245. Business Canvas – Week 4
    Seller : - More customer traffic
    • Bulk sales- Lower transaction fees- Brand name marketingBuyer : - Better discounts
    - Power to choose product deal
    - Buyer community feedback on products and sellers
    - Platform/Networkmanagement (maintaining online buyer/seller communities and credibility)- promotion of website and brand
    - Sellers who need more traffic
    -Regionalsellers
    - Server providers
    - Automated services- Communities of buyers and sellers- Co-creation of value through customer feedback
    Multi-sided platformSeller :
    Sellers on Amazon and eBayBuyer :Online shoppers who are willing to waitto get significant discounts on products
    - Web & App sales
    - Online social networks
    - Onlineadvertising
    - Physical resources (IT infrastructure)- Existing social networks - Buyer and seller communities,- Brand awareness
    - Variable costs: server and traffic maintenance costs- Fixed costs: rent, salaries
    Seller side:- transaction fees
    Buyer side:- targeted ads
  • 246. Business Canvas – Week 5
    - Platform/Networkmanagement (maintaining online buyer/seller communities and credibility)- promotion of website and brand
    Seller : - More customer traffic
    - Bulk sales- Lower transaction fees- Brand name marketing
    - Access to customer contact information
    - Ability to cross-sell products
    - Site advertising
    Buyer : - Better discounts
    - Power to choose product deal
    - Buyer community feedback on products and sellers
    - Sellers who need more traffic
    -Regionalsellers
    - Server providers
    - Automated services- Communities of buyers and sellers- Co-creation of value through customer feedback
    Multi-sided platformSeller :
    Sellers on Amazon and eBayBuyer :Online shoppers who arewilling to waitto get significant discounts on products
    - Web & App sales
    - Online social networks
    - Onlineadvertising
    - Physical resources (IT infrastructure)- Existing social networks - Buyer and seller communities,- Brand awareness
    - Variable costs: server and traffic maintenance costs- Fixed costs: rent, salaries
    - Online ads
    Seller side:- transaction fees
    Buyer side:- targeted ads
  • 247. Business Canvas – Week 6
    Seller : - More customer traffic
    - Bulk sales- Lower transaction fees- Access to customer contact information
    - Cross-sell their products.- Site advertising- Power to create dealsBuyer : - Better discounts- Power to choose product deal- Buyer community feedback on products and sellers
    - Platform/Networkmanagement (maintaining online buyer/seller communities and credibility)- promotion of website and brand
    - Sellers who need more traffic
    -Regionalsellers
    - Server providers
    - Automated services- Communities of buyers and sellers- Co-creation of value through customer feedback
    Multi-sided platformSeller :
    Sellers on Amazon and eBayBuyer :Online shoppers who arewilling to waitto get significant discounts on products
    - Web & App sales
    - Online social networks
    - Onlineadvertising
    - Physical resources (IT infrastructure)- Existing social networks - Buyer and seller communities,- Brand awareness
    - Variable costs: server and traffic maintenance costs- Fixed costs: rent, salaries
    - Online ads
    Seller side:- transaction fees
    Buyer side:- targeted ads
    - float money
  • 248. Business Canvas – Week 7
    Seller : - More customer traffic
    - Bulk sales- Lower transaction fees- Access to customer contact information
    - Cross-sell their products.- Site advertising- Power to create dealsBuyer : - Better discounts- Power to choose product deal- Buyer community feedback on products and sellers
    - Platform/Networkmanagement (maintaining online buyer/seller communities and credibility)- Promotion of website and brand
    - Sellers who need more traffic
    - Regionalsellers
    - Server providers
    Established services- Online Marketing : Google/Facebook -Payment Gateway : Paypal- Customer Service (Front side webservice) : Self- Customer Service (Product side) : Sellers- Delivery : Sellers
    - Automated services- Communities of buyers and sellers- Co-creation of value through customer feedback
    Multi-sided platformSeller :Sellers on Amazon and eBay
    Seller:
    Trustworthy sellers with verifiable websites.Buyer :Online shoppers who arewilling to waitto get significant discounts on products
    - Web & App sales
    - Online social networks
    - Onlineadvertising
    - Physical resources (IT infrastructure)- Existing social networks - Buyer and seller communities,- Brand awareness
    - Variable costs: server and traffic maintenance costs- Fixed costs: rent, salaries
    - Online ads
    Seller side:- transaction fees
    Buyer side:- targeted ads
    - float money
  • 249. Business Canvas – Week 8
    Seller : - More customer traffic
    - Bulk sales- Lower transaction fees- Access to customer contact information
    - Cross-sell their products.- Site advertising- Power to create dealsBuyer : - Better discounts- Power to choose product deal- Buyer community feedback on products and sellers
    - Platform/Networkmanagement (maintaining and growing online buyer/seller communities and credibility)- Promotion of website and brand
    - Establishing credibility
    - Sellers who need more traffic
    Established services- Online Marketing : Google/Facebook -Payment Gateway : Paypal- Customer Service (Front side webservice) : Self- Customer Service (Product side) : Sellers- Delivery : Sellers
    - Automated services- Communities of buyers and sellers- Co-creation of value through customer feedback
    Multi-sided platform
    Seller:
    Trustworthy sellers with verifiable websites.Buyer :Online shoppers who are willing to wait to get significant discounts on products
    - Web & App sales
    - Online social networks
    - Onlineadvertising
    - Physical resources (IT infrastructure)- Existing social networks - Buyer and seller communities,- Brand awareness
    - Variable costs: server and traffic maintenance costs- Fixed costs: rent, salaries
    - Online ads
    Seller side:- transaction fees
    Buyer side:- targeted ads
    - float money
  • 250. Pivot ExampleRobotic Weeding
    Talked 75 Customers in 8 Weeks
  • 251. Our initial plan
    Confidential
  • 252. 20 interviews, 6 site visits…We got OUR Boots dirty
    Weeding
    Visited two farms in Salinas Valley to better understand problem
    Interviewed:
    • Bolthouse Farms, Large Agri-Industry in Bakersfield
    • 253. White Farms, Large Peanut farmer in Georgia
    • 254. REFCO Farms, large grower in Salinas Valley
    • 255. Rincon Farms, large grower in Salinas Valley
    • 256. Small Organic Corn/Soy grower in Nebraska
    • 257. Heirloom Organics, small owner/operator, Santa Cruz Mts
    • 258. Two small organic farmers at farmers market
    • 259. Ag Services of Salinas, Fertilizer applicator
    Mowing
    Interviewed:
    • Golf: Stanford Golf course
    • 260. Parks: Stanford Grounds Supervisor, head of maintenance and lead operator (has crew of 6)
    • 261. Toro dealer (large mower manufacturer)
    • 262. User of back-yard mowing system
    • 263. Maintenance Services for City of Los Altos
    • 264. Colony Landscaping (Mowing service for stadiums)
    Confidential
  • 265. Business Plan Autonomous Vehicles for Mowing & Weeding
    Dealers sell, installs and supports customer
    Co. trains dealers, supports dealers
    - Innovation
    - Customer Education
    - Dealer training
    Mowing
    - Owners of public or commercially used green spaces (e.g. golf courses)
    - Landscaping service provider
    Weeding
    - Farmers with manual weeding operations
    We reduce operating cost
    - Labor reduction
    - Better utilization of assets (eg mow or weed at nights)
    - Improved performance (less rework, food safety)
    - Dealers (Mowing and Ag)
    - Vehicle OEMs (John Deere, Toro, Jacobsen, etc)
    - Research labs
    - Mowing Dealers
    - Ag Dealers
    Engineers on Autonomous vehicles, GPS, path-planning
    Dealer discount
    COGS seek a 50-60% Gross Margin
    Heavy R&D investment
    Asset sale
    Our revenue stream derives from selling the equipment
  • 266. Autonomous vehiclesWEEDING
    Dealers sell, installs and supports customer
    Co. trains dealers, supports dealers
    - Innovation
    - Customer Education
    - Dealer training
    - Low density vegetable growers
    - High density vegetable growers
    - Thinning operations
    - Conventional vegetables
    We reduce operating cost
    - Labor reduction (100 to 1)
    - Reduced risk of contamination
    - Mitigate labor availability concerns
    - Ag Dealers
    - Ag Service providers
    - Research labs
    - Ag Dealers
    - Ag Service providers
    Engineers on Machine Vision
    Two problems:
    - Identification
    - Elimination
    Dealer discount
    COGS seek a 50-60% Gross Margin
    Heavy R&D investment
    Asset sale
    Our revenue stream derives from selling the equipment
  • 267. 1 Week – 1 CarrotBot
    Confidential
  • 268. The Business Plan Canvas Updated
    Value-Driven
  • 294. The Business Plan Canvas Updated
    Value-Driven
  • 321. 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
  • 322. The Business Plan Canvas Updated
    Value-Driven
  • Autonomous weeding - Final
    Direct
    - Provide high quality service at competitive price
    - Innovation
    - Customer Education
    - Dealer training
    - Low density vegetable growers
    - High density vegetable growers
    - Thinning operations
    - Conventional vegetables
    We reduce operating cost
    - Labor reduction (100 to 1)
    - Reduced risk of contamination
    - Mitigate labor availability concerns
    - Ag Service providers
    - Research Institutes (eg UC Davis, Laser Zentrum Hannover)
    - 3-4 key farms
    Direct
    - Alliance with service providers
    - Eventually sell through dealers
    Engineers on Machine Vision
    Two problems:
    - Identification
    - Elimination
    Costs for service provision
    COGS seek a 50-60% Gross Margin
    Heavy R&D investment
    Service provision
    - Charge by the acre with modifier according to weed density
    - Eventually move to asset sale
  • 352. Why Startups Aren’t Run By Accountants
  • 353. Inventor of the Modern Corporation
    Scalable
    Startup
    Transition
    Large Company
  • 354. Inventor of the Modern Corporation
    Scalable
    Startup
    Transition
    Large Company
    Alfred P. Sloan
  • 355. Alfred P. Sloan
    Scalable
    Startup
    Transition
    Large Company
    General Motors, President/Chairman
  • Founder of General Motors
    Scalable
    Startup
    Transition
    Large Company
  • 359. Founder of General Motors
    Scalable
    Startup
    Transition
    Large Company
    Billy Durant
  • 360. Billy Durant
    Scalable
    Startup
    Transition
    Large Company
    • Leader in horse-drawn buggy’s
    • 361. Fired by board, starts Chevrolet
    • 362. Regains control of GM
    • 363. Fired by board, GM ~$3.6 billion*
    * GM Net sales in 1921 $304.5M = $3.6 Billion today
  • 364. Durant Versus Sloan
    Scalable
    Startup
    Transition
    Large Company
  • 365. Durant Versus Sloan
    • Dies, rich, honored and famous
  • Durant Versus Sloan
    • Dies managing a bowling alley
    • 366. Dies, rich, honored and famous
  • Durant Versus Sloan
    Accountant
    • Dies managing a bowling alley
    • 367. Dies, rich, honored and famous
  • You are here
    Scalable
    Startup
    Transition
    Large Company
  • 368. Carpe Diem
    www.steveblank.com
  • 369. Thanks
    www.steveblank.com