Jeff Cutuli gave a presentation on business models for startups at the Santa Clara County Small Business Summit. He discussed that a business model is not just a play thing, puzzle or process, but rather a tool for startups to discover, create, deliver and capture value. He emphasized that business models require skills in customer development like testing assumptions and collecting statistically valid customer feedback. Cutuli also presented several common business model canvases and tools that startups can use to help validate their ideas, including the business model canvas, lean canvas, and customer development process.

1. Jeff Cutuli
Executive, Engineer, Entrepreneur, Consultant, Adviser, Executive Coach, Lean Startup Mentor
• SV Startup Cup
• LAUNCH, UC Haas School of Business
• Spartups
• Clean Tech Open Accelerator
• NSF i-Corps
LinkedIn.com/in/JeffCutuli May 26, 2015
Jeff Cutuli – Business Models – SCC Small Business Summit 1

2. Objectives:
 What is a Business Model?
 How Startups use Business Models
 Various Business Models and Similarities
 Business Model skill requirements
◦ Customer Development Process
Jeff Cutuli
2nd Annual Santa Clara County
Small Business Summit
May 26, 2015
Jeff Cutuli – Business Models – SCC Small Business Summit 2

3. Is it something that…
you play with…
Jeff Cutuli – Business Models – SCC Small Business Summit 3

4. …a Puzzle that requires time and patience to
assemble and has lots of interconnecting pieces …
Jeff Cutuli – Business Models – SCC Small Business Summit 4

5. …or a complex Process, which requires
testing, measurement and control, with
many steps?
Jeff Cutuli – Business Models – SCC Small Business Summit 5

6. Play Thing, Puzzle, Process are all true…but really
Jeff Cutuli – Business Models – SCC Small Business Summit 6

7.  The Goal of a Startup is NOT to be a Startup
◦ Lean and Temporary organization
◦ Searching for Truth
 Discover
◦ Find the Problem before the Solution
◦ Seek guidance from experts
 Create and Validate a Business Model
◦ Product-Market Fit
◦ Repeatable
◦ Scalable
 Deliver & Capture Value
◦ Learning and Doing
◦ Build team
◦ Partnerships
Jeff Cutuli – Business Models – SCC Small Business Summit 7

8.  Alex Osterwalder: Business Model Canvass
 Rob Fitzpatrick: Startup Canvas
 Ash Maurya: Lean Canvas
 Sean Griffin: Startup Cup Model
Jeff Cutuli – Business Models – SCC Small Business Summit 8

9. Jeff Cutuli – Business Models – SCC Small Business Summit
9

10. Value Proposition
Claim
Single, clear,
compelling message
Why you are
different and worth
buying
Strengths &
Weaknesses
Features
Gain
Minimal Viable
Product (MVP)
Problem
Pain
Specific
Customer
Segments
Target customers
who desperately
want the pain to go
away
Channels
Path to customers
Revenue Model
Activities that drive
revenue, raving fans,
retention
Market
Size
Demographics Opportunities
External Risks
Competition
Unfair Advantages Threats
Key Performance
Indicators
Measurements
Jeff Cutuli – Business Models – SCC Small Business Summit 10

11. Problem
Top 3 problems
Solution
Top 3 features
Unique Value
Proposition
Single, clear,
compelling
message
Why you are
different and
worth buying
Minimal Viable
Product (MVP)
Unfair
Advantage
Can’t be easily
copied or bought
Customer
Segments
Target customers
who are suffering
in the absence of
your UVP
Desperate for the
pain to go away
Key Activities
Activities that
drive revenue,
raving fans,
retention
Channels
Path to customers
Cost $tructure
Customer Acquisition Costs
Distribution Costs
Hosting
People
Facilities, etc.
Revenue $treams
Revenue Model
Customer Life Time Value
Margins
PRODUCT MARKET
Jeff Cutuli – Business Models – SCC Small Business Summit 11

12. Jeff Cutuli – Business Models – SCC Small Business Summit 12

13. Evidence-Based Tools
◦ Test Assumptions
◦ Get Lots of Data
◦ Feedback Loop
◦ Diagnose Pain
◦ Differentiate Your Claim
◦ Demonstrate Gain
◦ Deliver the Value
Jeff Cutuli – Business Models – SCC Small Business Summit 13

14. 1. Problem
 Be Specific
 Where’s the Pain
2. Customer
 Niche / Individual
3. Value Proposition
 Product-Market Fit
 Solution
 Customer Acquisition
 Unfair Advantage
4. Revenue Streams
5. Cost Structure
6. Team
 Core Competence
 Key Activities
 Human & Capital Resources
 Partnerships
 Advisors, Mentors, Coaches
Jeff Cutuli – Business Models – SCC Small Business Summit 14

15. Business Model Tools Require
Customer Development
Skills
Jeff Cutuli – Business Models – SCC Small Business Summit 15

16. “Find early customers and confirm their intent to buy
(without biasing them) before building everything.”
Rob Fitzpatrick –The Mom Test
“You can’t guess how your product is valued by customers…
Customer Development allows you to discover the economics needed
for value pricing your product.”
Steve Blank – The Four Steps to the Epiphany
Jeff Cutuli – Business Models – SCC Small Business Summit 16

17. TEST
Assumptions
n >30
Steve Blanks’s Customer Development Process:
Search and Test Assumptions before Executing
BUSINESS
MODEL
Jeff Cutuli – Business Models – SCC Small Business Summit 17

18. • No Guessing…Test Assumptions
• Curiosity
• Active Listening
• Unbiased Questioning
• Discipline
• Collect Statistically Valid and
Significant Data
• Analyze the Data
• Act on the Data
• “Rinse and Repeat”
Jeff Cutuli – Business Models – SCC Small Business Summit 18

19.  Business Models are Tools for Startups
◦ Discover, Create, Deliver & Capture Value
◦ Quantify the Problem before Solution
 Business Models require Skills
◦ Customer Development Process
◦ Show me the Evidence!
 Business Models expedite the Learning
◦ Challenge our assumptions and thinking
◦ Learn with help from mentors, teachers, customers
◦ Learn by doing at a Business Model Competition
 Several Business Models and Competitions
◦ No excuses. Just pick one and Go!
Jeff Cutuli – Business Models – SCC Small Business Summit 19

20. "There are more ways than one to skin a cat…
so are there more ways than one of digging
for money.”
Seba Smith - The Money Diggers, 1840
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21. It’s normal to resist change. Business Models give entrepreneurs a
better way to discover, validate and exploit business opportunities.
Jeff Cutuli – Business Models – SCC Small Business Summit 21

22. Don’t let this happen to you!
Jeff Cutuli – Business Models – SCC Small Business Summit 22

23. References:
Blank, Steve; The Startup Owner's Manual: The Step-By-Step Guide for
Building a Great Company; K & S Ranch; 1st Ed.
Blank, Steve; The Four Steps to the Epiphany; K & S Ranch; 1st Ed.
Croll, Alistair, and Yoskovitz, Benjamin; Lean Analytics: Use Data to
Build a Better Startup Faster; O'Reilly Media; 1st Ed.
Fitzpatrick, Rob; The Mom Test: How to talk to customers & learn if
your business is a good idea when everyone is lying to you; Create
Space Independent Publishing Platform; 1st Ed.
Osterwalder, Alex; Business Model Generation: A Handbook for
Visionaries, Game Changers, and Challengers; Wiley & Sons; 1st Ed.
Osterwalder, Alex; Value Proposition Design: How to Create Products and
Services Customers Want; Wiley & Sons; 1st Ed.
Ries, Eric; The Lean Startup: How Today's Entrepreneurs Use
Continuous Innovation to Create Radically Successful Businesses;
Crown Business, 1st Ed.
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24. Questions?
LinkedIn.com/in/JeffCutuli May 26, 2015
Jeff Cutuli – Business Models – SCC Small Business Summit 24