Lean Startup & Business Modelling
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Lean Startup is a proven methodology to increase the odds of your success. Entrepreneurs around the world have embraced principles of lean startup. With just an idea or a product, you cannot build a sustainable growing business. You also need to think about various parts of building a business and create a working business model. This presentation introduces you to basic building blocks of Startup business models and lean startup principles.
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Lean Startup & Business Modelling
- 2. Business Model A puzzle to figure out © Abhijit Mhetre & Canvazify Abhijit Mhetre
- 3. Our association with… © Abhijit Mhetre & Canvazify
- 4. What is a Startup? © Abhijit Mhetre & Canvazify
- 5. Startup Business © Abhijit Mhetre & Canvazify
- 6. http://www.forbes.com/sites/neilpatel/2015/01/16/90-of-startups-will-fail-heres-what-you-need-to-know-about-the-10/#4ec8612455e1 90% Of startups fail © Abhijit Mhetre & Canvazify
- 7. Startup is a temporary organization created to search for a repeatable and scalable business model – Steve Blank Startup © Abhijit Mhetre & Canvazify
- 8. What is Lean Startup? © Abhijit Mhetre & Canvazify
- 9. Build – Measure - Learn Customer Development Business Model Canvas Lean Canvas L E A N S T A R T U P © Abhijit Mhetre & Canvazify
- 10. The Lean Way: Lean means not cheap. Lean advocates wise usage of resources – Avoid wastage 1. Think Big – Start Small – Scale Fast 2. Entrepreneurship is Management (Discipline) 3. Validated Learning 4. Innovation Accounting 5. Build – Measure - Learn Lean Methodology Every startup is a grand experiment that attempts to answer a KEY Questions. Question is not “Can this product be build?” Real question is “Should this product be build and can we create a sustainable / scalable business?” Lean Principles © Abhijit Mhetre & Canvazify
- 11. Customer Discovery: • Customer hypothesis (Canvas) • Test Hypothesis (Problem vs Solution) • Product Market fit (Fit or Pivot) Customer Validation: • MVP • Build - Measure – Learn • Verify repeatable + Scalable model or Pivot Lean Methodology © Abhijit Mhetre & Canvazify
- 12. Steve Blank © Abhijit Mhetre & Canvazify
- 13. © Abhijit Mhetre & Canvazify
- 14. Hypothesis validation exercise “Let’s get real - Get out of the building” User Demographic User response Validated Invalidated Our Comment Our hypothesis is that Team: We will ask © Abhijit Mhetre & Canvazify
- 16. © Abhijit Mhetre & Canvazify
- 17. • The core of startup (over)valuation hype is that start- ups are surviving on VC/PE/angel money and not on its own earned profits. When that source eventually dries up, some will go belly up. Only those with business models that generate real cash profits will survive – Indianweb2.com – http://www.indianweb2.com/2015/10/21/bubble-burst-begins-housing-com-valuation-plunges-to-less-than-50- million/ • Brings you clarity on what you know, and what you don’t know • Helps you test, validate and make changes, tweaks, pivots • Gives you a BIG picture of your business Why Do you need Business Model? © Abhijit Mhetre & Canvazify
- 18. • Alexander Osterwalder • “A business model describes the rationale of how an organization creates, delivers and captures value.” Business Model Canvas © Abhijit Mhetre & Canvazify
- 19. Business Model Canvas - Video © Abhijit Mhetre & Canvazify
- 20. Business Model Canvas © Abhijit Mhetre & Canvazify
- 21. Customer Segment Whose problem are we solving? Who are we creating value for? Customer User Influencer Group/Profile customers based on • Common needs and problems • Common behavior • Demographic (Age, Gender, etc) • Common attributes (Social, Economical, Geo, Education, occupation) © Abhijit Mhetre & Canvazify
- 22. Based on Different needs Different Channels Different Relations Willingness to Pay Market Types Mass Market Niche Market Single/Multi Sided Diverse New Existing Evolving Dying Market Status Customer Segment CustomerSegments © Abhijit Mhetre & Canvazify
- 23. Value Proposition “People don’t like to be sold, but they love to buy” – Jeffrey Gitomer What value do we deliver to our customer? What alternatives customer has? Why us over competition? © Abhijit Mhetre & Canvazify
- 24. Newness Customization Performance Brand Price Design Usability Experience Convenience Productivity Reliability Risk reduction Guarantee, Maintenance, Service assurance Value Proposition Fast/Timely © Abhijit Mhetre & Canvazify
- 25. Delivery Channel How efficiently we deliver our Value Proposition to our Customer Segment? Touchpoints Direct/Indirect Add Value, Handle Complexity, Move Volume © Abhijit Mhetre & Canvazify
- 26. DirectIndirect Channel Types • In person • Phone • Own Store • Mobile/Web • Distributors, Dealers, Agents • Franchise, Retailers • Affiliates • OEM • Platform (App stores) 1 2 3 4 5 Awareness Evaluate Purchase Delivery After sales Delivery Channel How do we help customer in her journey from Awareness to After sales © Abhijit Mhetre & Canvazify
- 27. Customer Relationship What types of relationships a you want to establish with your specific customer segments? Get Keep Grow © Abhijit Mhetre & Canvazify
- 28. Customer Relationship © Abhijit Mhetre & Canvazify
- 29. Customer Relationship In person Self service Phone/Remote Communities Automated … • CAC – Customer Acquisition Cost • LTV – Life Time Value • Churn Rate : Customer dropping rate • LTV = [(Revenue – Support Cost)/Retention Period ]– Acquisition Cost © Abhijit Mhetre & Canvazify
- 30. Revenue Stream “Price is driven by the Value and not by the Cost” How do you make money? How frequently? How long? Revenue Model Pricing Alternatives © Abhijit Mhetre & Canvazify
- 31. Revenue Streams Asset sale Subscription Usage fee Rent/Lease Licensing (IP) Brokerage Advertising Freemium Commission … Fixed: List price, Value price, Volume price, Sp price Dynamic: Realtime, Yield, Auction One time Per Interval Sp. Pricing Packaged ModelPrice Frequency © Abhijit Mhetre & Canvazify
- 32. Key Resources What are the Most important assets required to make business model work? Goal is to identify indispensible assets Human Physical Financial Intellectual © Abhijit Mhetre & Canvazify
- 33. Key Resources Physical Financial Land, Factory, Machines, Office, etc Initial funds, External capital, line of credit Patents, TM, Customer list, Specific Knowledge, Experts, contracts, etc Skilled, qualified, advisors, etc Intellectual Human © Abhijit Mhetre & Canvazify
- 34. Key Activities Execution Why What When Focus Core Vs Non Core Activities “Ideas are cheap, execution is key that defines the fate” © Abhijit Mhetre & Canvazify
- 35. Key Activities Must Should do Market research R&D Sales/Marketing Product Development Strategy Planning Fundraising Investment Operations IP/Branding HR/ Recrutment Customer Dev Outsource Deligate Differentactivities © Abhijit Mhetre & Canvazify
- 36. - Which gaps/weakness you have where partners can add value? - Which non-core things you can outsource Key Partners Why What When © Abhijit Mhetre & Canvazify
- 37. Key Partners Optimize Business Model Bring Efficiency Reduce Risk Economy of scale Faster GTM Win-Win Companies create alliances to optimize their business models, reduce risks, or acquire resources Strategic alliances Joint ventures Suppliers Vendors Channel partners Coopetition Influencers WhyWho © Abhijit Mhetre & Canvazify
- 38. Cost Structure What are the most important costs in our business? Which key resources or key activities are most expensive? Model Types Unitonomics © Abhijit Mhetre & Canvazify
- 39. Cost Structure Value driven Cost driven Initial Cost Sunk Cost Fixed Cost Recurring Cost Model Variable Cost Type Unitonomics © Abhijit Mhetre & Canvazify
- 40. Left Brain Right Brain Market Side Emotions, Value Product Side Logic, efficiency © Abhijit Mhetre & Canvazify
- 41. • Direct sales • e/mCommerce • Franchise / Dealership / Distributor / Retailer • Freemium • Auction • Affiliate • Aggregation • MLM • Not for profit • Ad Based • Research / Consultancy Types of business models © Abhijit Mhetre & Canvazify
- 42. We are into business of _________________ We help _<Type of customers>__ people in / to __<Value your product/service create >___ by providing/using __<your product> Startup Pitch © Abhijit Mhetre & Canvazify
- 43. We help companies achieve productive innovation through Collaborative innovation platform called “Canvazify” And strategic consultancy We are in business of “innovation management”. Startup Pitch © Abhijit Mhetre & Canvazify
- 44. http://www.businessmodelgeneration.com/ http://blog.strategyzer.com/ http://steveblank.com/ https://leanstack.com/ http://www.startuplessonslearned.com/ https://hbr.org/2013/05/why-the-lean-start-up-changes-everything/ar/1 http://canvazify.com Resources © Abhijit Mhetre & Canvazify P.S. Lean Startup, Business Model Canvas, Lean Canvas are terms/trademarks owned by respective owners/creators. Use of these terms during the presentation is for explanation purpose only.
- 45. Your Startup Digital toolkit Track the evolution of your startup journey © Abhijit Mhetre & Canvazify Canvazify.com
- 46. Reach us at… @canvazify ideas@canvazify.com Canvazify.com