Introduction and workshop to develop student team concepts into business model hypotheses. Focused on value proposition design, customer segments, and the rest of the Business Model Canvas.

1. Business Modeling
NYU Stern
Innovation
4.6.2016
by Jen van der Meer
NYU ITP
Reason Street

2. Intro to the
Business Model Canvas

3. Starting a company is hard
More fail than succeed
US business deaths now
outnumber business births

4. We make it seem too easy
Or that you can just wish your way
or grind your way into success

5. Most companies do not survive
More than 50% close within the first five years

6. When companies fail
All reasons for failure
point to a lack of
customer need

7. Why did they fail?
“No product market fit” “Didn’t listen to customers”
“Ran out of cash”
“Solving for a want to have,
not a need to have”
“No market need”
“Never found a
business model”
“Customers didn’t want
to pay for it”
From autops.io and CB Insights Founder Post Mortems -
Top 20 Reasons Why Startups Fail

8. Question: Have you ever
failed, big time?

9. If so - why do you think
you failed?

10. And here’s the thing
about failure

11. We used to do this the harder way

12. Leading
Entrepreneurship Training
Ideas
Build
Product
Measure
Data
Learn
Key Partners Key Activities
Value
Propositions
Customer
Relationships
Channels
Revenue StreamsCost Structures
Key Resources Key Channels
Lean Startup Business Model Canvas
Customer
Segments

13. What is a Startup?
(according to 3 w.m.)
“A startup is a human institution designed to deliver a
new product or service under conditions of extreme
uncertainty.” – Eric Ries
“A startup is a company designed to grow fast.” –Paul
Graham. Y Combinator.
“A startup is a temporary organization designed
formed to search for a scalable repeatable business
model.” – Steve Blank.
“”Most startups change their business model multiple
times. A scalable startup is a special class of startup –
world class team, large vision, large target market,
passionate belief and a reality distortion field.”

14. Are you ready?

15. What are your assumptions?
Business Model Canvas
Key Partners Key Activities
Value
Propositions
Customer
Relationships
Channels
Revenue StreamsCost Structures
Key Resources Key Channels
Customer
Segments

16. Let’s take a tour:
Choose:
Uber
Airbnb
Warby Parker
Other?

17. Your Turn

18. What are your assumptions?
Business Model Canvas
Key Partners Key Activities
Value
Propositions
Customer
Relationships
Channels
Revenue StreamsCost Structures
Key Resources Key Channels
Customer
Segments

19. Who are Your Customers?

20. You Can’t Target Everyone
“Serve a unique customer
segment”
“Target a specific niche”
“Aim for your most
profitable segment” “It’s better to dominate a
micro segment than to aim
for everyone and hit nobody”
“Define your Archetypes”

21. Context:
#stillathome
#notanadultyet
Name:
Peyton
Age:
24
Job:
Jr. Designer
Priorities
Pay off college loan
Apartment
Independence
Freedom
Bike to work
Interests:
Roller derby
Raising money for
breast cancer
Jewelry making
Pains:
Can’t seem to save
At breakeven/loss
each month
Bad credit rating
Fears + Secrets:
Afraid of getting
rejected for an
apartment
Really likes
mom’s support
Customer Persona
Persona

22. The money question:
which one first?
Context:
#stillathome
#notanadultyet
Name:
Peyton
Age:
24
Living with
Mom at
home
Goals:
Independence
Freedom
Apartment
Bike to work
Pay off college
loan
Interests:
Roller derby
Raising money for
breast cancer
Jewelry making
Pains:
Can’t seem to save
At breakeven/loss
each month
Bad credit rating
Fears + Secrets:
Afraid of getting
rejected for an
apartment
Really likes
mom’s support
Context:
Name:
Percy
Age:
28
Lives w/
Roomates
Goals:
Interests:
Church volunteer
Pains:
Fears + Secrets:
Name:
Peyton
Age:
24
Living with
Mom at
home
Name:
Peyton
Age:
24
Living with
Mom at
home
Context:Goals:
Interests:
Church volunteer
Pains:
Fears + Secrets:
Context:Goals:
Interests:
Church volunteer
Pains:
Fears + Secrets:
Persona

23. Pain (!)

24. Pain is a shortcut

25. Scratch your own itch

26. Pains, gains, jobs to be done
From: Business Model Canvas, Value Proposition
Design, Alexander Osterwalder, The Innovators’s
Solution, Clay Christensen and Michael Raynor

27. The pain point secret:
Plans Known needs
Behavior

28. Plans
Values
Known needs
Behavior
Norms
Assumptions
Taboo Beliefs
Unknown Needs
Go deeper

29. What are your assumptions?
Business Model Canvas
Key Partners Key Activities
Value
Propositions
Customer
Relationships
Channels
Revenue StreamsCost Structures
Key Resources Key Channels
Customer
Segments

30. Value Proposition
My company is developing
company name defined offering
to help
And here’s how we prove it
to solve
target customer segment defined problem or pain
our secret sauce, and proof point

31. For next time: test your
assumptions and talk to people

32. Repeat Repeat Repeat
Business Model Canvas
Key Partners Key Activities
Value
Propositions
Customer
Relationships
Channels
Revenue StreamsCost Structures
Key Resources Key Channels
Customer
Segments

33. Customer Relationships
Business Model Canvas
Key Partners Key Activities
Value
Propositions
Customer
Relationships
Channels
Revenue StreamsCost Structures
Key Resources Key Channels
Customer
Segments
EarCre CapCre

34. Customer Relationships
What are the main goals of customer
relationships?
Get
Keep
Grow
(And let the mismatched ones go)

35. The FUNNEL(s)

36. Customer Relationships

37. CAC Vs. LTV
VC shorthand / gibberish for: does it cost
you less to get customers than all the
money you are going to get from that
customer? And by how much?

38. CAC vs. LTV
Customer Acquisition Cost
Lifetime Value

39. The magic accelerator:
The Viral Loop
The viral co-efficient: the average number
of invitations sent by each existing user
times the conversion rate of invitation to new
user. The viral coefficient is referred to as the
K value.

40. CAC vs. LTV

41. Lean Analytics, Alistair Croll, Benjamin
Yoskovitz
SAAS CUSTOMER
LIFECYCLE

42. Earn ReferralCreate Value Capture ValueCreate Interest
Test value before you even begin making your product
Where to Start:
Jen van der Meer Reason Street Revenue Steps

43. ReferralActivation ConversionAcquisition
Where to Start:
Jen van der Meer Reason Street Revenue Steps

44. Channels describe all your customer interfaces
through which you reach your customer
segments, communicate with them and through
which you deliver your value propositions.
Channels

45. Customer Channels
Business Model Canvas
Key Partners Key Activities
Value
Propositions
Customer
Relationships
Channels
Revenue StreamsCost Structures
Key Resources Key Channels
Customer
Segments
EarCre CapCre

46. First Easy Decision
Channel
Product
Physical
Physical
Bits/Virtual

47. Channels: More Complex Now
Physical Sales Digital Sales
Direct sales through
salesforce
OEM
Systems Integrator
Dealer
Distribute to retailer
Value added resellers
Sell to distributor
Aggregator
Other
Direct sales through web
Direct sales through mobile
Direct sales through mobile
Sales through app store
In game or in app purchases
Direct sales on the dark web
Direct sales on virtual reality
Targeting blogs (get written up)
Publicity / PR
Unconventional PR
Search engine marketing
Online ads (social, display, blogs)
Offline ads
Search engine optimization
Content marketing
Email (build your own list)
Referral marketing
Engineering marketing
(microsites, widgets)
Affiliate Programs
Educational marketing (webinars)
Existing platforms (app store, FB)
Trade shows
Offline events
Speaking engagements
Community building
Traction Channels

48. Testing to Learn Your Advantage
Traction: quantitative evidence of
customer demand. - Naval Ravikant
“many startups experimented with
multiple channels until they found the
ones that worked”
most founders pick the channel with
which they are already familiar
“it’s hard to predict a traction channel
that will work best”
- Gabriel Weinberg and Justin Mares

49. Traction Channels
Marketing Channels Sprint 1 Sprint 2 Sprint 3
Targeting blogs (get written up)
Publicity / PR x
Unconventional PR
Search engine marketing x
Online ads (social, display, blogs) x
Offline ads
Search engine optimization
Content marketing
Email (build your own list) x x x
Referral marketing x
Engineering marketing
Affiliate Programs
Educational marketing (webinars) x
Existing platforms (app store, FB)
Trade shows
Offline events
Speaking engagements x
Community building

50. The Backstage!
Business Model Canvas
Key Partners Key Activities
Value
Propositions
Customer
Relationships
Channels
Revenue StreamsCost Structures
Key Resources Key Channels
Customer
Segments

51. The Money. Last.
Business Model Canvas
Key Partners Key Activities
Value
Propositions
Customer
Relationships
Channels
Revenue StreamsCost Structures
Key Resources Key Channels
Customer
Segments

53. How to Validate: Get Out!

54. Plug:
ITP Business 101.1
(lean startup)
www.reasonstreet.co