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Different types of startups, markets and whys

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This presentation is about various types of startup companies, markets and core competencies.

In the presentation you will learn why market trends are important, why markets always win, how to calculate market size and why you have to start with the strong why.

You will also learn the fundamental difference between established companies and startups. Startups are designed to search and established companies to execute.

Published in: Business

Different types of startups, markets and whys

  1. 1. MASTER OF STARTUPS SERIES DIFFERENT TYPES OF STARTUPS, MARKETS AND WHYS www.geekhouse.si/en
  2. 2. BLAZ KOS • 10+ years working with start-ups • Management of university incubator, technology park and business angel network • Management of two start-up accelerators and co-working space • PODIM Conference – one of the biggest conferences in Alps-Adriatic region • 600+ lectures in CEE • Mentored over 300 start-ups • Two handbooks about startups, 1500+ pages on two blogs I am on a life mission to make the world a more innovative, organized and transparent place to be by helping individuals, organizations and communities achieve their peak potential and an entirely new level of performance.
  3. 3. www.AgileLeanLife.com An entirely new level of personal performance.
  4. 4. 6 TYPES OF START-UPS • Lifestyle Start-up: Work to Live Your Passion • Known customers and product • Small Business Start-ups: Work to Feed the Family (99%) • Known customers and product, challenge is business model and profit • Internet Version of Small Business Start-ups • Buyable start-ups: Acquisition Targets (5 – 50 mio €) • Large Company Start-ups: Innovate or Evaporate • Innovation: New markets, technology, customers or channels • Social start-ups: Driven to make a difference • Social Innovation, New strategies, profitable? • Scalable start-ups: Born to be Big • Venture capital, 300 mio € + markets, unknown customers and product Source: Steve Blank
  5. 5. 4 TYPES OF MARKETS •Existing market •Resegmented market • Low cost provider • New niche •Clone market •New market Source: Steve B
  6. 6. When a great team meets a lousy market, market wins; When a lousy team meets a great market, market wins. Marc Andreessen
  7. 7. DREAMS SOLUTIONS
  8. 8. Value based economy • The business that continuously create the most value for a market wins. This is true for big, established businesses, as well as start-ups. • Producers: Those who build and create • Consumers: Those who experience it
  9. 9. Core competency Operational excellence, or key differentiator internal to the business, which allows it to outperform the competition.
  10. 10. MARKET TYPE AFFECTS CUSTOMERS • Needs • Adoption Rate • Problem Recognition • Positioning MARKET • Market Size • Cost of entity • Launch Type • Competitive Barriers SALES • Distribution channels • Margins • Sales cycle FINANCE • On going capital • Time to Profitability Source: Steve Blank
  11. 11. 1. EXISTING MARKET
  12. 12. Established companies usually win. • Technology • Tech usability • Emotional innovation Business model • Communication • Organization •
  13. 13. Emotional Innovation We buy because of human weaknesses • Pride - desire to be more important/attractive than others • Envy - sorrow for another's good • Gluttony - over-consumption of anything • Lust - excessive thoughts or desires of a sexual nature • Wrath – uncontrolled feelings of hatred and anger • Greed - excess acquisition of wealth • Sloth - (physical and mental) laziness and indifference
  14. 14. Great Products & Companies •Get you laid (sex) •Get you paid (money) •Get you made (power) Dave McClure
  15. 15. 2. CLONE MARKET 100 MIO €
  16. 16. • LOW COST PROVIDER • UNIQUE NICHE 3. RE-SEGMENTED MARKET
  17. 17. 4. NEW MARKET „Blue Ocean“
  18. 18. Source: Lean Entrepreneur
  19. 19. The best way to navigate the near future is to hyperfocus on creating value for customers and moving at the speed of the Internet.
  20. 20. NEW MARKET
  21. 21. Problem/Pain Unknown Solution Unknown Customer Unknown
  22. 22. HYPOTHESES
  23. 23. Wrong assumptions are mother of all fu*k-ups.
  24. 24. We are wrong before we are right.
  25. 25. A temporary organization designed to search for a repeatable and scalable business model. • Business model • Product/Market Fit • Repeatable sales model • Managers hired FAILURE = LEARNINGSource: Steve Blank
  26. 26. Customer acquisition cost Viral coefficient Customer Lifetime Value Average selling Price Monthly burn rate Balance Sheet Income Statement Cash Flow START-UPS SEARCH COMPANIES EXECUTE Source: Steve Blank
  27. 27. Agile Development Continuous Deployment Continuous Learning Self Organizing Teams Minimum Feature Set Pivots Requirements Docs Waterfall Development QA Tech Pubs START-UPS SEARCH COMPANIES EXECUTE Source: Steve Blank
  28. 28. Market Size • Market size • Market share • Market growth rate • Market structure • Market insight (talking to customers) • Sales Channel
  29. 29. TAM Total possible demand – if they all bought SAM Based on your BM – target segment SOM Based on limits – Targeted market
  30. 30. Total Addressable Market (TAM): Value of all of the buyer/seller relationships participating in the market. Served Addressable Market (SAM): The part of the TAM for which your business model’s value proposition is strongest. Target Market: (Usually) demographic segment of the SAM with the most direct path to success. Source: UCSB
  31. 31. Total Addressable Market (TAM) • Quantifies the entire chain of buyer/seller relationships in your market. • Only need to estimate the value of the relationships at point of consumption (incorporates the value of all relationships in the chain) • Usually very broad. • Easiest to estimate. • Examples: • Mobile apps • Energy consumption • Health & fitness TAM Source: UCSB
  32. 32. Served Addressable Market (SAM) • A value proposition rarely applies to an entire TAM. • Opportunity to sharpen your focus on a particular part of the market. • If TAM and SAM aren’t that different, just estimate an addressable market. • Examples: • Mobile healthcare apps for seniors • Self-generated renewable energy storage • Health & fitness at work SAM Source: UCSB
  33. 33. Target Market • Process not that different than for SAM. • One more level of refinement. • Often a demographic target. • Examples: • Mobile healthcare apps for seniors, targeting retirement homes and large gerontology practices. • Self-generated renewable energy storage, targeting the oilfield services, food manufacturing and automotive industries. • Health & fitness at work, targeting new male employees aged 25-40 in companies with annual sales of $500M or more. Source: UCSB SOM
  34. 34. Quantifying Market Size • If you’re lucky: • Find an industry or market study that fits your business model • If you’re not: • Build a market model • Important to differentiate: • Facts • Assumptions • Extrapolation Algorithms • Run multiple scenarios • Two time frames: • Now • In 5 years (Market Growth)
  35. 35. MARKET LANDSCAPE AND COMPETITORS Source: Steve Blank
  36. 36. UNIQUE POSITIONING Source: Steve Blank
  37. 37. START WITH WHY!
  38. 38. THE GOLDEN CIRCLE Source: Simon Sinek
  39. 39. WHY? 1. Why are we making this? 2. Why doesn’t this exist already? 3. Why us? 4. Why now? 5. Why do people need this product? 6. Why will people want this product? 7. Why will people pay for this? 8. Why will this make people do/feel/be, what they want to do/feel/be? 9. Why would people buy from our competitors? 10. Why will people cross the street to buy from us? 11. Why does this idea matter?
  40. 40. Sources and additional resources • Paul Graham: Startup Ideas • http://www.paulgraham.com/startupideas.html • Eric Ries@Google : Lean Startup • http://www.youtube.com/watch?v=fEvKo90qBns • Steve Blank: Start-up Tools • http://steveblank.com/tools-and-blogs-for-entrepreneurs/ • Simon Sinek: Start with Why? • http://www.ted.com/talks/simon_sinek_how_great_leaders_inspire_action.html • Steve Blank: Market and start-up types • http://blogs.wsj.com/accelerators/2012/12/04/4-types-of-markets-4-ways-to-gauge-them/ • http://blogs.wsj.com/accelerators/2013/06/24/steve-blank-the-6-types-of-startups-2/ • Kanban Board • http://en.wikipedia.org/wiki/Kanban_board • Landscape and competitors • http://tomtunguz.com/ecosystem-vs-competition/ • http://women2.com/new-way-look-competitors/
  41. 41. Additional resources • Calculating TAM, SAM, SOM • http://en.wikipedia.org/wiki/Total_addressable_market • http://tamsamsom.blogspot.com/2009/03/tam-sam-som.html • http://www.liveplan.com/blog/2012/06/the-importance-of-tam-sam-and-som-in-your-plan/ • http://www.quora.com/Lean-Startups/How-can-I-calculate-the-market-size-of-my-idea • http://www.caycon.com/blog/2013/10/understanding-market-size-or-demystifying-tam-sam- and-som/ • http://lasvegas.startupweekend.org/2013/01/01/how-to-size-your-market/ • http://theleanexplorers.wordpress.com/2013/10/10/the-tam-sam-and-som/
  42. 42. Secondary Data Sources • Google, Bing and other Search Engines • NGOs • OEDC, World Bank, Statistical Offices,… • Data Compendia • CIA World Factbook, Wikipedia • Govenmnet • Chamber of Commerce, Ministy of Economy, Ambassies • Business • Barrons, The Economist, Wall Street Journal • Consultanices • Accenture, Booz Allen, Deloitte, Forrester, IBM, McKinsey, PWC • Universities and Industry Gorups • Other • Industry magazines, diplomas, Master and PhD thesis • Company websites
  43. 43. (sources and references) Learn More Steve Blank @sgblank http://steveblank.com/ Eric Ries @EricRies http://startuplessonslearned.com/ Ash Maurya @ashmaurya http://ashmaurya.com/ Dave McClure @davemcclure http://davemcclure.com/ Alex Osterwalder @AlexOsterwalder http://alexosterwalder.com Brad Feld @bfeld http://feld.com/

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