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Business Model
@KareemSamara
Why Business Models Matter
Building a product is NOT “the
product” 

of your startup.
Your Business Model is “The Product”.
Ash Maurya
What is Business Model?
Business Model simply answer those Qs:
Who is your customer?



What does the customer value?
How ...
Business Model
Canvas
Why Business Model?
Fast
Instead of taking weeks or months, you can outline
multiple business models in an afternoon.
Why Business Model?
Concise
Because your business model has to fit on a single
page, you have to pick your words carefully...
Why Business Model?
Portable
A single-‐page business model is much easier to
share with others, which means it will be rea...
The Model
• Models not only help in the process of
planning and construction of new structures,
but also in the understand...
The Business Model Canvas
11
Value Propositions
Customer Relationships
Customer Segments
Distribution Channels
Revenue Str...
1. Customer Segments
1
Customer Segments
• Who are your most important users and
customers?

Who are our most important customers?
• Mass Market
• Niche Market
• S...
2. Value Proposition
Value Proposition
2
For each Customer Segment:
▪ What is their PAIN?



▪ What is the GAIN for them to solve their?
2. Value Proposition
3. Distribution Channels
Distribution Channels
3
3. Distribution Channels
How do you deliver this value?
• Through which Channels do our Customer Segments
want to be reach...
4. Customer Relationships
Customer Relationships
4
4. Customer Relationships
How do you
GET,
KEEP,
and GROW
your customer base?
How do you build a loyal and
enthusiastic tri...
5. Revenue Streams
Revenue Streams
5
5. Revenue Streams
How do you generate cash from each customer segment?
• For what value are our customers really willing ...
6. Key Resources
Key Resources
6
6. Key Resources
What infrastructure and resources do you need to deliver what you
promise?

● tools, space, locations
● p...
7. Key Activities
Key Activities
7
7. Key Activities
What major activities (﴾deliverables)﴿ must
be produced – when and by who?
8. Key Partners
Key Partners
8
8. Key Partners
Partners
• Suppliers
• Developers
• Distributors
• Investors
• Collaborators
• Affiliates

Competitors
Alt...
9. Cost Structure
Cost Structure
9
9. Cost Structure
What are the critical elements of the cost structure?
● Fixed costs
● Variable costs
● Resource, activit...
The Business Model Canvas
Value Propositions
Customer Segments
Distribution Channels
Revenue StreamsCost Structure
Key Res...
Lean Startup
What Most Startups Want to Build
What They Should Build First
Eventually Build This
“People don’t want
¼” drill bits,
they want ¼” holes”
(c) 2012 Mary Caravella 7
Two drills on Amazon…
(c) 2012 Mary Caravella 8
Black & Decker SSL20SB 20-Volt
MAX Smart Select Lithium Ion Drill/
Driver ...
Two drills on Amazon…
(c) 2012 Mary Caravella 9
} SmartSelect Clutch; Choose
your project icon and drill
automatically ad...
Two different brands 

for two different targeted markets

with different problems to be solved or goals to be achieved
(c...


Three DIMENSIONS of customer needs
(c) 2012 Mary Caravella 11
} Functional
} Social
} Psychological


Why does he choose specific products/services?
(c) 2012 Mary Caravella 12
Because they help me
•Do something (Functional...


Why does he choose specific products/services?
(c) 2012 Mary Caravella 13
I need…
•A drill I can use for
everything
•Ass...


Why does he choose specific products/services?
(c) 2012 Mary Caravella 14
Because they help me
•Improve my business
(Fun...


Why does he choose specific products/services?
(c) 2012 Mary Caravella 15
I need…
•Tools I can use all day
• Rugged
• Co...
Your product is a tool to help
customers create value for
themselves.
The more you understand
customers and what they valu...
} Functional value: helps solve
a problem or achieve a goal
} Social value: connects with or
distinguishes from others;
...
Now that we better
understand WHY people
choose what they do,
we turn to HOW they
do it
(c) 2012 Mary Caravella 19
Common Questions about
Lean Startup
Problem Vs. Unique Value Proposition?
Problem box is intended to capture the top
problems customers face in their environm...
Example
On a job board site:
A job seeker’s problem:
“Getting noticed by a prospective employer”.
Job board service to off...
Where do competitors go on the Lean Canvas?
Your true competition is NOT who you think they
are, but who your customers th...
Unique Value Proposition Vs. Unfair Advantage?
UVP
is to capture a customer’s attention
Unfair Advantage
is to deter copy ...
Example
UVP:
“Connect and share with the people in your life.”
UA:
Large network effects.
On Facebook:
Validating The Canvas
Everything on you put on your canvas is a HYPOTHESIS.
You must VALIDATE every element through -



•...
65
One More Thing
67
Create your own
http://leanstack.com/lean-‐canvas/
http://businessmodelgeneration.com/canvas/bmc
https://canvanizer.com...
Books to Read
‣ The Four Steps to the Epiphany
‣ Lean Startup
‣ Playing To Win
‣ Understanding Michael Porter
‣ Good Strat...
Thank You
@KareemSamara
Social Media Trainer

Founder & CEO of 

Social Business Kits

SBKits.com
Kareem@SBKits.com
Why Business Models Matter
Why Business Models Matter
Why Business Models Matter
Why Business Models Matter
Why Business Models Matter
Why Business Models Matter
Why Business Models Matter
Why Business Models Matter
Why Business Models Matter
Why Business Models Matter
Why Business Models Matter
Why Business Models Matter
Why Business Models Matter
Why Business Models Matter
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Why Business Models Matter

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Why Business Models Matter

Why Business Models Matter

  1. 1. Business Model @KareemSamara Why Business Models Matter
  2. 2. Building a product is NOT “the product” 
 of your startup. Your Business Model is “The Product”. Ash Maurya
  3. 3. What is Business Model? Business Model simply answer those Qs: Who is your customer?
 
 What does the customer value? How do you deliver value at an appropriate cost? Peter Drucker
  4. 4. Business Model Canvas
  5. 5. Why Business Model? Fast Instead of taking weeks or months, you can outline multiple business models in an afternoon.
  6. 6. Why Business Model? Concise Because your business model has to fit on a single page, you have to pick your words carefully and get to the point. This is great practice for distilling the essence of your business.
  7. 7. Why Business Model? Portable A single-‐page business model is much easier to share with others, which means it will be read by more people and be more frequently updated.
  8. 8. The Model • Models not only help in the process of planning and construction of new structures, but also in the understanding the design of existing structures. • The Goal is simple: Increase our understanding of the real world objects while eliminating the unimportant details.
  9. 9. The Business Model Canvas 11 Value Propositions Customer Relationships Customer Segments Distribution Channels Revenue StreamsCost Structure Key Resources Key Partners Key Activities
  10. 10. 1. Customer Segments 1 Customer Segments
  11. 11. • Who are your most important users and customers?
 Who are our most important customers? • Mass Market • Niche Market • Segmented • Diversified • Multi-‐sided Platform 1. Customer Segments
  12. 12. 2. Value Proposition Value Proposition 2
  13. 13. For each Customer Segment: ▪ What is their PAIN?
 
 ▪ What is the GAIN for them to solve their? 2. Value Proposition
  14. 14. 3. Distribution Channels Distribution Channels 3
  15. 15. 3. Distribution Channels How do you deliver this value? • Through which Channels do our Customer Segments want to be reached? • How are our Channels integrated? • Which ones work best? • Which ones are most cost-‐efficient?
  16. 16. 4. Customer Relationships Customer Relationships 4
  17. 17. 4. Customer Relationships How do you GET, KEEP, and GROW your customer base? How do you build a loyal and enthusiastic tribe around your offer?
  18. 18. 5. Revenue Streams Revenue Streams 5
  19. 19. 5. Revenue Streams How do you generate cash from each customer segment? • For what value are our customers really willing to pay? 
 For what do they currently pay? • How are they currently paying? 
 How would they prefer to pay?
  20. 20. 6. Key Resources Key Resources 6
  21. 21. 6. Key Resources What infrastructure and resources do you need to deliver what you promise?
 ● tools, space, locations ● personnel (﴾qualifications, in-‐house or sub)﴿ ● licenses, intellectual property ● supplies (﴾components, assemblies)﴿ ● financial requirements
  22. 22. 7. Key Activities Key Activities 7
  23. 23. 7. Key Activities What major activities (﴾deliverables)﴿ must be produced – when and by who?
  24. 24. 8. Key Partners Key Partners 8
  25. 25. 8. Key Partners Partners • Suppliers • Developers • Distributors • Investors • Collaborators • Affiliates
 Competitors Alternatives How does each partner help or hinder the business model?
  26. 26. 9. Cost Structure Cost Structure 9
  27. 27. 9. Cost Structure What are the critical elements of the cost structure? ● Fixed costs ● Variable costs ● Resource, activity, partner costs ● Infrastructure, operational, cost of sales ● Payroll costs, benefits, bonus structure, taxes ● What are the risks, the unknowns?
  28. 28. The Business Model Canvas Value Propositions Customer Segments Distribution Channels Revenue StreamsCost Structure Key Resources Key Partners Key Activities
  29. 29. Lean Startup
  30. 30. What Most Startups Want to Build
  31. 31. What They Should Build First
  32. 32. Eventually Build This
  33. 33. “People don’t want ¼” drill bits, they want ¼” holes” (c) 2012 Mary Caravella 7
  34. 34. Two drills on Amazon… (c) 2012 Mary Caravella 8 Black & Decker SSL20SB 20-Volt MAX Smart Select Lithium Ion Drill/ Driver with extra battery DEWALT DCD760KL 18-Volt 1/2-Inch Cordless Compact Lithium-Ion Drill/ Driver Kit (includes second battery) $118.05 $179.99
  35. 35. Two drills on Amazon… (c) 2012 Mary Caravella 9 } SmartSelect Clutch; Choose your project icon and drill automatically adjusts power and speed for optimal results } Gear indicator; 2-speeds indicates high or low setting } 20-volt MAX Lithium batteries deliver extended run-time } High torque motor delivers 175- Inch-pounds } Ergonomic design for improved comfort and control } Lightweight design (4.0 lbs) minimizes user fatigue } Dual speed range 0-500/0-1700 rpm delivers optimal performance } LED worklight provides increased visibility in confined spaces } Compact track saw batteries (DC9181) are compatible with the existing system of DEWALT 18v power tools produced since 1996 } Compact size (8.2-inch) allows users to fit into tight spaces; $118.05 $179.99
  36. 36. Two different brands 
 for two different targeted markets
 with different problems to be solved or goals to be achieved (c) 2012 Mary Caravella 10
  37. 37. 
 Three DIMENSIONS of customer needs (c) 2012 Mary Caravella 11 } Functional } Social } Psychological
  38. 38. 
 Why does he choose specific products/services? (c) 2012 Mary Caravella 12 Because they help me •Do something (Functional) •Express myself with others (Social) •Experience something enjoyable (Psychological)
  39. 39. 
 Why does he choose specific products/services? (c) 2012 Mary Caravella 13 I need… •A drill I can use for everything •Assurance I am buying a reliable product
  40. 40. 
 Why does he choose specific products/services? (c) 2012 Mary Caravella 14 Because they help me •Improve my business (Functional) •Market my business (Social) •Avoid risks (Psychological) (and I’m a person too!)
  41. 41. 
 Why does he choose specific products/services? (c) 2012 Mary Caravella 15 I need… •Tools I can use all day • Rugged • Compatible power supplies •Tools that show I’m a professional (and make me feel like one) • Distinctive styling consistent with me
  42. 42. Your product is a tool to help customers create value for themselves. The more you understand customers and what they value the more likely you will create value (c) 2012 Mary Caravella 16
  43. 43. } Functional value: helps solve a problem or achieve a goal } Social value: connects with or distinguishes from others; expresses something about self to others } Psychological value: interesting, enjoyable, anxiety- reducing, satisfying (c) 2012 Mary Caravella 17
  44. 44. Now that we better understand WHY people choose what they do, we turn to HOW they do it (c) 2012 Mary Caravella 19
  45. 45. Common Questions about Lean Startup
  46. 46. Problem Vs. Unique Value Proposition? Problem box is intended to capture the top problems customers face in their environments UVP is the marketing promise you make to them that stems from the intersection of the Problem and (﴾your)﴿ Solution boxes.
  47. 47. Example On a job board site: A job seeker’s problem: “Getting noticed by a prospective employer”. Job board service to offer solutions like “professionally designed resume templates”. but the UVP might be 
 “Land your dream job in 60 days or less”.
  48. 48. Where do competitors go on the Lean Canvas? Your true competition is NOT who you think they are, but who your customers think they are.
  49. 49. Unique Value Proposition Vs. Unfair Advantage? UVP is to capture a customer’s attention Unfair Advantage is to deter copy cats and competitors.
  50. 50. Example UVP: “Connect and share with the people in your life.” UA: Large network effects. On Facebook:
  51. 51. Validating The Canvas Everything on you put on your canvas is a HYPOTHESIS. You must VALIDATE every element through -
 
 • Discovery (your own data) • Research (other people’s data) • Testing (simulation, MVP)
  52. 52. 65 One More Thing
  53. 53. 67 Create your own http://leanstack.com/lean-‐canvas/ http://businessmodelgeneration.com/canvas/bmc https://canvanizer.com/choose-‐canvas
  54. 54. Books to Read ‣ The Four Steps to the Epiphany ‣ Lean Startup ‣ Playing To Win ‣ Understanding Michael Porter ‣ Good Strategy, Bad Strategy
  55. 55. Thank You @KareemSamara Social Media Trainer
 Founder & CEO of 
 Social Business Kits
 SBKits.com Kareem@SBKits.com

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