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The Other Side of the Canvas

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The Other Side of the Canvas

  1. the other side of the canvas Keith McGreggor Director, VentureLab at GT Lead Instructor, NSF I-Corps Program what investors really need to know about the new startup philosophy
  2. the “new” startup philosophy
  3. the new testaments
  4. Coherence Clarity Context
  5. Coherence Clarity Context
  6. What is a Startup?
  7. A startup is a temporary organization designed to search for a repeatable and scalable business model. - Steve Blank
  8. Startup ≠ Company A startup is a temporary organization designed to search for a repeatable and scalable business model.
  9. Startups Search Companies Execute
  10. Startup Business Model Company Product/Service
  11. business plan vs. business model
  12. business plan a place to collect all of your (current) hypotheses and your rationale for them cover page table of contents executive summary business description business environment analysis industry background competitor analysis market analysis marketing plan operations plan management summary financial plan attachments and milestones
  13. Business Plans are FICTION
  14. "Everybody has a plan until they get punched in the mouth."
  15. Five year forecast? MAGICAL THINKING
  16. Crystal ball... 2007 2013
  17. $ time
  18. $ time Year 3
  19. Planning Plan>
  20. business model the rationale of how an organization creates, delivers, and captures value
  21. Offer
  22. Offer Customers
  23. Offer CustomersInfrastructure
  24. Offer CustomersInfrastructure Financial
  25. ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? FICTION
  26. ✔ ✔ ✔ ? ✔ ✔ ? ✔ ✔ ✔ ✔ ✔ ? ✔ ? ✔
  27. ©2006 “innovation”
  28. 36 the key idea There are NO FACTS in the building!
  29. 37 the big secret Conduct 100+ Interviews
  30. 38 A man who carries a cat by the tail learns something he can learn in no other way.
  31. Why do Startups fail?
  32. $ time VALLEY OF DEATH
  33. $ time VALLEY OF DEATH ACTUAL CUSTOMER
  34. Startups don’t fail because they fail to make something. Startups fail because they fail to make something someone wants to buy from them.
  35. $ time VALLEY OF DEATH
  36. Product / Market Fit
  37. Product / Market Fit Financial
  38. Product / Market Fit COST < REVENUE
  39. $ time TRACTION!
  40. $ time TRACTION! Profit
  41. $ time oops... Profit = Revenue - Cost
  42. COST < REVENUE ?
  43. METRICS Vanity
  44. Moneyball! METRICS Actionable
  45. the Pipeline $$$
  46. METRICS AARRR
  47. 55 the Pirate Metrics Acquisition Activation Retention Referral Revenue
  48. acquisition activation retention revenue referral
  49. 57 SaaS Example
  50. $500 / user / month $$$
  51. 59 Paid Demand @ $1500 / 1k Clicks Organic Traffic @ $0.00 Google Adwords = $1.50 per Visitor = $0.00 per Visitor
  52. 60 Paid Demand = $1.50 / Visitor Organic Traffic = $0.00 / Visitor 50% 50%
  53. 61 Cost per Visitor = $0.75
  54. 62 Cost per Visitor = $0.75 Visitor to Raw Lead 3%
  55. 63 Cost per Visitor = $0.75 Visitor to Raw Lead 3% Raw to Qualified Lead 20%
  56. 64 Cost per Visitor = $0.75 Visitor to Raw Lead 3% Raw to Qualified Lead 20% Qualified Lead Cost = 0.75 0.03 * 0.20 = $125
  57. 65 Cost per Visitor = $0.75 Visitor to Raw Lead 3% Raw to Qualified Lead 20% Closed Deal Cost = 0.75 0.03 * 0.20 * 0.10 = $1250 Qualified Lead to Closed Deal 10%
  58. 66 Cost per Visitor = $0.75 Visitor to Raw Lead 3% Raw to Qualified Lead 20% = $1250 Qualified Lead to Closed Deal 10% Marketing Cost Sales Cost Marketing Cost Sales Cost = ?
  59. 67 Visitors Raw Leads (RLC) 50 Qualified Leads (QLC) 10 Closed Deals (CDC) 1 Sales Cost Sales Cost = (1,667 * RLC) + (50 * QLC) + (10*CDC) 1,667
  60. 68 Visitors Raw Leads 50 Qualified Leads 10 Closed Deals 1 Sales Cost Sales Cost = (1,667 * $2.00) + (50 * $20. 00) + (10 * $200. 00) 1,667 = $3,334 + $1,000 + $2,000 = $6,334 $2.00 $20.00 $200.00
  61. 69 3% 20% $1,250 + $6,334 10% Marketing Cost Sales Cost = $7,584CAC = Customer Acquisition Cost (CAC)
  62. 70 LTV = ? Lifetime Value of a Customer (LTV)
  63. 71 Lifetime Value of a Customer (LTV) Average Revenue Per User (ARPU) ARPU = Total Revenue Customers
  64. 72 Lifetime Value of a Customer (LTV) Average Revenue Per User (ARPU) ARPU = Total Revenue Customers Gross Margin = Revenue - Cost Revenue
  65. 73 Lifetime Value of a Customer (LTV) LTV = ARPU * Gross Margin not quite...
  66. 74 Churn churn = leave stay
  67. 75 Lifetime Value of a Customer (LTV) LTV= ARPU * Gross Margin Churn
  68. 76 Lifetime Value of a Customer (LTV) LTV= 0.01 Suppose ARPU = $500 per month & Gross Margin = 40% & Churn = 1% per month 1% $500 * 0.4 = $20,000
  69. 77 $1,250 + $6,334 Marketing Cost Sales Cost = $7,584CAC = LTV= 0.01 $500 * 0.4 = $20,000 ARPU Gross Margin Churn
  70. Balancing a SaaS model 3xCAC < LTV recover CAC < 12 months why? churn < 3%
  71. COST < REVENUE the equation that matters...
  72. ... is this one: CAC << LTV acquisition activation retention revenue referral CAC LTV
  73. $ time CAC << LTV Profit
  74. if CAC << LTV COST < REVENUE and then COMPANY!
  75. Coherence Clarity Context
  76. Canvas Flow
  77. for each customer segment, one or more value propositions
  78. for each value proposition, one or more customer segments
  79. indirect for each customer segment, one or more channels direct
  80. get for each customer segment, how to get/keep/grow keep grow
  81. for each customer segment, which revenue stream (and for what value) A $ for A B $ for B
  82. for each value proposition, some resources and activities create it A B act 1 act 2 R R R R
  83. although an activity might create a resource too... A B act R
  84. each customer relationship phase has its own activities and/or resources Get Keep act R Grow
  85. channels also require activities or resources... act R indirect direct
  86. revenue streams also need activities or resources act R A $ for A B $ for B
  87. partners provide missing resources or activities act 1 ??? R R R R partner 1 partner 2
  88. each activity or resource has an associated cost act 1 act 2 R R R R fixed costs variable costs
  89. the engine of the business
  90. the canvas, pitched
  91. Title Team Overview Problem Solution Value Secrets Advantage Strategy Model Projections Requirements Closer
  92. Title Team Overview Problem Solution Value Secrets Advantage Strategy Model Projections Requirements Closer
  93. Title Team Overview Problem Solution Value Secrets Advantage Strategy Model Projections Requirements Closer
  94. Title Team Overview Problem Solution Value Secrets Advantage Strategy Model Projections Requirements Closer
  95. Title Team Overview Problem Solution Value Secrets Advantage Strategy Model Projections Requirements Closer
  96. Title Team Overview Problem Solution Value Secrets Advantage Strategy Model Projections Requirements Closer
  97. Title Team Overview Problem Solution Value Secrets Advantage Strategy Model Projections Requirements Closer
  98. Title Team Overview Problem Solution Value Secrets Advantage Strategy Model Projections Requirements Closer
  99. Title Team Overview Problem Solution Value Secrets Advantage Strategy Model Projections Requirements Closer
  100. Title Team Overview Problem Solution Value Secrets Advantage Strategy Model Projections Requirements Closer CAC << LTV COST < REVENUE
  101. Title Team Overview Problem Solution Value Secrets Advantage Strategy Model Projections Requirements Closer
  102. Title Team Overview Problem Solution Value Secrets Advantage Strategy Model Projections Requirements Closer My company, _______________, is developing ______________ to help ________________ _____________________ _____________________. company name something someone solve some problem with secret sauce
  103. Coherence Clarity Context
  104. trends macro-economic forces industry forces market forces
  105. trends macro-economic forces market forces market issues market segments needs & demands switching costs revenue attractiveness
  106. trends macro-econo forces industry forces Competition incumbents & insurgents Substitutions Suppliers & value chain Stakeholders
  107. trends industry market technology regulatory societal & cultural socioeconomic
  108. macro-economic forces forces forces global market conditions capital markets commodities & resources economic infrastructure
  109. trends macro-economic forces industry forces market forces technology regulatory societal cultural socioeconomic suppliers stakeholders incumbents insurgents substitutes global market capital market commodities economic infrastructure segments needs and demands switching costs revenue attractiveness
  110. trends macro-economic forces industry forces market forces foresight macroeconomics competitiveanalysis marketanalysis
  111. the other side of the canvas
  112. venturelab.gatech.edu @venturelab / @keithmcgreggor keith@venturelab.gatech.edu 75 Fifth St NW, Suite 202, Atlanta GA 30308

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