From Idea to a Business

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Have an idea for a new business but don't know how to progress it? A great place to start is to discover your business model.

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  • Divide and conquer
  • Brainstorm possible customersAn MVP aims to solve not only the TOP problems the customer has but also the problems that are WORTH solvingWhat we deliver is just enough to charge customersList the top 3 problems for the customer segment you are working withProblems are jobs customers need done, what problems arise for these customer segments that would cause them to seek products or services to solveList existing alternatives – document how you think the early adopters address these problems todayMost problems have existing solutionsIdentify other user rolesHone in on possible early adopters – using the problems in mind, narrow down the characteristics of your prototypical customer – our objective is to define an early adopter not a mainstream customerCustomer segment – who we aim to reach and serveWho do we plan on selling our solution to?Segment – a defined group of people who share the same problem or passion and speak the same languageDefining who will buy the product is as important as the product itselfIn some cases the segment comes first, that’s the fulcrum on which the rest of the business model pivotsDoes the prospect have an adequate workaround to their current problem? Do they have budget for you product?Can we find out what the specific shortfalls of the existing workaround the customer is using? Be specificWhat functionality or feature of your solution resolves which shortfall?Does the customer segment represent a large enough business for this product?Distinguish between customers and users, customers are the ones that pay – a user does notIdentify the user roles that interact with the customerSplit broad customer segments in to smaller ones, not easy to build a product to suit EVERYONE at once (Facebook targeted Harvard only first)If getting messy with different slants we can slit into multiple canvases but start off with oneYou will likely need a separate lean canvas per customer segment since elements of the business model can vary per customer segmentProblems are jobs that customers want done – when people want to get a job done they hire people or a service to do it for them Pick the top 2-3 most promising customer segments
  • Products and services that create value for your segmentsThis is what will grab someone’s attention long enough to want to find out moreWhat makes our product different?Start with the best guess and iterate from thereBe different and be sure that matters – derive this from the number 1 problem you are solvingBe bold and target only early adopters – don’t water it down at this stageA good UVP gets inside the head of your customers and focuses on the BENEFITS you customers will derive AFTER using your productFor example, for a CV creating product, benefit is “getting an eye-catching CV that stands out”UVP format – Instant Clarity Headline = End Result Customer Wants + Specific Period of Time + Address the objectionsDominos = Hot fresh pizza delivered to your door in 30 minutes or its freePick your words carefully Performance = BMWDesign = AudiPrestige = MercedesUVP answers what is your product and who is your customer, subheading of ‘why’ if possibleHelps to create a high-concept pitch to identify the UVP
  • All we have is untested problemsSince the problems will get reprioritised or replaced no need to fully refine the solution just yetSketch out the simplest thing you could possibly build to address each problemBased on the problems create a short list of features we should include in the minimum viable product or MVP
  • How you communicate with and reach your segmentsFailing to build a path to customers is a big cause of failureInitially don’t plan to scale – get in front of some customers first, refine the productBy engaging in customer discovery/interview process we already build a path to customers enough earlyFirst sell your product manually before automating itSell your product yourself first before getting others to sell itAny way to get your product to a customer is a channel
  • This is about the viability of this as a businessRevenue streams – how we’ll get paidAn MVP aims to solve not only the TOP problems the customer has but also the problems that are WORTH solvingWhat we deliver is just enough to charge customersCustomers should be charged for this from Day 1, that way you will really find out if it’s proving them with value and you will get the feedback you need to learn and create a better product for your customersNot charging will impose a big risk on the product – maybe customers WON’T pay for itPrice is part of your productPrice defines your customersGetting paid validates your productCost structure – how much it costs you to run your businessList the operational costs in bringing your product to marketFocus on the present rather they too far off into the futureWhat will it cost to interview 10-30 customers?What will it cost to build and launch your MVP?
  • Key numbers that show how well your business is doingHow many actual users? (acquisition)How many user did an activation? (activation)Do users come back? (retention)Do we make money? (revenue)Do users tell others? (referral)
  • From Idea to a Business

    1. Getting from an Idea to a BusinessWorkshop 1: Discover your business model using the Lean CanvasRory Cawley rcawley@linkedin.comhttp://ie.linkedin.com/in/rorycawleyAll based on Running Lean by Ash Maurya
    2. TECHNICAL PRODUCT CONSULTINGWorkshop aims1. Understand what to do once you have a startup idea2. Learn a systematic technique to reduce the risk of your startupfailing3. Create a framework for your startup that can progress you furtherLinkedIn © 2013 All Rights Reserved 2
    3. What to do once you have a startup ideaLinkedIn © 2013 All Rights Reserved
    4. TECHNICAL PRODUCT CONSULTINGYou have a big idea, what’s next? Don’t waste any more time – let’s BUILD IT!LinkedIn © 2013 All Rights Reserved 4
    5. TECHNICAL PRODUCT CONSULTINGYou have a big idea, what’s next? Don’t waste any more time – let’s BUILD IT! Entrepreneurs love to create things This creative work will only last as long as thereis money in the bank When the money runs out that’s it!LinkedIn © 2013 All Rights Reserved 5
    6. TECHNICAL PRODUCT CONSULTINGYou have a big idea, what’s next? Don’t waste any more time – let’s BUILD IT! Life is too short building something no-one wants– this is the top reason startups failLinkedIn © 2013 All Rights Reserved 6
    7. TECHNICAL PRODUCT CONSULTINGWhy is building successful products so hard? It’s a myth that a visionary entrepreneur just comes up with theproduct and builds it to great applause from the market Startups who just focus on building their imagined productmostly find there is a poor market fit and poor customer demand The result is very costly failureLinkedIn © 2013 All Rights Reserved 7
    8. TECHNICAL PRODUCT CONSULTINGMost Startups fail! Startups that are capable of changing their plan to eventually findone that works before running out of resources have the bestchance of success Most initial plans FAILLinkedIn © 2013 All Rights Reserved 8
    9. TECHNICAL PRODUCT CONSULTINGFacts versus opinions A strong vision is vital but it needs to be backed by facts not justopinionsLinkedIn © 2013 All Rights Reserved 9
    10. TECHNICAL PRODUCT CONSULTINGVision backed by facts Initial vision is largelya set of untestedassumptions To strengthen thevision allassumptions needto be tested toensure the vision isupheld with factsLinkedIn © 2013 All Rights Reserved 10
    11. TECHNICAL PRODUCT CONSULTINGWrite down your initial visionLinkedIn © 2013 All Rights Reserved 11
    12. TECHNICAL PRODUCT CONSULTINGShare your vision with peopleLinkedIn © 2013 All Rights Reserved 12
    13. TECHNICAL PRODUCT CONSULTINGUnderstand the problem“A problem well stated is a problem half-solved” – Charles Kettering“Customers don’t care about your solution. They care about theirproblems” – Dave McClureYou must figure out whatcustomers want and willpay for as quickly and costeffectively as possibleLinkedIn © 2013 All Rights Reserved 13
    14. TECHNICAL PRODUCT CONSULTINGLearning from the customer“It’s not the customer’s job to know what they want” – Steve Jobs“If I had asked people what they wanted they would have said fasterhorses” – Henry Ford In the case of Ford, the customer really had a problem withtransport speed and that was the problem Ford set out to solveLinkedIn © 2013 All Rights Reserved 14
    15. TECHNICAL PRODUCT CONSULTINGLearning as startup progress It’s up to you to help customers clearly spell out what their problemsare The customer isn’t expected to come up with a solution however! Instead of pitching your solution focus on learning from people –customers, team members, advisors, investorsIn fact, learning is the truemeasure of progress for astartupLinkedIn © 2013 All Rights Reserved 15
    16. TECHNICAL PRODUCT CONSULTINGHave enough runway to deliver your product Your startup can keep going as long as it has enough resources –usually money Entrepreneurs pitch their idea (the solution) to internalstakeholders or investors to get enough of a runway to deliver theproduct However, people and especially investors don’t really care aboutyour amazing and innovative solutionLinkedIn © 2013 All Rights Reserved 16
    17. TECHNICAL PRODUCT CONSULTINGWhat do investors care about? Investors want a return on investment so the first thing they seekis evidence of traction, engagement with your customers or markets Investors want to know about your cost structures and revenuestreams (margins) or how you will build a scalable and profitablebusiness Investors care about what the market size is, how big is thisproblem Investors worry about how easy it would be to keep other peoplefrom just copying your businessLinkedIn © 2013 All Rights Reserved 17
    18. TECHNICAL PRODUCT CONSULTINGTraction Internal stakeholders or investors care about traction more thananything else Traction is the engagement of your product with customers Therefore before going to investors it’s best to start off withcustomersLinkedIn © 2013 All Rights Reserved 18
    19. TECHNICAL PRODUCT CONSULTINGWhat do customers care about? Customers don’t care (that much) about the solution Customers buy products that solve the underlying problems theyhave The way you tell customers about your product is through a wellcrafted Unique Value Proposition (the promise) The UVP is the intersection of the customers top problems andyour solution The UVP starts the conversation, it should get you noticed – itdoesn’t close the deal Important to start by identifying who needs your solution themost If you try to market to everyone then you market to no-one, startwith early adopters Price is very important for customers – the price of your productneeds to be in line with the value it bringsLinkedIn © 2013 All Rights Reserved 19
    20. TECHNICAL PRODUCT CONSULTINGThe solution versus the business model We’ve seen that a successful business needs to appeal tocustomers and investors We saw that the entrepreneur needs to initially write out yourassumptions about:– The top customer problems– The unique value proposition– The market size– How to show traction– What makes your idea difficult to copy– Costs involved in running the company– Price of the product– The ways customers can find and buy your product– And of course the amazing solution All the above can be covered by creating a business model The business model is the real productLinkedIn © 2013 All Rights Reserved 20
    21. TECHNICAL PRODUCT CONSULTINGWhat to do with the business model The initial working business model consists of abunch of assumptions The job of the entrepreneur is to– systematically de-risk this business model over time– through a series of conversations– With Customers Internal team Competitors Investors Advisors The true benefit of the model is when it facilitateslearning from other peopleLinkedIn © 2013 All Rights Reserved 21
    22. TECHNICAL PRODUCT CONSULTINGOne page format for your business modelLinkedIn © 2013 All Rights Reserved 22
    23. Learn a systematic technique to reduce the risk ofyour startup failingLinkedIn © 2013 All Rights Reserved
    24. TECHNICAL PRODUCT CONSULTINGThe three stage approachLinkedIn © 2013 All Rights Reserved 24
    25. TECHNICAL PRODUCT CONSULTINGStage 1: document your plan A on a lean canvas Divide and conquer Take the tough parts of creating a business Break them into smaller bits to make it more manageable Do a separate canvas for each possible customer segment A suggested order to fill in the boxes is on the canvas below Some of the models can be eliminated straight awayLinkedIn © 2013 All Rights Reserved 25
    26. TECHNICAL PRODUCT CONSULTINGStage 2: identify the riskiest parts of your plan Standard project management Start with the riskiest stuff first Avoid some last minute surprises as you approach deadline Test what’s riskiest in the business model vs. what’s easiest The riskiest part is often not the solution but the problemLinkedIn © 2013 All Rights Reserved 26
    27. TECHNICAL PRODUCT CONSULTINGStage 3: systematically test your plan Test your assumptions going from highest risk to lowest risk Run experiments to test the assumptions and get answers Test multiple models in parallel At this stage some models might be prioritised on review of theanswers from certain customer segments Feedback the results to adjust the planLinkedIn © 2013 All Rights Reserved 27
    28. Create a framework for your startup that can progressyou furtherLinkedIn © 2013 All Rights Reserved
    29. TECHNICAL PRODUCT CONSULTINGCreating a lean canvas for your startup step by stepLinkedIn © 2013 All Rights Reserved 29
    30. TECHNICAL PRODUCT CONSULTINGLean Canvas ExampleLinkedIn © 2013 All Rights Reserved 30
    31. TECHNICAL PRODUCT CONSULTINGThe Problem – Customer Segment pair drives modelLinkedIn © 2013 All Rights Reserved 31ProblemTop 3 ProblemsExisting AlternativesCustomer SegmentsEarly Adopters
    32. TECHNICAL PRODUCT CONSULTINGWhat’s unique about your product?LinkedIn © 2013 All Rights Reserved 32Unique Value PropositionHigh-level concept
    33. TECHNICAL PRODUCT CONSULTINGWhat features would solve the top problems?LinkedIn © 2013 All Rights Reserved 33Solution
    34. TECHNICAL PRODUCT CONSULTINGChannels – getting your product to customersLinkedIn © 2013 All Rights Reserved 34Channels
    35. TECHNICAL PRODUCT CONSULTINGRevenue Streams and Cost StructureLinkedIn © 2013 All Rights Reserved 35Revenue Streams Cost Structure
    36. TECHNICAL PRODUCT CONSULTINGKey MetricsLinkedIn © 2013 All Rights Reserved 36Key Metrics
    37. TECHNICAL PRODUCT CONSULTINGUnfair AdvantageLinkedIn © 2013 All Rights Reserved 37Unfair Advantage
    38. Where to next?LinkedIn © 2013 All Rights Reserved
    39. TECHNICAL PRODUCT CONSULTINGLean Canvas:Problem Solution Unique ValuePropositionUnfairAdvantageCustomerSegmentsCost Structure Revenue StreamsKey Metrics ChannelsDate: Version Name:name12th May 2013 First brainstormTop 3 problems.Top 3 features.Single, clear, compellingmessage that states why youare different and worthbuying.Cant be easily copied orbought.Target Customers.Early Adopters:Personas:Activity that drivesretention/revenue.Path to customers.Customer Acquisition CostsDistribution CostsHostingPeople, etc.Revenue ModelLifetime valueRevenueGross Margin

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