1. Engineering 245 The Lean LaunchPad Session 1: Overview/Business Models/Customer Development Professors Steve Blank, Ann Miura-Ko, Jon Feiber http://e245.stanford.edu/

3. Introductions

19. Class Logistics

20. How the Class Works Class Topic Deliverable for the Next Week (Submit interview notes, present results, update wiki/blog) January 4 th Class 1 Business Model and Customer Development - Hypotheses for each part of business model. - Test for whether your business is worth pursuing (market size) - Test for each of the hypotheses - What constitutes a pass/fail signal for the test (e.g. at what point would you say your hypotheses wasn ’t even close to correct)?

21. How the Class Works Class Topic Deliverable for the Next Week (Submit interview notes, present results, update wiki/blog) January 4 th Class 1 Business Model and Customer Development - Hypotheses for each part of business model. - Test for whether your business is worth pursuing (market size) - Test for each of the hypotheses - What constitutes a pass/fail signal for the test (e.g. at what point would you say your hypotheses wasn ’t even close to correct)? January 5 th Team Mixer - Teams by midnight Jan 5 th at the Treehouse Cafe Jan 6 Speed Dating with Professors – team ideas approved Form teams. Get ideas approved. Meet in Thornton 110

25. How the Class Works Class Topic Deliverable for the Next Week ( Submit interview notes, present results, update wiki/blog) Feb 1 st Class 5 Testing Sales Channel For web teams : Get working website/analytics up. - Track where visitors are coming from, how behavior differs. - What were your hypotheses about site results? - Anything in Value Proposition or Customers/Users? For non-web teams : Interview 10 people in channel - Anything change in Value Proposition, Channel or Customers/Users? - Does your product extend/replace existing channel revenue? - What ’s the “cost” of your channel/ it’s efficiency vs. product selling price. For Everyone : What is your customer lifetime value? - What feedback did you receive from your users? - What are the entry barriers?

26. How the Class Works Class Topic Deliverable for the Next Week ( Submit interview notes, present results, update wiki/blog, build website) Feb 1 st Class 5 Testing Sales Channel For web teams: Get working website/analytics up. - Track where visitors are coming from, how behavior differs. - What were your hypotheses about site results? - Did anything change about Value Proposition or Customers/Users? For non-web teams: Interview 10 people in channel - Did anything change about Value Proposition or Customers/Users? - Does your product extend/replace existing channel revenue? - What ’s the “cost” of your channel/ it’s efficiency vs. product selling price. For Everyone: What is your customer lifetime value? - What feedback did you receive from your users? - What are the entry barriers? Feb 8 th Class 6 Testing Revenue Model - Assemble income statement for your business model. - Lifetime value calculation for customers.

27. How the Class Works Class Topic Deliverable for the Next Week ( Submit interview notes, present results, update wiki/blog, build website) Feb 15 th Class 7 Testing Partners - Any change of Value Proposition, Customers/Users, Channel, or Demand Creation? - What are the partners incentives/impediments?

31. How to Build A Startup Idea Size Opportunity Business Model Customer Development

32. How to Build A Startup Idea Size of the Opportunity Business Model(s) Customer Discovery Customer Validation

33. How to Build A Startup Idea Size of the Opportunity Business Model(s) Customer Discovery Customer Validation Theory Practice

35. How to Build A Startup Idea Size of the Opportunity Business Model(s) Customer Discovery Customer Validation

36. Idea

39. An Idea is _Not_ a Company

40. Size of Opportunity

47. Venture Firms Invest in Scalable Startups Small Business Startup Scalable Startup Large Company

54. Business Model

56. 9 building blocks of a business model:

57. CUSTOMER SEGMENTS which customers and users are you serving? which jobs do they really want to get done?

58. VALUE PROPOSITIONS what are you offering them? what is that getting done for them? do they care?

59. CHANNELS how does each customer segment want to be reached? through which interaction points?

60. CUSTOMER RELATIONSHIPS what relationships are you establishing with each segment? personal? automated? acquisitive? retentive?

61. REVENUE STREAMS what are customers really willing to pay for? how? are you generating transactional or recurring revenues?

62. KEY RESOURCES which resources underpin your business model? which assets are essential?

63. KEY ACTIVITIES which activities do you need to perform well in your business model? what is crucial?

64. KEY PARTNERS which partners and suppliers leverage your model? who do you need to rely on?

65. COST STRUCTURE what is the resulting cost structure? which key elements drive your costs?

66. images by JAM customer segments key partners cost structure revenue streams channels customer relationships key activities key resources value proposition

67. sketch out your business model

68. building block building block building block building block building block building block building block building block building block building block building block building block

69. But, Realize They ’re Hypotheses

70. 9 Guesses Guess Guess Guess Guess Guess Guess Guess Guess Guess

72. Customer Development Solving For Customer Risk

73. Customer Development Get Out of the Building The founders ^

74. More startups fail from a lack of customers than from a failure of product development (focus on “who” more than “what”)

75. Customer Development Concept/ Bus. Plan Product Dev. Alpha/Beta Test Launch/1st Ship Product Introduction Model Customer Development Company Building Customer Discovery Customer Validation Customer Creation Pivot

84. Break