This document provides an overview of business modeling for millennial entrepreneurs. It discusses what a business model is, why it is important to have one, and the skills needed for entrepreneurship today. The document then covers translating an idea into a business model by filling out a business model canvas. It discusses validating and maintaining a business model through testing assumptions, getting user feedback, and regularly comparing forecasts to actual performance. Methods and tools for business modeling are also presented, such as the business model canvas, lean canvas, and financial planning templates.

1. From Idea
To Business
A guide to business modeling
for millennial entrepreneurs
By Norbert Schöpke © 2017

2. Topics
1. What is a business model?
2. Why should I care?
3. Entrepreneurial skills today
4. Translating your idea into a business
5. How do I validate and maintain it?
6. Methods, tools and how to learn more

3. This is you

4. How many Startups
are launched every year
worldwide?

5. 50 million
6.5 mn in the US
2.6 mn in the EU

6. This is you...

7. What is a Business Model?

8. Financial Physical Intangible Human
Creator Investment Banking Manufacturer Inventor /
Artist
Reproductive Services
Distributor Exchange Trade Wholesale / Retailer Record Label / Media
Network
Slavery
Lessor Bank Rental SaaS Contractor
Broker Insurance Advisor /
Portfolio Mgt.
E-Commerce /
Auction
Analytics /
Data Brokerage
HR Agency
Business Model Archetypes

9. Financial Physical Intangible Human
Creator ChromeBook, Nexus,
ChromeCast, Pixel
PageRank Algorithm,
TensorFlow machine
learning
Distributor Self-driving car
system
Lessor Cloud Platform,
GSuite
Broker Google Analytics /
AdWords / AdSense
Business Model Archetypes: Google

10. Business Model Patterns
● Long Tail: sell less of more (niche products)
● Multi-sided Platform: connect distinct customer groups,
create win-win for all sides
● Free Business: freemium vs. premium segments
● Bait and Hook: complementary products, lock-in
● Customer Data Monetization
● Micropayments
● Ponzi Scheme
● Exit ;-)

11. Why should I care?

12. Intrinsic
Motivators
Convince Yourself
● Define and refine your idea
● Understand the scope of what
you want to achieve
● Challenge your own
assumptions
● Reason and strategize
efficiently
● Understand other business
models
● Track your performance

13. Extrinsic
Motivators
Convince Others
● Communicate your idea
● Collaborate and share
● Input for forecast and pitch
● VCs might demand it ;-)

14. Components
● Value proposition of your
products and/or services
● Unit economics and pricing
● Revenue mechanics
● Cost structure
● Marketing channels, funnels
and sales pipelines
● Business drivers and KPI’s
● Milestones and strategic goals

15. Model: Ice cream booth

16. Example: Unit Economics
● Functional and fashionable business bags for her
● Manufacturer and wholesale preorder for retail
● 1 year research of market and supply chain setup
● Cost of Sales: €60
● Production cost target multiple: x5
● Avg. unit price retail: €300 (incl. VAT)
● Avg. unit price wholesale: €126
● Preorder risk: pay 50% upfront, 4 months delivery, 30
days payment target for retailers

17. Example: Marketing

18. Concepts
● Product-Market fit
● Profitability
● Scalability
● Robustness
● Disruption
● Networked BM
● Funding
● Pivot

19. Profitability vs. Scalability

20. Example: SaaS
● Users pay per month: ARPU and MRR
● Estimate CLV (Customer Lifetime Value)
● Calculate CPA (Cost Per Acquisition)
● CLV to CPA target ratio: x3
● Below 1 your business is unsustainable
● Between 1 and 3 you are profitable
● From 3 upwards you should get funding and scale

21. How can I estimate the CLV?
Simplistic formula:
Starbucks case:
https://blog.kissmetrics.com/how-to-calculate-lifetime-value

22. How can I calculate the CPA?
● Depends on marketing channels
○ Adwords: CPC (Cost Per Click)
■ CPA = Traffic * CPC / Conversion Rate
■ CPA = 1000 * CPC / 10% = 10000 * CPC
○ TV News: CPM (Cost Per Mille)
○ Online Sign-Up: CPL (Cost Per Lead)
● With CLV: Upper limit for marketing spend
● Options for hacking your business model
○ Lower CPA
○ Higher price to increase CLV
○ Improve retention rate

23. Disruption

24. Disruption

25. Disruption
● Undermining BM operations of big industry players
● Exchanging consumer touchpoint
● Re-combination of old products or services
and new forms of operating or revenue model
● Examples: Amazon, Dell, AirBnB, Uber

26. Networked Business Models

27. Networked BM: Tinder
● Strategy: mobile-first, viral growth, gamification
● Networked with Facebook, Instagram and advertisers
● Pay-per-tier vs. Pay-per-feature
● Revenue streams:
○ Premium subscription
○ In-app purchases
○ Advertising
● Pricing age- and location based
● Primary driver: PMC (paid member count) 1.7 mn Q4’16
● MRR $20 mn, ARPU $0.40

28. What does it take to be an
Entrepreneur today?

29. Soft Skills
● Think outside the box
● DIY attitude vs. delegation
● Avoid bias blind spot
● Stress resistance
● Embrace uncertainty
● Embrace possible failure
● Time management
● Focus, focus, focus

30. Cognitive Biases
● Projection
● Confirmation bias
● Hindsight
● Survivorship bias
● Loss aversion / sunk costs fallacy
● Planning fallacy
● Framing
● Anchoring

31. You don’t have to
have a lot of
money!
Instead, you should know
● what makes your business
profitable
● how much funding to ask for
when starting up or scaling
● how to effectively spend
the money you’ve got
● when to exchange money
for time
● when to go all-in and
when to fold your cards

32. Translating your Idea into a
Business

33. From Idea...
1. Start with Why?
2. Look for pain points
3. Formulate the solution
4. Create a narrative for change
5. Fill a Business Model Canvas
6. Do a SWOT or 5 Forces analysis
7. Do the same for your main
competitors

34. ...to Business
Model...
1. Model basic unit economics
2. Model revenue streams and
cost buckets
3. Identify customer funnel steps
4. Predict retention / churn rates
and returning customers
5. Try to put it all into numbers
6. Forecasts and balance sheet
from abstract business model

35. ...to Business
Model Analytics
1. Add growth functions and
seasonality
2. Add factor dependencies
3. Make it data-driven
4. Best-case vs. worst-case
5. What-If Scenarios
6. Identify KPI’s
7. Discover hidden insights

36. Business Model Validation
and Maintenance

37. “If I had asked people
what they wanted,
they would have said:
faster horses”
Henri Ford

38. Start with the
Basics
● Which value do you create
● At what cost
● For whom
● Don’t rely on naive and broad
customer canvassing
● Pick low-hanging fruits

39. Let it grow
● Rapid prototyping
● Fail fast
● Ideally 3+ USPs
● Create MVP
● Incorporate User Feedback
● Reach Product-Market fit
● Build brand

40. Maintenance
● Compare forecast with actual
performance
● Increase robustness by hooking
up 3rd-party data sources
● Document strategic changes
● Try growth hacking
● If you fail with an experiment,
try to understand WHY?
● If it doesn’t work at all,
pivot or fold

41. The Millennial
Entrepreneur
A Manifesto
● Inspired
● Inspiring
● Networked
● Prudent
● Convincing
● Agile

42. Inspired - the possibilities of
the digital global economy
spark your creativity and
entrepreneurial spirit

43. Inspiring - you are a great
communicator of ideas and
a storyteller in business

44. Networked - in a sharing
economy, your business
model is as networked
as you are

45. Prudent - your seek insights
about your market,
your product and
how they fit together;
you can handle money

46. Agile - you execute what
works efficiently, but
change or throw away what
doesn’t

47. Thank you!
norbert.schoepke@gmail.com

48. Methods, Tools
and how to learn more

49. Methods
● Business Model Canvas
(https://canvanizer.com/new/business-model-canvas)
● Lean Canvas (https://canvanizer.com/new/lean-canvas)
● SWOT (https://canvanizer.com/new/swot-canvas)
● Five Forces
● Lean Startup
● Empathy Map
(http://bmtoolbox.net/tools/empathy-map/)

50. Financial Physical Intangible Human
Creator
Distributor
Lessor
Broker
Business Model Archetypes:

51. Tools
● Spreadsheet tools (Google Sheets, LO Calc, MS Excel)
● Business plan templates
● CLV calculator (http://www.clv-calculator.com/)
● Financial planning tools
● Accounting tools with API (e.g. FIGO)

52. How to learn more
● https://strategyzer.com/books/business-model-generation
● Startup Playbook (http://playbook.samaltman.stfi.re/)
● YCombinator’s StartupClass (https://startupclass.co/)
● Free Udacity course: The Lean LaunchPad
(https://www.udacity.com/course/how-to-build-a-startup--ep245)
● Business Model Toolbox (http://bmtoolbox.net/)
● Contact me ;-)