Validating a Startup business model
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Bryan Starbuck provides a presentation on research shaping startups. He outlines a 4 step process for validating startup ideas: 1) develop a list of ideas, 2) build a pitch deck for the top idea, 3) validate the idea with target customers, and 4) if it passes validation then build the startup, if it fails then repeat the process. Starbuck emphasizes the importance of validating business models and ideas by talking to potential customers and getting feedback on pitch decks to identify weaknesses or blind spots before fully developing a startup.
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Validating a Startup business model
- 1. Research shaping! a Startup! Speaker! This Talk:! Bryan Starbuck! ! Video: <Coming>! CEO & Co-Founder – Empower.me! ! Slides: - Former CEO of TalentSpring (Acquired 2010)! www.slideshare.net/BryanStarbuck/presentations! - Former Engineering Managed! Linked-In: Linkedin.com/in/bryanstarbuck! ! Oct 16th, 2012!
- 2. Process for Idea Stage! Slide 2! bryanstarbuck.tumblr.com!
- 3. To lock in on a business model! 1 Have a list of startup ideas ! My list of Startup ideas! ! My idea #1! ! My Idea #2! ! My Idea #3! 2 Build a pitch deck ! My idea #...! for the top idea! 3 Validate the idea with target customers! 4 If it PASSES, then 4 If it FAILS, then repeat! build the startup! Slide 3! bryanstarbuck.tumblr.com!
- 4. Business Model! Validation! Slide 4! bryanstarbuck.tumblr.com!
- 5. Validate by Pitch-Deck! ! Force Planning in all Critical Areas! ! Brief enough for feedback from Customers, Employees, Advisors, Investors, etc. ! Slide 5! bryanstarbuck.tumblr.com!
- 6. Pitch Deck PAIN finds your Blind Spots! He says, “THIS specific Pitch-Deck SLIDE is PAINFUL”! ! Response, “You found a Blind Spot in your ANALYSIS skills… … or in your business”! Complete ALL of your Pitch-Deck slides! Slide 6! bryanstarbuck.tumblr.com!
- 7. 10x Healthy Business Model! “10-x” refers to the customer have a LARGE problem in their life, not just another small issue in their life.! 1 2 10x! 10x! PROBLEM! SOLUTION! 3 4 Great Single Transactions Transaction multiply to a Large Economics! Market Size! Slide 7! bryanstarbuck.tumblr.com!
- 8. Validate by talking to CUSTOMERS! 1 2 Do they want a SOLUTION! Do they have this PROBLEM! 9! 2! 8! 3! People! People! People! People! 3 Will they PAY THE PRICE! 4 Will they BUY with these FEATURES! 10! 1! 2! 9! People! Person! People! People! A real Problem ! 5 Are they any hidden found in validation! PROBLEMS! 9! 2! People! People! Slide 8! bryanstarbuck.tumblr.com!
- 9. How to Validate! ! Do NOT use your friends! ! And do not use the startup community !! ! Be willing to pay $25 to $50 for 60-minutes for B2C. $50-$100 for B2B professionals. PayPal, Amazon, iTunes! ! lets you record the dial-in conference call and share the screen. Cheaply! People from! The US and your customers Your Social Group are BAD! are more like:! ! Early Adopters! ! NOT Early Adopters! ! White-Collar employees! ! NOT A-Players or Type-A! ! NOT Advocating change & disruption! ! College educated! ! Have a budget already fully spent! ! A-Players or Type-A! ! Blue-Collar employees! ! Advocate change & disruption! ! High School only, Community College…! Slide 9! bryanstarbuck.tumblr.com!
- 10. The 5th Factor: PASSION TO BUY! “!Make sure there is a very strong desire to purchase !”! For B2B Customers:! ! Make sure it is a BUYER controlling their dept budget! ! Have them show you the stack rank of purchases. See where your purchase would be wrt the top or the cut-off line! ! You want your purchase to be the buyer’s TOP #1 or #2 problem in their life currently! Slide 10! bryanstarbuck.tumblr.com!
- 11. How to spend your time! 1 Build pitch deck! My list of Startup ideas! 5 days! ! My idea #1! ! My Idea #2! ! My Idea #3! ! My idea #...! 2 Talk to target customers! 10 customers in 5 to 10 days! 3 If it PASSES, then 3 If it FAILS, then repeat! build the startup! Slide 11! bryanstarbuck.tumblr.com!
- 12. Most important! Research! Slide 12! bryanstarbuck.tumblr.com!
- 13. B2B: Find customers in Linked-In! ! Use Linked-In! ! Find exact job title match! ! You want them spending their budget! Slide 13! bryanstarbuck.tumblr.com!
- 14. See the top of a BUYER’S Budget! Your product is very valuable ! “! ”! My Dept Budget! ! Purchase #1! ! Purchase #2! ! “! Here is where I run out of budget ! ”! ! Purchase #3! Purchase #4! ! ! Purchase #5! ! Purchase #6! “! Your product would go here in my buy queue ! ”! ! ! Purchase #7! ! Purchase #8! “! What goes on the TOP of your queue? And why? What if I solved THAT top problem my own better way? ! Slide 14! bryanstarbuck.tumblr.com! ”!
- 15. Industry Conferences! “! Industry conferences are often an invaluable source of knowledge! ”! “! Learn there early in the life of your startup! Slide 15! bryanstarbuck.tumblr.com! ”!
- 16. Market Size! ! # of Customers! Price! Size of the Market! x Price! Market Size! Number of Customers! I often tease my software engineering friends who are “! first time founders. They are exceptional at math, but often tend to avoid this calculation. Often it can look great until it is calculated! ”! Slide 16! bryanstarbuck.tumblr.com!
- 17. Great Tips! ! WolframAlpha is great for researching job titles! ! UW MBA library gives Gartner and similar research for free to MBA students ! ! Speaking with long-time industry experts (often from exec positions) will give incredible insights! Slide 17! bryanstarbuck.tumblr.com!
- 18. “Positioning” in marketing! “! Positioning will often be the most strategic work you do. Perfect it and then use it to focus your company & strategy! ”! (i.e. Hedgehog principle from “Good to Great” book”)! Slide 18! bryanstarbuck.tumblr.com!
- 19. Additional Tips! ! SurveyMonkey do customer surveys: http://www.surveymonkey.com/mp/audience/! ! Google Consumer Surveys: http://www.google.com/insights/consumersurveys/home! Slide 19! bryanstarbuck.tumblr.com!
- 20. The END! Next Steps:! ! ! Create your company and have a BLAST! ! ! Join the “MicrosoftßàStartup Learning” mailing list! ! Join here: http://groups.google.com/group/Knowledge-Startup-to-Microsoft! ! Bryan Starbuck’s Blog: bryanstarbuck.typepad.com!
- 21. Source of Learning! Slide 21! bryanstarbuck.tumblr.com!
- 22. Next Steps for Learning (1 of 3)! People often ask how to learn more. Here is the best way:! ABSOLUTE Must Read! Strategic Thinking or Execution! Venture Deals On Amazon! Innovator’s Dilemma On Amazon! By: Brad Feld! By: Clayton Christensen! ! ! ! Crossing the Chasm On Amazon! Art of the Start On Amazon! By: Geoffrey Moore! By: Guy Kawasaki! ! ! Blue Ocean Strategy On Amazon! ! By: W. Kim! ! ! The Lean Startup On Amazon! ! By: Eric Ries! Good to Great On Amazon! ! By: Jim Collins! ! Maverick On Amazon! Other! By: Ricardo Semier! ! ! The Ten-Day MBA On Amazon! The Four Steps to the Epiphany On Amazon! By: Steven Silbiger! By: Steven Blank! ! ! Founders at Work On Amazon! Inspiring Excellence On Amazon! By: Jessica Livingston! By: Michael Schutzler! ! ! ! ABSOLUTE Must Read! ! BLOG: bryanstarbuck.typepad.com!
- 23. Next Steps for Learning (2 of 3)! People often ask how to learn more. Here is the best way:! Marketing! Other! The 22 Immutable Laws of Branding On Amazon! Founders at Work On Amazon! By: Al Ries! By: Jessica Livingston! ! ! ! ! Full Frontal PR On Amazon! Startup Weekend On Amazon! By: Richard Laermer! By: Marc Nager! ! ! ! Positioning: The Battle for your Mind On Amazon! Don’t Make Me Think On Amazon! By: Jack Trout! By: Steve Krug! ! ! The Strategy and Tactics of Pricing On Amazon! ! By: John Hogan! ! ! Purple Cow On Amazon! By: Seth Godin! ! ! ABSOLUTE Must Read! ! BLOG: bryanstarbuck.typepad.com!
- 24. More Learning (3 of 3)! ! (My) Bryan Starbuck’s Blog on Company Building:! ! http://bit.ly/StarbuckBlog! ! Dave McClure – Marketing Model for Startups: ! ! http://500hats.typepad.com/500blogs/2007/06/internet-market.html! ! http://vimeo.com/26277733! ! http://www.slideshare.net/dmc500hats/startup-metrics-for-pirates-long-version! ! http://www.slideshare.net/dmc500hats/startup-metrics-101-367863! ! More from Dave McClure:! ! http://www.slideshare.net/dmc500hats/why-not-to-do-a-startup! ! http://www.slideshare.net/dmc500hats/do-marketing-its-not-evil! ! Presenting to Investors:! ! http://www.slideshare.net/dmc500hats/how-to-pitch-a-vc-aka-startup-viagra-how-to-give-a-vc-a-hardon! ! Strategic economics of SaaS https://salesforce.adobeconnect.com/_a13852757/buildingasuccessfulsaasco/! ! Startup Marketing: http://howtolaunchastartup.com/2011/06/20/21-must-read-resources-for-start-up-marketing/! ! 57 Things I’ve Learned Founding 3 Tech Startups: http://betashop.com/post/1417413108/57-things-ive-learned-founding-3-tech-companies! ABSOLUTE Must Read! ! BLOG: bryanstarbuck.typepad.com!