GW $50K Biz Plan Workshop Business Model Generation www.gwbizplan.com The Context • My Background • Lean Startup Methodology – DC Lean Startup Circle – NSF Innovation Corps Program • Thought Leaders – Steve Blank: Customer Development • The Four Steps to the Epiphany – Alex Osterwalder: Business Canvas • Business Model Generation – Eric Ries: Lean Startup (Agile Development) • The Lean Startup 1 What’s a Business Model? • Description of all the parts of the company necessary to make money • Relevance to Business Plan Competition: – Business Plan = Snapshot of the Business Model + Customer Development Process • Purpose – Reality Check – Strategy and Guide – Communication 2 What’s Customer Development? • Product v. Customer Development • “Get Out of the Building” – Interviews – Example: Webvan v. Peapod – Example: Furniture.com v. Design Within Reach • Customers • Domain Experts – Product Testing • Minimal Viable Product – Google AdWords – Surveys Source: http://steveblank.files.wordpress.com/2010/01/scalable-startup.jpg 3 Diagram from Alex Osterwalder, Business Model Generation The Business Canvas 4 Customer Segments • Who Are Our Most Important Customers? Diagram from Alex Osterwalder, Business Model Generation • For Whom Are We Creating Value? 5 Diagram from Alex Osterwalder, Business Model Generation Value Propositions • Value to Customers? • Problems Solved? • What Bundle of Products & Services to Customers? 6 Diagram from Alex Osterwalder, Business Model Generation Channels • How to Reach Customers? • How are Channels Integrated with Each Other • Which Channels Work Best? and With Customer • Which are Most CostRoutines? Efficient? 7 Diagram from Alex Osterwalder, Business Model Generation Customer Relationships • What Type of Relationship Do Customers Expect? • How Expensive Are They to Maintain? • Integration With Rest of Business Model? 8 Revenue Streams • How Much Willing to Pay? • How Do They Want to Pay? Diagram from Alex Osterwalder, Business Model Generation • For What Value Are Customers Willing to Pay? 9 Diagram from Alex Osterwalder, Business Model Generation Key Resources • What Key Resources Are Required to Deliver Value Proposition? Distribution Channels? Customer Relationships? Revenue Streams? 10 Diagram from Alex Osterwalder, Business Model Generation Key Activities • What Key Activities Do Value Propositions Require? Distributions Channels? Customer Relationships? Revenue Streams? 11 Key Partners Diagram from Alex Osterwalder, Business Model Generation • Who Are Key Partners? • Which Key Resources Key Suppliers? Are Partners Providing? Key Activities? 12 Diagram from Alex Osterwalder, Business Model Generation Cost Structure • Most Important Costs? • Which Key Resources and Activities are Most Expensive? 13 Diagram from Alex Osterwalder, Business Model Generation Case Study 1: Skype Payment Providers Software Development Distribution Partners Telco Partners Software Development Software Developers Free Internet & Video Calling Cheap Calls to Phones (SkypeOut) Skype.com Web Users Globally People Who Want to Call Phones Headset Partnerships Software Complaint Management Mass Customized Free SkypeOut PrePaid or Subscription Hardware Sales 14 Diagram from Alex Osterwalder, Business Model Generation Case Study 1: Skype v. Telco Maximum Outsourcing Software Development w/ No Network Maintenance No Infrastructure Cost Structure of a Software Company Roughly Similar Voice Offering Automized Mass Customization Global Reach w/o Limitations of a Network Software Distribution: 100% Low Cost Channels 90% Free Usage 10% Paying 15 Customer Discovery Process Customer Discovery Bus Model Canvas Customer Validation Extract Hypotheses Customer Creation Test Problem Company Building Test Solution Pivot or Proceed Adapted from Stanford Course i245 by Steve Blank 16 Case Study 2: Location Privacy Week 1 17 Case Study 2: Location Privacy Week 2 18 Case Study: Location Privacy Week 3 Consumers Don’t Care 19 Case Study: Location Privacy Week 3 Success or Failure? 20 Diagram from Alex Osterwalder, Business Model Generation Business Model Environment 21 Sponsors 22