Stern NYU Innovation : Business Model Canvas Introduction

Business ModelingNYU SternInnovation

4.6.2016

by Jen van der MeerNYU ITP

Reason Street

Intro to the Business Model Canvas

Starting a company is hard

More fail than succeed

US business deaths now outnumber business births

We make it seem too easy

Or that you can just wish your way or grind your way into success

Most companies do not survive

More than 50% close within the first five years

When companies fail

All reasons for failure point to a lack of customer need

Why did they fail?“No product market fit” “Didn’t listen to customers”

“Ran out of cash”

“Solving for a want to have, not a need to have”

“No market need”

“Never found a business model”

“Customers didn’t want to pay for it”

From autops.io and CB Insights Founder Post Mortems - Top 20 Reasons Why Startups Fail

Question: Have you ever failed, big time?

If so - why do you think you failed?

And here’s the thing about failure

We used to do this the harder way

Leading Entrepreneurship Training

Ideas

Build

Product

Measure

Data

Learn

Key Partners Key Activities Value Propositions

Customer Relationships

Channels

Revenue StreamsCost Structures

Key Resources Key Channels

Lean Startup Business Model Canvas

Customer Segments

What is a Startup? (according to 3 w.m.)

“A startup is a human institution designed to deliver a new product or service under conditions of extreme uncertainty.” – Eric Ries

“A startup is a company designed to grow fast.” –Paul Graham. Y Combinator.

“A startup is a temporary organization designed formed to search for a scalable repeatable business model.” – Steve Blank.

“”Most startups change their business model multiple times. A scalable startup is a special class of startup – world class team, large vision, large target market, passionate belief and a reality distortion field.”

Are you ready?

What are your assumptions?

Business Model Canvas

Key Partners Key Activities Value Propositions

Customer Relationships

Channels

Revenue StreamsCost Structures

Key Resources Key Channels

Customer Segments

Let’s take a tour:

Choose: Uber

Airbnb Warby Parker

Other?

Your Turn

What are your assumptions?

Business Model Canvas

Key Partners Key Activities Value Propositions

Customer Relationships

Channels

Revenue StreamsCost Structures

Key Resources Key Channels

Customer Segments

Who are Your Customers?

You Can’t Target Everyone

“Serve a unique customer segment”

“Target a specific niche”“Aim for your most

profitable segment” “It’s better to dominate a micro segment than to aim

for everyone and hit nobody”

“Define your Archetypes”

Context:

#stillathome #notanadultyet

Name: Peyton

Age: 24

Job: Jr. Designer

Priorities Pay off college loan Apartment Independence Freedom Bike to work

Interests: Roller derby Raising money for breast cancer Jewelry making

Pains: Can’t seem to save At breakeven/loss each month Bad credit rating

Fears + Secrets: Afraid of getting rejected for an apartment Really likes mom’s support

Customer Persona

Persona

The money question: which one first?

Context:

#stillathome #notanadultyet

Name: Peyton

Age: 24

Living with Mom at home

Goals: Independence Freedom Apartment Bike to work Pay off college loan

Interests: Roller derby Raising money for breast cancer Jewelry making

Pains: Can’t seem to save At breakeven/loss each month Bad credit rating

Fears + Secrets: Afraid of getting rejected for an apartment Really likes mom’s support

Context:

Name: Percy

Age: 28

Lives w/ Roomates

Goals:

Interests: Church volunteer

Pains:

Fears + Secrets:

Name: Peyton

Age: 24

Living with Mom at home

Name: Peyton

Age: 24

Living with Mom at home

Context:Goals:

Interests: Church volunteer

Pains:

Fears + Secrets:

Context:Goals:

Interests: Church volunteer

Pains:

Fears + Secrets:

Persona

Pain (!)

Pain is a shortcut

Scratch your own itch

Pains, gains, jobs to be done

From: Business Model Canvas, Value Proposition Design, Alexander Osterwalder, The Innovators’s Solution, Clay Christensen and Michael Raynor

The pain point secret:Plans Known needs

Behavior

Plans

Values

Known needs

Behavior

Norms

Assumptions

Taboo Beliefs

Unknown Needs

Go deeper

What are your assumptions?

Business Model Canvas

Key Partners Key Activities Value Propositions

Customer Relationships

Channels

Revenue StreamsCost Structures

Key Resources Key Channels

Customer Segments

Value PropositionMy company is developing

company name defined offering

to help

And here’s how we prove it

to solvetarget customer segment defined problem or pain

our secret sauce, and proof point

For next time: test your assumptions and talk to people

Repeat Repeat Repeat

Business Model Canvas

Key Partners Key Activities Value Propositions

Customer Relationships

Channels

Revenue StreamsCost Structures

Key Resources Key Channels

Customer Segments

Customer Relationships

Business Model Canvas

Key Partners Key Activities Value Propositions

Customer Relationships

Channels

Revenue StreamsCost Structures

Key Resources Key Channels

Customer Segments

EarCre CapCre

Customer RelationshipsWhat are the main goals of customer relationships?

Get

Keep

Grow

(And let the mismatched ones go)

The FUNNEL(s)

Customer Relationships

CAC Vs. LTV

VC shorthand / gibberish for: does it cost you less to get customers than all the money you are going to get from that customer? And by how much?

CAC vs. LTV

Customer Acquisition Cost

Lifetime Value

The magic accelerator: The Viral Loop

The viral co-efficient: the average number of invitations sent by each existing user times the conversion rate of invitation to new user. The viral coefficient is referred to as the K value.

CAC vs. LTV

Lean Analytics, Alistair Croll, Benjamin Yoskovitz

SAAS CUSTOMER LIFECYCLE

Earn ReferralCreate Value Capture ValueCreate Interest

Test value before you even begin making your product

Where to Start:

Jen van der Meer Reason Street Revenue Steps

ReferralActivation ConversionAcquisition

Where to Start:

Jen van der Meer Reason Street Revenue Steps

Channels describe all your customer interfaces through which you reach your customer

segments, communicate with them and through which you deliver your value propositions.

Channels

Customer Channels

Business Model Canvas

Key Partners Key Activities Value Propositions

Customer Relationships

Channels

Revenue StreamsCost Structures

Key Resources Key Channels

Customer Segments

EarCre CapCre

First Easy Decision

Channel

Pro

duct

Physical

Phy

sica

l

Bits/Virtual

Channels: More Complex NowPhysical Sales Digital Sales

Direct sales through salesforce OEM Systems Integrator DealerDistributetoretailerValueaddedresellersSelltodistributorAggregatorOther

Direct sales through web Direct sales through mobile Direct sales through mobile Sales through app store In game or in app purchases Direct sales on the dark web Direct sales on virtual reality

Targeting blogs (get written up)Publicity / PRUnconventional PRSearch engine marketing Online ads (social, display, blogs)Offline ads Search engine optimizationContent marketingEmail (build your own list)Referral marketing Engineering marketing (microsites, widgets)Affiliate ProgramsEducational marketing (webinars)Existing platforms (app store, FB)Trade showsOffline eventsSpeaking engagements Community building

Traction Channels

Testing to Learn Your Advantage Traction: quantitative evidence of

customer demand. - Naval Ravikant

“many startups experimented with multiple channels until they found the

ones that worked”

most founders pick the channel with which they are already familiar

“it’s hard to predict a traction channel that will work best”

- Gabriel Weinberg and Justin Mares

Traction ChannelsMarketing Channels Sprint 1 Sprint 2 Sprint 3

Targeting blogs (get written up)Publicity / PR xUnconventional PRSearch engine marketing xOnline ads (social, display, blogs) xOffline ads

Search engine optimizationContent marketing

Email (build your own list) x x xReferral marketing xEngineering marketing Affiliate ProgramsEducational marketing (webinars) xExisting platforms (app store, FB)Trade shows

Offline eventsSpeaking engagements xCommunity building

The Backstage!

Business Model Canvas

Key Partners Key Activities Value Propositions

Customer Relationships

Channels

Revenue StreamsCost Structures

Key Resources Key Channels

Customer Segments

The Money. Last.

Business Model Canvas

Key Partners Key Activities Value Propositions

Customer Relationships

Channels

Revenue StreamsCost Structures

Key Resources Key Channels

Customer Segments

How to Validate: Get Out!

Plug:

ITP Business 101.1 (lean startup)

www.reasonstreet.co