Bootstrap Your Business Model

BOOTSTRAP YOUR BUSINESS MODEL

Find Product / Market Fit with the Back of a Napkin

1 @berniemaloney

POWER FROM A SINGLE PAGE VIEW

2

14 mo design cycle

3 mo shelf life

HP PC: http://www.macmemorystore.com/content/navigation/small/xt963.jpg SW Bits: http://www.newpackettech.com/software_bits.jpg

HW SW +

All with WEEKLY iterations of the plan

Breakeven

$B/y

6 in USA

20

Products / qtr

200 in EU alone

@berniemaloney

@berniemaloney 3

Bernie Maloney, CSP PE, CSM, CSPO

Agile Coach Accelerating Genius Turning Strategies into Results From Startup to Beyond $100M

NO BUSINESS PLAN SURVIVES FIRST CONTACT WITH A CUSTOMER

Steve Blank

4 @berniemaloney

PLANS ARE WORTHLESS, BUT PLANNING IS EVERYTHING

Dwight D. Eisenhower

5 @berniemaloney

DO ITERATIONS APPLY TO PLANS?

Build

Measure

Learn

6 @berniemaloney

7

Let’s start here…

SO, WHAT IS A BUSINESS MODEL?

@berniemaloney

SO, WHAT IS A BUSINESS MODEL?

Better yet…

8 @berniemaloney

EXPLAIN YOUR BUSINESS (MODEL) TO YOUR NEIGHBOR

Exercise

2 min each in pairs

9 @berniemaloney

HOW MANY COULD ACCURATELY DESCRIBE THEIR NEIGHBOR’S BUSINESS?

10 @berniemaloney

OR, WAS YOUR EXPERIENCE LIKE THIS?

11 @berniemaloney

ANY PROBLEM CAN BE MADE CLEARER WITH A PICTURE

Dan Roam

12 @berniemaloney

ANY PROBLEM CAN BE MADE CLEARER WITH A PICTURE

Dan Roam

13 @berniemaloney

Dan also wrote an earlier, worthwhile book: The Back of the Napkin

14 @berniemaloney

HOW CAN A BUSINESS BE PICTURED?

http://youtu.be/QoAOzMTLP5s

15 @berniemaloney

BUSINESS MODEL CANVAS

16

Partners Offer Key Customers

What you ‘get’ What it ‘costs’

Relationship

Channel Resources

Activities

Source: http://www.businessmodelgeneration.com/downloads/business_model_canvas_poster.pdf

@berniemaloney

HOW ABOUT AN EXAMPLE?

17 @berniemaloney


18

Better yet…

@berniemaloney

BUS 15 @ STANFORD

19

Experience in Product Management & Agile

Bay Area

Prepare outline; develop materials; coordinate efforts; time to teach…

Stanford


What we ‘get’ What it ‘costs’ Feedback; fresh perspective; resume enhancer; honorarium; contacts…

Guest Speakers

Curious about Prod Mgt &/or Agile

Very Early Entrepreneurs

Live Class

Relationship

Channel Experienced & want increased results

Live Class

direct

Personal (vs automated)

Resources

Activities

Brand Rooms Equipment

Marketing

Experience

@berniemaloney

BUS 15 @ STANFORD

20


Bay Area


Stanford



Guest Speakers



Live Class

Relationship

Channel Experienced & want > results Live Class

direct


Resources

Activities


Marketing

How could inspect/adapt be applied?

Experience

@berniemaloney

HOW ABOUT…?

21


East Bay Area


Berkeley



Guest Speakers



Live Class

Relationship

Channel Experienced & want > results Live Class

direct


Resources

Activities


Marketing

Experience

Experience at Stanford

@berniemaloney


22 @berniemaloney

RESIDENTIAL REALTOR

23

Expertise in transaction

Downsizing

Licensing; desk fees; personal & property marketing; education; rev share…

Broker


What Realtor ‘gets’ What it ‘costs’ Expanded network; thrill of helping client realize dream; referrals; commission…

Personal network

New to Area

‘under water’ on mortgage

Network of trusted suppliers

Relationship

Channel

Growing family

Face to Face

direct

Personal

Resources

Activities

Brand Offices Equipment

Marketing

Leads Other Realtors

Escrow Agents

Advice

Remote

Area familiarity

investors

@berniemaloney

WHY IS A MODEL SIGNIFICANT?

24 @berniemaloney

WHY IS A MODEL SIGNIFICANT? DESIGN THINKING

25 @berniemaloney

DESIGN THINKING

• Freezing an idea early risks falling in love with it

• Refining an idea quickly risks become attached (sunk cost)

• Objective: Defer judgment & emphasize crude prototypes to help avoid these pitfalls

• Example: IDEO - an illustration of Design AND Agile http://youtu.be/M66ZU2PCIcM

26 @berniemaloney

OTHER VALUES OF THE BM CANVAS

• Ecosystems Win

– Microsoft Office

– iTunes

– Search + Ads

• Canvas Maps an Ecosystem Fits a single visual field = shifts brain processes

• Looks at Market & Opportunity over chasing a competitor’s ‘tail lights’

27 @berniemaloney

WHY IS A MODEL SIGNIFICANT?

28 @berniemaloney

Build

Measure

Learn

29 @berniemaloney

A MODEL MIGHT LOOK GREAT ON PAPER…

30 @berniemaloney

… REMEMBER IT’S A SET OF HYPOTHESES

guess

31 @berniemaloney

Build

Measure

Learn

32 @berniemaloney

COST PER TEST / LESSONS = ?

33

http://www.automobilesreview.com/uploads/2012/09/Mercedes-Benz-SLS-AMG-Coupe-Electric-Drive-651.jpg

@berniemaloney

COST PER TEST / LESSONS = ?

34

http://image.internetautoguide.com/f/auto-news/2010-mercedes-amg-sls-crash-test-videos/31178790/mercedes-sls-amg-crash-test-video-germany-tuv.jpg

@berniemaloney

This is a crude prototype of a business

35


What we ‘get’ What it ‘costs’

Relationship

Channel Resources

Activities

@berniemaloney

THERE ARE NO FACTS IN THE BUILDING …SO GET OUT AND TALK TO CUSTOMERS

Steve Blank

36 @berniemaloney

CUSTOMER DEVELOPMENT

Customer Discovery

Customer Validation

Customer Creation

Company Building

pivot

37

Source: Steve Blank The Four Steps to the Epiphany

@berniemaloney

TWO PHASES

Customer Discovery

Customer Validation

Customer Creation

Company Building

pivot

Search Execution

38 @berniemaloney

ENLIGHTENED TRIAL & ERROR SUCCEEDS OVER THE PLANNING OF LONE GENIUS

Peter Skillman

39 @berniemaloney

APPLY THE SCIENTIFIC METHOD: RUN EXPERIMENTS

test

40 @berniemaloney

WITH VALIDATION, ITERATE (PIVOT) MODEL AND RUN FURTHER EXPERIMENTS

valid

41 @berniemaloney

PIVOTING: LEARNING CHEAPLY FROM FAILURE

42 @berniemaloney

Build

Measure

Learn

Lean Startup / Eric Ries: Build-Measure-Learn 43 @berniemaloney

THE WAY TO SUCCEED IS TO DOUBLE YOUR FAILURE RATE

Thomas Watson

Founder of IBM

44 @berniemaloney

HP MEDIASMART (RETAIL) TVS

45

American Brand

CircuitCity

Cost-plus Mat’l; Design; Supply Chain; Placements

Asian TV Brand You know


Revenues Costs Just enough to break even at intro, Not enough to sustain price drops

CinemaNow

Best Buy

Relationship

Channel

Direct

Direct B2C

Indirect B2B2C

Resources

Activities

Glass TV KnowHow

Microsoft Internet Content

Asian TV Brand New to USA

Netflix

Retail Electronics

Leading Edge Internet TV

Known Brand

IPTV Visionary Adopters

Manufacturing

Set Devel’mnt

Licensing

Volume Retail

future proofing

@berniemaloney

HP COMMERCIAL TVS

46

American Brand

HP Sales

Cost-plus Mat’l; Design; Supply Chain;



Revenues Costs Sustainable Margin

CDW

Relationship

Channel

Direct B2B

Indirect B2B2B

Resources

Activities

Glass TV KnowHow


Commercial Suppiers

Known Brand

Manufacturing

Set Devel’mnt Competive Price

Direct HP Accounts

@berniemaloney

VIZIO TVS (2006)

47

American Brand

Costco

Competitive Mat’l; Design; Supply Chain;



Revenues Costs Sustainable Margin Sustainable Volume

Relationship

Channel

Direct

Direct B2C

Indirect B2B2C

Resources

Activities

Glass TV KnowHow


Warehouse Clubs

Value Pricing Manufacturing

Set Devel’mnt

Value Buyers

@berniemaloney

LAYERING IN MARKET RESEARCH

48


Revenues Costs

Relationship

Channel Resources

Activities

Retail Electronics

Leading Edge Internet TV

IPTV Visionary Adopters

Value Buyers Commercial

Suppiers

Value Pricing

1Ks

100s @1Ks

10s @1Ks

1M+

@berniemaloney

PIVOTS ARE BUSINESS MODEL CHANGES WITHOUT CRISIS

Steve Blank

49 @berniemaloney

Customer Discovery

Customer Validation

Customer Creation

Company Building

pivot

50

Test & Adapt the model until you can prove it works

@berniemaloney

HOW TO PROVE IT WORKS?

• MVP

– Minimum Viable Product

– Sale of a Product (it’s viable!)

• PMF

– Product Market Fit

– Is it the right customer segment?

– Is the segment sustainable?

– Is the product / model sustainable?

51 @berniemaloney

Build

Measure Learn

Release

Measure

Earn $

Noted by Jeff Patton (Aug ‘12 DFWScrum) 52 @berniemaloney

Customer Discovery

Customer Validation

Customer Creation

Company Building

pivot

Search Execution

53

MVP PMF

@berniemaloney

EXTENDING THE BUSINESS MODEL CANVAS

54 @berniemaloney

BUSINESS TO CONSUMER B2C

55 @berniemaloney

BUSINESS TO BUSINESS TO CONSUMER B2B2C

56 @berniemaloney

OR AN ENTIRE VALUE CHAIN

57 @berniemaloney

OR MULTIPLE MODELS FOR 1 PRODUCT

58 @berniemaloney

OR MULTIPLE MODELS FOR 1 PRODUCT

59

Ready for a Group Exercise?

@berniemaloney

EXERCISE: BUSINESS MODEL CREATION

• Form Teams

• Product: Biodegradable Bag (ok for fertilizer)

• 5 minutes: Create (at least 1) business model

60

http://www.naparecycling.com/uploads/plastic%20bag.png

@berniemaloney

EXERCISE: BUSINESS MODEL CREATION

• Form Teams

• Product: Biodegradable Bag (ok for fertilizer)

• 5 minutes: Create (at least 1) business model

61

Want a comparison?

@berniemaloney

BASIC SANITATION

62

Image Source: http://www.whale.to/a/bangladesh.html

@berniemaloney

ACCESS TO SANTIATION

• 4 out of 10 people lack even simple latrines (2.6 billion people)

• A solution?

63 @berniemaloney

PEEPOO BAG

• Single use toilet bag

• Self sanitizing

• Low production cost

• Biodegradable – turns into fertilizer

• (initially) targeted at poor people

• People already pay for sanitation

64 @berniemaloney

WHO / WHERE ELSE COULD USE THIS?

65


What you ‘get’ What it ‘costs’

Relationship

Channel Resources

Activities

@berniemaloney

ARE PRODUCTS THIS EASY TO ITERATE?

66 @berniemaloney

WHICH ONE(S) BEST FIT MARKET?

67 @berniemaloney

Customer Discovery

Customer Validation

Customer Creation

Company Building

pivot

68

Each Experiment amounts to an (Agile) Iteration of the Business the Ecosystem

@berniemaloney

IF YOU DON’T WORK UNDER TIME CONSTRAINTS, YOU COULD NEVER GET ANYTHING DONE. IT’S A MESSY PROCESS, IT COULD GO ON FOREVER.

Dave Kelley

69 @berniemaloney

FAIL OFTEN, IN ORDER TO SUCCEED SOONER

IDEO

70 @berniemaloney

@berniemaloney 71

Bernie Maloney, CSP PE, CSM, CSPO

bit.ly/speedmygenius

Agile Coach Accelerating Genius Turning Strategies into Results From Startup to Beyond $100M

FIN Ut Prosim. Namaste.

@berniemaloney 72