APEC START-UP ACCELERATOR LEADERSHIP SUMMIT

MENTORSHIP PROGRAM

BUSINESS MODEL AND CUSTOMER DEVELOPMENT

AGENDA

13th August 2013 Business Model and Customer Development 2

Introduction

Business Model Development

Customer Development

Channel Development

INTRODUCTION

INTRODUCTION

JOHN WILLIAMSON

13th August 2013 Business Model and Customer Development 4

Vertu Taiwan – Head of ODM

Puno Systems – Founder & CTO

i-mate™ – Co -founder & CTO

O2 UK – Principal Radio Architect

Sendit – Co-founder & Technical Product Manager

Acquired by EQT October 2012

Closed April 2012

Flotation on London AIM for $400M Sept. 2006

Acquired by Telstra October 2005

Acquired by Microsoft July 1998

BUSINESS MODEL DEVELOPMENT

BUSINESS MODEL DEVELOPMENT

INTERNAL DELIBERATIONS

13th August 2013 Business Model and Customer Development 6

Entry strategy

Incorporation

Funding

Customer Development & Acquisition

Pivot

Growth

Exit Strategy

Market size

Competitors

Unique and differentiated product

Validate value proposition

EXTERNAL DELIBERATIONS

BUSINESS MODEL DEVELOPMENT

ENTRY STRATEGY

13th August 2013 Business Model and Customer Development 7

Define your value proposition?

Does your product target a viable market?

What differentiates your product from competitors?

What are the barriers to entry?

How much start-up capital do you need?

How much cash do you need to prototype?

How do you plan to validate the business?

How will you finance the business?

What price will consumers pay?

What are your financial projections?

What is your end game?

What are your strengths, and your weaknesses?

Who are your competitors?

How much power do your suppliers have?

How much power do your buyers have?

How should you sell your product?

How should you market your product?

Does the business scale?

How do you protect your IP?

Who do you ask for help?

How do you keep employees happy?

How committed are you to making this happen?

BUSINESS MODEL DEVELOPMENT

INCORPORATION

13th August 2013 Business Model and Customer Development 8

Incorporation Jurisdiction

IPR Protection

Target Markets

Logistics Considerations

Labor Law

Tax Obligation

Bootstrap

Friends & Family

Angel

Incubator

Kickstarter / Indiegogo

Profitable

Venture Capital

FUNDING OPTIONS

BUSINESS MODEL DEVELOPMENT

CAPITAL COSTS

13th August 2013 Business Model and Customer Development 9

Office Rental

IT Infrastructure

Internet, Hosting & Telephony

e-Payment Solution

DRM

Insurance

Consulting

Marketing

Letter of Credit

IPR & Trademark

Employment Tax

Corporate Tax

Salary Inflation

Retail Margin

Service Life (years)

FOB

Freight Cost

MOQ Cost Decrease

AMS

Marketing Margin

Customer Messaging

Retail Price

Vendor Costs (pre sale)

Vendor Costs (post sale)

ID NRE

Design NRE

Tooling NRE

Certifications

Samples

Internet, Hosting & Telephony

Warranty

OPERATIONAL COSTS

BUSINESS MODEL DEVELOPMENT

TYPES OF REVENUE

13th August 2013 Business Model and Customer Development 10

SOFTWARE

Ad supported / Freemium

Web + App

SaaS

Commercial customers

Consulting action/reward

HARDWARE

Distribution / OEM / ODM

Kickstarter (Bootstrap funding, samples cost)

Higher investment, better returns

FUNDING IS NOT REVENUE

Strong sensitivity analysis

High, Target, Low forecast

Identify break even year

Identify 10x ROI year

Model both Profit & Bank Balance

Hardware Tooling & NRE

BUSINESS MODEL DEVELOPMENT

MULTIPLE MODELS

13th August 2013 Business Model and Customer Development 11

-$10,000,000

-$5,000,000

$0

$5,000,000

$10,000,000

$15,000,000

$20,000,000

Year 1 Year 2 Year 3 Year 4 Year 5

Best $$

Bull $$

Baseline $$

Bear $$

Worst $$-$10,000,000

-$5,000,000

$0

$5,000,000

$10,000,000

$15,000,000

$20,000,000

Year 1 Year 2 Year 3 Year 4 Year 5

Best

Bull

Baseline

Bear

Worst

BUSINESS MODEL DEVELOPMENT

PIVOT

13th August 2013 Business Model and Customer Development 12

Continual validation

Periodic review

Analyze new opportunities

Plan for change

Be a leader

My first 10 startups failed not because the idea wasn’t

sound, the business case was flawed, the team wasn’t

capable. Growing the business beyond 100 people proved

impossible.

Paraphrasing Rolf Skoglund

Mange Growth

Plan for it

Learn to let go, delegate

GROWTH

BUSINESS MODEL DEVELOPMENT

EXIT STRATEGY

13th August 2013 Business Model and Customer Development 13

Know where you are going

Clear ownership at incorporation

VC dilution

Plan for unexpected exits and entrants

Profitability

Endless Funding

Acquisition

Flotation (IPO)

Sale

Closure

TYPES OF EXIT

CUSTOMER RETENTION

CUSTOMER DEVELOPMENT

ACQUISITION

13th August 2013 Business Model and Customer Development 15

Cost of customer acquisition

Routes to market

Actual customer acquisition

Agency

Supplier

Producer

Distributor

Social Media

App Store

End customer

Customer replication

After Market Service

Product longevity

Alternate distribution models

Product novelty, new product development

Copy entrant

RETENTION

CUSTOMER DEVELOPMENT

END-CUSTOMER CONTACT

13th August 2013 Business Model and Customer Development 16

Old Media

Social Media

Distributors

Web sales (Amazon)

Direct communication

Telcos/Carriers

Shadow competitors (Pfizer)

Enterprise volume sales (Ubuntu Edge)

Brand integrity

Customer loyalty (Vertu)

AMS

CHANNEL RETENTION

CHANNEL RETENTION

13th August 2013 Business Model and Customer Development 18

Keep channel happy

Consistent, trusted roadmap

Development funding

Distributor margin

Maintenance overhead

Don't push too hard

Build engineering links

13th August 2013 Business Model and Customer Development 20 -$10,000,000

-$5,000,000

$0

$5,000,000

$10,000,000

$15,000,000

$20,000,000

Year 1 Year 2 Year 3 Year 4 Year 5

Best

Bull

Baseline

Bear

Worst

13th August 2013 Business Model and Customer Development 21 -$10,000,000

-$5,000,000

$0

$5,000,000

$10,000,000

$15,000,000

$20,000,000

Year 1 Year 2 Year 3 Year 4 Year 5

Best $$

Bull $$

Baseline $$

Bear $$

Worst $$

13th August 2013 Business Model and Customer Development 22 -$10,000,000

-$5,000,000

$0

$5,000,000

$10,000,000

$15,000,000

$20,000,000

Year 1 Year 2 Year 3 Year 4 Year 5

Best

Bull

Baseline

Bear

Worst

Best $$

Bull $$

Baseline $$

Bear $$

Worst $$