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Lean LaunchPad Value Proposition Aaron Eden Created by Steve Blank

Lean Launchpad Tucson - Value Proposition

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Page 1: Lean Launchpad Tucson - Value Proposition

Lean LaunchPadValue Proposition

Aaron EdenCreated by Steve Blank

Page 2: Lean Launchpad Tucson - Value Proposition

Weekly Topics

» 5/12 – What to Expect» 5/19 – First Pitches» 5/26 – Experiment Day» 6/2 –Value Propositions» 6/9 – Customers, Users, Payers (Andrew)» 6/16 – Distribution Channels (Justin)» 6/23 – Customer Relationships» 6/30 – Revenue Models» 7/7 – Partners» 7/14 – Key Resources & Costs» 7/21 – Lessons Learned Presentations

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Agenda

» Homework Review» Team Business Model Presentations» Value Propositions

˃ Product˃ Service˃ Ecosystem

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Homework Discussion

» Business Model Generation˃ Visual Thinking˃ BMC Prototyping˃ Environment

» Startup Owners Manual˃ Customer Problem (Need or Passion)˃ Customer Types˃ Customer Archetypes˃ A Day In The Life˃ Influence Maps

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Presentations

» How many customers did you talk to?» What were your value proposition hypotheses?» What do customers think about your value

proposition hypotheses?» Post updates in the Google group (lessons

learned, canvas changes)http://www.youtube.com/watch?v=VZ5rgVgn5qk

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WionTV

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Appstore Analytics

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Forward Intelligence

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VALUE PROPOSITIONS

images by JAM

what are you offering them? what is that getting done for them? do they care?

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Step 1. Spec. the Value Proposition

» Product(s)?» Service(s)?» Ecosystem?

» Is it a company or product?

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Common Mistakes

» Is it just a feature of someone else’s product?» Is it a “nice to have” product?» Is it a “got to have” product?» Can it scale to a company?

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Discovery

» Product ˃ Long term vision˃ Features ˃ Benefits˃ Minimum Viable Product spec

» For a web/mobile app˃ Low fidelity MVP live and running

» Understand Customer Problem and Solution» Test Market Type

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Product

» Problem Statement: What is the problem?

» Technology / Market Insight: Why is the problem so

hard to solve?

» Market Size: How big is this problem?

» Competition: What do customers do today?

» Product: How do you do it?

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Step 2: What’s the MVP – Web/Mobile

» NOW “low fidelity” web/app for customer feedback˃ First, tests your understanding of the problem

» LATER, “high fidelity” web/app tests your understanding of the solution˃ Proves that it solves a core problem for customers ˃ The minimum set of features needed to learn from

earlyvangelists

- Avoid building products nobody wants- Maximize the learning per time spent

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Step 2: What’s the Testing the MVP – Web/Mobile

» Smoke testing with landing pages using AdWords» In-product split-testing» Prototypes (particularly for hardware)» Removing features» Continued customer discovery and validation» Interviews» Surveys

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Step 2: What’s the Testing the MVP– Web/Mobile - Tactics

» Interview customers ˃ make sure they have a matching core problem

» Set up web site landing page to test for conversion˃ What offers are required to get customers to use the product

(e.g. prizes, payment)˃ Use problem definition as described by customers to identify

key word list – plug into Google search traffic estimator - high traffic means there is problem awareness

» Drive traffic to site using Google search and see how deep into a registration process customers are willing to go through

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Pivot ExampleRobotic Weeding

Talked 75 Customers in 8 Weeks

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Our initial plan

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20 interviews, 6 site visits…We got OUR Boots dirty

WeedingVisited two farms in Salinas Valley to better understand problem

Interviewed:• Bolthouse Farms, Large Agri-Industry in Bakersfield• White Farms, Large Peanut farmer in Georgia• REFCO Farms, large grower in Salinas Valley• Rincon Farms, large grower in Salinas Valley• Small Organic Corn/Soy grower in Nebraska• Heirloom Organics, small owner/operator, Santa Cruz Mts• Two small organic farmers at farmers market• Ag Services of Salinas, Fertilizer applicator

MowingInterviewed:• Golf: Stanford Golf course • Parks: Stanford Grounds Supervisor, head of maintenance and

lead operator (has crew of 6)• Toro dealer (large mower manufacturer) • User of back-yard mowing system• Maintenance Services for City of Los Altos• Colony Landscaping (Mowing service for stadiums)

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Autonomous Vehicles for Mowing & Weeding

We reduce operating cost- Labor reduction- Better utilization of assets (mow or weed at nights)- Improved performance (less rework, food safety)

Mowing- Owners of public or commercially used green spaces (e.g. golf courses)- Landscaping service provider

Weeding- Farmers with manual weeding operations

Dealers sell, installs and supports customer

Co. trains dealers, supports dealers

- Mowing Dealers- Ag Dealers

- Innovation- Customer Education- Dealer training

Dealer discount COGS seek a 50-60% Gross MarginHeavy R&D investment

- Dealers (Mowing and Ag)- Vehicle OEMs (John Deere, Toro, Jacobsen, etc)

- Research labs

Asset saleOur revenue stream derives from selling the equipment

Engineers on Autonomous vehicles, GPS, path-planning

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Found weeding in organic crops is HUGE problem; 50 - 75% of costs

Crews of 100s-1000

Back-breaking task

(legal) labor harder to get

1-5 weedings per year/field

$250-3,500 per acre and increasing

Food contamination risk

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Autonomous vehicles WEEDING

We reduce operating cost- Labor reduction (100 to 1)- Reduced risk of contamination- Mitigate labor availability concerns

- Low density vegetable growers- High density vegetable growers- Thinning operations- Conventional vegetables

Dealers sell, installs and supports customer

Co. trains dealers, supports dealers

- Ag Dealers- Ag Service providers

- Innovation- Customer Education- Dealer training

Dealer discount COGS seek a 50-60% Gross MarginHeavy R&D investment

- Ag Dealers- Ag Service providers

- Research labs

Asset saleOur revenue stream derives from selling the equipment

Engineers on Machine VisionTwo problems:- Identification- Elimination

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CarrotBot

» Machine Vision data collection platform˃ Monochrome & Color Cameras˃ Laser-line sweep (depth

measurement)˃ Encoders (position/velocity)˃ Onboard data acquisition & power

CarrotBot 1.0

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The Canvas Updated

•Research Labs•Equipment Manufacturers•Distribution Network•Service Providers

•Technology Design•Marketing•Demo and customer feedback

•Cost Reduction•Remove labor force pains•Eliminate bio-waste hazards

•IP – Patents•Video Classifier Files•Robust Technology

•Farming conventions.•Demo, demo, and demo!!•Proximity is paramount

•Organic Farmers•Weeding Service Providers•Conventional Farmers

•Dealers•Direct Service•Indirect Service• … then Dealers

•Asset Sale•Direct Service with equipment rental•… then Asset Sale

Value-Driven

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Visit Highlights

Above: Organic Carrots, 7wks. Top right: Conventional carrotsBottom Right: Very weedy. Will require multiple passes of hand weeding

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Visit Highlights

Carrot vs. WeedsDue to small root systems, carrots have no chance against weeds

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Visit Highlights

Organic Broccoli, closely cultivated. Weeds close to plants are hand-picked

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Visit Highlights

State of the Art in Weeding Technology for Organic Crops

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Customer Hypothesis

Us Dealer

Large Growers

Industrial Growers

Us Dealer

Industrial Growers

Large Growers

Service Providers

Equipment Rental

Hypothesis Confirmed• Growers interested in own equipment

• Industrial (10,000s of acres) • Large (1,000s of acres)• Willing to pay $100k for one

unit

• Smaller growers (100s of acres) usually subcontract the labor services or rent equipment

• All purchases through local dealers• Customer service is essential

Pre-Test

Post-Test

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Customer Map #1 – Industrial Growers

End User

Influencer

Recommender

Decision Maker

Approver

Example: Bolthouse Farms – Large Industrial Carrot Producer – 8K acres/yr

• Equipment Operator

• Director, Ag Technology• Justin Grove, interviewed

• VP, Growing Operations

• CFO, CEO (Jeff Dunn)

• Local Farm Mgr• Cliff Kirkpatrick, visited

Equipment Operator

Cliff, Farm Mgr

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Customer Map #2 – Service Providers

End User

Influencer

Recommender

Decision Maker & Approver

Example: Ag Services – Service Provider, Salinas Valley

• Equipment Operator

• Service Mgr

• ?? (service mgr’s boss)

Me (left), Marty (middle, Service Mgr), Doug (right, Grower)

• Grower

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The Canvas Updated

•Research Labs•Equipment Manufacturers•Distribution Network•Service Providers

•Technology Design•Marketing•Demo and customer feedback

•Cost Reduction•Remove labor force pains•Eliminate bio-waste hazards

•IP – Patents•Video Classifier Files•Robust Technology

•Farming conventions.•Demo, demo, and demo!!•Proximity is paramount

•Mid/Large Organic Farmers•Agricultural corporations•Weeding Service Providers

•Mid/Large Conventional Farmers

•Direct Service•Indirect Service• … then Dealers

•Direct Service with equipment rental•($1,500/d; 120d/yr )•Low density: $1,500/d•High density: $6,000/d

Value-Driven

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World Ag Expo:The need is real and wide spread

» 10+ interviews at show˃ Everyone confirmed the need˃ Robocrop, UK based, crude

competitor sells for $171 K

» Revenue Stream˃ Mid to small growers prefer a

service˃ Large growers prefer to buy, but

OK with service until technology is proven

˃ Charging for labor cost saved is OK, as we provide other benefits (food safety, labor availability)

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The Business Canvas Updated

•Research Labs•Equipment Manufacturer•Distribution Network•Service Providers• 2 or 3 Key Farms

•Technology Design•Marketing•Demo and customer feedback

•Cost Reduction•Remove labor force pains•Eliminate bio-waste hazards•IP – Patents

•Video Classifier Files•Robust Technology

•Farming conventions.•Demo, demo, and demo!!•Proximity is paramount

•Mid/Large Organic Farmers•Agricultural corporations•Weeding Service Providers

•Mid/Large Conventional Farmers

•Direct Service•Indirect Service• … then Dealers

•Direct Service with equipment rental•Low density: $1,500/d•High density: $6,000/d

Value-Driven• R&D• Bill of Materials• Training & Service• Sales

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Autonomous weeding - Final

We reduce operating cost- Labor reduction (100 to 1)- Reduced risk of contamination- Mitigate labor availability concerns

- Low density vegetable growers- High density vegetable growers- Thinning operations- Conventional vegetables

Direct- Provide high quality service at competitive price

Direct - Alliance with service providers- Eventually sell through dealers

- Innovation- Customer Education- Dealer training

Costs for service provisionCOGS seek a 50-60% Gross MarginHeavy R&D investment

- Ag Service providers

- Research Institutes (eg UC Davis, Laser Zentrum Hannover)

- 3-4 key farms

Service provision- Charge by the acre with modifier according to weed density - Eventually move to asset sale

Engineers on Machine VisionTwo problems:- Identification- Elimination

The Business Canvas Final

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Market Type

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Definitions: Four Types of Markets

» Clone Market˃ Copy of a U.S. business model

» Existing Market˃ Faster/Better = High end

» Resegmented Market˃ Niche = marketing/branding driven˃ Cheaper = low end

» New Market˃ Cheaper/good enough, creates a new class of product/customer˃ Innovative/never existed before

Clone Market

Existing Market Resegmented Market

New Market

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Market Type determines: Rate of customer adoption

Sales and Marketing strategies Cash requirements

Market Type

Existing Resegmented New

Customers Known Possibly Known Unknown

Customer Needs

Performance Better fit Transformational improvement

Competitors Many Many if wrong, few if right

None

Risk Lack of branding, sales and distribution ecosystem

Market and product re-definition

Evangelism and education cycle

Examples Google Southwest Groupon

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Market Type - Existing

» Incumbents exist, customers can name the mkt» Customers want/need better performance» Usually technology driven

» Positioning driven by product and how much value customers place on its features

» Risks:˃ Incumbents will defend their turf˃ Network effects of incumbent˃ Continuing innovation

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Market Type – Resementing Existing

» Low cost provider (Southwest)» Unique niche via positioning (Whole Foods)

» What factors can:˃ you eliminate that your industry has long competed on?˃ Be reduced well below the industry’s standard?˃ should be raised well above the industry’s standard?˃ be created that the industry has never offered? (blue ocean)

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Market Type – New

» Customers don’t exist today» How will they find out about you?» How will they become aware of their need?» How do you know the market size is compelling?

» Which factors should be created that the industry has never offered? (blue ocean)

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Homework

» What were your value proposition hypotheses? » What did potential customers think about your

value proposition hypotheses?˃ Get out of the building and begin to talk to more customers˃ Talk to 10-15 customers more ˃ Follow-up with Survey Monkey (or similar service) to get more data

» Submit interview notes, present results in class.» Update Google Group with progress customers

and value prop