Class5 Business Design
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This document provides an overview and discussion of topics related to developing a business from an initial idea, including: - Researching customer needs and validating ideas through frameworks and brainstorming techniques. - Customer development processes like validating minimum viable products and creating shared visions with teams. - Business model canvases, acquisition channels, revenue streams like marketplace, subscription and advertising models. - Pricing strategies like determining the unit of exchange and capturing customer value while driving desired behaviors. - Examples of pricing models for software and lessons on testing pricing through interviews and mockups.
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Class5 Business Design
- 1. Class 5: From Idea to Business @cwodtke www.eleganthack.com
- 3. Business • Dave is alive! Yay! • Feedback response • Email vs Canvas • Review, and Overview • Q&A
- 5. REVIEW Our Story So Far
- 7. WE BEGIN WITH RESEARCH
- 8. WE USE OUR HANDS AND FRAMEWORKS TO UNCOVER INSIGHTS
- 10. BRAINSTORMING IS BEST DONE SILENTLY, THEN WORK TOGETHER TO DETERMINE QUALITY
- 11. BRAINSTORMING AGAINST EXISTING FRAMEWORKS CAN HELP US THINK BIGGER Photo credit Wiesław Kotecki
- 12. VISUAL THINKING WAKES UP OUR CREATIVITY
- 13. PARTICIPATORY ROADMAPS TO VALIDATE MVP FEATURES
- 14. Customer Development Customer Development Company Building Customer Discovery Customer Validation Customer Creation Steven Gary Blank, Four Steps to the Ephinany
- 16. EXPERIENTIAL LEARNING From Ed Batista http://www.edbatista.com/2007/10/experiential.html
- 17. Research and synthesize Creative a shared vision with team Iterate with prospective market Finally…
- 20. “NEVER WRITE ON THE BUSINESS MODEL CANVAS, THAT’S WHY GOD GAVE US POST-IT NOTES” -ALEX OSTERWALDER
- 23. Adam Nash Five Sources of Content 1. Organic 2. Email 3. Search 4. Ads 5. Social Jherin Miller Sketchnote
- 24. FREELIST ALL THE ACQUISITION CHANNELS YOU CAN Exercise
- 26. Relationships • Personal Assistance • Dedicated Personal Assistance • Self-Service • Automated Service • Communities • Co-Creation • More!
- 27. REVENUE STREAMS
- 29. • Marketplace Model • Advertising Model • Affiliate Model • Community Model • Subscription Model
- 30. I have always been a woman who arranges things, for the pleasure–and the profit–it derives. I have always been a woman who arranges things, like furniture and daffodils and lives. Marketplaces bring buyers and sellers together and facilitate transactions. They can play a role in business-to-business (B2B), business-to- consumer (B2C), or consumer-to-consumer (C2C) markets. Usually a marketplace charges a fee or commission for each transaction it enables.
- 32. I’ll go where the buyers are I want to find things! I want the best price! Can I trust this seller? Users must find products, evaluate seller, and make a purchase
- 33. Advertising Model The web advertising model is an update of the one we’re familiar with from broadcast TV. The web “broadcaster” provides content and services (like email, IM, blogs) mixed with advertising messages. The advertising model works best when the volume of viewer traffic is large or highly specialized.
- 34. Users must: •Notice advertising •Interact with ad Preconditions: User must visit advertising location Share their demographic information Types: CPM CPC CPA
- 35. Community Model The viability of the community model is based on user loyalty. Revenue can be based on the sale of ancillary products and services or voluntary contributions; or revenue may be tied to contextual advertising and subscriptions for premium services. The Internet is inherently suited to community business models and today this is one of the more fertile areas of development, as seen in rise of social networking. Open Source Red Hat, OpenX Open Content Wikipedia, Freebase
- 37. Users need to • Create an identity • Connect with other users • Build a reputation • Create and share content/work/etc Users must care
- 38. Subscription Model Users are charged a periodic—daily, monthly or annual—fee to subscribe to a service. It is not uncommon for sites to combine free content with “premium” (i.e., subscriber- or member-only) content. Subscription fees are incurred irrespective of actual usage rates. Subscription and advertising models are frequently combined. Content Services Software as a Service Internet Services Providers
- 40. User must: •Able to evaluate the offering • Subscribe and unsubscribe to offering •Realize value offered
- 44. HOW DO YOU MAKE MONEY? Exercise Marketplace Model Advertising Model Affiliate Model Community Model Subscription Model
- 45. PRICING
- 46. Pricing • Part of the business model – How do we make money? How much? – Revenue/profit/shipment forecasts • Supports core value proposition – “Our product/service saves you $$$$… – …and we want 15% of the savings.” • Often an obstacle to buying – Too complex – Much too high (sticker shock) or too low (desperate) – Free (no reason to trade up)
- 47. Designing pricing • What’s the natural unit of exchange? – How do they derive value? – What does the competition do? – Can you split off a profitable segment? • How much of customer value can you capture? • Test, trial-close, get your hands dirty
- 48. Software Pricing Models 1. Time-based access (e.g. unlimited/month) 2. Transaction (stock trade) 3. Metered (seats, CPUs, named users) 4. Hardware (appliances, dongles) 5. Service (virus updates, support) 6. Percentage of incremental revenue/savings 7. Data-driven insights
- 49. Pricing drives customer behavior • What do you want core customers to do? – No-brainer renewals (small monthly fees) – Big up-front license (lock up marketplace) – Lust for upgrades (cool features are extra) – Freemium model (1% upsold into paid services) – Install latest version (free updates, increasing service – fees)
- 51. Storium Pricing 1. Interviews with Kickstarter backers 2. Synthesis to discover Value 3. Discovered anchors 4. New Model 5. Validated with mockups
- 54. Homework • Build an initial Business Model Canvas • Create a landing page • How many emails can you collect? • Extra-credit: try a pricing exercise
- 55. APPENDIX
- 57. From Google Vetures Design Sprint http://www.gv.com/lib/the-gv-research-sprint-a-4-day-process-for-answering-important-startup-questions
- 58. From Google Vetures Design Sprint http://www.gv.com/lib/the-gv-research-sprint-a-4-day-process-for-answering-important-startup-questions
- 59. From Google Vetures Design Sprint http://www.gv.com/lib/the-gv-research-sprint-a-4-day-process-for-answering-important-startup-questions