UMSI Entrepreneurship Nancy A. Benovich Gilby Ehrenberg Director of Entrepreneurship Clinical Associate Professor  School of Information 650-539-8376 nabgilby@umich.edu 2016 Winter UMSI 363 Class #9

Today 1:10 – 1:15 Midterm Discussion Moving Forward 1:15 - 1:30 – Backend as a service: Parse 1:30 – 2:30 Lab/Standup/Organize for Shareout – Add Data model, information architecture for back end data for your app, additional functionality, get help if struggling with your assignment last week. QUIZ, Fill out MakeHealth Bootcamp survey 2:30 – 2:45 Chasm 1 & Elevator Pitch 2:45 – 4 Share out (closed computer, phone)

Team Project Overview Project Week: Form your team, establish ground rules, Interviews round 1 Review Customer Development Round 1 and Potentially Pivot, Competition, Market size Review Customer Development Round 2, Pivot? Review Customer Development Round 3, Pivot? Skeleton of Swift App KJ Affinity Diagram, Design Thinking for initial brainstorming, wireframe, xcode storyboard layout to wireframes, test with users Draft pitch, Dataset, backend, build app scaffolding, All teams pitch and review, MVP prototype Pitch and demo to VCs, Executives, Entrepreneurs

Midterm Discussion Moving Forward 1:10 – 1:15

Midterm Dissatisfaction Complete the midterm, including extra credit, re-submit Complete additional exercise, similar difficulties, submit

Parse: Back End As a Service/Data Model 1:15 - 1:30

Full Stack – Parse! mBaaS

Parse Backend – More on Parse

We’ll be using User Class and Custom Classes for this week’s assignment

Available Data Types to Store

You will see these extra fields in your parse app data store but you can not edit them, they are used for a variety of things including analytics

Share Out Team name Target user description What is their urgent problem? What is your value hypothesis? Walk through your KJ Show User Scoring Group discussion

Record and Write Top Quotes 2-3 for each interview, 25-30 QUOTES TOTAL Black text, all caps, large, easily readable from 6 feet away Traceability code: allows trace back to the source for the team but respects confidentiality

Sample Wildfire KJ Diagram

Sample Wildfire KJ Diagram: top 1 sections cc

Sample Wildfire KJ Diagram: top 3rd

How to Present a KJ Diagram (for customer feedback) Put the KJ diagram on the wall. Explain to the customer that this is an affinity diagram made from the most urgent, direct quotes your team heard from conversations with a group of target users. Point to and read the Black “What” statement in the upper left of the KJ Diagram What we heard from target users was …. Point to and read summary statement in Red on the upper right The details backing this are…. Walk through and point to the flow, starting with the left-top most Blue level statement, point to the next blue level use language: <blue 1 statement> “leads to” -> <blue 2 statement> <blue 1 statement> and <blue 2 statement> “mutually affect each other” <-> <blue 1 statement> |-| “is in contrast to” <blue 2 statement> The top priorities are: Point to and read the top priority Red XX, Red level statement, repeat with Blue \\\ 2nd priority Red level statement then Green … 3rd priority Red level statement These priorities support, point to and read the upper left Red summary statement. Point out direct quotes from the customer you are presenting to. Ask them “did we hear you correctly? Is there anything we are missing?” Thank the customer

Your VIDEO Presentation Format: 4 Minutes Competition Matrix, Describe Landscape List competitors List competitive advantages Why you as a team believe (or not) KJ, quotes, What you’ve learned What’s Next and Team. Company timeline with development roadmap Founders, why great team LIVE: Name, Elevator pitch: KJ Wakthrough Solution And demo Demonstrate your company’s value proposition to make the customer’s life better. (Video, walk through user scenario, addressing top items from Problem) Provide use cases. Questions http://www.sequoiacap.com/grove/posts/6bzx/writing-a-business-plan We like business plans that present a lot of information in as few words as possible. The following business plan format, within 15–20 slides, is all that’s needed. Company purpose Define the company/business in a single declarative sentence. Problem User scenario, use quotes Describe the pain of the customer (or the customer’s customer). Outline how the customer addresses the issue today. Why now Set-up the historical evolution of your category. Define recent trends that make your solution possible. Market size Identify/profile the customer you cater to. Calculate the TAM (top down), SAM (bottoms up) and SOM.

Lab/Standup/Organize for Shareout – Add Data model, information architecture for back end data for your app, additional functionality, get help if struggling with your assignment last week. QUIZ, Fill out MakeHealth Bootcamp survey 1:30 – 2:30

Chasm 1 & Elevator Pitch 2:30 – 2:45

”Build Something for SOMEBODY Instead of Everything FOR NOBODY" - Geoffrey Moore in “Crossing the Chasm”

Minimal Viable Product

IDEATION: Customer Development Customer Search Customer Validation Week Problems Solutions

Minimal Viable Product

Who is the FIRST target, specifically

Chasm Model: The People The market waiting and watching…FUD!!

Marketing?

Aggregate sales, both past and present for products or services Market? Aggregate sales, both past and present for products or services

“taking actions to create, grow, maintain, or defend markets” Marketing “taking actions to create, grow, maintain, or defend markets”

MARKET!!! A set of actual or potential customers For a given set of products or services Who have a common set of needs or wants, and Who reference each other when making a buying decision.

Market Segment? Natural market boundaries within an aggregate of current and potential sales (boundaries around customers or users who reference each other) A group of people you can wrap your arms around and count

Adoption of New Technologies

Classical Diffusion Theory When faced with discontinuous innovations, customers fall into five broad categories along an axis of risk-aversion. Everett Rogers (1962) Innovators Early Adopters Early Majority Late Majority Laggards

Technology Adoption Life cycle In high-tech, the categories have been given more specific names (Geoffrey Moore). Geofferey Moore 1991 Innovators Early Adopters Early Majority Late Majority Laggards = Technology Enthusiasts = Visionaries = Pragmatists = Conservatives = Skeptics

Pragmatists create the dynamics of market development. Technology Adoption Life Cycle – Types of Consumers Discontinuous Innovation Innovators Early Adopters Early Majority Late Majority Laggards Techies: Try it! Pragmatists: Stick with the herd! Conservatives: Hold on! Skeptics: No way! Visionaries: Get ahead of the herd! Pragmatists create the dynamics of market development.

Hockey Stick The VC Revenue Curve Expectation: What is Success?? Big Enough Idea That It’s not Just Another Mouse Trap Users/ Revenue Go public, everyone makes millions $100M In the Tornado, can barely keep up with customer growth Everything is going according to plan First batch of users 1 3 5 Time (years)

Point of Peril Users/ Revenue Time Oh no, What’s wrong, I’m scared First batch of users Time

Point of Peril – the Chasm Innovators Early Adopters Early Majority Late Majority Laggards

Techie Innovators Key Role: Gatekeeper to the Early Adopter Primary Motivation: Learn about new technologies for their own sake Key Characteristics: Strong technical aptitude Like to test new products Can ignore any missing elements Like to help Want no-profit pricing (preferably free) Key Role: Gatekeeper to the Early Adopter

Early Adopters - Visionaries Primary Motivation: Visionaries Highly motivated, driven by a revolutionary breakthrough Key Characteristics: Visionary executives going ahead of the herd Driven by competitive advantage Will help pay for new paradigm Demand “what ever it takes” commitment Rely on their own judgment Strategic thinkers, not from technology itself Think project not product Key Role: Fund the development of the early market

Early Majority Primary Motivation: Key Characteristics: Pragmatists Gain sustainable productivity improvements via evolutionary change Key Characteristics: Astute managers of mission-critical applications Understand real-world issues and tradeoffs Focus on proven applications Like to go with the market leader Must have complete whole products Insist on good references from trusted colleagues Key Role: Bulwark of the mainstream market

Four Value Propositions Go ahead of the herd for competitive advantage. Go ahead of the herd to fix a broken business process. Go with the herd to create new infrastructure. Go after the herd to get better values. Early Majority

Why: Pragmatists Don’t Trust Visionaries as References!!! New & revolutionary Unique functionality Horizontal references Willing to take risk Want rich tech-support Revolutionary processes Tolerate bugs Standard Third party supporters Vertical references Little risk Great quality of support Enhance established processes Bug free

How do you Cross the Chasm? ????

How Do You Cross the Chasm? Early Market Chasm Bowling Alley Tornado Main Street Total Assimilation Go Bowling!!

Facebook Bowling Alley Example Adoption happens by groups who reference each other Company Aunts and Uncles Grand Mas and Pas Middle School Students Middle Age Workers Mom’s and Dads High School Students First Time Workers Twenty Some things College Students How hard did Facebook need to work to get the Early Majority? Where does the Early Majority begin here?

To WIN the Niche Market Pick on someone your own size, pick carefully What “features” do we need to build? Product Development’s role is to help determine and execute the whole product For a TARGET CUSTOMER MUST HAVE, COMPELLING Reason to Buy

Where does the MVP fit in?

GET 3 Referenceable Customers If I could leave you with the most important things I’ve learned over 20+ years: GET 3 Referenceable Customers Strategy & plan must be based on the REALITIES of where you are in the adoption cycle of your product in the market Development’s role is to help determine and execute the whole product (Development = Product Management + Engineering) Engineering is responsible to find a solution, within a given time window, determine how much the solution costs Once a plan is agreed, engineering must ship on time, every time.

Try the Elevator Pitch (Positioning: Create and Occupy a Space in the Target Customer’s Head) Format Example Intuit Bill Pay For (target customers— beachhead segment only) Who are dissatisfied with (the current market alternative) Our product is a (new product category) That provides (key problem-solving capability). Unlike (the product alternative), We have assembled (key whole product features for your specific application). For For the bill-paying member of the family who also uses a home PC Who are dissatisfied with Who is tired of filling out the same old checks month after month Our product is a Quicken is a PC home finance program That automatically creates and tracks all your check-writing Unlike Unlike Managing Your Money, a financial analysis package We have assembled Our system is optimized specifically for home bill-paying.

”Build Something for SOMEBODY Instead of Everything FOR NOBODY" - Geoffrey Moore in “Crossing the Chasm”

Assignment Summary Assignments: #19: 3 Business Model Canvases #20: Project Name, Elevator Pitch, Logo #21: Back/End to Parse, Data model/Information Architecture

Lean Model Canvas

Share out (closed computer, phone) 2:45 – 4

Share Out Team name Target user description What is their urgent problem? What is your value hypothesis? Walk through your KJ Show User Scoring Group discussion

Assignment Summary Assignments: #19: 3 Business Model Canvases #20: Project Name, Elevator Pitch, Logo #21: Back/End to Parse, Data model/Information Architecture