Vernon’s Razor ©2007 Patrick Vernon BUSI 506 New Venture Analysis Class 2 Value Proposition

Vernon’s Razor ©2007 Patrick Vernon Imagine: Medieval Europe Weather Zillow

Vernon’s Razor ©2007 Patrick Vernon Occam’s Razor Example Solution A – 70% Solution B – 90% Solution C – 100% Separate red circles from blue squares. Effective? Replicable? Scalable?

Vernon’s Razor ©2007 Patrick Vernon Analogous to Business Planning Design prototype Refine manufacturing process Identify target market Analyze competitive landscape Create financial model …

Vernon’s Razor ©2007 Patrick Vernon or Occam’s Razor for Business Plan

Vernon’s Razor ©2007 Patrick Vernon Go or No-Go? Vernon’s Razor

©2007 Patrick Vernon Go or No-Go?

Vernon’s Razor ©2007 Patrick Vernon Vernon’s Razor 1.Value Proposition 2.Market Potential 3.Return 4.Team 5.Competitive Advantage 6.Business Model 7.Customer Pain Defining Opportunity Minimizing Risk

Vernon’s Razor ©2007 Patrick Vernon Value Proposition Your new venture should make the world a better place = you are creating value VP is brief description of the value that you will create with your new venture Begin thinking of your idea in terms of the value they create

Vernon’s Razor ©2007 Patrick Vernon Value Proposition Kawasaki – 3 Ways to Make Meaning Increase quality of life Right a wrong Prevent end of something good video

Vernon’s Razor ©2007 Patrick Vernon Value Proposition Riozen Video: get to VP quickly –Goal is to get to next step –“Elevator Pitch” –Effective communications Kawasaki: make mantra Who is the mantra for? Customer? Employee? Investor? Partners? Suppliers? Dilbert

Vernon’s Razor ©2007 Patrick Vernon Components of Good VP Problem solved (#1) Size of problem Target market Competitive advantage Team

Vernon’s Razor ©2007 Patrick Vernon Bad VP University Biodiesel recognizes that reliance on petroleum to fuel our nation’s vehicles is problematic in that domestic production is decreasing, and the petroleum that remains globally is increasingly difficult to extract. Dependence on foreign sources is also inherently costly, insecure and politically undesirable… UniBio will address this opportunity through an integration of UNC- Chapel Hill (UNC) resources. 1.We will recycle waste vegetable oil (WVO) from UNC dining facilities 2.We will establish a collection system to likewise recycle WVO generated by the broader UNC community. 3.The biodiesel production facility and collection system will serve as educational resources, engaging and empowering faculty, students and staff in being part of the solution to an impending energy transition.

Vernon’s Razor ©2007 Patrick Vernon Good VP University Biodiesel offers an educational and operational package that allows universities to save cost on fuel and reduce greenhouse emissions by recycling waste vegetable oil into biodiesel fuel for use in university vehicles while teaching students the importance of environmental responsibility.

Vernon’s Razor ©2007 Patrick Vernon Bad VP Customer service and efficiency best practices are defined by forward thinking corporations who drive differentiation by their speed, flexibility and quality of service. Providing high levels of service (and “touch”) while driving profitability requires communications-enabled technologies. Such technologies implemented privately/individually by an enterprise are costly and typically out of reach for small and medium businesses – yet customer expectations don’t change. The new venture by NewCo will establish a delivery model and hosted infrastructure based on “software-as-a-service” (hosted/operated/ managed services) for communications enabled business applications. Where appropriate, the chosen applications will be from the opensource community to provide for customer access to business solutions heretofore too expensive and complex to integrate by the Small and Medium sized businesses.

Vernon’s Razor ©2007 Patrick Vernon Good VP Using NewCo software-as-a-service, small- to mid-sized businesses can offer world- class customer services previously only available to the Fortune 500.

Vernon’s Razor ©2007 Patrick Vernon VP for Google “Organize the world’s information making it universally accessible and useful.” Founder Larry Page Not necessarily a great “value proposition” statement, but an interestingly bold one.

Vernon’s Razor ©2007 Patrick Vernon VP for eBay “Making inefficient markets efficient.” CEO Meg Whitman Also, not necessarily great, but certainly bold.

Vernon’s Razor ©2007 Patrick Vernon Value Network The economy is too complicated to think of customers only as end-user (B2C) (Estrin Video) An overview of everyone who might be touched by your venture Your challenge: identify who in the network gets the most value

Vernon’s Razor ©2007 Patrick Vernon Caller NewGadget Office Phone Company Cell Phone Company Home Phone Company End User Office Phone Company Cell Phone Company Home Phone Company Equipment Retailers Equipment Manufacturers Equipment Wholesalers Following the Path of One Phone Call NewPhoneChipCo A technology company that has a chip that can divert phone calls to any of a customer’s telephones.

Vernon’s Razor ©2007 Patrick Vernon

Vernon’s Razor ©2007 Patrick Vernon

Vernon’s Razor ©2007 Patrick Vernon Assignment Value Network for ReverbNation