1. Business Models and Customer Development
Lecture 1, Part 1
Business Models
and
Customer Development

2. Overview Start-ups and companies – how they differ Strategy Process
Organization
Impact on start-up launches

3. What we used to believe

4. Startups are smaller versions of large companies

5. What we now understand

6. Startups search Companies execute

7. What we used to believe
Strategy

8. Instead of creating business plans…
Today we discover business models.

9. Old definition of entrepreneurial strategy
Entrepreneurial strategy = Plan + Financial statements
…for startups

11. Plans are worthless, but planning is everything.
- Dwight D. Eisenhower

12. Business Model Canvas
October 20-22, 2014
Los Angeles cohort

13. Our curriculum 2
Who are your most important customers?
What are their archetypes?
What job do they want you to get done for them? 4 1
How will you get, keep, and grow customers?
What customer problems are you helping to solve ?
What customer needs are you satisfying? 3
Through which channels (sales, distribution, support) do your customers want to be reached? 5
How will you make money?
What is revenue model?
What are pricing tactics? 6
Who are your Key Partners?
Who are your key suppliers?
What are you getting from them…and giving to them?
What Key Activities do you require?
Manufacturing? Software development? Personal concierge service? Etc. 7 9
What are most important costs inherent in your business model?
What is mix of fixed and variable costs?
What Key Resources do you require?
Financial? Physical? Intellectual property? Human resources? 8
What are key features of your product/service that match customer problems/needs?
Pivot

14. What we used to believe
Process

15. Classical view of process
Concept/seed round
Product dev
Alpha/Beta test
Launch/ 1st ship
Marketing
Marcom, positioning
PR, buzz
Demand, launch event, branding
Sales
VP/sales staff
Sales organization
Engineering
MRD, waterfall
Q/A
Tech pubs

16. Startups don’t fail from lack of process…
Startups fail from lack of customers.

17. We will run out of time and money before we run out of steps!
Product introduction
Concept/seed round
Product dev
Alpha/Beta test
Launch/ 1st ship
…for startups
We will run out of time and money before we run out of steps!

18. Waterfall Development
Requirements
Design
Implementation
Verification
Maintenance
Customer Problem: known
Product Features: known
…for startups
We have known unknowns and unknown unknowns!

19. Customer Development

20. What we used to believe
Organizations

21. A founder does not run sales, marketing or business development…
A founder runs a customer development team.

22. …for startups

23. Startups operate as teams, not as hierarchies.
Organizations
Classical company
…for startups
Startup PI EL M
Startups operate as teams, not as hierarchies.

24. What we used to believe
Impact

25. Rethinking startups Startups Companies execute search Strategy Process
Business model hypothesis
Operating plan and financial model
Process
Customer and agile development
Product management and waterfall development
Organization
Customer dev team – Founder driven
Functional organization by department

26. Startups are the pediatric patients of the business world.
We manage them differently.

27. So what? You will NEVER LAUNCH if you act like a large company.
You will learn NOTHING if you start with the plan rather than the market.
NO INDUSTRY is exempt from this.
Your search begins with 100 interviews, which YOU CAN ACHIEVE.

28. Team presentations
+ Technical Videos