3. » Homework Review
» Team Business Model Presentations
» Value Propositions
˃ Product
˃ Service
˃ Ecosystem
4. » 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
5. » 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
6.
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9. VALUE PROPOSITIONS
what are you offering them? what is that getting
done for them? do they care?
images by JAM
11. » 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?
12. » 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
13. » 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?
14. » 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
15. » Smoke testing with landing pages using AdWords
» In-product split-testing
» Prototypes (particularly for hardware)
» Removing features
» Continued customer discovery and validation
» Interviews
» Surveys
16. » 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
19. Weeding
Visited 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
Mowing
Interviewed:
• 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)
20. - Innovation Dealers sell, installs Mowing
- Dealers (Mowing - Customer We reduce operating and supports - Owners of public
and Ag) Education cost customer or commercially
- Vehicle OEMs - Dealer training - Labor reduction used green spaces
(John - Better utilization of Co. trains (e.g. golf courses)
Deere, Toro, Jacob assets (mow or dealers, supports - Landscaping
sen, etc) weed at nights) dealers service provider
- Improved
performance (less Weeding
- Research labs
Engineers on rework, food safety) - Mowing Dealers - Farmers with
Autonomous - Ag Dealers manual weeding
vehicles, GPS, operations
path-planning
Dealer discount Asset sale
COGS seek a 50-60% Gross Margin Our revenue stream derives from selling the equipment
Heavy R&D investment
21. 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
22. - Innovation Dealers - Low density
- Ag Dealers - Customer We reduce sell, installs and vegetable
- Ag Service Education operating cost supports growers
providers - Dealer training - Labor reduction customer - High density
(100 to 1) vegetable
- Research labs - Reduced risk of Co. trains growers
contamination dealers, supports - Thinning
- Mitigate labor dealers operations
Engineers on availability - Ag Dealers
- Conventional
Machine Vision concerns - Ag Service
vegetables
Two problems: providers
- Identification
- Elimination
Dealer discount Asset sale
COGS seek a 50-60% Gross Margin Our revenue stream derives from selling the
Heavy R&D investment equipment
29. State of the Art in Weeding Technology for Organic Crops
30. Pre-Test
Large
Growers
Us Dealer
Industrial
Growers
Hypothesis Confirmed
• Growers interested in own
Industrial equipment
Growers • Industrial (10,000s of acres)
• Large (1,000s of acres)
Post-Test • Willing to pay $100k for one
Large
unit
Growers
Us Dealer
• Smaller growers (100s of acres)
Service
usually subcontract the labor services
Providers or rent equipment
Equipment • All purchases through local dealers
Rental • Customer service is essential
31. Example: Bolthouse Farms – Large Industrial Carrot Producer – 8K acres/yr
End User • Equipment Operator
Influencer • Local Farm Mgr
• Cliff Kirkpatrick, visited
Recommender • Director, Ag Equipment Operator
Technology
• Justin Grove, interviewed
Decision
Maker • VP, Growing
Operations
Approver • CFO, CEO (Jeff
Dunn)
Cliff, Farm Mgr
32. Example: Ag Services – Service Provider, Salinas Valley
End User • Equipment Operator
Influencer • Grower
Recommender • Service Mgr
Me (left), Marty (middle, Service Mgr), Doug
(right, Grower)
Decision Maker • ?? (service mgr’s boss)
& Approver
33. •Technology •Farming
Design conventions.
•Marketing •Demo, demo, a •Mid/Large
•Demo and nd demo!! Organic Farmers
customer •Cost Reduction •Proximity is •Agricultural
•Research Labs feedback paramount
•Remove labor corporations
•Equipment
Manufacturers
force pains •Weeding Service
•Eliminate bio- Providers
•Distribution
waste hazards
Network
•Service •IP – Patents •Mid/Large
Providers •Video Classifier •Direct Service Conventional
Files •Indirect Service Farmers
•Robust • … then Dealers
Technology
•Direct Service with
equipment rental
Value-Driven •($1,500/d; 120d/yr )
•Low density: $1,500/d
•High density: $6,000/d
34. » 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)
35. •Technology •Farming
Design conventions.
•Marketing •Demo, demo, a •Mid/Large
•Research Labs •Demo and nd demo!! Organic Farmers
•Equipment customer •Cost •Proximity is •Agricultural
Manufacturer feedback Reduction paramount corporations
•Distribution •Remove labor •Weeding Service
Network force pains Providers
•Service •Eliminate bio-
Providers
•IP – Patents
waste hazards •Mid/Large
• 2 or 3 Key
•Video •Direct Service Conventional
Farms
Classifier Files •Indirect Service Farmers
•Robust • … then Dealers
Technology
Value-Driven •Direct Service with
• R&D equipment rental
• Bill of Materials •Low density: $1,500/d
• Training & Service •High density: $6,000/d
• Sales
36. - Innovation Direct - Low density
- Ag Service - Customer We reduce - Provide high vegetable growers
providers Education operating cost quality service at - High density
- Dealer training - Labor reduction competitive price vegetable growers
- Research (100 to 1) - Thinning
Institutes (eg UC - Reduced risk of operations
Davis, Laser contamination - Conventional
Zentrum - Mitigate labor vegetables
Hannover) availability
Engineers on concerns Direct
- 3-4 key farms Machine Vision - Alliance with
Two problems: service providers
- Identification - Eventually sell
- Elimination through dealers
Costs for service provision Service provision
COGS seek a 50-60% Gross Margin - Charge by the acre with modifier according to weed
Heavy R&D investment density
- Eventually move to asset sale
37.
38. Clone Market Existing Market Resegmented New Market
Market
» 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
39. Existing Resegmented New
Customers Known Possibly Known Unknown
Customer Performance Better fit Transformational
Needs improvement
Competitors Many Many if wrong, None
few if right
Risk Lack of branding, sales Market and Evangelism and
and distribution product re- education cycle
ecosystem definition
Examples Google Southwest Groupon
Market Type determines:
Rate of customer adoption
Sales and Marketing strategies
Cash requirements
40. » 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
41. » 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)
42. » 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)
43. » 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