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Class5 Business Design

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The right side of the BMC, esp Aquistion, Retention and Revenue

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Class5 Business Design

  1. 1. Class 5: From Idea to Business @cwodtke www.eleganthack.com
  2. 2. THAT IDEO VIDEO
  3. 3. Business • Dave is alive! Yay! • Feedback response • Email vs Canvas • Review, and Overview • Q&A
  4. 4. REVIEW Our Story So Far
  5. 5. WE BEGIN WITH RESEARCH
  6. 6. WE USE OUR HANDS AND FRAMEWORKS TO UNCOVER INSIGHTS
  7. 7. DISTRIBUTED COGNITION Photo: woodleywonderworks
  8. 8. BRAINSTORMING IS BEST DONE SILENTLY, THEN WORK TOGETHER TO DETERMINE QUALITY
  9. 9. BRAINSTORMING AGAINST EXISTING FRAMEWORKS CAN HELP US THINK BIGGER Photo credit Wiesław Kotecki
  10. 10. VISUAL THINKING WAKES UP OUR CREATIVITY
  11. 11. PARTICIPATORY ROADMAPS TO VALIDATE MVP FEATURES
  12. 12. Customer Development Customer Development Company Building Customer Discovery Customer Validation Customer Creation Steven Gary Blank, Four Steps to the Ephinany
  13. 13. INTRODUCTI ON TO LEAN
  14. 14. EXPERIENTIAL LEARNING From Ed Batista http://www.edbatista.com/2007/10/experiential.html
  15. 15. Research and synthesize Creative a shared vision with team Iterate with prospective market Finally…
  16. 16. TODAY: DESIGN OF BUSINESS
  17. 17. “NEVER WRITE ON THE BUSINESS MODEL CANVAS, THAT’S WHY GOD GAVE US POST-IT NOTES” -ALEX OSTERWALDER
  18. 18. ACQUISITION CHANNELS
  19. 19. Adam Nash Five Sources of Content 1. Organic 2. Email 3. Search 4. Ads 5. Social Jherin Miller Sketchnote
  20. 20. FREELIST ALL THE ACQUISITION CHANNELS YOU CAN Exercise
  21. 21. Relationships • Personal Assistance • Dedicated Personal Assistance • Self-Service • Automated Service • Communities • Co-Creation • More!
  22. 22. REVENUE STREAMS
  23. 23. • Marketplace Model • Advertising Model • Affiliate Model • Community Model • Subscription Model
  24. 24. 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.
  25. 25. 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
  26. 26. 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.
  27. 27. Users must: •Notice advertising •Interact with ad Preconditions: User must visit advertising location Share their demographic information Types: CPM CPC CPA
  28. 28. 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
  29. 29. Users need to • Create an identity • Connect with other users • Build a reputation • Create and share content/work/etc Users must care
  30. 30. 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
  31. 31. User must: •Able to evaluate the offering • Subscribe and unsubscribe to offering •Realize value offered
  32. 32. Combos Advertising Community
  33. 33. Combos Advertising Community Subscription
  34. 34. Combos Marketplace Community Affiliate
  35. 35. HOW DO YOU MAKE MONEY? Exercise Marketplace Model Advertising Model Affiliate Model Community Model Subscription Model
  36. 36. PRICING
  37. 37. 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)
  38. 38. 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
  39. 39. 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
  40. 40. 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)
  41. 41. Storium Pricing 1. Interviews with Kickstarter backers 2. Synthesis to discover Value 3. Discovered anchors 4. New Model 5. Validated with mockups
  42. 42. Homework • Build an initial Business Model Canvas • Create a landing page • How many emails can you collect? • Extra-credit: try a pricing exercise
  43. 43. APPENDIX
  44. 44. From Google Vetures Design Sprint http://www.gv.com/lib/the-gv-research-sprint-a-4-day-process-for-answering-important-startup-questions
  45. 45. From Google Vetures Design Sprint http://www.gv.com/lib/the-gv-research-sprint-a-4-day-process-for-answering-important-startup-questions
  46. 46. From Google Vetures Design Sprint http://www.gv.com/lib/the-gv-research-sprint-a-4-day-process-for-answering-important-startup-questions

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