Tools and templates to help develop a business model using Lean Canvas, Business Model Canvas and Lean Start-up concepts

1. Building a Business Model
Dave Angelow
April 2014

2. About Me
• Investor, Mentor, Professor
• Marketing, Operations, Business Modeling
• Contact Info
– dangelow@gmail.com
– Cell 512.633.1500

3. Agenda
• Business Model Journey
• Start with the end in mind – the “Pitch Deck”
• Steps to get to a pitch and a business
• Use of Lean Canvas to start the journey

4. Steps to build a business
1
3
2
4
Iterative approach
• Utilize “lean”
techniques
• Start with a hypothesis
….
• Validate problem,
solution, pricing with
minimum investment
• Start-ups focus on
finding a business
model (Companies focus on scale
and optimization)

5. Slide Content Comments
Title Include your organization’s name, your name and title, and contact information. The audience can read the slide—cut to the chase and summarize what you do (e.g., we sell
software, we protect the environment).
Problem Describe the pain that you’re alleviating. The goal is to get everyone nodding and buying in. Provide context for the problem you’re solving; don’t assume everyone understands the
market/business
Solution Explain how you alleviate this pain and the meaning that you make. Ensure that the audience clearly understands what you
sell and your value proposition.
Provide just the gist of how you fix the pain.
Not an in-depth technical explanation.
Business
Model
Explain how you make money—who pays you, your channels of distribution and your gross margins. Describe the sources of revenue, the product/service and channels that generate income. Describe
major drivers of costs and the margins you’re targeting
Underlying
Magic
Describe the technology, secret sauce or magic behind your product or service. Aim for less text and more diagrams, schematics and flowcharts on this slide.
Marketing
and Sales
Explain how you will reach your customer and your marketing leverage points. Convince the audience that you have an effective go-to-market strategy that will not break the
bank.
Competition Provide a complete view of the competitive landscape. Most every business has competition – The “Do nothing” alternative
is competition
Never dismiss your competition. Everyone—customers, investors and employees—wants to hear
why you’re good, not why the competition is bad.
Management
Team
Describe the key players on your management team, board of directors and board of advisors, as well as your major
investors.
Investors are often as interested in the team as the solution itself – “We bet on the Jockey”
Financial
Projections
and Key
Metrics
Provide a three-year forecast containing not only dollars but also key metrics, such as number of customers and conversion
rate.
Details are not required for the pitch, roll-up revenue and costs are good. However detailed
bottom-up models need to be in place for due-diligence review.
Timeline and
Funding
Needs
Define the major milestones you expect to accomplish, and the timeline for achieving the milestones. Tie the milestones to
use of funds needed to meet the timeline
Build excitement by describing the milestones and how meeting these drives the business. Tell how
funds will be used (why are you asking for $$$)
http://www.marsdd.com/articles/investor-engagement-elements-of-a-pitch-deck/
Building content for a “Pitch Deck”

6. Tonight’s Focus
Customer, Problem, Solution
Lean Canvas
• Focus on
customer
needs (by
segment)
• Start with
defining the
problem
solved
Over
achievement

7. Suggested sequence for completing
the full canvas

8. Techniques for defining the problem
you solve
• 5 Whys
– Decompose the problem by asking “why”
• What is the job the customer is hiring you to do?
– People pay to have problems solved, the question is
what problem do you solve?
– How do you make life better than “status quo” ?
• Fishbone Diagrams (a bit esoteric)

9. Thinking like a Customer
What’s in their head…….

10. Looking ahead we’ll extend the canvas
to create financial models
Revenue
streams from
problems
solved
Costs incurred
in delivering
solutions

11. Next Steps
• Start working the lean canvas
• Homework for the coming month
– Share, test, refine, validate with customers and
prospects
– Iterate (pivot) based on feedback
• Start thinking about major categories of costs
and revenues

12. Slide Content Comments
Title Include your organization’s name, your name and title, and contact
information.
The audience can read the slide—cut to the chase and
summarize what you do (e.g., we sell software, we
protect the environment).
Problem Describe the pain that you’re alleviating. The goal is to get everyone
nodding and buying in.
Provide context for the problem you’re solving; don’t
assume everyone understands the market/business
Solution Explain how you alleviate this pain and the meaning that you make.
Ensure that the audience clearly understands what you sell and
your value proposition.
Provide just the gist of how you fix the pain.
Not an in-depth technical explanation.
Business Model Explain how you make money—who pays you, your channels of
distribution and your gross margins.
Describe the sources of revenue, the product/service
and channels that generate income. Describe major
drivers of costs and the margins you’re targeting
Underlying
Magic
Describe the technology, secret sauce or magic behind your product
or service.
Aim for less text and more diagrams, schematics and
flowcharts on this slide.
Marketing and
Sales
Explain how you will reach your customer and your marketing
leverage points.
Convince the audience that you have an effective go-
to-market strategy that will not break the bank.
Competition Provide a complete view of the competitive landscape. Most every
business has competition – The “Do nothing” alternative is
competition
Never dismiss your competition. Everyone—
customers, investors and employees—wants to hear
why you’re good, not why the competition is bad.
Management
Team
Describe the key players on your management team, board of
directors and board of advisors, as well as your major investors.
Investors are often as interested in the team as the
solution itself – “We bet on the Jockey”
Financial
Projections and
Key Metrics
Provide a three-year forecast containing not only dollars but also
key metrics, such as number of customers and conversion rate.
Details are not required for the pitch, roll-up revenue
and costs are good. However detailed bottom-up
models need to be in place for due-diligence review.
Timeline and
Funding
Needs
Define the major milestones you expect to accomplish, and the
timeline for achieving the milestones. Tie the milestones to use of
funds needed to meet the timeline
Build excitement by describing the milestones and
how meeting these drives the business. Tell how
funds will be used (why are you asking for $$$)
http://www.marsdd.com/articles/investor-engagement-elements-of-a-pitch-deck/

13. Resources
• http://customerdevlabs.com/2012/06/05/how-assumptions-made-
an-ass-out-of-my-startup/
• http://leanstack.com/LeanCanvas.pdf
• http://practicetrumpstheory.com/2012/02/why-lean-canvas/
• http://practicetrumpstheory.com/2010/08/businessmodelcanvas/
• https://www.youtube.com/watch?v=7o8uYdUaFR4
• http://bubblecow.co.uk/images/running_lean_7.pdf
– Complete Running Lean Book