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ENT526Wisew2020week3.pptxWelcome to Understanding your Business Model Ent 526 Winter 2020
Dr. Sean Wise, BA LLB MBA PhD
TRSM 2-076
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Entrepreneur
Startup
SME
Opportunity
Scalability
The Purple cow
The Timmons Model
Adversity Quotient
Internal Locus of Control
Creative Destruction
Last 2 Weeks
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Definition of entrepreneurship
An entrepreneur is the person who destroys the existing economic order by introducing new products and services, by introducing new methods of production, by creating new forms of organization, or by exploiting new raw materials. Creative Destruction.
Schumpeter
An entrepreneur is the person who perceives an opportunity and creates an organization to pursue it.
Simpler
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The Entrepreneurship Process
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What do all Great Entrepreneurs have in common?
Internal Locus of Control
High Adversity Quotients
Post Facto Success
Actions lead to creative destruction
Found 10x Solutions
Had huge $$$$ exit
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Climbers
Campers
Quitters
The Purple Cow exercise
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Idea Multiplication aka Double Dipping
Build Once.
Sell Twice.
Monetize Three times.
e.g. Lady Gaga
Sells her songs on itunes
Sells concert tickets
Releases a line of clothing
Releases a fragrance
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This Week
Lecture:
What is a Business Model?
Business Model vs Business Plan
Business Model Canvas vs Lean Canvas
Entrepreneurial Strategies: First mover myth; Long Tail theory; SWIPE strategy; Beachheads
Readings:
ENT pg 130-147, Fig 4.2
http://www.businessmodelgeneration.com/canvas/bmc
Exercise:
Crafting a Business Model Canvas for Amazon, Facebook & Netflix
Video:
Business Model Canvas Explained https://www.youtube.com/watch?v=QoAOzMTLP5s
Making a Canvas https://www.youtube.com/watch?v=s-TWYN6F6LU
Home Depot case
Video: The Naked Entrepreneur: John Sleeman
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Today’s Key Concepts
Def’n of Opportunity
Difference between an Idea and an Opportunity
4 Characteristics of an opportunity
Where can you look for great Opportunities
How can you turn an Idea into an Opportunity?
How can you make an Opportunity better?
Lean Startup
Customer Development
Market Testing
Pivots
Idea multiplication
TAM
S curve and the Window of Opportunity
ARPU > COCA
10x Rule
Unique Value Proposition
Defensible Competitive Advantage
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Finding Success
In entrepreneurship, as in any other profession, luck is where preparation and opportunity meet
The crucial ingredients for entrepreneurial success are a superb entrepreneur with a first-rate management team and an excellent market opportunity.
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What’s an Opportunity?
“The very best startup ideas tend to have three things in common: they're something the founders themselves want, that they themselves can build, and that few others realize are worth doing. Microsoft, Apple, Yahoo, Google, and Facebook all began this way.”
Paul Graham
Y Combinator
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4 Key Characteristics of an Opportunity
Timely (the market is ready)
Durable (will last long enough to generate ROI)
Attractive (Huge Profit Potential
Customer Centric (solves a real pain)
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Other Things to Look For
ARPU > COCA
10x Rule
Unique Value Proposition
Defensible Competitive Advantage
Larger and Growing Market (CAGR)
Access to Customers
Access to needed Resources
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Make sure you are Right for the Opportunity
Successful founders are obsessed with the industry, customer and opportunity (would do this even without pay)
Successful founders have access to Early Adopters (those already spending resources (time & money) to solve the unmet market need
Successful founders have unique insight into the industry, customer and opporunity
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Your Opportunity
Your Opportunity
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Access to Customers
10X advantage
Domain Knowledge
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Customer Development
Get out of the Building
Customer Development: finding your customers “in the wild” and understanding how they really use your product. Steve Blank
Customer development is the process of identifying, finding and talking to your customers to validate the assumptions you’ve made about your business.
“At an abstract level, Customer Development is simply about questioning your core business assumptions.” Brant Cooper and Patrick Vlaskovits
“Customer Development is a four-step framework to discover and validate that you have identified the market for your product, built the right product features that solve customers’ needs, tested the correct methods for acquiring and converting customers, and deployed the right resources to scale the business.”
21st Century
Entrepreneurship
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Customer Development
Steve Blank
21st Century
Entrepreneurship
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Customer Development
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What About Timing?
As of 2009
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5 Steps to Opportunity Evalution
Figure 3.14
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The Changing Process
| 20th Century | 21st Century |
| Build in Secret | Go to customers early and often |
| Only focus group in Secret | Share, share, share |
| Only have 1 chance to make a first impression of customers | Name it BETA and let customers shape it |
| Engineering Driven | Customer Driven |
21st Century
Entrepreneurship
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But won’t they steal my idea…
Secret vs Share
Ideas are a dime a dozen; it’s the execution that will set you apart from the rest.
Myth #1: “I Should Save My Startup Idea Until It’s Refined”
You should share your idea with everyone you meet.
By sharing your idea with as many people as possible, you can get feedback early on to prevent wasting time on an idea that won’t sell.
Myth #2: “My Startup Idea Is Too Unique To Be Shared”
Then you either don’t know how to google or your idea is so wacky no one else has
Myth #3: “People will steal My Startup Idea If I Tell Them What It Is”
But they can’t steal your passion, insight and execution
The reality is for those talented enough to build your idea, they are busy enough focusing on things they already care about and want to work on.
your potential competitors are more likely to become partners.
You should embrace real feedback, embrace learning early, embrace building a list of real users and customers for day one. When you do, you’re going to be much more successful, and you’re going to hit the ground running that much faster.
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The Changing Process
21st Century
Entrepreneurship
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Recap
All opportunities start with an idea, but it takes execution to generate wealth
Four key elements of an Opportunity: Durable, Timely, Attractive, Customer-centric
There should be an established and growing market
Entrepreneur should have passion for the idea and know the customer
Reach customer better than the competition can
Four favorable elements: customer, competitors, suppliers and government
BUILD – TEST – LEARN
Customer Development & Lean Startup Methods facilitate releasing early and often in order to engage customers early and often
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Business Models
Business Model vs Business Plan
Business Plan vs Business Model Canvas
Business Model Canvas Explained https:// www.youtube.com/watch?v=QoAOzMTLP5s
Making a Canvas: https ://www.youtube.com/watch?v=obX5yjFWnIM
BMC vs Lean Startup Canvas https ://www.youtube.com/watch?v=s-TWYN6F6L
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What’s a business model?
A business model describes the rationale of how an organization creates, delivers, and captures value, in economic, social, cultural or other contexts.
Business model = revenue model – cost model
The revenue model breaks down all the sources of revenue that your business will generate.
The cost model identifies how you are spending your resources to make money. It includes your cost of goods sold (COGS) and your operating expenses.
Business Model has 9 components
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Create your business model
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Business Model
Cost Model
Cost of Goods Sold
Operating Expenses
Revenue Model
Sources of Revenue
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9 Parts of a Business Model
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Business Model Canvas
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Business Model Canvas: Amazon
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Business Model Canvas: Netflix
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Business Model Canvas
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Testing the Business Model
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Testing the Business Model
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Lean Startup Canvas
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Let’s do one together
Let’s create a Lean Canvas for UBER
Hypothesis Testing
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Key Concepts
Def’n of Opportunity
Difference between an Idea and an Opportunity
4 Characteristics of an opportunity
Where can you look for great Opportunities
How can you turn an Idea into an Opportunity?
How can you make an Opportunity better?
Lean Startup
Customer Development
Market Testing
Pivots
Idea multiplication
TAM
S curve and the Window of Opportunity
Rogers Adoption Curve
ARPU > COCA
10x Rule
Unique Value Proposition
Defensible Competitive Advantage
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