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ENT526Wisewinter2019week5v2.pptxWelcome to Elevator Pitches, Business Plans & Investor Decks Ent 526 Winter 2019 Week 5
Dr. Sean Wise, BA LLB MBA PhD
TRSM 2-076
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Last Week’s Concepts
21st Century Entrepreneurship
The Lean Startup Methodology
Customer Development
Business Plans
Business Model Canvas
Lean Canvas
Build/Measure/Learn
The Lifecycle of a startup
S curve
Problem Solution Fit
Product Market Fit
Creating a Lean Canvas for: uber, amazon, google search, tinder, etc.
Not yet covered:
Hypothesis Design
Hypothesis Testing
A/B Testing
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#1 Cause behind changes in Entrepreneurship?
#1 Cause behind changes in Entrepreneusnhip?
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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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Keys to 21st Century Entrepreneurship
Get out of the Building
Done today, beats perfect tomorrow
Build Measure Learn
Share, Share, Share
Launch early and iterate often
Customers before Investors
Show Don’t Tell
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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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9 Parts of a Business Model
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Lean Canvas
You need to be able to fill in a Lean Canvas for:
Netflix
Uber http:// www.tomersagi.com/blog/2015/5/8/what-would-ubers-business-model-look
Tinder
Wikipedia
Hypothesis Testing
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Lean Startup Methodology
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Lean Startup Methodology
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Hypothesis Testing
A hypothesis is a way of taking a scientific question and turning it into testable prediction.
A good hypothesis is important because it leads to good experimental design. Good experimental design is important because you need it to properly validate or invalidate what you’re doing.
“What is the simplest thing we could do here to prove our hypothesis?”
The key outcome of an experimental approach is measurable evidence and learning.
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Hypothesis Testing
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Hypothesis Testing
The basic structure is this:
I believe [target market] will not [do this action / use this solution] for [this reason].
A good hypothesis must be:
Written down in advance
Be falsifiable Is there a test after which the hypothesis could turn out to be wrong? If not, it's not a falsifiable hypothesis or in other words: It's not really a hypothesis
Be testable
Be quantifiable
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Hypothesis Testing
Examples:
I believe that East Coast U.S.-based investors will read at least one article per week on NextMontreal because they have a growing interest in the Montreal startup ecosystem.
I believe that people will not want to download their content to have a separate place in case of being audited or canceling an online service.
More people would catch the train if they got an SMS message 15 minutes before they needed to leave.
If we add logos of our existing customers to our landing page, it will convey trust as a key value proposition to Bernie, our customer persona, and he will sign up.
Potential partners will not be willing to fill out a lead sheet when they view a partner page explaining our 3 key value propositions.
Customers are only willing to pay a max price for a hotel based on the time of day they book.
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A/B Testing
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The Startup Lifecycle
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Key Inflection Points
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Customer Discovery
Goal is to Achieve Problem/Solution Fit
Problem/Solution fit means you answer: Does this Problem exist? And can I Solve it?
Customer Validation
Goal is to Achieve Product/Market Fit
Product/Market fit means being in a good market with a product that can satisfy that market
Achieving Product/Market fit requires at least 40% of users saying they would be “very disappointed” without your product.
Customer Creation – Drive Demand
Company Building – Scale the Company
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The S Curve:
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The Startup Life Cycle
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The Startup Life Cycle
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Key Inflection Points
MVP
Problem Solution Fit
Product Market Fit
Scale
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The Startup Life Cycle
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The S Curve:
Product Market Fit Scale now
(LTV > COCA)
Problem Solution Fit
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The Story of Uber
https:// www.youtube.com/watch?v=horKATZh4-8
This Week
Lecture:
The Elevator Pitch
The Executive Summary
Business Plans
Business Plans vs Lean Canvas
Investor Decks
KPIs and Pirate Metrics
Readings:
ENT pg 285-302
The Art of the Pitch, Chapter 3, The Art of the Start, Guy Kawasaki, (BB)
10 magic slides http://www.marsdd.com/mars-library/how-to-create-a-pitch-deck-for-investors/
Investor Decks http://blog.pickcrew.com/the-investor-presentation-we-used-to-raise-2-million/
How to Write a Business Plan, Sahlman, HBS (BB)
The 10/20/30 Rule http://blog.guykawasaki.com/2005/12/the_102030_rule.html
The Executive Summary (BB)
Exercise:
Crafting elevator pitches for Netflix, Google & Wikipedia
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This Week’s Concepts
Business Plan
Business Plans vs Business Canvases vs Lean Canvases
Elevator Pitching
Back of the Napkin Diagram (BoND)
KPIs
Pirate Metrics
Show don’t Tell
UVP
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It is a small investment in time and cost when compared to the time and cost of starting a business.
It forces the entrepreneur to think critically about all aspects of the business venture.
It can later be used as a benchmark to monitor the progress of the business.
“Plans are nothing, but planning is everything” - GEN Dwight D. Eisenhower
You need a business plan
***new slide***
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Many established ventures use business model canvas instead of a business plan. Many startups use a lean startup canvas not a business plan
So why write one?
Helps stakeholders align.
It forces the entrepreneur to think critically about all aspects of the business venture.
It can later be used as a benchmark to monitor the progress of the business.
Not the paper, but the ideas that matter.
“No plan survives first contact with customer” Steve Blank
Wait! No one reads a business plan
***new slide***
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Start business planning when starting to think about a new venture
Organize information into topic areas
Focus on critical aspects of the business model and follow basic/common plan formats
Keep in mind—the business plan is a “living document.” It will continue to evolve as you progress.
Business planning is a continuous process
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How will stakeholders interpret your plan?
A tagline creates a unifying plot line that organizes your thinking
Keep your plan as close to the “general format” as possible
Your plan should flow like a story
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What is your primary reason for starting a business?
What are some personal objectives you have for the business?
Is the Industry growing or declining? How do you know and where will the industry be in 5 years?
What are the past, present and future industry rends?
Have you anticipated technological changes? How will technology affect the business?
In geographic terms, how large is the market area you intend to serve with your product or services?
What percentage of the market share do you hope to obtain in each of the first three years? How are you going to capture it?
Who are you major potential business customers? Where are they located? How often will they buy your product or service?
Do you know the strength and weaknesses or advantages and disadvantages of your competition?
What will be the image if your business?
How much will it cost you to acquire one customer? How much profit will you make from that one customer? How long will that customer remain a customer?
What do readers want to know?
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The 9 parts of the Business Model
The milestones you have hit so far
What you will do with the money, what KPIs will be hit, by when?
Why you? your team?
What is the UVP?
What is the defensible competitive advantage?
Who else is committed?
What stage is the business at? MVP? Product/Market Fit
What do investors really want to know?
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People –Who are the people behind the venture? Can they successfully build a company?
Pain – The bigger the “pain” the company is solving, the better
Product – Is the product or service 10 times better, 10 times faster, 10 times cheaper.
Placement (industry) – Is the cumulative annual growth rate (CAGR) of the industry > 25%
Go to market Plan – Is the plan reasonable, not right
Pitch – Is the pitch clear, confident and concise
Proposal – Is the reward worth the risk
The 7 Ps
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Your plan should cover 8 main areas
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Executive Summary
Operations
Marketing Plan
Team
Develop-ment Plan
Critical Risks
Company/ Product Description
Industry/ Competitor Analysis
Financial Plan
Appendix
Start with your Business Model Canvas
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Elevator Pitch = Customer Pain + Startup Solution
Must be:
Irrefutable – the pain statement should not be subjective
Greed Inducing – should illustrate how an investor can make money
Easily Understandable - simple enough that both an investor and your Grandmother
Succinct – short enough to be said in 3 to 4 sentences or 1 to 2 minutes
http:// www.youtube.com/watch?v=Tq0tan49rmc
The elevator pitch
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One person’s trash is another’s treasure. Our online global garage sale brings together buyers and sellers from around the world through our proprietary trust-based platform.
Not everyone can afford US$1000+ to access information. Our online platform offers encyclopedic knowledge, available on demand, in the cloud, 24/7 and free. We are 100 x larger than the Encyclopedia Britannica and growing exponentially. Our content is updated by thousands of editors daily. We are the world’s largest repository of human knowledge.
Elevator pitch samples
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Unique Value Proposition
UVP is a clear statement that describes the benefit of your offer, how you solve your customer's needs and what distinguishes you from the competition.
value proposition is a clear statement that
explains how your product solves customers’ problems or improves their situation (relevancy),
delivers specific benefits (quantified value),
tells the ideal customer why they should buy from you and not from the competition (unique differentiation).
A key part of your Elevator Pitch
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UVP Sample
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Investor Decks: Keys
10/20/30 Rule of Powerpoint
No more than 10 Slides
No more than 20 minutes
No less than 30 point font
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Investor Decks: 10 magic slides
Problem
Your solution
Business model
Underlying magic/technology
Marketing and sales
Competition
Team
Projections, milestones & traction
Status and timeline
Summary and call to action
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https:// slidebean.com/blog/startups/pitch-deck-examples
One Rule for all Tools?
Use objective numbers not subjective opinion to validate your positions
Always provide 3rd Party evidence
Always focus on KPIs
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Show vs Tell
People love us
vs
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Key Performance Indicators
KPIs are like vital statistics (e.g. Blood pressure) for your venture
KPIs for a growing organization should be as simple and inexpensive to track as possible, while providing information leading to better decision making.
Stratup metrics fall into five groups:
financial, user, acquisition, sales, and marketing.
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AARRRrrrrrrr
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Pirate Metrics
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Other Key Performance Indicators
Customer Acquisition Costs (CAC) – COCA, equal to your sales and marketing expenses divided by the # of customers
Customer Retention - % of new customers that stay
Life Time Value (LTV) – ARPU, how much one customer is worth to your company.
Product Metabolism - how quickly your team makes decisions and rolls out updates to your products
Viral Coefficient - measures your initial customers and the number of invites they send out
Revenue - $$$
Conversion Rate - activation rate, a measure of the # of visitors who become customers
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