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ENT526WiseWinter2020week4.pptxWelcome to 21st Century Entrepreneurship Ent 526 Winter 2018 Week 4
Dr. Sean Wise, BA LLB MBA PhD
TRSM 2-076
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Last week’s Key Concepts
Def’n of Opportunity
Difference between an Idea and an Opportunity
4 Characteristics of an opportunity
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
ARPU > COCA
10x Rule
Unique Value Proposition
Defensible Competitive Advantage
Missed: Where to find great opportunities?
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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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The Entrepreneurship Process
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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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Your Opportunity
Your Opportunity
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Access to Customers
10X advantage
Domain Knowledge
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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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Customer Development
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.
“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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Opportunity Development
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This Week
Lecture:
Where can you look for great Opportunities
Changes in entrepreneurship
Lean Startup Methodology
The Startup Life Cycle
The S Curve: Problem/Solution fit, Product/Market Fit, Scale
Lean Canvas
Falsifiable Hypotheses
A/B Testing
Readings:
ENT pg 10-21, Fig 4.3 & pg 304-305
The Lean Startup http://steveblank.com/2013/05/06/free-reprints-of-why-the-lean-startup-changes-everything/
Falsifiable Hypotheses: http://www.instigatorblog.com/good-hypotheses/2011/05/05/
Exercise:
Writing hypothesis & how to test them
Video:
Steve Blank: How to Build a Great Company http://www.youtube.com/watch?v=1RTcXwJuCaU
Steve Blank, Evidence-based Entrepreneurship http://www.youtube.com/watch?v=zjvEanpktEo
Into to the Lean Startup https://www.youtube.com/watch?v=jBlrLqsjIDw
Steve Blank, 2 minute lessons, http://steveblank.com/category/2-minute-lessons/
Eric Reis, The Lean Startup http://www.youtube.com/watch?v=txbt7eDdBF8
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Where do you find opportunities?
Unmet market needs of large and growing customer segment can be addressed 10x with new tech, new innovations, new business models.
So what causes unmet market needs?
https ://www.oreilly.com/library/view/startup-opportunities-2nd/9781119378181 /
Where to find great opportunities?
Entrepreneurial activity is the source of innovation in an economy.
But where do the opportunities come from?
Joseph Alois Schumpeter
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But where do the opportunities come from?
Where to find great opportunities?
Internal
The unexpected – the unexpected success, the unexpected failure, the unexpected outside event
The incongruity – between reality as it actually is and reality as it is assumed to be or as it "ought to be"
Innovation based on process need; any inadequacy in a business process that is taken for granted
Changes in industry structure or market structure that catch everyone unawares
External
Demographic changes caused by things like wars, migrations, medical developments
Changes in perception and fashion brought about by changes in the economy
Changes in awareness caused by new knowledge
Generalizing
Technological Change
Demographic Change
Market demand in general and fashions in particular
changes in policy regime and changes in the law
SWIPE, look to other innovations that became big opportunities
Where to find great opportunities?
Product Hunt surfaces the best new products, every day.
It's a place for product-loving enthusiasts to share and geek out about the latest mobile apps, websites, hardware projects, and tech creations.
This Week’s Concepts
21st Century Entrepreneurship
The Lean Startup Methodology
Customer Development
Business Model Canvas
Lean Canvas
Build/Measure/Learn
Hypothesis Design
Hypothesis Testing
A/B Testing
The Startup Life Cycle
The S Curve:
Problem/Solution fit,
Product/Market Fit
Scale
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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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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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Business Model Canvas
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Business Model Canvas
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Lean Startup Canvas
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Lean Canvas Examples
https://leanstack.com/leancanvas
https ://railsware.com/blog/5-lean-canvas-examples/
How you use the Lean Canvas?
How do you know what to put in the boxes?
How do you prove what is in the boxes is true?
What third party arms length DATA (evidence) do you need?
3 Steps to the Lean Startup:
Assumption Experiment Pivot, Punt or Perserve
Build - Measure - Learn
Create your business model
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Business Model
Cost Model
Cost of Goods Sold
Operating Expenses
Revenue Model
Sources of Revenue
Hypothesis Testing
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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
The basic structure is this:
I believe [target market] will [do this action / use this solution] for [this reason].
A good hypothesis must be:
Written down in advance
Be written in the negative
Be testable
Be quantifiable
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Hypothesis Testing
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Hypothesis Testing
Examples:
U.S.-based investors will read NextMontreal on a regular basis because they have a growing interest in the Montreal startup ecosystem.
I believe that people would 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 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
A/B testing (sometimes called split testing) is comparing two versions of a web page to see which one performs better. You compare two web pages by showing the two variants (let's call them A and B) to similar visitors at the same time. The one that gives a better conversion rate, wins!
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A/B Testing
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Lean Startup Methodology
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Lean Startup Methodology
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The Startup Lifecycle
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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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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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Key Inflection Points
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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
Tesla Story
https:// www.youtube.com/watch?v=su96z_Ski9w
This Week’s Concepts
21st Century Entrepreneurship
The Lean Startup Methodology
Customer Development
Business Model Canvas
Lean Canvas
Build/Measure/Learn
Hypothesis Design
Hypothesis Testing
A/B Testing
The Startup Life Cycle
The S Curve:
Problem/Solution fit,
Product/Market Fit
Scale
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