Week 4: Revenue Models, Distribution, and the strategy vs. tactics of revenue definition

1. LEAN
LAUNCHPAD
AT NYU ITP
Class 4 / 12
February 24, 2013
Jen van der Meer | jd1159 at nyu dot edu
Josh Knowles | chasing at spaceship dot com
Rockets Sketches borrowed from Harry Allen Design

2. TODAY:
6:00 – 7:00: Working through Revenue and Distribution Channels
7:00 – 7:15 Break
7:15- 8:30 Teams Present

3. WE ARE HERE
.
2/3
Value Proposition
UX Tools, Frameworks
1/27
Business Models
Customer Development
UX Tools Intro
3/17
Spring Break
2/17
President’s Day
2/10
Customer Segments
Research Tools
3/24
Customer Development
Product Development
3/3
Customer Relationships
Partners,
Product Development
2/24
Revenue Streams
Distribution
Product Definition
4/7
Customer Development
Product Development
3/31
Customer Development
Product Development
3/10
Resources,
Activities, Costs,
Product Development
4/21
Product MVP
4/14
Customer Development
Product Development
4/28
Lessons Learned

5. REVENUE SEEMS SIMPLE
Is revenue = pricing?

6. CUSTOMER DEVELOPMENT
Iteration
Customer
Discovery
Execution
Customer
Validation
Customer
Creation
Company
Building
Revenue: The strategy the company uses to generate cash from
each customer segment
What value are customers willing to pay for?

7. REVENUE GAME – WHAT ARE THE MODELS?
Google
Dropbox
Leapfrog
OpenTable
Foursquare
Hootsuite
Fitbit
Flickr
Facebook
Instagram
Scholastic
WhatsApp
Cherrios
Whole Foods
Amazon
Walmart
Lego
Postmates
Salesforce.com
Netflix
Kickstarter
Organic broccoli farmer

8. REVENUE PATH: WHO IS YOUR CUSTOMER?
Users
Buyers
Influencers
Approvers
Blockers
How the target customer currently purchases goods and services and how much they
currently pay for equivalent products
Their willingness to pay for value versus lowest cost?
How much budget they have for your type of product?

9. TYPES OF REVENUE:
WHAT STRATEGIES WILL YOU TEST?
Selling physical goods
Dynamic pricing
Selling digital products
Advertising
Service per unit
Promoted content
Service for fixed prices
Sponsorships
Sales of service for future use
Analytics
Daily deals/flash sales
Databases
Subscriptions
Brokerage
Usage fees
Transaction enablement
Rental
Affiliate programs
Licensing
Marketplace
Certifications
Freemium –paid w/out advertising
Auctions
Freemium –paid w/out restrcitions
Interest/Mgmt fees
Freemium – paid with additional features

10. REVENUE > PRICING
Iteration
Customer
Discovery
Execution
Customer
Validation
Customer
Creation
Pricing is a tactic – how much are each of your segments
willing to pay?
Company
Building

11. REVENUE > PRICING
Users
Buyers
Influencers
Approvers
Blockers
How the target customer currently purchases goods and services and how much they
currently pay for equivalent products
Their willingness to pay for value versus lowest cost?
How much budget they have for your type of product?

12. CUSTOMER VALIDATION
Iteration
Customer
Discovery




Execution
Customer
Validation
Verify core features
Verify market’s existence
Locate customers
Tests the product’s perceived value
and demand
 Idenfity the economic buyer
 Establish pricing and channel
strategies
 Check out proposed sales cycle
and process
Customer
Creation
Company
Building
ESCAPE VELOCITY

13. 13

14. CHANNELS AND DISTRIBUTION
How does your product get from your company to your
customer?

15. CHANNELS PRE INTERNET
What were the channels before there was the internet?

16. CHANNELS POST DIGITAL
What are the many channels now?

17. CHANNEL / PRODUCT
Channel
Bits/Virtual
Physical
Product
Bits/Virtual
Physical

18. HOW DO YOU WANT TO GET YOUR PRODUCT TO
YOUR CUSTOMER?
Product:
Virtual or Physical
Channel:
Direct or Indirect

19. WHAT CHANNELS WILL YOU TEST?
Direct sales through salesforce
Dealer
Direct sales through web
Distribute to retailer
Direct sales through mobile
Value added resellers
Direct sales through mobile app store
Sell to distributor
OEM
Aggregator
Systems integrator
Other
What is the complexity of your product/service?

20. WHAT CAME BEFORE STEVE AND ERIC
20

21. FOR NEXT WEEK
3/3/14

22. NEXT WEEK PREP:
. Watch Lecture Customer Relationships—take the quiz
Watch Lecture Partners
Read: Business Model Generation 180-225
Talk to 5 or more customers face-to-face, Survey Monkey if relevant. Post
discovery narratives
Presentation:
· Cover slide
· Latest version Business Model Canvas with changes marked
· Updates to Market size (TAM, SAM, Target Market)
· Results of last week’s experiments. What passed, what failed, what did you
learn?
· Proposals for next week’s experiments. What constitutes a pass/fail signal for
each

23. EVENT ! NYU ENTREPRENEURS SPEAKERS SERIES
. Brett Martin
Co-founder & CEO, Sonar
Postmortem to a Venture-backed Startup
Thurs, Feb 27
5pm-7pm
Sonar was a mobile app created to usher in a new wave of “Ambient Social
Networking”. It was downloaded by millions of people, promoted by Apple and
Google, won numerous awards such as runner-up at TechCrunch Disrupt and
Ad:Tech Best Mobile Startup, raised nearly $2,000,000 from prominent angels
and VCs, and was featured on more than 300 publications including the New
York Times, CNN, CNBC, TechCrunch, and TIME. And, yet it failed. Join Brett
for a candid conversation on his lessons learned. RSVP.

24. EVENT ! NYU ENTREPRENEURS FESTIVAL
.
Celebrating Entrepreneurship @ NYU!
New York University hosts the third annual NYU Entrepreneurs Festival on
the weekend of February 28 and March 1 to celebrate the vibrant and
growing startup culture at the University. The event enables startup
founders, investors, and prospective entrepreneurs from the NYU and
NYC entrepreneurial community to share their experiences, exchange
valuable insights, and provide advice on creating new ventures with our
students, faculty, and alumni. Get your tickets here!

25. NEXT: CANVAS REVIEW AND
FEEDBACK

26. APPENDIX

27. ITP TEACHING TEAM
Jen van der Meer, Adjunct Professor at ITP since 2008
ITP courses + workshops: Bodies and Buildings, Products Tell Their
Stories, ITP VC Pitchfest, . Currently: Luminary Labs, Angel Investor,
Health Data Challenges, Judge for startup competitions, + SVA PoD
Josh Knowles, ITP ’07
15+ years as an independent developer/consultant, working with
numerous brands and start-up clients (currently under the aegis of
Frescher-Southern, Ltd.)

28. STUDENT TEAMS
Team
Name
School
Cognitive Toy Box
Lindsey Jones
Stern
Tammy Kwan
Stern
Hsiang Huang
Stern
Rodrigo Derteano
ITP
Maximo Sica
ITP
Ajejandro Puentes
ITP
Alon Chitayat
ITP
Sam Slover
ITP
Shilpan Bhagat
ITP
Max Ma
ITP
Sergio Majluf
ITP
Su Hyun Kim
ITP
Christina Yugai
Stern
Yuliya Parshina Kottas
ITP
Rose Meacham
ITP
Alternative Monuments
NYBL
DiscoverEd
Advanced Expression

29. MENTORS + TEAMS
Tom Igoe @tigoe
ITP, Arduino, Making Things Talk, NYU
ITP Pitchfest
Alternative Monuments
Julie Berkun Fajgenbaum @julieF
Stern Adjunct Professor, Former VP
Amex Open, now startup co-founder
NYBL
Michael Levitz @michael_levitz
ITP grad, R/GA, Lean
DiscoverED
Sarah Krasley @sarahkrasley
Autodesk, Sustainability, Berkeley
Advanced Expression
Chris Milne @greedo1000
IDEO, Toy Lab, Stanford, LEGO
Cognitive Toy Box