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Class 5:
From Idea to
Business
@cwodtke
www.eleganthack.com
THAT IDEO VIDEO
Business
• Dave is alive! Yay!
• Feedback response
• Email vs Canvas
• Review, and Overview
• Q&A
REVIEW
Our Story So Far
WE BEGIN WITH RESEARCH
WE USE OUR HANDS AND
FRAMEWORKS TO UNCOVER INSIGHTS
DISTRIBUTED
COGNITION
Photo: woodleywonderworks
BRAINSTORMING IS BEST DONE
SILENTLY, THEN WORK TOGETHER
TO DETERMINE QUALITY
BRAINSTORMING AGAINST EXISTING
FRAMEWORKS CAN HELP US THINK
BIGGER Photo credit Wiesław Kotecki
VISUAL THINKING WAKES UP
OUR CREATIVITY
PARTICIPATORY ROADMAPS
TO VALIDATE MVP FEATURES
Customer Development
Customer Development
Company
Building
Customer
Discovery
Customer
Validation
Customer
Creation
Steven Gary Blank, Four Steps to the Ephinany
INTRODUCTI
ON TO LEAN
EXPERIENTIAL LEARNING
From Ed Batista http://www.edbatista.com/2007/10/experiential.html
Research and synthesize
Creative a
shared vision
with team
Iterate with prospective market
Finally…
TODAY:
DESIGN OF
BUSINESS
“NEVER WRITE
ON THE
BUSINESS
MODEL
CANVAS,
THAT’S WHY
GOD GAVE US
POST-IT
NOTES”
-ALEX
OSTERWALDER
ACQUISITION
CHANNELS
Adam Nash
Five Sources of Content
1. Organic
2. Email
3. Search
4. Ads
5. Social
Jherin Miller Sketchnote
FREELIST ALL THE ACQUISITION
CHANNELS YOU CAN
Exercise
Relationships
• Personal Assistance
• Dedicated Personal Assistance
• Self-Service
• Automated Service
• Communities
• Co-Creation
• More!
REVENUE STREAMS
• Marketplace Model
• Advertising Model
• Affiliate Model
• Community Model
• Subscription Model
I have always been a woman who arranges things,
for the pleasure–and the profit–it derives.
I have always been a woman who arranges things,
like furniture and daffodils and lives.
Marketplaces bring buyers and sellers together
and facilitate transactions. They can play a role
in business-to-business (B2B), business-to-
consumer (B2C), or consumer-to-consumer
(C2C) markets. Usually a marketplace charges a
fee or commission for each transaction it
enables.
I’ll go where
the buyers are
I want to find
things!
I want the
best price!
Can I trust
this seller?
Users must find products, evaluate seller, and make a purchase
Advertising Model
The web advertising model is an
update of the one we’re familiar
with from broadcast TV. The web
“broadcaster” provides content
and services (like email, IM,
blogs) mixed with advertising
messages. The advertising
model works best when the
volume of viewer traffic is large
or highly specialized.
Users must:
•Notice advertising
•Interact with ad
Preconditions: User must
visit advertising location
Share their demographic
information
Types:
CPM
CPC
CPA
Community Model
The viability of the community
model is based on user loyalty.
Revenue can be based on the sale
of ancillary products and services
or voluntary contributions; or
revenue may be tied to contextual
advertising and subscriptions for
premium services. The Internet is
inherently suited to community
business models and today this is
one of the more fertile areas of
development, as seen in rise of
social networking.
Open Source Red Hat, OpenX
Open Content Wikipedia,
Freebase
Users need to
• Create an identity
• Connect with other users
• Build a reputation
• Create and share
content/work/etc
Users must care
Subscription Model
Users are charged a periodic—daily,
monthly or annual—fee to subscribe
to a service. It is not uncommon for
sites to combine free content with
“premium” (i.e., subscriber- or
member-only) content. Subscription
fees are incurred irrespective of
actual usage rates. Subscription and
advertising models are frequently
combined.
Content Services
Software as a Service
Internet Services Providers
User must:
•Able to evaluate the
offering
• Subscribe and
unsubscribe to offering
•Realize value offered
Combos
Advertising Community
Combos
Advertising Community
Subscription
Combos
Marketplace Community
Affiliate
HOW DO YOU MAKE MONEY?
Exercise
Marketplace Model
Advertising Model
Affiliate Model
Community Model
Subscription Model
PRICING
Pricing
• Part of the business model
– How do we make money? How much?
– Revenue/profit/shipment forecasts
• Supports core value proposition
– “Our product/service saves you $$$$…
– …and we want 15% of the savings.”
• Often an obstacle to buying
– Too complex
– Much too high (sticker shock) or too low
(desperate)
– Free (no reason to trade up)
Designing
pricing
• What’s the natural unit of exchange?
– How do they derive value?
– What does the competition do?
– Can you split off a profitable segment?
• How much of customer value can you
capture?
• Test, trial-close, get your hands dirty
Software
Pricing
Models
1. Time-based access (e.g. unlimited/month)
2. Transaction (stock trade)
3. Metered (seats, CPUs, named users)
4. Hardware (appliances, dongles)
5. Service (virus updates, support)
6. Percentage of incremental revenue/savings
7. Data-driven insights
Pricing
drives
customer
behavior
• What do you want core customers to do?
– No-brainer renewals (small monthly fees)
– Big up-front license (lock up
marketplace)
– Lust for upgrades (cool features are
extra)
– Freemium model (1% upsold into paid
services)
– Install latest version (free updates,
increasing service
– fees)
Storium Pricing
1. Interviews with Kickstarter
backers
2. Synthesis to discover Value
3. Discovered anchors
4. New Model
5. Validated with mockups
Homework
• Build an initial Business Model Canvas
• Create a landing page
• How many emails can you collect?
• Extra-credit: try a pricing exercise
APPENDIX
From Google Vetures Design Sprint http://www.gv.com/lib/the-gv-research-sprint-a-4-day-process-for-answering-important-startup-questions
From Google Vetures Design Sprint http://www.gv.com/lib/the-gv-research-sprint-a-4-day-process-for-answering-important-startup-questions
From Google Vetures Design Sprint http://www.gv.com/lib/the-gv-research-sprint-a-4-day-process-for-answering-important-startup-questions

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