session 2 fall 2014

Problem/solution fitLean Canvas &

Value Prop Canvas

2

Your startup is not your product!

A customer buys a solution to a problem

3

Why Lean Canvas

• Business Plan waste of time until later

• The need of a communication tool

• Improves learning in a structured way

• Helps focus on the ”right” stuff

4

Lean Canvas Project Name01-Jan-2014

Iteration #x

Cost Structure

Customer Acquisition costs

Distribution costs

Hosting

People, etc.

Revenue Streams

Revenue Model

Life Time Value

Revenue

Gross Margin

Problem

Top 3 problems

Existing

alternatives

Solution

Top 3 features

MVP

Key MetricsKey activities you

measure

Unique Value

PropositionSingle, clear,

compelling

message that states

why you are

different and worth

paying attention

High-level concept

Unfair

AdvantageCan’t be easily

copied or bought

ChannelsPath to customers

Customer

SegmentsTarget customers

Early adopters

PRODUCT MARKET

6

Lean Canvas Project Name01-Jan-2014

Iteration #x

Cost Structure

Customer Acquisition costs

Distribution costs

Hosting

People, etc.

Revenue Streams

Revenue Model

Life Time Value

Revenue

Gross Margin

Problem

Top 3 problems

Existing

alternatives

Solution

Top 3 features

Key MetricsKey activities you

measure

Unique Value

PropositionSingle, clear,

compelling

message that states

why you are

different and worth

paying attention

High-level concept

Unfair

AdvantageCan’t be easily

copied or bought

ChannelsPath to customers

Customer

SegmentsTarget customers

Early adopters

PRODUCT MARKET

1 12

3

4

5 5

7

6

PROBLEM, SOLUTION, VALUE PROP

8

You really need to understand your customer (and user)

9

Customers and problems

Who is the customer?Multi-sided market?Different from user?

hPp://www.businessmodelalchemist.com/2012/08/achieve-product-market-fit-with-our-brand-new-value-proposi8on-designer.html

Customers and problems- jobs to be done

What functional jobs is your customertrying get done? (e.g. perform orcomplete a specific task, solve a specificproblem…)

What social jobs is your customer tryingto get done? (e.g. trying to look good,gain power or status…)

What emotional jobs is your customertrying get done? (e.g. esthetics, feel good,security…)

“What jobs are the customers you aretargeting trying to get done”

Customers and problems- customer pains

What does your customer find too costly?(e.g. takes a lot of time, costs, effort)

What makes your customer feel bad?(e.g. frustrations, annoyances)

How are current solutions under-performing for your customer?(e.g. lack of features, performance,malfunction)

What negative social consequences doesyour customer encounter or fear?(e.g. loss of face, power, trust, or status)

“What are the costs, nega2ve emo2ons, badsituations etc. that your customer risksexperiencing before, during, and after gettingthe job done.”

Customers and problems- customer gains

Which savings would make your customerhappy? (e.g. in terms of time, money andeffort)

What would make your customer’s job orlife easier? (e.g. flatter learning curve,more services, lower cost of ownership)

What positive social consequences doesyour customer desire? (e.g. makes them

look good, increase in power, status)

What are customers looking for? (e.g.good design, guarantees, features)

What do customers dream about? (e.g.big achievements, big reliefs)

“What are the benefits your customerexpects, desires or would be surprised by.”

Problem

What are you customers’key jobs/pains/gains?

Solution Unique ValueProposition

Key features Single, clear, compellingmessage that states why

MVP you are different andworth buying from

Key Metrics

What metrics aremost criticalto track?

Unfair CustomerAdvantage Segments

That can’t be easily Who are your customers?bought, or imitated?

Who are earlyvangelists?

Channels

How do you reachcustomers?

Cost StructureCustomer Acquisition CostsDistribution CostsHostingPeopleetc.

Fixed/variable

Revenue StreamsRevenue ModelLife Time ValueRevenue/pricingetc.

Unique Value Propositions/Solution

What are your products andservices?

How do they create value forthe customer segments?

Unique Value Propositions/SolutionCan your product/service:

• Produce savings?

• Make your customers feelbetter?

• Put an end to difficulties?

• Wipe out negative socialconsequences?

Unique Value Propositions/SolutionCan your product/service:

• Outperform currentsolutions?

• Produce outcomes that gobeyond their expectations?

• Make your customer’s jobor life easier?

• Create positive socialconsequences?

Examples

• Skype’s value proposition

– Free internet based chat, audio and video calls.

– Cheap calls to mobile and landline phones.

– Additional premium features like group video for personal or business calls,

Examples

• Netflix's value proposition

– A low fixed price and unlimited viewing from itslarge content collection.

– Netflix can be viewed from most devices with an Internet connection.

– Netflix doesn't have any commercial interruptions

Examples

• Instagram

– ”Free”

– Real-time, mobile photo friend-following

– Egocasting

• Shopify

– simple, well-designed shops and setup

– scalable server farms (flexible volume pricing)

– freakish control over external look & feel.

The process - tactics

• Focus on the right stuff at the right time – it’s not necessary to make complete canvases

• Be open – develop many hypothesis (avoid localmaxima)

• No business plan – but you still need the customer and market insight

• Validate or discard – gain knowledge• Document and adjust along the way• Then start building….

21

WORKSHOP

22

Workshop

• Define 3-5 segment -> problem -> solution -> unique value prop’s (if not already)

• Define how you are going to validate that(quantitative and/or qualitative)

• Present for the group (2-3 min) -> get feedback

To think about

• When defined a segment, make it 50% smaller– The biggest issue for all startups is prioritization

• Be extremely specific (you WILL be able to expand)– Adding a lot of ”nice to have” stuff doesn’t make it a ”must

have solution” -> impact on MVP

• Think through the red line: user/customer -> problem -> solution -> unique value prop– Visualize your user/customer and avoid thinking of

”distance segments”

VALIDATION

25

How are you planning to validate?

26

Sources/channels

Landing Page

Buy keywords

Pitch to everyone

Mockup/

demo

Surveys

Sketch

Interviews

28

Lean Canvas

Cost Structure Revenue Streams

Problem

Existing alternatives

Solution

MVP

Key Metrics

Unique Value

Proposition

High-level concept

Unfair Advantage

Channels

Customer

Segments

Early adopters