so i've got a big idea...now what (maplewood ideas festival 2017)

@NYUEntrepreneur

So I’ve got a big idea…now what?!Frank RimalovskiExecutive Director, NYU Entrepreneurial InstituteManaging Director, NYU Innovation Venture FundInstructor, NSF Innovation Corps (I-Corps)March 20, 2017

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75% of startups fail to return investors capitalShikhar GhoshHarvard Business School

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So why do so many startups

fail?

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“More startups fail from a lack

of customers than from a

failure of product

development.”

@NYUEntrepreneur

Top 12 Reasons Startups Fail

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Top 12 Reasons Startups Fail

42%#nyuef

cite lackof marketneed

@NYUEntrepreneur7

“Starting a startup is something you can only learn intrinsically by

doing it. What you need to learn is

the needs of your own users.”

@NYUEntrepreneur

Need to do this before you finish designing and/or building your product/service

@NYUEntrepreneur

Bigger Than a Revenue Modelu Who are our initial target customers?

u What do they value/why will they buy?

u How do we get/keep/grow customers?

u What’s our channel strategy/how will we deliver?

u What’s our revenue model/how will we make money?

u What key partnerships do we need to start?

u What are the key skills do we need on our team?

u What are our cost structure/unit economics?

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Evidence-based Entrepreneurship(aka the Lean Startup)

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All I Need to Do is Make the Forecast

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“For everyone of our

failures, we had

spreadsheetsthat looked awesome!”

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“Everyonehas a planuntil they get punched in the face!”

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Planning comes beforethe plan

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“In preparing for battle I have always found that plans are useless, but planning is indispensable.”

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Business Model CanvasThe Business Model Canvas

Revenue Streams

Channels

Customer SegmentsValue PropositionsKey ActivitiesKey Partners

Key Resources

Cost Structure

Customer Relationships

Designed by: Date: Version:Designed for:

designed by: Strategyzer AGThe makers of Business Model Generation and Strategyzer

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What are the most important costs inherent in our business model? Which Key Resources are most expensive? Which Key Activities are most expensive?

is your business moreCost Driven (leanest cost structure, low price value proposition, maximum automation, extensive outsourcing)Value Driven (focused on value creation, premium value proposition)

sample characteristicsFixed Costs (salaries, rents, utilities)Variable costsEconomies of scaleEconomies of scope

Through which Channels do our Customer Segments want to be reached? How are we reaching them now?How are our Channels integrated? Which ones work best?Which ones are most cost-efficient? How are we integrating them with customer routines?

channel phases1. Awareness

How do we raise awareness about our company’s products and services?2. Evaluation

How do we help customers evaluate our organization’s Value Proposition?3. Purchase

How do we allow customers to purchase specific products and services?4. Delivery

How do we deliver a Value Proposition to customers?5. After sales

How do we provide post-purchase customer support?

For what value are our customers really willing to pay?For what do they currently pay? How are they currently paying? How would they prefer to pay? How much does each Revenue Stream contribute to overall revenues?

For whom are we creating value?Who are our most important customers?

Mass MarketNiche MarketSegmentedDiversifiedMulti-sided Platform

What type of relationship does each of our Customer Segments expect us to establish and maintain with them?Which ones have we established? How are they integrated with the rest of our business model?How costly are they?

examplesPersonal assistanceDedicated Personal AssistanceSelf-ServiceAutomated ServicesCommunitiesCo-creation

What Key Activities do our Value Propositions require?Our Distribution Channels? Customer Relationships?Revenue streams?

categories ProductionProblem SolvingPlatform/Network

What Key Resources do our Value Propositions require?Our Distribution Channels? Customer Relationships?Revenue Streams?

types of resourcesPhysicalIntellectual (brand patents, copyrights, data)HumanFinancial

Who are our Key Partners? Who are our key suppliers?Which Key Resources are we acquiring from partners?Which Key Activities do partners perform?

motivations for partnershipsOptimization and economy Reduction of risk and uncertaintyAcquisition of particular resources and activities

What value do we deliver to the customer?Which one of our customer’s problems are we helping to solve? What bundles of products and services are we offering to each Customer Segment?Which customer needs are we satisfying?

characteristicsNewnessPerformanceCustomization“Getting the Job Done”DesignBrand/StatusPriceCost ReductionRisk ReductionAccessibilityConvenience/Usability

typesAsset saleUsage feeSubscription FeesLending/Renting/LeasingLicensingBrokerage feesAdvertising

fixed pricingList PriceProduct feature dependentCustomer segment dependentVolume dependent

dynamic pricingNegotiation (bargaining)Yield ManagementReal-time-Market

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So what do we do?

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What’s a Startup?

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A temporary organization designed to search for a repeatable and scalable business model

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A temporary organization designed to searchfor a repeatable and scalable business model

@NYUEntrepreneur

A temporary organization designed to search for a repeatable and scalable business model

@NYUEntrepreneur

What is a Business Model?

How a company creates value for itself

while delivering products or services for

customers

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The Business Model Canvas

Revenue Streams

Channels


Key Resources

Cost Structure





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More than half of your assumptions are wrong!

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Customer DevelopmentHow you search for the business model

Test assumptions about customer needs/problem & develop MVPs

Seek validationthat people are interested in your product/ solution

Begins to builddemand & improve efficiency of customer acquisition

Drive growth aggressively & execute business model

@NYUEntrepreneur

“You can’t just ask customers

what they want and then try to give that

to them.”

@NYUEntrepreneur

“New ideas come from watchingsomething, talk(ing) to people,experimenting,asking questions and getting out of the office!”

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“Great founders

never put anyone

between themselves

and their users.”

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Revenue Streams

Channels


Key Resources

Cost Structure





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Value PropositionWhat Problem Are You Solving?

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Value Proposition

u describes the benefits customers can expect from a bundle of products and services

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Customer SegmentWho Cares?

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Customer Profile

u Who are they and why would they buy?

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Problem-Solution Fit

Fit

@NYUEntrepreneurhttp://bit.ly/2ncE5IS

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Value PropositionWhat Problem Are You Solving?

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Key Questions for Value Prop

u Problem Statement: What is the problem?

u Technology/Market Insight: Why is the problem so hard to solve today?

u Product: How do you solve it today?

u Competition: Who is delivering that solution?

u Utility: What level of improvement in efficacy/speed/cost/etc. is needed?

u Market Size: How big is this problem?

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Customer SegmentWho Cares?

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Define Customer Archetype

u Who are they?o Position / title / age / sex / role

u How/where do they buy?o Discretionary budget (name of

budget and amount)

u What matters to them?o What motivates them?

u Who influences them?o What do they read/who do they

listen to?

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put yourself in the customers’ shoes

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What is your potential customer trying to get done?

Jobs to be Done

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@NYUEntrepreneur

…they want a quarter-inch hole!"

“People don't want to buy a quarter-inch drill…

SOLUTION(WHAT)

JOB(WHY)

InnosightLLC

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“Make me efficient at my work”

FUNCTIONAL

“Convey my professional status”

SOCIAL

“Make me confident that I can get the job

done”

EMOTIONAL

“Help me perform likea professional”

JOB

• Valueà demonstrate my ability to recognize value

• Prestigeà show others that I focus on quality starting with my equipment

• Confidenceà ensure me that I can count on my equipment

• Versatilityà give me the ability to work in different environments

• Powerà give me the ability to cut through thick/dense material

• Speedà help me get the project done quickly

InnosightLLC

@NYUEntrepreneur

Guess the product from the job

I want to feel confident when having a

close conversation

I want my mouth to feel refreshed

I want to kill the germs that cause bad breath

I want to show that I have the latest gadget

I want to be able to get information easily

when on the go

I want to kill small snippets of time

productively

I want feel ‘in-the-know’ about things

happening in my social circle

I want an efficient way to share my pictures

with all my friends and family

I want a way to reconnect with friends I

haven’t talked to in a while

I want to feel like I’m buying the best for my

family

I want to be socially conscious

I want access to high-quality grocery products

I want the convenience of shopping online

I want to be able to decide how much I will

pay for a product

I want an easy way to sell things I no longer

need

InnosightLLC

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Who’s the Customer?

User

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User EconomicBuyer

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User Influencer Recommender DecisionMaker

SaboteurEconomicBuyer

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“Customer”Ecosystem of people you need to understand, satisfy and appeal to in order to get them to buy your product

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Technology Lifecycle Adoption Curve

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@NYUEntrepreneur

Who wants…uA combined phone, internet

browsing & mail device withoNo copy & pasteoNo physical keyboardoOnly 2G data speedsoNo corporate emailoNo 3rd party appsoOnly works on one carrier

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Look familiar?

0

20

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Year 1 (2007-08)

Year 2 (2008-09)

Year 3 (2009-10)

Year 4 (2010-11)

Year 5 (2011-12)

Year 6 (2012-13)

Year 7 (2013-14)

Uni

t Sa

les

(mill

ions

)

Apple iPhone Sales Since Introduction

Enthusiasts

Visionaries

Pragmatists

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What’s your point?I have two!

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1. As a startup, you are not capable of serving the mainstream marketWith your half-baked product, small staff & non-existent sales & market budget

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2. There is no point in building the features you will need when you have a million usersOptimize your product for the immediate stage of growth

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“The key to success I know not, buttrying to please everyone, the key to failure is.”

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Product / Solution Fit?

I’ve figured out who I’m selling to and what pain point I’m solving!

I’m ready to start building and selling… Right?!

@NYUEntrepreneur

? ✔ ✔?

?

?

?? ?

Not so fast!

You can’t have a valid business until you test

both sides of the canvas!

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Customer RelationshipsHow do you Get, Keep and Grow Customers?

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ChannelsHow does your product get to customers?

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Revenue StreamsHow do you make money?

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Key ActivitiesWhat are the most important things your

business needs to be good at?

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Key ResourcesWhat are your most important assets?

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Key PartnersWho are your partners and suppliers?

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Cost StructureWhat are the key costs and expenses?

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Revenue Streams

Channels


Key Resources

Cost Structure





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9+ Guesses!

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@NYUEntrepreneur

Customer DevelopmentHow you search for the business model

Test assumptions about customer needs/problem & develop MVPs

Seek validationthat people are interested in your product/ solution

Begins to builddemand & improve efficiency of customer acquisition

Drive growth aggressively & execute business model

@NYUEntrepreneur

Customer DiscoveryuApply the scientific method to

business model development

Modify hypothesis

Observe phenomena

Formulate hypothesis

Test hypothesis via rigorous experiments

Establish theory

based on repeated

validation of results

PIVOT!

@NYUEntrepreneur

Talk to Humans!u Get out of

the building!

u In person is best

u You must gaininsight into your customer & market

u You are doing pattern recognition… Must have sufficient data points to see andto test all elements of your BMC!

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Who do you want to learn from?

75

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3A. Who Do You Want To Learn From (Inked)

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Who Cares?

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Do not fear picking the wrong market!

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Types of Customers

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Customers are People!

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Finding Interview Subjects

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5A. How Do You Find Your Interview Subjects (Inked)

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Finding Interview Subjectsu At least one degree of separation

u Become a LinkedIn power user

u Make referrals happen

u Get creative…recruiting hacks

u Fish where the fish are…

u …In the wild

u Promise to be brief

u Tell them you’re studying or trying to learn about something!

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Meet People You Don’t Know

u People you know will be nice and tell you what you want to hear

u Those interviews are possibly harmful

u Let others use people you know

u People you don’t know have no relationship to protect…Only they will tell you the truth

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The Ugly Baby!

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Pro Tipsu Practice, practice, practiceu NO email, focus groups or surveysu Don’t start with your dream customeru Being an entrepreneur means being

aggressive & persistentu Leverage your network!u Flatter subjectsu Be transparentu Follow up/stay in touch

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What do you want to learn?

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4D. What Do You Want To Learn

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What do you want to learn?

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Revenue Streams

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Key Resources

Cost Structure





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Don’t Assume You Understand the Problem!

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“(The great entrepreneurs) fall in love with

the problem, not the

solution.”

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Ensuring effective interviews

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6B. How To Ensure An Effective Session (Draft)

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Do not sell!

@NYUEntrepreneur

Do not sell!u No demos! No presentations! No tech talk!

u Get stories, not speculation

u Ask open-ended questions

u Ask how they do their job, about their problems, & how they solve them today

u It’s about them. Not you. Not your product.

u Ask why? Then why? They why again!

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What About IP?

uNever sign an NDA

uNever ask people to sign an NDA

u If you’re describing your idea/tech

in any detail, you’re doing it wrong

uFocus on the what & not the how

@NYUEntrepreneur

“Don’t worry about people

stealing an idea. If it’s

original, you will have to

ram it down their throats.”

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“Don’t worry about people stealing your idea, worry that no one will care.”

@NYUEntrepreneur

Create an Interview Guideu A guide, not a script

u Helps to keep you organized & on point!

u Appear more professional, & ensure you get most important questions early

u Test your Customer Segment & Value Proposition hypotheses first

u List 5-8 questions to test your Value Proposition hypotheses with your initial target Customer Segment(s)

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Focus on actual behaviorNot speculative or abstract feelings

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Your job is not to validate your product…

Your job is not to validate your product…

It’s to validate the problem, who has it and

then how best to solve it?

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Documenting Interviewsu (Assign someone to) take notes

u Write down key a-ha’s as they happen

u Note questions that worked & use them again!

u Take pictures or videos!

u Write up & share key insights with your team ASAP!

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How do you make sense of what you learn?

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7B. How Do You Make Sense Of What You Learn (Draft)

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Gaining Insightu Facts are interesting…Insights are your goal

u Be honest…Don’t be too quick to validate or too slow to disprove your hypothesis

u Don’t just scratch the surface, dive deep

u Find the hidden motivations

u Understand their priorities

u Ask why? And why? Then why again?

u Depth of understanding leads to insight

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What’s an insight?

@NYUEntrepreneur

in•sight |ˈinˌsīt|nounthe capacity to gain an accurate and deep intuitive understanding of a person or thing

@NYUEntrepreneur

in•sight |ˈinˌsīt|nounsomething you’re so excited about you tell strangers on the train

@NYUEntrepreneur111

“It's grueling listening to

customer feedback. And

if it isn't, you're probably doing it wrong."

@NYUEntrepreneur

Required Reading/Viewing

TALKING TO HUMANS

Success starts with understanding your customers

GIFF CONSTABLE

Pre-release edition

with Frank Rimalovskiand illustrations by Tom Fishburne

bit.ly/llpcdvstalkingtohumans.com

bit.ly/htbas-ep245

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Questions?

[email protected]@nyuentrepreneurentrepreneur.nyu.edu16 Washington Place

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so i've got a big idea...now what (maplewood ideas festival 2017)

Small Business & Entrepreneurship