Lecture 1
Business begins with value creation
● Take some inputs, apply a process/work to make them more valuable, exchange them with a customer who values the good/service you’re offering more than the amount of money you’re asking, capture some of that value as profit
● A business model describes how an organization creates, delivers, and captures value
Connection to marketing
● Marketing = “the process of creating, communicating, and delivering value for customers” - American Marketing Association
● Business model = “how an organization creates, delivers, and captures value” - Business Model Generation
● Startup = “the search for a business model” - Steve Blank
Value proposition
● What customer problem are we trying to solve?
● Which customer needs are we addressing?
● What key features of our product or service match the customer’s problem/need?
Customer development process
● Generate hypotheses about each element of your business model
● Design experiments to test your assumptions
● Conduct tests before building your service or product
● Analyze results and iterate
Sources of opportunities
● Marketing prospective:
○ Fulfilling unmet customer needs
● Engineering/product prospective:
○ New combinations of existing technologies
○ Technology shifts
○ Market changes
Assessing potential opportunities
● Probability of success (high/low)
● Size of successful outcome (high/low)
● Upside reward vs. downside risk
Where don’t good ideas come from?
● Building better mousetraps: “just add machine learning”
● Innovation by analogy: “Uber for X”
● Copycat businesses that follow a trend
Market sizing
● What determines a startup’s success? Product, Market, or Team?
● How big is the market/opportunity?
○ Identify a customer and market need
○ Size the market
○ Competitors
○ Growth potential
● Total Available Market (TAM)
○ Total market / size
● Served/Serviceable Available Market (SAM)
○ Your own technology/ services
● Serviceable Obtainable Market (SOM)
○ Which realistic market share can be obtained considering competition, trends, expected demand/forecast, countries, sales/distribution channels and other market influences?
*https://www.preplounge.com/en/bootcamp.php/case-cracking-toolbox/identify-your-case-type/market-sizing
Market type
Here's more information on Market Type. For your market type slide, you should present
1) what type of market you are in (new, existing, cloned, resegmented) and
2) where your customers will come from. For instance, if you are entering an existing market or resegmented market, you will need to take customers from existing companies. If you are entering a new market or a clone market, your customers will come from other markets.Here's an example: when the first electronic scooter company launched, it was a new market. Their customers came from other markets, as people switched from using public transportation or Uber/Lyft to electronic scooters. When this company then expanded from the first city to other cities, it was entering cloned markets.
Now, if you were going to start a scooter company, you would be entering an existing market because there are a number of earlier entrants. Your customers would be people who are customers of existing scooter companies. But if you were going to start a new scooter company with a different business model (for instance, rent the scooter by the month instead of by the ride or selling scooters instead of renting them), you would be resegmenting the market.
Competitive landscape analysis
● Direct competitors - serve the same target market with a similar approach
● Indirect competitors - serve the same target market with a different approach
● Differentiate from competition based on price plus 1 non-price attribute
Your Job: Build a Minimum Viable Product (MVP)
● An MVP is an experiment that turns business model assumptions into facts
在市场不确定的情况下，通过设计实验来快速检验你的产品或方向是否可行。如果你的假设得到了验证，再投入资源大规模进入市场；如果没有通过，那这就是一次快速试错，尽快调整方向。提供MVP，最小化可行产品，是在创业初期以最少的投入只提供最少、最核心的功能。旨在以最低投入快速获取用户反馈（看这个idea是否可行），并根据反馈持续快速迭代，直到产品到达一个相对稳定的阶段。
● Higher quality MVP gives better learning:
● Low quality MVP (Landing Page) - are people interested enough in this product to give me their email?
● Medium quality MVP (Kickstarter or Video) - are people interested enough to pay for this product before it’s delivered?
● High quality MVP (Deliver Value to Customer) - do people care enough to use this product consistently?
Difference between Business model & Assumption
I was wondering what the difference is for the content that should we include in Slide 3 (Your team's business model canvas) vs. Slide 4 (Write down hypotheses for each of the 9 parts)?"
Slide 3 should answer the below questions at a high level (see business model canvas screenshot). For instance, if you're a startup working on the problem of parking, your key partners will likely include the university and possibly also the city of Irvine.Your job in Slide 4 is to identify the most important or riskiest assumptions underlying Slide 3. As you go forward with your project, your job will be to test those assumptions. For example, when Tony Hsieh had the idea for Zappos website, he assumed that people were willing to buy shoes online, without trying them on in person. So he needed to test this assumption. If you're trying to fix the parking problem by building an app, you're assuming that drivers are willing to actually download and use an app.The most common assumptions are:
- Problem (Is this actually a problem?)
- Solution (Is this the right way to solve it?)
- Implementation (Can we actually build it and sell it before our company runs out of money?)
