Bob Dorf "The four steps 12 step program"
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Transcript of Bob Dorf "The four steps 12 step program"
So You Want To Be An Entrepreneur?(a 12-step program from authors of the new Four Steps*)
Bob Dorfallegedly retired serial entrepreneur
www.steveblank.com
*Caution: this 12 step program may require alcohol
A bit about me…
• “Unemployable” since age 22, (gasp) 4 decades ago• 6 startups: 2 homeruns, 2 base hits, 2 tax losses
– 1to1: from 3 people/10k revenue to 400 people/$44mm in 8 years– D&S: from 1 person/12k revenue to 150 people/15mm in 20 years
• >20x startup Investor: 10 personally, 10 via fund
• >12x startup advisor including EPNY, BVSN, DCLK, ICGE
• 3 fleece vests: greatest all-time tuition• 2 years with Steve, teaching, consulting, new book
So What Do I Do?
1. Decide what type of entrepreneur2. Do you have what it takes?3. Find an idea of sufficient size4. Craft company hypotheses5. Build the Website Logistics6. Build a “low-fidelity” web site7. Get customers to the site8. Add the backend code to make the site work9. Test the “problem” with customer data10. Test the “solution” by building the “high-fidelity” website11. Ask for money12.Celebrate success!
12 Steps to a Startup
Step 1: What’s A Startup?
Who’s An Entrepreneur?
Startup
Lifestyle Startups Work to Live their Passion
• Serve known customer with known product
• Work for their passion
Small BusinessStartup
Small Business StartupsWork to Feed the Family
• Serve known customer with known product
• Feed the family
Small BusinessStartup
Exit Criteria- Business Model found- Profitable business- Existing team< $500K in revenue
Small Business StartupsWork to Feed the Family
• known customer known product
• Feed the family
Large Non-Profit
Social Startup
Social Entrepreneurship Startups
• Solve pressing social problems• Social Enterprise: Profitable• Social Innovation: New Strategies
ScalableStartup
Large Company
Scalable Startup
Goal is to solve for: unknown customer and
unknown features
Search Execute
Exit Criteria- Business model found- Total Available Market > $500m- Can grow to $100/year
ScalableStartup
$2 to $50M Acquisition
Buyable StartupBorn to Be Big
Goal is to solve for: Internet, Mobile, Gaming Apps
Search Sell
Sell to larger company
What’s A Startup?
A Startup is a temporary organization used to search for a repeatable and
scalable business model
Startup Large CompanyTransition
BuildSearch Execute
Step 2: Do You Have What It Takes?
• Founder?• Early Employee?• Later Stage?
• Resilient• Relentless• Agile• Curious• Passionate• Driven• “Fire in the Belly”
Step 3: Find an Idea of Sufficient Size
• Idea sources:– New technology– Regulatory/legal changes– Customer tastes changes– Unmet customer needs
• Size the opportunity:– Total Available Market – Served Available Market– Target Market
Step 4: Craft Company Hypotheses
• Any company can be described in 9 hypotheses
CUSTOMER SEGMENTS
which customers and users are you serving? which jobs do they really want to get done?
VALUE PROPOSITIONS
what are you offering them? what is that getting done for them? do they care?
CHANNELS
how does each customer segment want to be reached? through which interaction points?
CUSTOMER RELATIONSHIPS
what relationships are you establishing with each segment? personal? automated? acquisitive? retentive?
REVENUE STREAMS
what are customers really willing to pay for? how? are you generating transactional or recurring
revenues?
KEY RESOURCES
which resources underpin your business model? which assets are essential?
23
KEY ACTIVITIES
which activities do you need to perform well in your business model? what is crucial?
KEY PARTNERS
which partners and suppliers leverage your model?
who do you need to rely on?
COST STRUCTURE
what is the resulting cost structure? which key elements drive your costs?
26images by JAM
customer segments
key partners
cost structure
revenue streams
channels
customer relationships
key activities
key resources
value proposition
sketch out your business model
Step 5: Website Logistics
• Get a domain name• Set up Google Apps• For Coders: set up a web host
– Use virtual private servers (VPS)– “Platform As A Service like Heroku, Dotcloud or
Amazon Web Services
Step 6: Build a “Low-Fidelity” Web Site
• Splash Page – value proposition, benefits summary, and a call-to-action to learn
more, answer a short survey, or pre-order
• For Non-coders– Make a quick prototype in PowerPoint or use Unbouce,
Wordpress– For surveys and pre-order forms use Wufoo or Google Forms
• For Coders– Build the User Interface with a wireframe prototyping tool– Create a fake sign up/order form
Step 7: Get Customers to the Site
• Start showing the site to potential customers, testing customer segment and value proposition
• Use Ads, textlinks or Google AdWords, Facebook ads and natural search
• Usse your network to find target customers • For B2B products, use Twitter, Quora, and industry
mailing lists are a good place to find target customers. • Use Mailchimp, Postmark or Google Groups to send out
emails and create groups• Create online surveys with Wufoo or ZoomerangGet
feedback on your Minimum Viable Product (MVP) features and User Interface
Step 8: Build a Complete Solution
• Build a more complete solution (Connect the User Interface to code)
• Connect the UI to a web application framework (– Node.js, Rubyon Rails, Django, SproutCore, jQuery, Symfony,
Sencha, etc.)
Step 9: Test the Customer Problem
Customer Development
The Search for the repeatable and scalable Business Model
Customer Development
There are no facts inside your building
So get the hell out
More startups fail from a lack of customers than from a failure of product development
Customer DevelopmentThe Search For the Business Model
CompanyBuilding
Customer
Discovery
Customer
Validation
Customer Creation
Pivot
• Stop selling, start listening
• Test your hypotheses – problem and solution
• Continuous Discovery
Customer Discovery
CustomerDiscovery
CustomerValidation
CompanyBuilding
CustomerCreation
Pivot
Customer Discovery
Customer Validation
Customer
Discovery
CustomerValidatio
n
Customer Creation
CompanyBuilding
• Repeatable and scalable business model?
• Passionate earlyvangelists?
• Pivot back to Discovery if no customers
Pivot
The Pivot
• The heart of Customer Development
• Iteration without crisis
• Fast, agile and opportunistic
Pivot Cycle Time Matters
• Speed of cycle minimizes cash needs
• Minimum feature set speeds up cycle time
• Near instantaneous customer feedback drives feature set
The Minimum Viable Product (MVP)
• Smallest feature set that gets you the most …
- orders, learning, feedback, failure…
Pivot ExampleRobotic Weeding
Talked 75 Customers in 8 Weeks
Our initial plan
Confidential
20 interviews, 6 site visits…We got OUR Boots dirty
WeedingVisited two farms in Salinas Valley to better understand problem
Interviewed:• Bolthouse Farms, Large Agri-Industry in Bakersfield• White Farms, Large Peanut farmer in Georgia• REFCO Farms, large grower in Salinas Valley• Rincon Farms, large grower in Salinas Valley• Small Organic Corn/Soy grower in Nebraska• Heirloom Organics, small owner/operator, Santa Cruz Mts• Two small organic farmers at farmers market• Ag Services of Salinas, Fertilizer applicator
MowingInterviewed:• Golf: Stanford Golf course • Parks: Stanford Grounds Supervisor, head of maintenance and
lead operator (has crew of 6)• Toro dealer (large mower manufacturer) • User of back-yard mowing system• Maintenance Services for City of Los Altos• Colony Landscaping (Mowing service for stadiums)
Business Plan Autonomous Vehicles for Mowing & Weeding
We reduce operating cost- Labor reduction- Better utilization of assets (eg mow or weed at nights)- Improved performance (less rework, food safety)
Mowing- Owners of public or commercially used green spaces (e.g. golf courses)- Landscaping service provider
Weeding- Farmers with manual weeding operations
Dealers sell, installs and supports customer
Co. trains dealers, supports dealers
- Mowing Dealers- Ag Dealers
- Innovation- Customer Education- Dealer training
Dealer discount COGS seek a 50-60% Gross MarginHeavy R&D investment
- Dealers (Mowing and Ag)- Vehicle OEMs (John Deere, Toro, Jacobsen, etc)
- Research labs
Asset saleOur revenue stream derives from selling the equipment
Engineers on Autonomous vehicles, GPS, path-planning
Found weeding in organic crops is HUGE problem; 50 - 75% of costs
Crews of 100s-1000
Back-breaking task
(Ilegal) labor harder to get
1-5 weedings per year/field
$250-3,500 per acre and increasing
Food contamination risk
Decision to make – mowing vs weeding
Application If ROI is < 1 yr they will
buy
Labor costs significant?
Autonomous would solve
problem?
TAM
Mowing of large fields
Yes.Professionally
run organizations
Yes Yes Adjusted up toxxx
Weeding in Agriculture
Agri Industry: YES!
Large Growers: Yes
Small Growers: No
YES! for organic crops
They are spending $500/ac!
Not necessarily
Key need is weed vs. crop differentiation
TAM increased to $2.6 B (Total
organic)
Target Market (organic
specialty) 162 M/yr
18%/yr growth
Autonomous vehicles WEEDING
We reduce operating cost- Labor reduction (100 to 1)- Reduced risk of contamination- Mitigate labor availability concerns
- Low density vegetable growers- High density vegetable growers- Thinning operations- Conventional vegetables
Dealers sell, installs and supports customer
Co. trains dealers, supports dealers
- Ag Dealers- Ag Service providers
- Innovation- Customer Education- Dealer training
Dealer discount COGS seek a 50-60% Gross MarginHeavy R&D investment
- Ag Dealers- Ag Service providers
- Research labs
Asset saleOur revenue stream derives from selling the equipment
Engineers on Machine VisionTwo problems:- Identification- Elimination
1 Week – 1 CarrotBot
Confidential
CARROTBOT
Machine Vision data collection platform Monochrome & Color
Cameras Laser-line sweep
(depth measurement)
Encoders (position/velocity)
Onboard data acquisition & power
CarrotBot 1.0
The Business Plan Canvas Updated
• Research Labs
• Equipment Manufacturers
• Distribution Network
• Service Providers
• Technology Design
• Marketing• Demo and
customer feedback
• Cost Reduction
• Remove labor force pains
• Eliminate bio-waste hazards
• IP – Patents• Video
Classifier Files
• Robust Technology
• Farming conventions.
• Demo, demo, and demo!!
• Proximity is paramount
• Organic Farmers
• Weeding Service Providers
• Conventional Farmers
• Dealers• Direct Service• Indirect
Service• … then
Dealers• Asset Sale• Direct Service
with equipment rental
• … then Asset Sale
Value-Driven
Visit Highlights
Carrot vs. WeedsDue to small root systems, carrots have no chance against weeds
Visit Highlights
Organic Broccoli, closely cultivated. Weeds close to plants are hand-picked
Visit Highlights
State of the Art in Weeding Technology for Organic Crops
Customer Hypothesis
Us Dealer
Large Growers
Industrial Growers
Us Dealer
Industrial Growers
Large Growers
Service Providers
Equipment Rental
Hypothesis Confirmed• Growers interested in own
equipment • Industrial (10,000s of acres) • Large (1,000s of acres)• Willing to pay $100k for one unit
• Smaller growers (100s of acres) usually subcontract the labor services or rent equipment
• All purchases through local dealers• Customer service is essential
Pre-Test
Post-Test
Customer Map #1 – Industrial Growers
End User
Influencer
Recommender
Decision Maker
Approver
Example: Bolthouse Farms – Large Industrial Carrot Producer – 8K acres/yr
• Equipment Operator
• Director, Ag Technology
• Justin Grove, interviewed
• VP, Growing Operations
• CFO, CEO (Jeff Dunn)
• Local Farm Mgr• Cliff Kirkpatrick, visited
Equipment Operator
Cliff, Farm Mgr
Customer Map #2 – Service Providers
End User
Influencer
Recommender
Decision Maker & Approver
Example: Ag Services – Service Provider, Salinas Valley
• Equipment Operator
• Service Mgr
• ?? (service mgr’s boss)
Me (left), Marty (middle, Service Mgr), Doug (right, Grower)
• Grower
The Business Plan Canvas Updated
• Research Labs
• Equipment Manufacturers
• Distribution Network
• Service Providers
• Technology Design
• Marketing• Demo and
customer feedback
• Cost Reduction
• Remove labor force pains
• Eliminate bio-waste hazards
• IP – Patents• Video
Classifier Files
• Robust Technology
• Farming conventions.
• Demo, demo, and demo!!
• Proximity is paramount
• Mid/Large Organic Farmers
• Agricultural corporations
• Weeding Service Providers
• Mid/Large Conventional Farmers
• Direct Service• Indirect
Service• … then
Dealers
• Direct Service with equipment rental
• ($1,500/d; 120d/yr )• Low density:
$1,500/d• High density:
$6,000/d
Value-Driven
World Ag Expo interviews:the need is real and wide spread
• 10+ interviews at show– Everyone confirmed the need– Robocrop, UK based, crude
competitor sells for $171 K
• Revenue Stream– Mid to small growers prefer a
service– Large growers prefer to buy, but
OK with service until technology is proven
– Charging for labor cost saved is OK, as we provide other benefits (food safety, labor availability)
Confidential
The Business Plan Canvas Updated
• Research Labs
• Equipment Manufacturer
• Distribution Network
• Service Providers
• 2 or 3 Key Farms
• Technology Design
• Marketing• Demo and
customer feedback
• Cost Reduction
• Remove labor force pains
• Eliminate bio-waste hazards
• IP – Patents• Video
Classifier Files
• Robust Technology
• Farming conventions.
• Demo, demo, and demo!!
• Proximity is paramount
• Mid/Large Organic Farmers
• Agricultural corporations
• Weeding Service Providers
• Mid/Large Conventional Farmers
• Direct Service• Indirect
Service• … then
Dealers
• Direct Service with equipment rental
• Low density: $1,500/d
• High density: $6,000/d
Value-Driven• R&D• Bill of Materials• Training &
Service• Sales
Autonomous weeding - Final
We reduce operating cost- Labor reduction (100 to 1)- Reduced risk of contamination- Mitigate labor availability concerns
- Low density vegetable growers- High density vegetable growers- Thinning operations- Conventional vegetables
Direct- Provide high quality service at competitive price
Direct - Alliance with service providers- Eventually sell through dealers
- Innovation- Customer Education- Dealer training
Costs for service provisionCOGS seek a 50-60% Gross MarginHeavy R&D investment
- Ag Service providers
- Research Institutes (eg UC Davis, Laser Zentrum Hannover)
- 3-4 key farms
Service provision- Charge by the acre with modifier according to weed density - Eventually move to asset sale
Engineers on Machine VisionTwo problems:- Identification- Elimination
Step 11: Ask for Money
HINT: YOUR VC PITCH WAS HIDING IN THE LAST 12 SLIDES…DISCOVERY
Step 12: Scale and Celebrate!
Step 13: Repeat
Thanks
now go PIVOT!
www.steveblank.comTONS of free tools, help, ideas
Want more info on upcoming events?
Henrik BerglundChalmers University of Technology
Center for Business [email protected]
www.henrikberglund.com@khberglund
[email protected]@chalmersinnovation.com
www.chalmersinnovation.com
Want to do it Yourself?WinterCamp