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FELLOWS CLASS #3 DECEMBER 4TH, 2014

• LAST WEEK’S READING / VIDEO • HOMEWORK #2 TIPS: DILIGENCE - PRESENTED DECEMBER 12TH • PRODUCT / MARKETING LECTURE • REAL WORLD PERSPECTIVE: JOSH BOWEN, CROWDTWIST • QUESTIONS

IN TODAY’S CLASS...2

HOMEWORK #2: DILIGENCE3

TELL A STORY:

YOU KNOW HOW WHEN... THE PROBLEM

WOULDN’T IT BE GREAT IF... THE GAP / INEFFICIENCY

WELL, WE CREATED.... THE SOLUTION

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HOMEWORK #2: DILIGENCE

IDENTIFYING THE MAJOR PLAYERS / COMPETITION:

PRODUCT & MARKETING5

“A STARTUP IS A TEMPORARY ORGANIZATION IN SEARCH OF A SCALABLE, REPEATABLE, PROFITABLE

BUSINESS MODEL”-­‐  STEVE  BLANK  

SERIAL  ENTREPRENEUR,  FOUR  STEPS  TO  EPIPHANY  

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“A STARTUP IS A HUMAN INSTITUTION DESIGNED TO CREATE A NEW PRODUCT OR SERVICE UNDER

CONDITIONS OF EXTREME UNCERTAINTY”-­‐  ERIC  RIES  

FOUNDER,  THE  LEAN  STARTUP  

PRODUCT & MARKETING

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MARKET / CUSTOMER

“SO OFTEN PEOPLE ARE WORKING HARD AT THE WRONG THING. WORKING ON THE RIGHT THING IS PROBABLY MORE IMPORTANT THAN WORKING HARD”

-­‐  CATERINA  FAKE  FOUNDER,  FLICKR,  PINWHEEL  

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MARKET / CUSTOMER

“BE A USER OF YOUR OWN PRODUCT. MAKE IT BETTER BASED ON YOUR OWN DESIRES. BUT DON’T TRICK

YOURSELF INTO THINKING YOU ARE THE USER”-­‐  EVAN  WILLIAMS  

FOUNDER,  TWITTER,  MEDIUM  

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MARKET / CUSTOMER

YOU’VE DONE SOME RESEARCH, IT’S TIME TO TEST YOUR IDEA:

HIT THE STREETS!

“THERE ARE NO FACTS INSIDE THE BUILDING, SO GET THE HECK OUTSIDE!”

-­‐  STEVE  BLANK  SERIAL  ENTREPRENEUR,  FOUR  STEPS  TO  EPIPHANY  

THE MVP:

PRODUCT10

BUILD

MEASURE

LEARN

PRODUCT 11

PRODUCT12

VALIDATED LEARNING:• FAIL FAST • FAIL CHEAP • ADDRESS KEY RISKS UPFRONT • LET THE DATA TELL A STORY

TEST HYPOTHESES

PRODUCT13

“IF YOU’RE NOT EMBARASSED BY YOUR FIRST LAUNCH, YOU LAUNCHED TOO LATE”

-­‐  REID  HOFFMAN  FOUNDER,  LINKEDIN  

PRODUCT14

THIS WAS NOT BUILT IN A DAY

PRODUCT: MVP15

START WITH THE SIMPLEST POSSIBLE IMPLEMENTATION:• GROUND UP: FINE TUNE BASIC FEATURES • CREATE ACTIONABLE METRICS • DEMONSTRATE CAUSE AND EFFECT • LISTEN AND LEARN FROM CUSTOMERS

BUILDING A MVP16

FROM MVP…

…. TO TODAY

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BUILDING A MVP

FROM MVP…

…. TO TODAY

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BUILDING A MVP

FROM MVP…

…. TO TODAY

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BUILDING A MVP

LEARN FROM METRICS• ITERATE • PIVOT • SPLIT (A/B) TEST • CONTINUOUS DEPLOYMENT

BUILDING A MVP20

KANBAN

LEAN MANUFACTURING

• VISUALIZE WORK • LIMIT WORK IN PROCESS • FOCUS ON FLOW • CONTINUOUS IMPROVEMENT

PRODUCT / METRICS21

STARTUP METRICS ARE OPERATIONAL, NOT FINANCIAL• WEBSITE TRAFFIC (E.G. PAGEVIEWS, UNIQUES, TIME SPENT, ETC.) • USER REGISTRATIONS • USER ACTIVATIONS • DAILY ACTIVE USERS (DAU) • MONTHLY ACTIVE USERS (MAU) • PAYING CUSTOMERS • MONTHLY REOCCURRING REVENUE (MRR) • CHURN • RETENTIONS: 30+, 90+ DAYS • LIFE TIME VALUE (LTV) • REVENUE PER USERS (RPU) • VIRAL COEFFICIENT

PRODUCT METRICS22

LARGE COMPANIES NEED FINANCIAL TOOLS TO MONITOR HOW WELL THEY ARE EXECUTING A KNOWN BUSINESS MODEL....

... AND STARTUPS NEED METRICS TO MONITOR HOW WELL THE SEARCH FOR A BUSINESS MODEL IS GOING. TO ULTIMATELY ANSWER THE BURNING QUESTION:

IS THIS BUSINESS MODEL WORTH SCALING INTO A COMPANY?

TYPES OF BUSINESS MODELS23

STANDARD BUSINESS MODELS:• AD-SUPPORTED (BRAND PARTNERSHIPS) • PAID (SUBSCRIPTION / ONE-TIME) • IN-APP PURCHASES • FREEMIUM • FREE (TEMPORARILY...) • LICENSING

SCALING EARLY WITH BRANDS24

EARLY STAGE COLLABORATION WITH BIG BRANDSPROS: • EARLY PROOF OF CONCEPT (VALIDATION) • BUILD A BETTER MOUSETRAP • POTENTIAL TO DISCOVER NEW USE CASES OR REVENUE STREAMS • BRANDS (SOMETIMES) LOVE FIRST MOVER ADVANTAGE • PRESS OPPORTUNITIES • BARTER PILOT COSTS FOR INCREMENTAL EXPOSURE (E.G. FACEBOOK POSTS, EMAIL

CONS:

• PARTNERSHIPS CAN CAUSE DISTRACTIONS • REQUIRE SIGNIFICANT BANDWIDTH • PILOTS ARE TYPICALLY LOW/NO REVENUE • OFTEN SLOW TO EXECUTE

SCALING EARLY WITH BRANDS25

REAL WORLD PERSPECTIVE26

JOSH BOWEN • CO-FOUNDER AND COO • TECHSTARS NYC GRADUATE • 15 YEARS IN SOFTWARE AND DIGITAL MEDIA • CORNELL UNIVERSITY: ELECTRICAL ENGINEERING

FOUNDER SPOTLIGHT!

• HOMEWORK ASSIGNMENT #2 DUE! • MEETINGS WITH VENTURES TEAM • MARVIN LIAO, PARTNER FROM 500 STARTUPS • CLASS WILL GO UNTIL 130P (OPTIONAL TO STAY LATER)

NEXT WEEK...27