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Startup MBA 2.1 - Business models - prototyping and moat design
Sep 14, 2014
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business model prototyping
& moatshttp://startupmba.foundercentric.com
[email protected] foundercentric.com @foundercentric !Mailing list: http://bit.ly/fc-list
Part I Prototyping,
communication and exploration
Alex Osterwalder’s Business Model Canvas
Value propositions aren’t just lists of features. !
It’s how you create joy or relieve pain.
You sell your value proposition...
Very specific customer segments are easier to think about. !
It’s better to have multiple specific segments than a single generic one.
To a customers segment
Who you reach through some channel
Channel has 2 parts: how they hear about it and how they actually buy it
How do you stop them from forgetting about you next time? !
How do you increase lock-in and retention?
You have an ongoing relationship to create retention and lock-in
The right side of the canvas is customer-facing. !
It’s about reaching & keeping the customer and generating revenue.
That’s how you make money.
Innovation on the left half of the canvas is about managing costs
The left side is how you create the value proposition. That costs you money.
What is the activity so strategically core to your business that you would never outsource it?
To create the value proposition, you do certain Key Activities
Key Resources are things competitors would have to replicate in order to compete. !
It could be your tech, your patents, or even your user-base.
Using your Key Resources
Your company has certain core competencies used to create & deliver the value proposition. !
Everything else can potentially come from a partner.
Anything you don’t do or have yourself, you get from a partner.
There are lots of ways to use the
canvas
Los Angeles Times Magazine, 1992
Question
What is ebay’s business model for collectors?
Sell anything
Sell anything
Indie merchants
Sell anything
Collectors
Indie merchants
Sell anything
CollectorsBuy hard-to-find
products
Indie merchants
Sell anything
CollectorsBuy hard-to-find
products
Indie merchants
% commission
Sell anything
CollectorsBuy hard-to-find
products
Indie merchants
% commission
Ads
Sell anything
CollectorsBuy hard-to-find
products
Indie merchants
% commission
Ads
SEO
Sell anything
CollectorsBuy hard-to-find
products
Indie merchants
% commission
Ads
SEO
Sell anything
CollectorsBuy hard-to-find
products
Indie merchants
% commission
Ads
SEO
The most buyers
Sell anything
CollectorsBuy hard-to-find
products
Indie merchants
% commission
Ads
SEO
The most buyers
Sell anything
CollectorsBuy hard-to-find
products
Indie merchants
% commission
Ads
SEO
The most buyers
The most sellers
Sell anything
CollectorsBuy hard-to-find
products
Indie merchants
% commission
Ads
SEO
The most buyers
The most sellers
Sell anything
CollectorsBuy hard-to-find
products
Indie merchants
% commission
Ads
SEO
The most buyers
The most sellers
The most products
Sell anything
CollectorsBuy hard-to-find
products
Indie merchants
% commission
Ads
SEO
The most buyers
The most sellers
The most products
Acquire users
Sell anything
CollectorsBuy hard-to-find
products
Indie merchants
% commission
Ads
SEO
The most buyers
The most sellers
The most products
Acquire usersAcquire
users
Sell anything
CollectorsBuy hard-to-find
products
Indie merchants
% commission
Ads
SEO
The most buyers
The most sellers
The most products
Acquire usersAcquire
users
Ads
Sell anything
CollectorsBuy hard-to-find
products
Indie merchants
% commission
Ads
SEO
The most buyers
The most sellers
The most products
Acquire usersAcquire
users
Ads
Ratings
What makes ebay’s model so strong?
The Key Resources are difficult to reproduce since they depend on being the biggest
Question
Why has ebay been so resistant to competitors? What makes its model so strong?
Sell anything
CollectorsBuy hard-to-find
products
Indie merchants
% commission
Ads
SEO
The most buyers
The most sellers
The most products
Acquire usersAcquire
users
Ads
Ratings
Ebay’s network effect
Ebay’s Key Resources are all a result of being the biggest, so they always have an edge over any new competitor
Does this capture every detail of ebay’s business?
What about Paypal? Power sellers? Buy-it-now?
Business models are sketches
Sketches aren’t meant to be perfect. They’re a disposable tool for understanding and communication.
Question
Why do Chrome and Android matter so much to Google?
Searchers
Find anything
Searchers
Find anything
Searchers
?
Find anything
Searchers
.000X / search
So who is paying?
Find anything
Searchers
.000X / search
Find anything
Searchers
.000X / search
Advertisers
Find anything
Searchers
.000X / search $ / click
Advertisers
Find anything
Searchers
Advertisers
.000X / search $ / click
Cost-effective
advertising
Find anything
Searchers
Advertisers
.000X / search $ / click
Cost-effective
advertising
Measurable
Find anything
Searchers
Advertisers
.000X / search $ / click
Cost-effective
advertising
Measurable
Any budget
Find anything
Searchers
Advertisers
.000X / search $ / click
Cost-effective
advertising
Measurable
Any budget
Big audience
Find anything
Searchers
Advertisers
.000X / search $ / click
Cost-effective
advertising
Big audience
Find anything
Searchers
Advertisers
.000X / search $ / click
Cost-effective
advertising
Big audience
Those are the basics. But how do they get
and keep users?
Find anything
Searchers
Advertisers
.000X / search $ / click
Cost-effective
advertising
Big audience
Find anything
Searchers
Advertisers
.000X / search $ / click
Cost-effective
advertising
Word of
mouth?Big audience
Find anything
Searchers
Advertisers
.000X / search $ / click
Cost-effective
advertising
Word of
mouth?
Brand?
Big audience
Find anything
Searchers
Advertisers
.000X / search $ / click
Cost-effective
advertising
Word of
mouth?
Brand?
Twitter?
Big audience
Seems weak. When the answer seems suspicious,
keep looking.
When you searched for something today,
why did you use Google?
Find anything
Searchers
Advertisers
.000X / search $ / click
Cost-effective
advertising
Word of
mouth?
Brand?
Twitter?
Big audience
Find anything
Searchers
Advertisers
.000X / search $ / click
Cost-effective
advertising
Word of
mouth?
Brand?
Twitter?
Big audience
Great product?
Find anything
Searchers
Advertisers
.000X / search $ / click
Cost-effective
advertising
Word of
mouth?
Brand?
Twitter?
Big audience
Great product?
No other
options?
Find anything
Searchers
Advertisers
.000X / search $ / click
Cost-effective
advertising
Word of
mouth?
Brand?
Twitter?
Big audience
Great product?
No other
options?
Find anything
Searchers
Advertisers
.000X / search $ / click
Cost-effective
advertising
Word of
mouth?
Brand?
Twitter?
Big audience
Find anything
Searchers
Advertisers
.000X / search $ / click
Cost-effective
advertising
Word of
mouth?
Brand?
Twitter?
Big audience
It’s the default
The default? Where?
Find anything
Searchers
Advertisers
.000X / search $ / click
Cost-effective
advertising
Word of
mouth?
Brand?
Twitter?
Big audience
It’s the default
Find anything
Searchers
Advertisers
.000X / search $ / click
Cost-effective
advertising
Word of
mouth?
Brand?
Twitter?
Big audience
It’s the default
Mozilla’s Firefox
Find anything
Searchers
Advertisers
.000X / search $ / click
Cost-effective
advertising
Word of
mouth?
Brand?
Twitter?
Big audience
It’s the default
Mozilla’s Firefox
Apple’s Safari
Find anything
Searchers
Advertisers
.000X / search $ / click
Cost-effective
advertising
Word of
mouth?
Brand?
Twitter?
Big audience
It’s the default
Mozilla’s Firefox
Apple’s Safari
Find anything
Searchers
Advertisers
.000X / search $ / click
Cost-effective
advertising
Big audience
It’s the default
Mozilla’s Firefox
Apple’s Safari
Browser partnerships
Find anything
Searchers
Advertisers
.000X / search $ / click
Cost-effective
advertising
Big audience
It’s the default
Mozilla’s Firefox
Apple’s Safari
Browser partnerships
$X00 M / year
Find anything
Searchers
Advertisers
.000X / search $ / click
Cost-effective
advertising
Big audience
It’s the default
Mozilla’s Firefox
Apple’s Safari
Browser partnerships
$X00 M / year
Question
Why do Chrome and Android matter so much to Google?
Find anything
Searchers
Advertisers
.000X / search $ / click
Cost-effective
advertising
Big audience
It’s the default
Mozilla’s Firefox
Apple’s Safari
Browser partnerships
$X00 M / year
Find anything
Searchers
Advertisers
.000X / search $ / click
Cost-effective
advertising
Big audience
It’s the default
Mozilla’s Firefox
Apple’s Safari
Browser partnerships
$X00 M / year
Find anything
Searchers
Advertisers
.000X / search $ / click
Cost-effective
advertising
Big audience
It’s the default
Mozilla’s Firefox
Apple’s Safari
Browser partnerships
$X00 M / year
Find anything
Searchers
Advertisers
.000X / search $ / click
Cost-effective
advertising
Big audience
It’s the default
$X00 M / year
Find anything
Searchers
Advertisers
.000X / search $ / click
Cost-effective
advertising
Big audience
It’s the default
$X00 M / year
Find anything
Searchers
Advertisers
.000X / search $ / click
Cost-effective
advertising
Big audience
It’s the default
$X00 M / year
Build a browser
Find anything
Searchers
Advertisers
.000X / search $ / click
Cost-effective
advertising
Big audience
It’s the default
$X00 M / year
Build a browser
35% browser
share
Find anything
Searchers
Advertisers
.000X / search $ / click
Cost-effective
advertising
Big audience
It’s the default
$X00 M / year
Build a browser
35% browser
share
Our own browser
Find anything
Searchers
Advertisers
.000X / search $ / click
Cost-effective
advertising
Big audience
It’s the default
$X00 M / year
Build a browser
35% browser
share
Our own browser
Phone default search
Find anything
Searchers
Advertisers
.000X / search $ / click
Cost-effective
advertising
Big audience
It’s the default
$X00 M / year
Build a browser
35% browser
share
Our own browser
Phone default search
iOS
etc...
The business model holds the answer
If Google didn’t win with Chrome and Android, they would be forced to spend a fortune on partnerships (and might even lose their whole business)
In review:
You sell your value proposition...
To a customers segment
Who you reach through some channel
You have an ongoing relationship to create retention and lock-in
That’s how you make money.
The left side is how you create the value proposition. That costs you money.
To create the value proposition, you do certain Key Activities
Using your Key Resources
Anything you don’t do or have yourself, you get from a partner.
Final business model tips
• Separate colors for each customer segment
Final business model tips
• Separate colors for each customer segment
• Use as few sticky notes as possible
Final business model tips
• Separate colors for each customer segment
• Use as few sticky notes as possible • Focus on quick communication,
not perfect representation
Final business model tips
• Separate colors for each customer segment
• Use as few sticky notes as possible
• Focus on quick communication, not perfect representation
• Explore lots of possibilities
Questions?
Zappos
Question
How did Zappos survive against Amazon and others?
Huge shoe selection U.S. shoe
buyers
Display ads
$ / pair
Returns
Fast & cheap
Logistics & fulfillment
Marketing
MarketingWare-houses
Support staff
Inventory
Re-target
WH staff
Huge shoe selection U.S. shoe
buyers
Display ads
$ / pair
Returns
Fast & cheap
Logistics & fulfillment
Marketing
MarketingWare-houses
Support staff
Inventory
Re-target
WH staff
Huge shoe selection U.S. shoe
buyers
Display ads
$ / pair
Returns
Fast & cheap
Logistics & fulfillment
Marketing
MarketingWare-houses
Support staff
Inventory
Re-target
WH staff
Huge shoe selection U.S. shoe
buyers
Display ads
$ / pair
Returns
Fast & cheap
Logistics & fulfillment
Marketing
MarketingWare-houses
Support staff
Inventory
Re-target
WH staff
Huge shoe selection U.S. shoe
buyers
Display ads
$ / pair
Returns
Fast & cheap
Shoe-focused
logistics & fulfillment
Marketing
MarketingWare-houses
Support staff
Inventory
Re-target
WH staff
Huge shoe selection U.S. shoe
buyers
Display ads
$ / pair
Returns
Fast & cheap
Shoe-focused
logistics & fulfillment
Marketing
MarketingWare-houses
Support staff
Inventory
Re-target
WH staff
Huge shoe selection U.S. shoe
buyers
Display ads
$ / pair
Returns
Fast & cheap
Shoe-focused
logistics & fulfillment
Marketing
Marketing
WH staffSupport
staffInventory
Re-target
Ware-houses
Huge shoe selection U.S. shoe
buyers
Display ads
$ / pair
Returns
Fast & cheap
Shoe-focused
logistics & fulfillment
Marketing
Marketing
Support staff
Inventory
Re-target
Ware-houses
Huge shoe selection U.S. shoe
buyers
Display ads
“Try it on at home” returns
$ / pair
Returns
Fast & cheap
Shoe-focused
logistics & fulfillment
Marketing
Marketing
Support staff
Inventory
Re-target
Ware-houses
Huge shoe selection U.S. shoe
buyers
Display ads
“Try it on at home” returns
$ / pair
Returns
Fast & cheap
Shoe-focused
logistics & fulfillment
Marketing
Marketing
Support staff
Inventory
Re-target
Ware-houses
Huge shoe selection U.S. shoe
buyers
Display ads
Ridiculouscustomer
service
“Try it on at home” returns
$ / pair
Returns
Fast & cheap
Shoe-focused
logistics & fulfillment
Marketing
Marketing
Support staff
Inventory
Re-target
Ware-houses
Huge shoe selection U.S. shoe
buyers
Display ads
Ridiculouscustomer
service
“Try it on at home” returns
$ / pair
Returns
Fast & cheap
Shoe-focused
logistics & fulfillment
Marketing
Marketing
Support staff
Inventory
Re-target
Ware-houses
Huge shoe selection U.S. shoe
buyers
Display ads
Ridiculouscustomer
service
“Try it on at home” returns
$ / pair
Returns
Fast & cheap
Shoe-focused
logistics & fulfillment
Marketing
Marketing
Support staff
Inventory
Re-target
Ware-houses
Love
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