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Designing a Customer-Centric Business Model — Transcript

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0:00[Music]
0:06[Music]
0:08thank you very much for coming everybody
0:10I want to say that the most important
0:11thing we're going to do tonight is to
0:13try to give you a chance to figure out
0:14what your business model is and D just
0:16gave me a perfect intro he said he's not
0:19sure why he's here well most of you
0:20probably aren't why do you need a
0:22business model that's a really really
0:24good question now by the end of this
0:25evening I hope you will answer that for
0:27yourselves now what is a business model
0:30that's what I want to get to this
0:31evening and I'm going to give you the
0:32agenda up front so you have a sense of
0:34it we're going to talk about a few key
0:36Concepts number one of which is how do
0:38you focus on the absolute essence of
0:40what you do that's what we call a call
0:42and then how do you multiply that to
0:44Market in a way that's very efficient
0:46and also get leverage from it in a way
0:49that it is ultimately going to become
0:51sustainable for you so that you can
0:53operate your business for the Long Haul
0:55and you'll learn five initials rsvpd
0:59and by the end of this evening you
1:01should be able to say to yourself okay
1:02if I have an rsvpd model you're great
1:05well how are you going to remember those
1:06initials
1:07when was the last time you went to an uh
1:09invitation to something and you didn't
1:11RSVP
1:12it's never a good thing to do so you
1:14just remember it that way you're going
1:15to be able to figure out a great
1:17business model by just rsvping it great
1:20so
1:21we've already asked this question but I
1:23want you to all write down one thing now
1:26that I've told you that we are going to
1:30Define what's important about a business
1:31model one thing that you think it might
1:33be just write it down for yourself this
1:35is for you not for anybody else just
1:36write down one thing
1:38so is anybody from HBS here by the way
1:42okay lots of HBS students that means I'm
1:45doubly challenged tonight because
1:47there's Harvard students from all over
1:49the campus all the different schools
1:51here tonight and some of them haven't
1:52had the benefit that you've had of going
1:54through business school and learning
1:55some of the fundamentals of why business
1:57models are important so I'm immediately
1:59going to bridge for you guys with the
2:01rest of the Harvard schools so when you
2:03go to HBS for those of you don't
2:05you will learn something from a great
2:07Professor Tom eisenmann and many others
2:09something called the diamond and he
2:11describes the business model in terms of
2:13a customer value proposition a go to
2:15market model a technology technology and
2:18operations model and a cash flow formula
2:21so as we are in a business school you're
2:22probably going well what are those
2:23things so I'm going to make it super
2:25easy for the rest of you one two three
2:27and four in iLab terms tonight we're
2:29going to talk about how you create
2:32deliver make money and do all of this
2:36sustainably
2:37and therefore the MBA students should
2:39walk out of here going okay I know how
2:40to go about building a business model
2:42you guys should all feel like you've
2:43been fully introduced to it and can also
2:45do the same that's my challenge to
2:47myself tonight
2:48great so what is this framework that
2:51we're talking about this thing that can
2:53help you create and deliver value to
2:55your customer and make money and keep
2:57that sustainable it turns out it's a lot
3:00of different pieces and so I'm really
3:02only going to cover three of them
3:04tonight this creating and delivering
3:06will be the bulk of it but making money
3:09we're not going to get to tonight we'll
3:11give you the essence of it but we will
3:13have it in a follow-up class doing it
3:15sustainably we will talk about tonight
3:16but again all of these elements are
3:18covered in startup Secrets classes in
3:20more depth uh going forward so I'm going
3:23to give you a sneak preview of those
3:24those of you are going to be coming to
3:26Future classes we will cover a lot of
3:27these in the startup secret workshops
3:30going forwards so the the particular one
3:32that I get excited about is next
3:34workshop and the reason is it's the one
3:37that covers this customer value prop or
3:40how you create this value
3:41and it's a whole Workshop unto itself
3:44and it is the most fundamental piece of
3:46a startup because if you haven't got the
3:48right value prop in other words if
3:50you're not solving a real meaningful
3:51problem or addressing a great
3:53opportunity there's no point doing
3:55anything else because the number one
3:57reason startups fail is
4:01they're not creating value for anybody
4:04who cares about it it's not a big enough
4:05or meaningful enough opportunity or it's
4:07not a significant enough problem that's
4:09worth solving that's the number one
4:11reason things fail so we're actually
4:13going to tackle that next Workshop but
4:14what I'm going to do is get you settled
4:16in with a really fun way to think about
4:19it regardless of any of this uh of
4:21what's on the board
4:22how many of you think that your
4:24technology or your idea or your service
4:27is really a breakthrough it's disruptive
4:31yep in the back
4:33my name is Maria and I'm building a
4:35digital health and Ed Tech business that
4:38is centrally helping people take charge
4:41of their health
4:43I'll say so Maria thank you first of all
4:45for doing something that's as important
4:47as health addressing Health what is it
4:49that you think is breakthrough about it
4:53um
4:53I think
4:54the
4:57the actual business is targeting
5:02non-consumers of the Health Market as of
5:06currently
5:07as in I'm not targeting what the Health
5:11Care system is targeting I would say
5:13okay very good so you've seen what you
5:16might call a white space where there's
5:18something that's not being addressed and
5:20you think you can fill it by serving
5:21consumers is that right
5:23okay great
5:24so even if your idea was terrible
5:29which it isn't
5:30if it was terrible we would hope tonight
5:33to be able to get you to a place where
5:34the business model you come up with is
5:36itself a breakthrough
5:38and here's the thing that most people
5:39don't really recognize when they think
5:41about business models it can be at least
5:43as impactful if not more impactful than
5:46your technology or your Marketplace
5:49and so what I want you to do is to think
5:51of tonight how can you end up with such
5:53a disruptive business model that people
5:54go wow I need to go work with Maria
5:56because the way she's approaching this
5:59enabling me as a consumer to get access
6:01to the healthcare I want is such a
6:03breakthrough that even if our service
6:05isn't Innovation I would want to deal
6:07with her does that make sense Maria so
6:09that's why business models are really
6:11exciting because they do give you that
6:12potential
6:13and by the end of this evening I
6:15hopefully you will start to think that
6:16way so here's a way to start approaching
6:19it that way so Maria and all the rest of
6:21you
6:22imagine that I gave you a completely new
6:24game tonight
6:25so let's start with one you all know
6:26who's played Monopoly
6:28okay what if I said Monopoly was about
6:31how much money you lose
6:33you'd all go well you're crazy it's all
6:34about how much money I win and the
6:36properties I get that's the idea that we
6:39want to come up with we want to come up
6:40with a game that nobody's ever played
6:42before or even if they have we changed
6:43the rules and so now it's your game your
6:46rules guess who's got the best chance of
6:48winning
6:51you you do if you write the game and the
6:55rules you have the best chance of
6:57winning of anybody
6:58and by the way especially if you change
7:00them in the middle which is what my
7:01brother always used to do to me no no
7:03kidding I really love him it's my
7:05younger brother is a lot younger than me
7:06it's always great but the point is this
7:09is what actually business is about too
7:11people do this all the time they do
7:12change the rules also sometimes the
7:14rules get changed on you but that's not
7:16what you want you want to create the
7:17game you want to cause an innovator's
7:20dilemma if you can the late Clayton
7:22christensen's great book is a wonderful
7:24way to get a handle on this because
7:25that's all what what it's all about and
7:27this business model approach can be as
7:29disruptive as technology
7:31so what's an example of this so I'm sure
7:36none of you pay attention to virus these
7:38days
7:41this is a long time ago so I'm going to
7:43have to go backwards believe it or not
7:45there wasn't even virus software 20
7:47years ago because we didn't have viruses
7:48they didn't exist they first came out
7:51really got prominent actually on the
7:52Macintosh and I happen to be working at
7:54Symantec which was the first antivirus
7:56Solution on the Macintosh and it was a
7:58great business we used to sell package
8:00software believe it or not in boxes
8:02through retailers and people would pay a
8:03lot of money for it that's how old I am
8:06it's embarrassing but it's true all
8:08right now the piece that's not
8:10embarrassing is that we figured out a
8:12really disruptive business model that
8:14changed the game completely
8:15and actually when Norton Antivirus for
8:18the PC came out which is we owned Norton
8:20too it wasn't a good product at all in
8:22fact everybody's product was better than
8:24ours that we could tell Dr Solomon and
8:26then McAfee and all these other people
8:28had much better Solutions so this was
8:29pretty embarrassing for us you know the
8:31Press would literally come up to our
8:32stands at exhibitions and go see if you
8:34can detect this virus and the answer
8:35would be Oh shoot no you know so what do
8:39you do you've now got this product
8:40that's not great a Mac product by the
8:42way was very good and we can't even
8:45detect the viruses because we're not
8:46keeping up with them we rewrote the
8:49rules we said we're not going to sell
8:51software and remember this is a long
8:53long time ago so there weren't such
8:55things as SAS models it didn't even
8:56exist as a term there weren't things
8:58like subscriptions things that you've
9:00all got used to like downloading an app
9:01and doing in-app purchases that's
9:03subscription type model that didn't
9:05exist
9:06but what happened was pretty interesting
9:09we literally ended up completely
9:12disrupting that business and the results
9:14were really fascinating
9:16we took out two competitors within a
9:18year they just were gone
9:20and we ended up serving the customer
9:22better because guess what customers
9:24don't want software what do they want to
9:26stop
9:27viruses it's just a protection for them
9:30all they really cared about was the
9:32notion that something somewhere would
9:34just make sure they didn't have to worry
9:35about viruses
9:36and so by selling them that service and
9:39then creating much much more importantly
9:41behind the scenes the subscription model
9:43that said we would pay for the the
9:46people in Ireland it was mostly where we
9:48developed this to sit there and get
9:50ahead of all the signatures of the
9:52viruses before they happen or create
9:53bases to even predict them and by
9:55selling that as a service everybody won
9:58we serve the customers better we started
10:00to be way ahead of the viruses we ended
10:01up creating a basis for them to say okay
10:03I'm paying for this for a reason because
10:04I saw 10 new viruses came out last week
10:07and I didn't get any of them this is
10:09like going to the doctrine being saying
10:10being able to say look I don't know what
10:12the next covet is but give me the shot
10:14in advance that's what our subscription
10:16service did
10:17do you think people would pay for that
10:19hell yes not only do they pay for it but
10:22it actually changed the game totally it
10:24ended up increasing the price of our
10:26products that we were selling by 50 per
10:28seat and then better still we realize
10:30wow why are we selling all these other
10:32things like backup and Norton utilities
10:34and all these other tools that were
10:36really about one thing which was
10:37securing your data we just started
10:39selling a data subscription service that
10:41got us 2.6 times the revenue and profit
10:44within some number of years I can't
10:46remember the exact number but the point
10:47is completely changed the games and it
10:50was all business model and remember
10:51where I started which is we had a worse
10:53product
10:54that's why I wasn't meaning to be
10:56belittling to Maria I'm sure she's got
10:57an excellent product but even if she
10:59didn't just as we didn't you can have a
11:01disruptive business model that can
11:03change the game and set you off on the
11:05right direction so that's why this
11:07evening is important it's one of the
11:09reasons
11:10okay so what are some of these models
11:13you will know these companies I would
11:14imagine so how many of you have used for
11:17example Netflix or Spotify
11:20I use both a bit too much
11:23so what is their model anybody anybody
11:25who raised their hand or anybody else
11:26who didn't what is their model
11:30it's subscription yeah what else is it
11:33it's a what
11:34a library yes so it's got content in it
11:37what else about it
11:39do you pay for it all up front
11:41no that's the subscriptionator of it how
11:44do you get value from it
11:47like when you're watching Netflix what
11:48value are you getting
11:51pleasure yeah it's pure joy but how do
11:53they measure that
11:55from how often you watch yes
11:57um I've already been
12:01with Swatch they pattern basically
12:03watches everything yeah they're going to
12:05say that oh you seem to be enjoying this
12:07movie so much
12:09maybe will you share your um what's it
12:12called login details with before they
12:13change they now
12:15you know
12:16so Abby is smart enough to have raised a
12:19whole bunch of things so first of all
12:20she started talking about for example
12:22are we getting pleasure out of this
12:24and they know that by how often we watch
12:27and that turns translates into Data and
12:30that data helps them you didn't mention
12:31it yet but we'll we'll see it
12:33recommendations right why do you go back
12:35to Netflix because hopefully they
12:36recommend something that you actually
12:37really like so they can also sell that
12:40for ads
12:42and they haven't yet to date
12:44but that changed now if you haven't
12:45already noticed it it changed for a
12:47reason because their stock price
12:49plummeted when they started losing
12:50subscribers and they couldn't compete
12:51with all the other services that had
12:53come out and so they said shoot we need
12:55a great to be able to compete so they
12:57introduced this other aspect of their
12:59business model
13:00so what I'm trying to do here is
13:02illustrate for you you don't even
13:03realize it when you're watching a movie
13:04that actually there's a business model
13:06behind this that keeps Netflix in
13:07business and if there isn't guess what
13:09they're not sustainable so they don't
13:11meet that key criteria which is
13:13ultimately the Outlast their competitors
13:15and be the surviving winner
13:17so you've got to think about this stuff
13:19even though sometimes it's like not
13:21obvious
13:22so now how do I help you guys
13:25well first thing I'm going to get you to
13:26do and this time
13:27I'm going to get you as a group to pick
13:30one person in the group who's working on
13:32a business so it could be yourself for
13:34example and you get everybody around you
13:36and you say Okay I want to know what is
13:39an example of a business model I could
13:41use doesn't mean I have to have to be
13:42the right one and to get you going
13:44is it a process or a product
13:47so if it's a process for example to get
13:49people Healthcare then it's probably
13:50something you'll sell as a service is it
13:53software or is it service so for example
13:56um Clint remind me is that is your
13:58product a software product or is it a
14:01service a better described as a service
14:03okay so can you just describe not
14:06everybody was here last time you were
14:07here what does City bricks do yeah sure
14:09we're trying to give aspiring homeowners
14:12access to investing in their local
14:15housing market while they're saving up
14:16for a down payment okay that sounds very
14:18much like a service to me rather than
14:19something you're going to go sell them
14:20software physically because that's not
14:22what they care about
14:23okay great so content or data so who
14:27thinks they have something that's data
14:28for example
14:30that they're selling
14:31remember Netflix didn't say that they
14:33were selling data oh sorry they were
14:35acquiring data they just did it in the
14:36background yeah go ahead
14:39I'm operating a Marketplace for data so
14:41literally that perfect so your product
14:43is data awesome and then finally how
14:47could you realize this would you do this
14:49with an open uh Source type model or
14:51proprietary freemium or premium
14:53subscription or license we're going to
14:55talk about that later so I'm not going
14:57to say you have to do this now but be
14:59thinking about that as you pick the
15:00first thing so go to the whiteboards
15:02I'll give you you really don't need more
15:04than a couple of minutes just pick one
15:06person first of all and then brainstorm
15:07quickly about what do you think would be
15:09the best starting point at the core of
15:12your business model all right have fun
15:15okay everybody did really really well
15:18just to be clear so I didn't see any
15:20team not get going once we started
15:23letting you quiz each other and so any
15:25one of you want to volunteer otherwise
15:27I'll just pick somebody to talk about
15:29what you did and how you went through
15:31the thinking
15:33great off you come Lisa yeah
15:36yeah grab the board come to the board
15:37and talk about it great
15:40um okay so this is uh my business time
15:45credit I'm nanga don't say the D the
15:48business that I'm building is using
15:50generative AI to translate accounting
15:52tables and into written form like memos
15:56and documents I worked in public
15:58accounting for seven years it's very
15:59boring work that a computer can do now
16:03um so that's the product and it is
16:05obviously software and so we went back
16:08and forth a little bit whether it's data
16:10or content I think we ended up with data
16:11because like the more you use it the
16:14more the ml like learns and like the
16:17products the actual memos and written
16:19reports it end up more improving in
16:22terms of tone
16:24um yeah perfect so let's let's give
16:27first of all a warm round of goes
16:30and you had a great team obviously so
16:32you can sit don't worry so longer
16:34actually has a very clear idea of what
16:36she's doing which is awesome she knows
16:38who she's doing it for she knows what
16:40she's selling them which is potentially
16:43software or data but is that the
16:45business model
16:47what does anybody think
16:51because there's a difference next week
16:53we're going to talk about what you're
16:55doing and that value prop but what's the
16:58business model without you answering how
17:00could we help nonga so she's doing
17:02something terribly important this boring
17:03work that's done in accounting is now
17:05going to be done by generative AI that's
17:07fabulous it's gonna I'm gonna stop
17:09making this up but free up people's time
17:12potentially give them much more accurate
17:13results and all sorts of good things
17:15come from that how should she make a
17:17business model out of that anybody want
17:19to volunteer
17:21Vivian
17:22in my understanding a business model
17:24also includes like an Excel table that
17:26addresses how big the market is how much
17:28people would pay for it how many of them
17:30would pay for it how often
17:32that is an important aspect that's
17:34sizing your Market that's something
17:35we'll talk about in the go to market
17:36session but how's she going to make
17:38money remember what we said we want to
17:40figure out how we create value we
17:42deliver value how we do that on a
17:44sustainable basis Etc
17:46anybody any ideas about what manga
17:48should do in that regard we need an MBA
17:51student to step in here you guys have
17:52studied this
17:53how about yourself
17:56uh for a business model um I guess you
17:58identify me doing a customer segment yep
18:01um as well as uh products like pathway
18:04or uh
18:06okay let's pick that one how should she
18:09sell it through what channel since uh
18:12we're all going to be interested to
18:14figure out how she can get this to the
18:15customer as fast as possible and as
18:16cheaply as possible any ideas and then
18:18we'll allow us yeah go ahead you can go
18:21to accounting firms great that's all I
18:23want to hear so you already
18:27just learned the secret to this class
18:29which is I don't actually teach you
18:30anything all the people in this room are
18:33great peers who you can learn all this
18:35stuff from so you don't need me I really
18:36seriously mean this one of the most
18:38important things you could get out of
18:39the startup Secrets classes is meeting
18:40each other and quizzing each other about
18:42how do you do these things so you two
18:44need to talk and now tell us how you're
18:46thinking about it
18:48um so yes it would be if I would start
18:50with accounting firms and charge a
18:53per user
18:55user it would be price and there would
18:58be like a basic and premium no premium
19:01but in terms of like the Enterprise
19:04tiering
19:06um
19:07yeah that's awesome that's the plan
19:09fabulous not sure why you're in the
19:11class because you're way ahead of it
19:12it's really great honestly that's
19:14exactly what we're trying to do trying
19:16to tease this out for you and separate
19:18things like what your product is versus
19:19how you sell it get it to Market and
19:22indeed how you're going to charge for it
19:23and make money from it so you're in
19:25great shape I'm going to take one more
19:26because I want to make sure that there's
19:27an opportunity to get through the rest
19:28of the material anybody else really
19:30dying to bring those up and also
19:31challenge us to get some value to it add
19:33some value to it yup in the back
19:36all right so yeah the product is coffee
19:38in a tea bag
19:39um this is a product or one from Whole
19:42Foods if anybody is interested in trying
19:43it and uh that's a product our business
19:46model is we link we buy the coffee
19:48directory from farmers in Kenya and we
19:50sell it to Coffee buyers directly coffee
19:52buyers get direct traceability to
19:53Farmers farmers get instant payment
19:55they're paid more so that's the business
19:58model and yeah we have all these other
20:00benefits it's locally sourced more money
20:02for Farmers higher quality coffee
20:03organic we are trying to improve the
20:06domestic consumption of coffee in Kenya
20:08because coffee is very expensive in
20:11Kenya so not everybody can afford it so
20:13yeah those are the benefits
20:16where's the round of applause for
20:18zipporah that's brilliant
20:19foreign
20:22so anybody think that we could help
20:24Zapora in any way I felt like she was
20:26doing great but is there anything you
20:27think hey zipporah for what you're doing
20:30is something I would want to call out
20:32that's at the core of your business
20:33model that is what you're doing that's
20:35the essence of it
20:38what
20:40what do you think
20:41anybody want to take a shot at this like
20:43if you were going to sell one thing yeah
20:45go ahead
20:46uh one thing about coffee is really the
20:49extraction process so how are you going
20:51to sell that to Coffee people that are
20:53really into coffee uh when you're
20:55suddenly get into tea bags because to
20:58them this is like the enemy you know tea
20:59versus coffee so how are you combining
21:01the both of them
21:04um you don't have to answer I want to
21:07just make sure so what do you think that
21:08should do in the business model how
21:09should that come out in the business
21:10model
21:12I think she should highlight that like
21:14why this is a premium product compared
21:18to the what we have on the market the
21:21regular coffee the
21:23um
21:24the pots or like for example if you have
21:27a fancy machine then how is this
21:29Superior to that just to answer that
21:32question like why I should use this
21:33product as opposed to using the regular
21:36product on the market so that has to be
21:38highlighted in the business model
21:41sir that's a fabulous example again of
21:44where I would sit down challenge each
21:46other have that discussion and it's very
21:48interesting because your premium pricing
21:49immediately caused people to say so why
21:51and so your business model somehow has
21:53got to be supporting that and also
21:55making sure that you're making money and
21:57being able to improve the supply chain
21:58that you've got but fantastic job thank
22:00you very much all right well done
22:04so like I said the beauty of this group
22:06is that you're all smart enough to be
22:07able to help each other so what I'm
22:09going to do is provide some Frameworks
22:10now so you can have the discussions
22:11amongst each other
22:13so let's get going on that so first of
22:15all if you haven't already taken away
22:17this this key message and you've already
22:19hopefully heard me espouse it and I gave
22:22the example with Symantec and Antivirus
22:23and going subscription all these things
22:26are what adds up to the perfect storm
22:28for a startup you obviously want the
22:30Breakthrough technology you obviously
22:32want to be able to discover some new
22:34market like consumers in healthcare or
22:35for example some different kind of way
22:38to get coffee to people but in the end
22:39if that can become a disruptive business
22:42model that in of itself is so
22:44significant you have the perfect storm
22:46because nothing's better than being in a
22:48place where nobody else is with a
22:50product that nobody else has got and
22:51being able to sell it in a way nobody
22:53else can be that's like wow we're in a
22:56great place so that's what we're trying
22:57to get you to and that's why this is so
22:59important
23:00so
23:01back to what this business model is it's
23:03about how you create deliver and make
23:06money and then do that sustainably let's
23:08get on to the create piece question
23:10number oh please do yeah on the Venn
23:12diagram so I guess I've been looking
23:14mainly at things in like energy and
23:16climate space B2B and in that one I
23:20guess some of the advice I've received
23:22is don't don't don't change all the
23:25circles right if you have a new
23:27technology definitely don't disrupt the
23:29business model or the way you're
23:30delivering it don't disrupt it yeah I
23:33mean if you have a new disruptive
23:35technology I guess like very well said
23:38very well said so lasers bring out an
23:40extremely important point which I want
23:41to make on two levels first of all not
23:43every one of these things is an answer
23:45like there is no right answer to all
23:47these things so in certain circumstances
23:49you're going to have such a disruptive
23:51technology that the last thing you want
23:52to do is change everybody's way of
23:53buying it because already you've got too
23:55much disruption so you don't want to
23:57jump five steps at once for example
23:58because you fall down the stairs
24:00but what's important and what you're
24:02saying is how you judge this is at the
24:05end of the day about what your product
24:07is and who's buying it and how they will
24:09consume it best so remember the title of
24:12the search this session is the
24:13customer-centric business model
24:15so now Lisa how could you find out
24:18whether you are disrupting too much at
24:19once
24:24bingo so you don't need me to answer
24:27this question in fact I'm the worst
24:29person to answer it your most important
24:31guide to anything you do is your
24:34customer
24:35period end of story doesn't matter
24:36whether it's your value prop your
24:37business model or your distribution or
24:39anything else that you get to work on so
24:42don't take anything for granted what I
24:44said at the beginning is what I really
24:45care about this is the second key point
24:46is I'm here to bring you to think about
24:49the right things not to give you answers
24:51so none of these things I'm telling you
24:53are answers that just Frameworks who
24:54don't get the right questions so
24:55zippora's thinking is so good I think
24:58she's way down the track on this but I'm
25:01really glad that we got a challenge too
25:02okay but how's she positioning this now
25:04honestly it's great you're getting
25:06challenged that here because this is
25:07safe but really what you want to do is
25:08go and ask your customers so why would
25:10you pay a premium if I could do all
25:12these things to improve the supply chain
25:13why would this be something you would
25:16engage and pay money for does that make
25:18sense
25:18does that answer your question okay
25:20great
25:21so next class we're going to take apart
25:24the value prop statement and at the
25:27highest level it's what do you do
25:29uniquely well for who that's the
25:31customer value prop on the other side of
25:33this board it is this segment here and
25:36you probably spent some time on that in
25:38the mba's course already but what we'll
25:40do next week is talk about how do you
25:42actually get it down to its absolute
25:44minimum Essence so that you could get in
25:46an elevator for example and Pitch it
25:48so that's next week but
25:51I've got good news for you we're going
25:52to cheat this week we're going to give
25:54you the advantage before we even get
25:56there we're going to tell you what the
25:58most important thing in this is
26:00and it's what I call the call
26:02and we really want to focus on it
26:04tonight so
26:05what is the call well as I've already
26:08told you I was a terrible student so
26:10everything has an acronym
26:12so the acronym for this
26:14is it is your capability of really
26:17exceptional value
26:18it's the thing that when somebody says
26:20they will say because X
26:23and ideally it'll be like one word
26:25like incredible experience so it's the
26:28taste
26:29that would be for example uh if you
26:32would if you're selling a food product
26:33or maybe if it's Netflix it's the
26:36recommendations or you pick it but it
26:39should be something that is so easy for
26:41you to test with customers that whenever
26:43they think of you they say yup that's
26:45what you guys do you're just excellent
26:46at bringing better taste giving better
26:49recommendations finding me the next
26:50piece of music I wouldn't have found on
26:52Spotify whatever it is so exploration or
26:54Discovery would be the word for Spotify
26:56by the way that's why I use Spotify
26:57because I'm too old to find good music
26:59so I just go on Spotify and ask all
27:01right so what do we do to cut to the
27:03court I'm going to give you some
27:04examples and uh challenge you at the
27:06same time anybody want to say what is at
27:08the core of Harvard University
27:13Prestige anybody else have a different
27:15word
27:17why did you come here
27:19education what else
27:22access
27:24oh this is awesome great so great good
27:26news Harvard's got lots of words
27:29and you're all here for a reason so I
27:31don't need to challenge that one anymore
27:32let's go to somewhere a little bit more
27:33interesting how many of you use Reddit
27:37quite a few of you okay I'm gonna pick
27:38somebody who hasn't talked gentleman in
27:40the back with glasses
27:41why do you use Reddit I don't really
27:44like red audience today but I think one
27:46of the things that they do very well
27:49being able to share
27:51so I'm going to challenge you a little
27:52bit you don't like it but do you use it
27:54yeah why one one word why
27:58uh
28:01I think the people and the community
28:03great done okay so I could have given
28:06you a different answer it might have
28:07been not the people it might have been
28:09the actual content itself it doesn't
28:11matter what it is but you got to the
28:12core eventually right it wasn't well I
28:14love the user interface
28:16it actually sucks in my opinion but
28:18that's a whole nother story the point is
28:20that there's something in all these
28:21products or services that is at the core
28:23of why you use it okay anybody use buy
28:26Patagonia stuff I happen to be wearing
28:27my Harvard Patagonia fleece earlier this
28:29evening that was given to me so I can't
28:31answer go ahead
28:33uh I mean they have a promise of a
28:35better Supply
28:37okay great anybody else do it for a
28:39different anybody else wear Patagonia or
28:42buy Patagonia yeah
28:43because of the style great so we've got
28:45style supply chain what else
28:48was actually a culture culture say more
28:51about that I always saw Patagonia as the
28:53specific brand associated with a certain
28:55type of people and community so it's
28:58almost like it embodied a certain
28:59culture whether it was the finance bro
29:02the VC bro but that whole so so it was
29:06kind of like okay so a Patagonia
29:08sleeveless vest okay you get you gotta
29:12get that as part of the look fabulous
29:13okay so listen to all this this great
29:17feedback here uh I will say that that's
29:20one of the things that uh Drew Claire
29:22who helps me with startup secrets she
29:23produces all this great content so thank
29:25you Claire uh she put this in here
29:27because she thought we should have
29:28something that's about social missions
29:30actually a lot of people buy Patagonia
29:32because of the social Mission or the
29:34culture or what it represents because
29:36you can buy the same clothing from all
29:38sorts of different places and sometimes
29:39cheaper I mean you could go to REI and
29:41buy you know five different other kinds
29:43of alternatives to Patagonia but a lot
29:45of people buy it because of the culture
29:46of the social Mission behind it not
29:48because of the supply chain but by the
29:50way you're not wrong everybody has their
29:51own reasons for doing things but you get
29:53into the point here where I hope you
29:54understand anybody not feel that they
29:57understand what I'm talking about when I
29:58say core now your capability of really
30:00exceptional value and please ask me any
30:02questions
30:03yep go ahead Maria
30:05since so far we've seen that the core is
30:08such a a diverse response
30:12um
30:13and you were saying that it's the first
30:15thing that people think about so
30:18um essentially what I'm getting at is
30:20like
30:21if you
30:23um as a Founder think the core of your
30:25business is one thing many of your
30:27customers think will think that the core
30:29of your business isn't something else so
30:31Innovation we just accept that like
30:33diversity because even with our room
30:37here there were so many different cores
30:39so is that okay
30:41and how can we leverage that diversity
30:43of course in the business model
30:45so let's draw this like this
30:48because Maria's asking a great question
30:50let's say your Market's here you're
30:53sitting in the middle of it here and
30:54you've got all these customers telling
30:55you all these different things all over
30:57the place somebody in this room tell me
30:58whether that matters or not and what you
31:00should do about it
31:03anybody wanted to help Maria with it
31:04answering that question does it matter
31:06that you all came up with different
31:07reasons for buying Patagonia
31:10is going to be the protagonist of a
31:12brand it has to have more than one core
31:14because you're appealing to uh Target
31:18yes but we need it to be attracted to
31:22different to different desires yep and
31:26so on purpose you design something that
31:28will appeal to different people in
31:30different levels
31:32okay different desires for different
31:34people
31:36and somebody had their hand up at the
31:38back so I want to capture you my name is
31:40knuckle and I think what she pointed out
31:42to sounds like a
31:45problem where you want to understand
31:47your brand positioning and you want to
31:49convey your idea in the best possible
31:51Manner and you know truly through market
31:54research or knowing your position in the
31:58market in the best possible Manner and
32:00stick to that you know position and
32:04portray that because ultimately as we
32:06saw although initially customers said
32:08something else but at the code there is
32:11one particular reason why they are
32:12buying into it like apple it's not just
32:15the phone it's it's about the feeling
32:17so I guess it doesn't matter what others
32:21might be saying which might be a noise
32:22but it's better that how we understand
32:24where we are positioned okay very very
32:27good now just because of time I'm going
32:29to stop at two View and because next
32:32session we're going to ask answer a lot
32:33of these questions but what I want to
32:35recognize this group
32:37uh is that you are doing a great job of
32:40describing why
32:42business model is not one thing it's not
32:45just your value prop and how you get
32:46positioned to the marketplace it's
32:48sometimes actually how people are going
32:51to find you and buy you and indeed how
32:53you will actually make money from them
32:55and also how you will in process in the
32:58process of supplying for example your
33:00coffee make money yourself it's all
33:02these elements
33:03therefore all I was really trying to get
33:06to was one thing here which is you still
33:08can't monetize everything
33:10like if Netflix decided they wanted to
33:12monetize their recommendations as well
33:14as their data as well as their
33:16advertising as well as their content
33:18that would be a very messy business in
33:21the end you have to pick something that
33:22is at the core of what you're going to
33:23monetize for your business model that's
33:25all this exercise is about but what
33:27you're raising and I do not want to in
33:29any way shape or form stop this great
33:31thinking is all sorts of things that are
33:33about actually your customer value prop
33:35and that's what we're going to talk
33:36about next session now I'll give you a
33:38little guide to this because it's this
33:40Claire and I challenged ourselves
33:42we took too long on it last time we did
33:44the session so we will put this in the
33:46workbook for you it turns out there is a
33:48trick to this though when you're a
33:49startup of one like you're one person
33:52trying to build your business and you
33:53have thousands potentially millions of
33:55customers even and they all pull you in
33:57different directions what happens to
33:59your energy
34:03it's diluted it's get dissipated it's
34:06pulled in all sorts of different
34:06different directions how's your business
34:08going to do
34:10not great you have to pick something and
34:13we call this a minimum viable segment an
34:15mvs
34:16and it's where everybody has the same
34:18need so if everybody has the need for a
34:21faster supply chain for their coffee or
34:22for a culture that is the basis on which
34:25they buy things or with a better means
34:27for a consumer to get access to health
34:28care that single need if it's the same
34:32across a set of customers is where you
34:34want to focus and that we call a minimum
34:35viable segment we will put that
34:37explanation up in the workbook for you
34:39and we'll give you some examples of it
34:41so you can go look at it because it's
34:42honestly the basis on which this
34:44conversation works for both of these
34:46points which is you do need Focus
34:48because otherwise you'll never make any
34:49impetus but your brand or your customer
34:52value proposition might be recognized to
34:55your point with positioning that people
34:57say well apples lots of things to me
34:59but what does it actually stand for when
35:01you buy a product some people will say
35:03privacy other people will say usability
35:05doesn't matter those are brand
35:07attributes they're a different set of
35:08things can you monetize usability yeah
35:10you probably can can you monetize
35:12promise privacy probably well what does
35:13Apple actually monetize
35:15a complete integrated stack from top to
35:18bottom that you can rely on that's what
35:21I would say for example anyway great
35:24conversation let's keep going so I want
35:25to get through the material we have got
35:27through the most important thing which
35:28is an understanding of how you cut to
35:32the core and now I'm going to give you a
35:33chance to see this in action
35:36so great news the company I'm about to
35:39introduce you is called tetracytes was
35:40started right here in the iLab and with
35:44students who are In This Very Room at
35:46one of the iLab one of the startup
35:47secret sessions and they actually came
35:50up with an idea that's really incredibly
35:52obvious which is that scientific
35:53instruments all over the world lack
35:55connectivity you can't actually get the
35:57data off them people all over the world
36:00in Labs today still go and take readings
36:03from these instruments and they hand
36:04write them into their notebooks or maybe
36:06electronic notebooks crazy right this is
36:09like everything's connected these days
36:10no it's not
36:12tens and hundreds of thousands of
36:14instruments are not so they were
36:16addressing an emerging pain and the
36:18first thing they did was
36:19they created a hardware device it's like
36:21this was the uh back six or seven years
36:24ago where everything was iot
36:26so they created a box sounded great
36:29I remember back in the launch lab over
36:30there going into the inventory room
36:32looking at that hardware and thinking oh
36:34my God
36:35all the different versions lots of
36:37expense of inventory Etc so I can tell
36:39you fast forward that was not the right
36:41uh thing to monetize
36:44and that's just giving you that answer
36:45right off the bat
36:46it actually nearly killed the company
36:48actually to be clear the whole first
36:50round that they raised flushed on the
36:53train caused the founders huge
36:55challenges they ended up having
36:57unfortunately one founder fell out gone
36:59so this is how badly business models can
37:02mess you up the good news is
37:04they live to tell the tale and because
37:07they figured out what the right business
37:08model is and I'm going to let you try to
37:10do it for them so now you know that iot
37:13and Hardware is not their business model
37:15let me tell you some of the other pain
37:17points the customers had they really
37:19struggle with basic things still
37:20required hardware for this by the way to
37:23detect when instruments failed
37:25they also really struggled to get the
37:27data in a form that they could use so I
37:29just told you you'd obviously don't want
37:30to handwrite this stuff
37:32and they realized that if they could get
37:33this data in a form that they could
37:36store and sometimes it's huge amounts of
37:38data any of you working in bio
37:41yeah how big is a DNA data record
37:48s so imagine taking tens to hundreds of
37:51gigabytes you can't write that stuff
37:52down but you've got to store it
37:54somewhere and they have it what's called
37:56in a temporal form which means over time
37:58they need to check the DNA so now
38:00imagine thousands of records of tens to
38:03hundreds of gigabytes you don't store
38:05that on your floppy Drive well those
38:07don't exist anymore but CDs or or your
38:09hard drive that just you're gonna run
38:10out of space on your iPad for sure right
38:13so where might they put that
38:17Cloud okay somebody's starting to think
38:19good
38:20so what is the right business model for
38:23tetriscience and I'm going to give you a
38:24big clue
38:26this is the diagram
38:28that they came up with when they
38:30realized they could connect everything
38:31to everything
38:33so now they've figured out they could do
38:35that
38:37so now as a group
38:39take a minute or two I'll give you two
38:41minutes to think what would you pick as
38:44the data as the business model excuse me
38:46for tetrascience and you might use some
38:49of the principles you're already going
38:50through just think well what's at the
38:51core of their business opportunity and
38:53then how might they monetize it
38:55I'm hearing really good discussion about
38:58what it is in fact this table is in such
39:00big debate that there is a four to one
39:03vote against a particular viewpoint
39:06so we're actually going to go right
39:09there so
39:10Alan you said Hardware tell us why you
39:14said Hardware the mic's right there
39:16the core of that value proposition is
39:18hardware and that's what they should
39:19monetize because you want to get the
39:21data into the cloud you need to be able
39:23to connect from the instrument to the
39:26cloud so you need that standard solution
39:29to because you have so many instrument
39:31providers it will be really difficult
39:34challenging for each of them to build a
39:36solution to connect to get their data
39:38into cloud in the first place so you are
39:40standardizing that part fantastic answer
39:42I really agree with that absolutely
39:45agree with it you guys what do you think
39:48uh so so we were thinking uh software uh
39:51either like a standard standardized
39:54Cloud solution or uh Marketplace uh to
39:58connect the people who produce the data
39:59and and use it okay so as you can tell
40:02we have fun and four of you said that
40:04right okay so let's just put this to the
40:06test in the room Hardware we have one to
40:09four
40:10for software show of hands everybody
40:12thinks Hardware
40:16it's just you and me cheapest we're in
40:18deep trouble
40:19really are the rest of you asleep hands
40:21up those of you think software
40:23anybody's hands not up you've definitely
40:25had too much pizza
40:26all right great so there's an
40:28overwhelming belief it's software
40:31all right what if I said none of your
40:33are right
40:35in terms of where the company went where
40:37would you go
40:38so over here we had some good thinking
40:40going on do you guys want to say what
40:42you came up with
40:45so we were kind of debating what to
40:48think about in terms of Hardware versus
40:49software and I thought about like a
40:52Garmin versus a whoop which is just like
40:54an athletic device and they each have
40:56their own
40:58um I guess apps or whatever where all
41:00the data goes and there's no way to
41:02really just connect both of those into
41:04to like compare them together I guess
41:07um so that's kind of where we were
41:09struggling to figure out a solution but
41:12I think the concept of having
41:14um one Hardware that is I I think like
41:17Oracle maybe would be a good example of
41:20that
41:21um in terms of what was it about Oracle
41:24that you thought was an example in terms
41:26of their Hardware products
41:30um that I guess it's like it's very hard
41:31to switch
41:33um to a similar product
41:36um
41:37I don't know I was struggling this is
41:38the kind of thing this is hard just to
41:40say it's really really hard does anybody
41:42have an idea thank you by the way for
41:44digging in on that I think a lot of
41:46things you're talking about are the
41:47right things to debate when you're
41:48trying to figure out your business model
41:49because it's not easy and what did I
41:50just tell you if we get it wrong causes
41:52you to almost implode as a business
41:54found a Fallout all sorts of challenges
41:56it was literally a couple of years
41:57written off because we couldn't figure
41:58that out uh anybody have a different
42:00View
42:02so our group actually thought about
42:05essentially what you have there is a
42:07problem of you initially thought
42:08connectivity but it's actually data
42:10management so we were thinking of a
42:13platform like a SAS platform for
42:14Enterprise where you are leveraging apis
42:17and you're trying to build like an
42:19ecosystem for this data to start sitting
42:22somewhere so you can connect producers
42:24on the one side versus consumers of the
42:27data and any other people who help with
42:29analyzing the data in between
42:32we needed you on the founding team of
42:35tetra science you would have saved us
42:37years and millions of dollars if you had
42:40been able to help this team understand
42:41that
42:42so not only is in tato turning out to be
42:45right for tetriscience but at the core
42:48of this and we they by the way this they
42:51you know in a very basic way describe
42:53this as spaghetti because that's what it
42:55looks like this bowl of spaghetti has at
42:57the core of it the ultimate need that
43:00the customer has which is to get at the
43:02data
43:04it doesn't matter how it gets there they
43:06couldn't care today whether they created
43:09the hardware to connect it or whether
43:10the instrument manufacturer did and in
43:11fact your point and tattoo about the
43:13ecosystem if they kept producing the
43:15hardware they would have ended up
43:16competing with all the instrument
43:17manufacturers who themselves need to
43:20create the connectivity so instead they
43:22made an ecosystem to the exact word you
43:24used and all those people are partners
43:26to them
43:27and on the other side of it the people
43:29who want to use that data the Pharma
43:32biopharma companies that they've focused
43:34on so they picked biopharma as their mvs
43:37those people don't care about how the
43:40data gets there either all they care
43:42about is that they have a data pipeline
43:43another great word you used that puts it
43:45in the form normalized for them and in
43:48fact makes it literally that usable to
43:51them that they think of it as
43:52Switzerland
43:53so in the middle of this they've become
43:56an envied leader because they connect
43:58all the data to all the places it might
44:00get used and provided in a normalized
44:02form I'm dramatically simple like this
44:04business has skyrocketed triple triple
44:08double double it's probably going to be
44:10one of the fastest companies to reach
44:11100 million dollars in less than five
44:13years
44:14after being Nearly Dead
44:17one reason business model
44:20makes sense
44:21any questions
44:23okay let's keep moving
44:25sir I've got great news for you you only
44:28need to start where we've already been
44:31we already had Lisa explain to us that
44:34she had something she wanted to test
44:35start with your customer
44:37so take a moment just as a group and
44:39write one thing that you think
44:42that your customer needs just one thing
44:44so I'm giving you 30 seconds it
44:46shouldn't take more than that
44:48so what did this table come up with
44:52oh
44:53um the main thing was personalization
44:56personalization okay great so what is it
44:59about personalization that is going to
45:02be valuable to your customer not you to
45:04them
45:07um I think health is a personal journey
45:09and that's perfect stop right there well
45:14done of course it is
45:15health is a personalized Journey
45:17fantastic who else what do we have over
45:20here Abby
45:24like um with some representation perfect
45:26so why is representation what the
45:29customer really needs
45:31the customers are actually students
45:33because what court is all about is is a
45:36service
45:36for students to have teachers who
45:39actually look like them especially in
45:40public schools in the US especially if
45:43you have students in your class who are
45:44not Americans so how can they have Role
45:47Models representation proper
45:48representation in schools and we picked
45:51representation perfect what I love about
45:54Abby's um one word there is that cohort
45:59is trying to deliver this education to
46:01people who need to be represented by the
46:03people who are teaching them it's like
46:05the teacher is themselves so they can
46:09understand what the student needs is
46:10that right Abby
46:12perfect and it wasn't me it came up it
46:14was you so and you've got a great name
46:16for it too so now you understand what I
46:18mean by figuring this out actually isn't
46:20that hard if you can get from the
46:22customer standpoint okay Claire we're
46:23back to your table they figured it out
46:25yet
46:26all right what is it
46:28all right it's basically a faster
46:30evaluation time for the data set they're
46:33looking at so the the turnaround time
46:35from when they want the data to be able
46:38to actually get their hands on the data
46:39that's their biggest problem great and
46:41and were you describing this for cold
46:43press AI perfect okay so it's turnaround
46:46time
46:47Perfect all right you guys are doing
46:50great so
46:52we've got to the place now where on the
46:53second piece of the business model and
46:55that is okay we figured out how to
46:57create the value but how do we deliver
46:59this value and what is the thing that's
47:01going to make that powerful and
47:02disruptive
47:04what we're going to try to do is think
47:05about around your core what is it that
47:08you can do
47:09to actually get a multiplier that will
47:13take your value higher and a lever that
47:17will take your costs lower and it starts
47:19to address this issue of how do we get
47:22to make money uh in the cash flow
47:25formula for those in the MS MBA classes
47:27or how do you make your operations model
47:29effective so it can be sustainable
47:31so
47:33what we want to do is think about that
47:34core that word that you all came up with
47:36that key thing or for example if you
47:39want to think about tetrascience how
47:40they actually decided to take the data
47:43and create the ecosystem around it that
47:45would give the people on both sides of
47:47it the instrument manufacturers and then
47:49the biopharma companies the usage of
47:51that data in an effective way so the two
47:54techniques are for multipliers we want
47:56to increase Revenue
47:58if you just sold a dollar for a dollar
47:59you wouldn't make any money just to stay
48:01at the office we want to increase reach
48:03we want to get to more people that's
48:05part of the go to market we want to
48:06increase coverage when people buy your
48:08coffee we want them to drink it lots of
48:09times a day or when people buy your
48:12health care you don't want them just
48:13buying them as individual you want them
48:15telling friends about it and so it
48:17spreads virally for example those are
48:18all multipliers that takes up for those
48:22of you are interested in these things
48:23your lifetime customer value your LTV is
48:25often called
48:26or or on the other side we want to
48:29reduce the time it takes you so you just
48:31gave a great example if we can reduce
48:33for your customers the time it takes for
48:35them to get the data that's huge value
48:36to them you're nodding your head so I
48:38think it must be right and we obviously
48:40want to make sure that for you while
48:42you're doing that you're reducing your
48:43costs as well as the customers costs of
48:45actually using your product and anytime
48:48you're reducing things like resources
48:50whether it's people time energy Etc
48:52that's a lever
48:54and if you're doing that around the core
48:56you're going to increase the value the
48:58ultimate value that the customer
49:00receives and you're increasing your
49:01ability to be a sustainable business so
49:03even if you have a non-profit this is
49:05important too because even if you're
49:07just delivering a service that you don't
49:09want people to pay for you've got to be
49:10able to sustain your business in order
49:13to be able to keep delivering that
49:14service
49:15all right so
49:17let me tell you how you designed that
49:20first off your product needs to feed the
49:23business model so the user's got to have
49:24an experience that they love
49:26so I've asked this question before but
49:28I'm going to ask it again because it's
49:29so real how many of you downloaded an
49:31app on your phone
49:33hopefully all of you okay good how many
49:36of you have deleted one within the same
49:38period of you know within like five
49:39minutes of deleting it
49:41okay clearly not either a good
49:44experience or a good value honestly that
49:46happens all the time I mean it's it's
49:48part of experimentation so remember that
49:50when you're thinking about designing
49:52your value you want people to have a
49:54great experience of it right away
49:55it leads to four startup secrets that
49:57I'm going to walk you through and you
49:59can design these from the get-go you
50:00don't even need to have a product you
50:02can start with for example literally
50:03your paper prototype and start thinking
50:05about this
50:06the first is my favorite
50:08so a long time ago I used to call this
50:11a startup secret called slippery and
50:14it's basically the same essence which is
50:17that we want to make something simple to
50:19use and install
50:20we wanted to make it low to no initial
50:23cost
50:24instant and ongoing value
50:26and then make sure it plays well in the
50:28ecosystem with everything else around it
50:31now I just said a lot but actually it's
50:33all brain dead simple and if you think
50:35about that app experience you had it
50:37clearly was simple to use and install or
50:39simple to install at least you just
50:40click to download it but it may not have
50:43been simple to use that may have been
50:44one of the reasons you uh you know threw
50:46it away I see a lot of you nodding your
50:48heads was it delivering instant value
50:50well clearly not you threw it away
50:52time to value is incredibly important it
50:54doesn't matter whether it's a service or
50:56a product or whether it's data if it
50:58gives you instant value you're going to
50:59keep it and then finally plays well in
51:01the ecosystem if you have to change your
51:04phone to use the app do you are you
51:06going to use it
51:07I don't think so
51:09there are things that already exist so
51:11this is to your point Lisa you don't
51:13want to change too much if it's
51:14disruptive to adopt something it's not
51:16going to work
51:17so I often say a startup secret that
51:20comes up lots of times is the best value
51:22props actually highly disruptive
51:25but non-disruptive to use
51:28and for example if you are building a an
51:31Enterprise product these days you don't
51:33build it on
51:35stacks of Hardware that you run under
51:37your desk which is how it was 20 years
51:38ago you build it in a container and you
51:40just deploy it to AWS or your favorite
51:43cloud provider
51:44that's incredibly non-disruptive to do
51:46and it gets you huge benefits so this is
51:49what you're looking for you're looking
51:50for products that have a slip which is
51:52now turned into a term that's become
51:54popular 15 years later called Product
51:56LED growth so if you want to go and
51:58investigate more about this how do you
52:00make products that are slippery that are
52:01really friction free and how they they
52:04can help you with product lab growth yep
52:05go ahead and donga
52:07um I was just wondering for example for
52:08enterprise software what the value would
52:10be for example having an API model
52:13versus something that can just be
52:15instantly downloaded where there might
52:17be a little bit more friction but it
52:20might also reduce churn because it's a
52:22little bit more personalized and then
52:24also a little bit more integrated that
52:26way wow you came up with a whole bunch
52:29of things again and I've thrown your
52:31board away but that's okay
52:33um we will put it over here that are all
52:36great questions so I'm going to answer
52:37some of them later just to make sure
52:39that I keep the class on track but you
52:41said apis
52:43and you said for example how do you
52:45reduce churn
52:47and there was one other thing you said
52:51um so it would be more personalized and
52:53a little bit more integrated I imagine
52:55integrated yep integrated personalized
52:58these are all good things
53:01so some of them I will answer
53:03next week
53:05one of them I'll just answer right now
53:07to give you a sense of this so if you're
53:09selling an API are you selling that to a
53:11developer or are you selling that to an
53:14end user
53:21algae Department
53:24grading it okay so I'm going to give you
53:27two examples of companies that have
53:29played in this world one that was
53:30extremely successful one that failed and
53:33what I want you to take out of it is
53:34well what would you do
53:36so anybody know twilio
53:38okay twilio actually it's not doing
53:40terribly well at the moment of the stock
53:41market but incredibly successful story
53:44of an API first company in fact many
53:46people would say they kind of led the
53:47API economy not really true Amazon did
53:50years before but they started selling
53:52everything they did but they sold it to
53:54developers apis because developers don't
53:56actually want a product that's finished
53:58because then they've got no job
54:01State the obvious right so you wouldn't
54:02sell it to a developer end users don't
54:05know how to program
54:06so would you sell them an API
54:08they don't know what to do with it so
54:10you just got to be very clear what your
54:12audience is who your customers who your
54:14buyer is and what they want to buy and
54:16what problem you're solving for them
54:17developers love apis because it gives
54:19them the ability to get a multiplier on
54:21their experience and build things
54:23quicker that's why Trulia took off I'm
54:25actually not going to mention the name
54:26of the company because I'd rather be
54:27embarrassing for them but a company that
54:29we have backed so I'm admitting this the
54:32nature of venture capital is you pack
54:34things some let's go wrong students came
54:35up with a brilliant API in the
54:37healthcare World it failed terribly
54:39because Healthcare developers didn't
54:42actually have any clout they're not the
54:44people who hold the budget in healthcare
54:45and so even though they love the product
54:48they couldn't get anybody else to pay
54:50any attention to it or give them budget
54:51for it because they just wanted a
54:52solution the healthcare provider said I
54:55just want the solution give me the
54:56workflow give me the process give me
54:57anything but I don't want to develop to
55:00go for six months and and customize this
55:02so what I hope you to realize takeaway
55:04from that is one simple thing it's about
55:06the audience back to the customer first
55:08and it's about what are you giving them
55:10that gives them a solution to a problem
55:12that's really significant to them that
55:13they can immediately use back to slip
55:15simple for them low to a note initial
55:18cost instant and ongoing value for them
55:20and it plays well in their ecosystem how
55:22does a slip make sense
55:24great all right thank you good question
55:28so hopefully you wrote something down
55:30that's useful to you and you'll use
55:31after the workshop
55:33and now second startup secret how you
55:36price and package this is incredibly
55:38important
55:39so if every app you wanted to try on the
55:42App Store
55:43cost a thousand bucks
55:45I didn't need to even say anymore
55:48it usually is free right the first thing
55:50they do is say download it but what they
55:52don't tell you in a lot of instances
55:53that oh when you start using it by the
55:55way there's an in-app purchase I see a
55:57lot of you nodding your heads okay it's
55:59true with online banking too by the way
56:01oh Free banking no fees everything else
56:03how do they make money
56:06interestingly lots of different ways
56:08sometimes it's on your data even though
56:10they don't tell you that
56:11sometimes it's on referring you so it's
56:14lead generation of getting you onboarded
56:17with their Bank sometimes it's on the
56:18back end with the credit card that they
56:20then sell you that you do pay for
56:22there's all sorts of ways that people do
56:24this but to start off with it's
56:26attractive when somebody says free
56:28so how you price and package is
56:30important it's often by the way true
56:33that when you figure this out it's a
56:35series of steps you take
56:36and I encourage you to think about where
56:38do you want to start and how will you
56:40get to a place where you ultimately
56:41delivering value and being paid for it
56:43that's what the business model is really
56:44all about
56:45so
56:47next key example is a very easy one
56:50anybody use wistia by any chance if
56:52you're in marketing you do
56:54so
56:55um clad you want to describe what wistia
56:57does
56:59it's essentially a platform for hosting
57:01videos so they make it really easy for
57:03marketers who don't have a videographer
57:05and their team but want to use and
57:07promote video content to just upload
57:09stuff and you see how they've tiered out
57:12their pricing they do it based on the
57:13number of videos that you store so the
57:15more stuff you create the more you end
57:17up paying them great thank you class so
57:19I I was hoping that one of you would use
57:21it but thank Claire is thankfully the
57:23customer in this case it's drawn people
57:25like Claire in for a simple reason which
57:27is there's no cost to start trying to
57:29use it if you have a great experience of
57:30it then you can play for the POS the
57:32plus piece if it really takes off it
57:34gets viral adoption you might have for
57:37example a work group that uses it and
57:38they pay the pro subscription and if
57:39your whole Enterprise takes it then you
57:41start paying a lot more for it that's a
57:43classic strategy go ahead Sephora can
57:46you do the same thing
57:49or
57:52great question what does anybody else
57:53think in the class
57:55yeah go ahead Lisa I feel I feel the
57:57bundling or like bundling or
58:00if I won't get one if it feels a little
58:01different because there's still a cost
58:03to initial entry whereas this one it's
58:06almost like a it's like if your coffee
58:08had a taster like for two weeks you can
58:11get free cups of coffee at the kiosk in
58:13Kenya like it's the free entry that I
58:15feel like is different in this model
58:16versus the other ones which are more
58:18about cross-selling or upselling or
58:21great so zippur I know that wasn't a
58:24complete answer to your question but
58:25it's a good start to the thinking so
58:27bundling as it turns out is a whole
58:29science into itself we will put a link
58:32in the workbook to uh one of the people
58:35who has a fantastic view on bonding has
58:37done a great video on it it's a guy
58:39called shashir mahotra in fact he's the
58:42uh founder of of uh Coda the what the
58:45workbook is built in and he also used to
58:47run YouTube before that and he's an
58:49expert at this so rather than me try to
58:50half answer your question I will say the
58:52following incredibly important question
58:53there's no right answer there's lots of
58:55times when bundling can make lots of
58:57sense but you have to think about it as
58:58a separate science in this but great
59:01question it's absolutely the kind of
59:02thing you should be thinking about
59:04all right
59:05next startup Secret
59:07if you can co-create stuff so in other
59:10words not just build it on your own but
59:12co-create it with other people you can
59:14create tremendous win-wins so how many
59:17of you know what open source software is
59:18before I explain that all okay so about
59:20half the class
59:22so the notion of Open Source software is
59:24very very simple which is that anybody
59:26can build a piece of this code and put
59:30it in an open repository so that anybody
59:33can look at it anybody can adapt it and
59:35anybody can use it any way they want I'm
59:37I'm grossly simplifying
59:39why did open source get started because
59:41people realize that actually it's a lot
59:43easier if I have the problem to design a
59:46nightmare developer to design the
59:48solution myself why why do I have to go
59:51pay some other giant company to do that
59:52if I'm a coder I'll just develop it and
59:54guess what if I want people to keep
59:55adding to it I'll say hey take a look at
59:57this see if you think we should do
59:58something better and pretty soon
1:00:00hundreds of thousands in fact millions
1:00:02of people have contributed to open
1:00:04source projects all around the world the
1:00:06one I happened to back was called Drupal
1:00:08which is became the largest Enterprise
1:00:10software content management system so
1:00:13it's actually used by everybody from
1:00:15Sony at one extreme to NBC at The Other
1:00:18Extreme to the White House at another
1:00:19extreme pretty much every website that
1:00:22that is out there at real scale for
1:00:24example the Olympics the Grammys Etc is
1:00:26all built on Drupal but it's all open
1:00:28source it's all free the founder of it
1:00:31dries is a brilliant guy who was solving
1:00:33his own problems it turns out in his
1:00:34dorm room he decided he needed to be
1:00:36able to share information with a friend
1:00:38over literally what wasn't even ethernet
1:00:40a cable and he created his Dutch uh or
1:00:44actually Belgium he created what
1:00:46effectively was a basis to share
1:00:47information and then it became sharing
1:00:49it on websites and then it became Drupal
1:00:51and you know literally there are now
1:00:53tens of thousands of modules that are
1:00:55built for Drupal that everybody around
1:00:57the world who's a Drupal developer
1:00:58contributes to but it's free
1:01:01how would you make money out of that
1:01:05go ahead you start with the free service
1:01:08people or the developers use the open
1:01:11source structure that exists today and
1:01:13then for some Enterprises you can start
1:01:15uh offering things like they would
1:01:17develop like the cloud storage Etc as a
1:01:19service and you monetize a part of what
1:01:22you can do for free but you just add
1:01:23convenience and charge for the
1:01:25convenience that's exactly what he did
1:01:27they figured out how to give away the
1:01:29software and then create the services
1:01:30around it that made it for example
1:01:32secure reliable scalable they eventually
1:01:35put it in the cloud and what Drupal
1:01:38became is a cloud service for anybody to
1:01:41create any website at any scale and it
1:01:45literally is used as I said by for
1:01:47example every major artist Harvard uses
1:01:49it for example everybody uses it as a
1:01:51service to be able to get their content
1:01:53their website there it's now media and
1:01:55their experience so they call it
1:01:56experience management up and running but
1:02:00what's the win-win in it
1:02:03I'll go backwards
1:02:05who created it
1:02:08everybody did
1:02:09so a huge startup secret if you can tap
1:02:13a community for example you're going to
1:02:15get into Healthcare right is there a
1:02:17community around Healthcare
1:02:18for sure there is imagine if you could
1:02:21tap the community that could help you
1:02:22create your product would that be a good
1:02:24thing
1:02:25absolutely
1:02:26uh who else has something that they
1:02:28think they could tap a community to help
1:02:30them build their solution
1:02:33yeah go ahead Charles
1:02:36working on developing a line of products
1:02:37that for the first
1:02:40um objective is to work on sex education
1:02:43and Reproductive Rights and so we we are
1:02:47going to develop a line of products that
1:02:49are biodegradable have embedded embedded
1:02:51biotech and they're going to be so
1:02:55affordable that low income and strained
1:02:57in individuals can buy them sounds like
1:02:59a great product now how is the community
1:03:01going to help you do that so we need
1:03:03experts on product design
1:03:06and also Health
1:03:09experts because we don't only want to
1:03:14develop a pad or of tampons but like a
1:03:17complete line of products for that so
1:03:19what's great about what you're thinking
1:03:21is look there's a lot of elements to
1:03:22these products and that you know
1:03:24everything to do with health and safety
1:03:25but also really important for population
1:03:27control for certain governments probably
1:03:29have a basis for actually wanting that
1:03:31product kind of products there's lots of
1:03:32people who could contribute to this need
1:03:35and you're going to get them involved in
1:03:36a community to help you build your
1:03:38product is that what you're thinking
1:03:40yeah I was thinking of an ecosystem yeah
1:03:42okay so I'm going to make sure that
1:03:45Cheryl doesn't get um literally like
1:03:47curtail tonight by asking if you guys
1:03:50would actually spend a bit of time with
1:03:51Cheryl afterwards what would you
1:03:52recommend to her to do to get the
1:03:54community engaged around this need
1:03:56because there must be many of you who've
1:03:58experienced this who've said okay this I
1:04:00wish I had a better biodegradable much
1:04:01more you know low cost or something that
1:04:04for example might appeal to low income
1:04:05how could you contribute to that what I
1:04:07will say is as follows which is it's
1:04:09really important that this word win-win
1:04:12it's it's two words I guess
1:04:14um is there for your community to work
1:04:16so the reason that for example Drupal
1:04:18took off or any rope and source project
1:04:19takes off is that the person who has the
1:04:22problem wants to solve it so you're
1:04:23going to have to find the person that's
1:04:25in the medical world for example or in
1:04:27the bio World by um in the a world
1:04:30that's just solving this problem for
1:04:31that wants to solve this problem that
1:04:33will contribute to your community
1:04:34it has to be a win-win otherwise they
1:04:36won't engage it can't be just your need
1:04:38if you keep asking that you need help
1:04:40that won't work but if you can get them
1:04:42to say but I want to solve this problem
1:04:44so I'd like to contribute then you're on
1:04:46the basis to get going on a win-win that
1:04:47makes sense it's not as easy as saying I
1:04:49just want to start a community
1:04:51you have to find this win-win
1:04:53I see lots of people nodding do you
1:04:54still have your question
1:04:56I'm developing a new pre-workout and I'm
1:04:58on a on the varsity rowing team
1:05:01um and I think I have a certain problem
1:05:03with like getting more endurance
1:05:06um in whatever way so I created a
1:05:09product but wanted to ask other teams
1:05:11like what they would want in a product
1:05:13so I sent out a survey to all the other
1:05:14varsity teams
1:05:16um and kind of like cross-reference
1:05:18different sports and like what they
1:05:21wanted to come up with an ultimate
1:05:23solution that kind of would cover a lot
1:05:25of different sports so it wasn't I guess
1:05:28me kind of created it more of like
1:05:30Harvard Athletics was helping me Create
1:05:33It Fabulous so what Meredith did is
1:05:36really smart to go and get a win-win you
1:05:38need to find out who else cares about
1:05:39the problem and if they care enough
1:05:41about it like there are other rowers or
1:05:43their other athletes and they're in the
1:05:45same Community as you Harvard for
1:05:46example and they would like to solve
1:05:48that problem too there you have the
1:05:50beginnings of something that could
1:05:51become a community and I bet that they
1:05:53would love to contribute to it it's
1:05:54going to help them
1:05:55so great great example thank you very
1:05:58much
1:05:59so win-win doesn't always work but I
1:06:01gave you an example here because I
1:06:02really want to make sure you understand
1:06:03it's actually something that can play
1:06:05out in different ways not just in
1:06:06aqueous open source example but via
1:06:09strategic Partnerships too so I'm almost
1:06:12going to guarantee that
1:06:14none of you have what we call a whole
1:06:16product
1:06:18what I mean by that is you're going to
1:06:20be a piece of the puzzle so I'm going to
1:06:22pick on cold press AI because I think
1:06:23you have a very good example of this so
1:06:26you're going to get your data to people
1:06:28faster it's the essence of the value
1:06:30prop right
1:06:31what are they going to do with it
1:06:33are they just going to say great I've
1:06:35got the answer there
1:06:36they're going to train their models with
1:06:38it Yep they're going to train their
1:06:39machine learning models okay and who has
1:06:41those models do you have them one day
1:06:43hopefully right now it's just it's on
1:06:45the customers to find another provider
1:06:46okay perfect so this is a perfect
1:06:49example of what I'm describing now which
1:06:51is that in order for cold press AI to
1:06:54have a whole product they're going to
1:06:56need a lot of things so first of all you
1:06:57need a cloud provider yeah okay and then
1:07:00as you said someday you hope to have
1:07:01models but you don't today so you need a
1:07:04partner for those models and I'm going
1:07:06to go one step further even when they've
1:07:08got all that what are they going to use
1:07:09it for
1:07:12deploy it and use it in features on
1:07:14their web on their applications
1:07:17so there's something they're going to
1:07:19use this for doesn't matter whether
1:07:20that's a healthcare application one
1:07:22extreme or a consumer application or
1:07:23something else right
1:07:25this is the notion of a whole product so
1:07:27you can't actually be successful for
1:07:29your customer to run X application with
1:07:32AI and data in it until you get all
1:07:34these pieces together you get the cloud
1:07:36the storage your product to get it there
1:07:39faster the models that make it useful
1:07:41and then it integrated into some
1:07:43application so good news
1:07:46these two people need you
1:07:48and actually because of that they'll
1:07:50help you get to Market and they'll help
1:07:52you find customers and they'll help you
1:07:54build the success of those customers and
1:07:56they'll be a great multiplier for you to
1:07:59get to Market as well as a lever they'll
1:08:00reduce your cost because you're not
1:08:01having to build all that stuff
1:08:03so strategic Partnerships are incredibly
1:08:05important and the first thing I
1:08:07recommend you do is think about the
1:08:09end-to-end solution what we call the
1:08:11whole product and where do you fit in
1:08:13the ecosystem and who could you partner
1:08:15with
1:08:16and by the way it's not optional because
1:08:18if you just keep trying to sell your
1:08:20little feature or your little functional
1:08:21your little product and there are all
1:08:23these other things that the customer
1:08:24needs it won't work
1:08:27but generally speaking by the way if you
1:08:28found a real need to solve are you at
1:08:30the end of this there will be people out
1:08:32there who are solving some part of it
1:08:34and they'll be delighted that you come
1:08:35in and say I can make it faster for you
1:08:37better cheaper Etc
1:08:38make sense any questions on that one
1:08:41good yeah whatever the community that
1:08:45that win-win exists is like the
1:08:48community of a competitor what do you
1:08:51think I don't know
1:08:52really
1:08:54you're very smart you've been here
1:08:56before so I've got to challenge you back
1:08:58what would you do like I'll be
1:09:00successful obvious example a competitor
1:09:03has a form people on that form talk
1:09:05about stuff that is needed yep that is
1:09:08not being provided perfect so like but
1:09:11you can't
1:09:12I don't know like because there your
1:09:14competitors can lock you out of there
1:09:15for example it's hard to engage in there
1:09:17oh true so you've got a Potential Threat
1:09:21and an opportunity the threat is that
1:09:23the competitors lock you out the
1:09:24opportunity is that you're identifying
1:09:26things that they're not doing
1:09:27so you you've got to play that with the
1:09:30classic skill of an entrepreneur and say
1:09:32I can see this competitor over here
1:09:34that's coming up against me cannot solve
1:09:36this problem so an example might be
1:09:38they're an on-premise solution you're
1:09:40the first people are going to do it in
1:09:41the cloud
1:09:42and by the way That's a classic thing
1:09:44that's happened for the last 10 years
1:09:45and it's still going on people are
1:09:46figuring out how to decimate old
1:09:48solutions that were Legacy Enterprise
1:09:50based on-premise by coming up with Cloud
1:09:53versions of it that's the whole SAS
1:09:55movement
1:09:56another example let's stick with cold
1:09:58press AI is almost every application is
1:10:00probably going to get reinvented with AI
1:10:02that's just my view of the world so the
1:10:05good news is you could go along to
1:10:07anybody who's got an application and say
1:10:08hey we could AI enable your application
1:10:12wow that's pretty cool because now
1:10:13they're not in the Old Guard you're
1:10:16enabling them as a partner to come into
1:10:18the Forefront of what people want which
1:10:19is more intelligent applications that
1:10:21have better data that are faster
1:10:23delivering the solution to their problem
1:10:25make sense
1:10:28makes sense to you
1:10:29great all right
1:10:32next one is what I call the three UPS so
1:10:34think about this as teeing up if you're
1:10:36looking for something a solution to have
1:10:38a great go to market experience
1:10:40so it turns out for your product to get
1:10:43adopted is just the beginning
1:10:45you are always going to want to improve
1:10:47it right so you're going to want to
1:10:48update it
1:10:49that sometimes is just for security
1:10:51fixes and things like that then you're
1:10:53going to upgrade it you're going to
1:10:54upgrade it when for example new
1:10:55capabilities are needed or new
1:10:58technologies like AI come along or you
1:11:00want to make it mobile
1:11:02Etc so those are the upgrades and then
1:11:04guess what you're selling into some
1:11:07particular function so let me pick one
1:11:09of the teams here
1:11:10uh Lisa you actually haven't talked
1:11:12about your Solutions where do you start
1:11:14with food print
1:11:15trying to provide environmental
1:11:17information information
1:11:18on groceries to Consumers Based on data
1:11:23not marketing so easily comparable
1:11:25environmental information about the food
1:11:27you consume and buy all right so I know
1:11:29nothing about your business
1:11:31but I can think of three ups for you
1:11:35what might they be
1:11:39so how might you update your solution
1:11:42how might you upgrade it and how might
1:11:44you upsell it
1:11:46so somebody's already bought it
1:11:48and anybody wants to help Lisa please
1:11:51join in this is a chance to really get
1:11:54somebody going yeah so I guess one one
1:11:56thing I've been playing with is if
1:11:58someone has already kind of in this case
1:12:00imagine like a online browser extension
1:12:03that goes in and if you buy groceries
1:12:04online when you get to the basket it
1:12:06suggests alternatives to switch out your
1:12:08products that have lower environmental
1:12:10footprint so in this case there's a
1:12:13range of products that then gets
1:12:15recommended and that's certainly like an
1:12:16like a I guess like an upgrade version
1:12:19where you could say well those products
1:12:21that are being recommended right now
1:12:22they're not they're not kind of they're
1:12:24not paying any commission but that's
1:12:26pretty valuable if people actually swab
1:12:28it into their basket so there might be
1:12:29an upgrade there perfect so I'm going to
1:12:32let you off the hook with coming up with
1:12:33all three of them but that was fabulous
1:12:34no seriously people buy her product and
1:12:37they're figuring this out with their
1:12:38groceries the first thing I would say
1:12:40that you you pointed out is you can give
1:12:42them an upgrade that makes
1:12:43recommendations for them great you could
1:12:46sell that if people really value it
1:12:47they'll pay for it that's both going to
1:12:49help you sell more because you're
1:12:50solving more of the problem because
1:12:51people want recommendations to find
1:12:53better products but it's also going to
1:12:55increase value for you so that's a
1:12:56classic upgrade by the way the things I
1:12:59thought of were pretty obvious which is
1:13:00you're going to constantly update the
1:13:02data right the data was out of date
1:13:03you're dead so you need this you you
1:13:06need that you and then the upsell one
1:13:10would this apply to cpg as much as
1:13:12groceries
1:13:14yeah so you could
1:13:15say I mean it's like a different value
1:13:17chain and less frequent purchasing so
1:13:20it's not exactly clear how the like
1:13:21human nudging behavior would work but
1:13:24absolutely like the idea that we should
1:13:25know the environmental footprint of any
1:13:27anything we buy and of extensis or
1:13:29Universal so
1:13:31there's both an update an upgrade and a
1:13:34huge potential set of upsells that could
1:13:36be done and guess what I did I only did
1:13:38one thing I kept the customer the same
1:13:40because if the customer is the same here
1:13:42this is why we always talk about this is
1:13:44customer-centric value propositions and
1:13:46you can keep updating upgrading and
1:13:48upselling them you have a fantastic
1:13:50business model so that's the secret and
1:13:52guess what it plays with what we've
1:13:54already talked with which about which is
1:13:55if you make it really slippery for
1:13:57people to just land and expand to get
1:13:59their first customer and then you keep
1:14:01updating upgrading and upselling them
1:14:03you build ultimately a moat meaning a
1:14:06defensibility around you that is
1:14:07tremendously valuable that's by the way
1:14:09how every social network works I might
1:14:12come up with a fantastic new Social
1:14:14Network tomorrow and let's say you will
1:14:16love posting photos I'm guessing that
1:14:18some of you do and I said I've got a way
1:14:21easier way we've got we've figured out
1:14:22this slip for you to just instantly
1:14:25download this thing but
1:14:27bad news you've got to invite all your
1:14:29friends before it's actually of any
1:14:30value to you
1:14:31you're not gonna do it that's the value
1:14:33the value is that somebody did a really
1:14:35good job of building whatever social
1:14:37network you like whether it's tick tock
1:14:38or Instagram or pick your favorite of
1:14:40building that Network to the point where
1:14:42they've got huge defensibility even if
1:14:44their features aren't that good they
1:14:45keep bringing you in sucking you up in
1:14:48there
1:14:49and their ecosystem effectively so
1:14:51somebody had a question I saw a raised
1:14:53hand yep go ahead Clint is it fair to
1:14:55say that both update and upgrade are
1:14:57about user customer retention whereas
1:14:59upsell is about increasing the the value
1:15:02per user yeah yeah you haven't have it
1:15:04exactly right and by the way there's no
1:15:06reason why all of that can't be true so
1:15:08remember my virus subscription example
1:15:10that was just updates we actually didn't
1:15:12change the product at all all we did was
1:15:14send you virus updates all the time so
1:15:15that you had the latest signature the
1:15:17latest virus before it even hits you we
1:15:18don't have to change anything about the
1:15:20product we did ultimately end up
1:15:21upgrading it because people had
1:15:23different ways in which they wanted to
1:15:25monitor it for example and they want to
1:15:26see well how many viruses did I get and
1:15:28they wanted an analysis of that and then
1:15:29the people who were actually in the IT
1:15:30department said well I want to track
1:15:32whether it's happening in certain
1:15:33regions Etc so the lots of ways these
1:15:35things happen and then we upsold them I
1:15:37think I told you this by 2.6 x by
1:15:40upgrading this functionality to being
1:15:43data security for everything so it
1:15:45wasn't just virus it was data backup and
1:15:47it was improving your performance of
1:15:49your PCS at the time Etc except very
1:15:52very compelling business model startup
1:15:54secret basically just think of three
1:15:56upping everything and you have a great
1:15:58basis so what I've been doing here is
1:16:01quietly building what we started out
1:16:03talking about is multipliers and levers
1:16:06around your core
1:16:07and anything that you can do to do that
1:16:09whether it's create whole product
1:16:10strategic Partnerships or for example
1:16:13find ways to make your product more
1:16:15friction free in the slip model or price
1:16:18and package it so it has pull you're not
1:16:20pushing it but customers demanding it
1:16:22because it's so easy it's so uh
1:16:24efficient for them to download it's free
1:16:26for them to try or how you co-create it
1:16:28with a community that makes it a real
1:16:30win-win or ultimately what we just
1:16:32talked about which is three upping it so
1:16:33it has a long life cycle and to Clint's
1:16:36point you can keep selling and getting
1:16:37more value for it
1:16:39that's it you just got four startup
1:16:41Secrets very quickly all around
1:16:43increasing your lifetime value for your
1:16:46customers and reducing your cost of
1:16:47acquisition
1:16:49it's a fun thing to play this game and I
1:16:51encourage you to just work on it very
1:16:53simply starting with this core as I said
1:16:56so we're nearly at the end here and what
1:16:58I want to do is give you a chance to
1:17:00just for a moment brainstorm on this as
1:17:04uh your own Venture could be a
1:17:06multiplier or a lever for your table
1:17:07but jump in everybody this is your
1:17:09chance to just brainstorm with each
1:17:10other
1:17:12I hear great discussion going on so top
1:17:14right what do we have this table said
1:17:16increased reach will be there one
1:17:18multiplier a lever and and what is it
1:17:21that your customer is going to benefit
1:17:22from that
1:17:24so our customer I had I didn't clarify
1:17:26before our customer is a low-income
1:17:28consumer in Kenya at the moment they
1:17:30can't afford coffee fresh coffee so
1:17:33they're going to benefit because of
1:17:34access so it's going to be affordable to
1:17:35them and convenient fabulous Sephora I
1:17:37actually don't need anybody else's
1:17:39answer tonight you just you expose the
1:17:41exact same thing no it's perfect
1:17:43seriously because the next slide is
1:17:45you're designing this for your customers
1:17:47so what's great about what you answered
1:17:49right right away was that yeah you want
1:17:52to get increased reach but why does your
1:17:54customer benefit and you just said it
1:17:57access are you getting that reach the
1:18:00low-income people that couldn't have got
1:18:02access to this coffee can now get access
1:18:04to it fabulous again we need a round of
1:18:06applause here that was just superb
1:18:09so we just came perfectly to the end for
1:18:13the session by bringing it all the way
1:18:15back to what I said was we need to
1:18:17design customer-centric models so things
1:18:19that benefit the customer I'm going to
1:18:21give you just a quick flip through what
1:18:23will be on the portal and that is how
1:18:25you do this so what you do the secret to
1:18:27it is following the customer Journey
1:18:29which is actually when they first engage
1:18:31with you all they have is a problem and
1:18:32they spend a lot of time and it costs
1:18:34them money to basically figure out what
1:18:36Solutions are out there they buy it then
1:18:38they have to implement it then they have
1:18:40to get trained on it then they test it
1:18:41then they roll it out then they measure
1:18:43whether it's working then they optimize
1:18:45it and only at some point do they go you
1:18:47know what we've got enough value from
1:18:48this thing that we should keep buying it
1:18:50we should go through the three out
1:18:51process
1:18:52so this is a whole journey that I
1:18:55encourage you to figure out and Clint
1:18:57you asked about this all of that you're
1:18:58trying to increase the dollars you're
1:19:00taking over the lifetime of your
1:19:02engagement with the customer and the
1:19:03more that they engage with you the
1:19:04longer they engage with you the higher
1:19:06your lifetime value which is going to
1:19:07make your business model much much
1:19:08better
1:19:09and obviously on the other side of this
1:19:11the question Zapora just nailed this so
1:19:14I don't really need to tell you but
1:19:15you're going to be answering questions
1:19:16for your customers like why is this
1:19:18better for them does it save the money
1:19:20just like support is saying it does or
1:19:22does it save them time like you're
1:19:23saying it does in terms of how you get
1:19:25the data to them or what's the margin
1:19:27Improvement in their business not yours
1:19:30you've got probably plenty of examples
1:19:32of where you've been proving the
1:19:33customers ultimate business model
1:19:34themselves by how what you're selling to
1:19:37them so these things are the things that
1:19:39make this a customer-centric model and
1:19:41for examples of these things think about
1:19:43Airbnb
1:19:44they're helping homeowners utilize their
1:19:47home they're getting paid money that
1:19:49they wouldn't have otherwise got wow
1:19:52what about for example Salesforce why
1:19:54would you sell Salesforce is a good
1:19:56model well pretty obviously people are
1:19:58getting better utilization out of their
1:20:00sales people if they're more in touch
1:20:01with their customers they have better
1:20:02relationships with them they can sell
1:20:03more to them sort of basic stuff but at
1:20:05the same time this stuff is what drives
1:20:08businesses
1:20:09so I won't ask you this question just
1:20:12because of time but I would leave you to
1:20:13think about it which is what's the one
1:20:15thing that makes your business
1:20:16profitable that your customer also gets
1:20:19profit from or benefit from if you can
1:20:22identify that this is the key to having
1:20:24a great sustainable business model that
1:20:27last thing I was talking about it's
1:20:29sustainable because it's not just you
1:20:31who's succeeding it's your customer
1:20:32you're making successful that's what
1:20:34makes for a great business model
1:20:36so to bring it all together
1:20:38this is the sustainable part it's what
1:20:42you're going to do to make your customer
1:20:43successful in the long run with all the
1:20:45different facets of the business model
1:20:47that you've built
1:20:48there's one phrase I said it to you at
1:20:50the beginning you're going to remember
1:20:51if you can get a great business model
1:20:53it's going to be like that invitation
1:20:55you're going to RSVP to it
1:20:57it's going to be something that becomes
1:20:59repeatable in other words the customers
1:21:01will keep buying it'll become scalable
1:21:04because not only they keep buying it but
1:21:06you can keep operating it at a
1:21:08profitable basis
1:21:09and importantly it's valuable along the
1:21:13way because the way in which you're
1:21:15actually creating that might be very
1:21:16effective for example from a community
1:21:18or you're making it very easy to sell
1:21:20through Partners Etc and it's disruptive
1:21:22because you're doing something that
1:21:23nobody else could do
1:21:25so open source disrupted for example
1:21:27many traditional software Stacks or the
1:21:31ad model disrupted all the traditional
1:21:34software Stacks so Google for example
1:21:36gives its apps away it caused Microsoft
1:21:38to have a stock price that was a dial
1:21:40turn for nearly a decade while they
1:21:42tried to catch up and compete
1:21:44that's what business models do they're
1:21:46that disruptive and ultimately it
1:21:47becomes defensible because you build a
1:21:49motor around it with things like your
1:21:51network
1:21:52and that's what's so exciting about an
1:21:54RSVP model
1:21:55and obviously the bottom line of this is
1:21:57it's for you and your customer if you
1:21:59design this right
1:22:01so thank you for listening the summary
1:22:02of all this is going to be up online but
1:22:04you just learn four startup secrets you
1:22:06learn how to figure out how to build
1:22:07those around the core of what you're
1:22:09doing and your design and you've learned
1:22:10how to design an RSVP model that will
1:22:13create a very disruptive and defensible
1:22:14business for you real pleasure having
1:22:16you here I only have one question for
1:22:18you now do you now understand why a
1:22:20business model is important for you as a
1:22:21founder
1:22:23that was incredibly quiet
1:22:25okay good so I'll connect the dots for
1:22:28you in one way you probably didn't think
1:22:30of if you have a smart business model
1:22:31it'll make you spend less you'll be very
1:22:33cash efficient you'll have better
1:22:34valuations you'll have lower dilution
1:22:36that'll give you higher ownership and
1:22:38the bottom line is you'll have a much
1:22:39bigger outcome as a founder this
1:22:42directly impacts your bottom line
1:22:45outcome
1:22:46let's figure out how to do great jobs
1:22:47with it thanks a lot really appreciate
1:22:49it
1:22:53[Music]
1:22:58thank you

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