ADM3313
Session 3
Business Models
Business Models
 A sketch/summary of what the business will do and how it
will make money.
 Includes strategic components of the business idea and how it
operates.
 Often established based on trial and error.
Business Plans
 Assume full knowledge of the market, solution and customers
 Don’t require a lot of external interaction
 Are a useful implementation tool, focusing much on
operationalizing strategies
 Usually written too soon; often not written at all
Business Models
 Assume evolution: discovery and iteration
 Force “getting out of the building” to talk with clients
 Forms foundation for success or failure
Last Week
1
2
3
4
5
Idea to Viable Business
1
2
3
4
5
6
Business Model Canvas
http://ecorner.stanford.edu/authorMaterialInfo.html?mid=28
77
Value Proposition
What Are You Building and For Who?
Customer Segments
Who Are They?
Why Would They Buy?
Multiple Customer Segments
 Might have multiple segments of users
 Might have users and payers
 Might have 5 or 6 different customers
 Medical devices have doctors, hospitals, patient, insurance company, FDA, etc.
 For every customer segment you need:
 Value proposition
 Revenue model
 And may have unique channels, cust relationships, etc.
Product/Market Fit
Does the Value Proposition MVP match the Customer
Segment Archetype?
Channels
How does your Product
Get to Customers?
Customer Relationships
How do you Get, Keep and Grow Customers?
Revenue Streams
How do you Make Money?
Key Resources
What are your most important Assets?
Key Partners
Who are your Partners and Suppliers?
Key Activities
What’s Most Important for the Business?
Cost Structure
What are the Costs and Expenses
BUT…
They are all Guesses
Guess
Guess
Guess
Guess
Guess
Guess
Guess
Guess
Guess
How Do We Test?
Test the Problem, Then the Solution
What Do Tests Look Like?
 Customer conversations – lots of them
 Validate the problem not the solution yet
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Industry expert conversations
Surveys – in person and/or online
Focus Groups
Test ads: Facebook, LinkedIn, Google Adwords
Test webpage collecting sign-ups
Minimum viable product
Crowd Funding campaign: http://www.indiegogo.com/projects/pipersmart-elegant-security-and-home-automation
 Example: WipeBook
Examples
http://www.slideshare.net/esaife/business-model-canvas-101
Canvas: Multiple Segments
Kiva Business Model Example
 http://www.kiva.org/home
 https://m.youtube.com/watch?v=gLi8yIdHYbI
Business Models
In groups:
-You will be assigned a business to consider.
- Study key components of their business model (concentrate
on only one or two of the 9 business model segments).
- Be prepared to present:
1. Which 1 or 2 components of the business model is
most significant or important for this business, and why.
NFL (Green Bay Packers)
2. Luxe Box (Loose Button)
3. iPhone
4. Elance
1.
.
Key Resources
 Validation Board -
http://www.youtube.com/watch?v=HhoducyStMw&feature=player_e
mbedded#t=157
 Case Study: http://www.youtube.com/watch?v=G8Rk0c3axtI
 http://learni.st/users/trevor.owens/boards/6470-learn-how-to-use-
the-validation-board-test-your-startup-idea-without-wasting-time-ormoney?tb=026e8657ead82f28371a1cca25ae13b3
 Customer Development – http://www.youtube.com/watch?v=6t0tCXPpyM
 http://steveblank.com/2013/09/05/why-real-learning-is-outside-thebuilding-not-demoday/?goback=%2Egde_5037848_member_271423445#%21