apec start-up accelerator leadership summit mentorship program business...
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APEC START-UP ACCELERATOR LEADERSHIP SUMMIT
MENTORSHIP PROGRAM
BUSINESS MODEL AND CUSTOMER DEVELOPMENT
AGENDA
13th August 2013 Business Model and Customer Development 2
Introduction
Business Model Development
Customer Development
Channel Development
INTRODUCTION
INTRODUCTION
JOHN WILLIAMSON
13th August 2013 Business Model and Customer Development 4
Vertu Taiwan – Head of ODM
Puno Systems – Founder & CTO
i-mate™ – Co -founder & CTO
O2 UK – Principal Radio Architect
Sendit – Co-founder & Technical Product Manager
Acquired by EQT October 2012
Closed April 2012
Flotation on London AIM for $400M Sept. 2006
Acquired by Telstra October 2005
Acquired by Microsoft July 1998
BUSINESS MODEL DEVELOPMENT
BUSINESS MODEL DEVELOPMENT
INTERNAL DELIBERATIONS
13th August 2013 Business Model and Customer Development 6
Entry strategy
Incorporation
Funding
Customer Development & Acquisition
Pivot
Growth
Exit Strategy
Market size
Competitors
Unique and differentiated product
Validate value proposition
EXTERNAL DELIBERATIONS
BUSINESS MODEL DEVELOPMENT
ENTRY STRATEGY
13th August 2013 Business Model and Customer Development 7
Define your value proposition?
Does your product target a viable market?
What differentiates your product from competitors?
What are the barriers to entry?
How much start-up capital do you need?
How much cash do you need to prototype?
How do you plan to validate the business?
How will you finance the business?
What price will consumers pay?
What are your financial projections?
What is your end game?
What are your strengths, and your weaknesses?
Who are your competitors?
How much power do your suppliers have?
How much power do your buyers have?
How should you sell your product?
How should you market your product?
Does the business scale?
How do you protect your IP?
Who do you ask for help?
How do you keep employees happy?
How committed are you to making this happen?
BUSINESS MODEL DEVELOPMENT
INCORPORATION
13th August 2013 Business Model and Customer Development 8
Incorporation Jurisdiction
IPR Protection
Target Markets
Logistics Considerations
Labor Law
Tax Obligation
Bootstrap
Friends & Family
Angel
Incubator
Kickstarter / Indiegogo
Profitable
Venture Capital
FUNDING OPTIONS
BUSINESS MODEL DEVELOPMENT
CAPITAL COSTS
13th August 2013 Business Model and Customer Development 9
Office Rental
IT Infrastructure
Internet, Hosting & Telephony
e-Payment Solution
DRM
Insurance
Consulting
Marketing
Letter of Credit
IPR & Trademark
Employment Tax
Corporate Tax
Salary Inflation
Retail Margin
Service Life (years)
FOB
Freight Cost
MOQ Cost Decrease
AMS
Marketing Margin
Customer Messaging
Retail Price
Vendor Costs (pre sale)
Vendor Costs (post sale)
ID NRE
Design NRE
Tooling NRE
Certifications
Samples
Internet, Hosting & Telephony
Warranty
OPERATIONAL COSTS
BUSINESS MODEL DEVELOPMENT
TYPES OF REVENUE
13th August 2013 Business Model and Customer Development 10
SOFTWARE
Ad supported / Freemium
Web + App
SaaS
Commercial customers
Consulting action/reward
HARDWARE
Distribution / OEM / ODM
Kickstarter (Bootstrap funding, samples cost)
Higher investment, better returns
FUNDING IS NOT REVENUE
Strong sensitivity analysis
High, Target, Low forecast
Identify break even year
Identify 10x ROI year
Model both Profit & Bank Balance
Hardware Tooling & NRE
BUSINESS MODEL DEVELOPMENT
MULTIPLE MODELS
13th August 2013 Business Model and Customer Development 11
-$10,000,000
-$5,000,000
$0
$5,000,000
$10,000,000
$15,000,000
$20,000,000
Year 1 Year 2 Year 3 Year 4 Year 5
Best $$
Bull $$
Baseline $$
Bear $$
Worst $$-$10,000,000
-$5,000,000
$0
$5,000,000
$10,000,000
$15,000,000
$20,000,000
Year 1 Year 2 Year 3 Year 4 Year 5
Best
Bull
Baseline
Bear
Worst
BUSINESS MODEL DEVELOPMENT
PIVOT
13th August 2013 Business Model and Customer Development 12
Continual validation
Periodic review
Analyze new opportunities
Plan for change
Be a leader
My first 10 startups failed not because the idea wasn’t
sound, the business case was flawed, the team wasn’t
capable. Growing the business beyond 100 people proved
impossible.
Paraphrasing Rolf Skoglund
Mange Growth
Plan for it
Learn to let go, delegate
GROWTH
BUSINESS MODEL DEVELOPMENT
EXIT STRATEGY
13th August 2013 Business Model and Customer Development 13
Know where you are going
Clear ownership at incorporation
VC dilution
Plan for unexpected exits and entrants
Profitability
Endless Funding
Acquisition
Flotation (IPO)
Sale
Closure
TYPES OF EXIT
CUSTOMER RETENTION
CUSTOMER DEVELOPMENT
ACQUISITION
13th August 2013 Business Model and Customer Development 15
Cost of customer acquisition
Routes to market
Actual customer acquisition
Agency
Supplier
Producer
Distributor
Social Media
App Store
End customer
Customer replication
After Market Service
Product longevity
Alternate distribution models
Product novelty, new product development
Copy entrant
RETENTION
CUSTOMER DEVELOPMENT
END-CUSTOMER CONTACT
13th August 2013 Business Model and Customer Development 16
Old Media
Social Media
Distributors
Web sales (Amazon)
Direct communication
Telcos/Carriers
Shadow competitors (Pfizer)
Enterprise volume sales (Ubuntu Edge)
Brand integrity
Customer loyalty (Vertu)
AMS
CHANNEL RETENTION
CHANNEL RETENTION
13th August 2013 Business Model and Customer Development 18
Keep channel happy
Consistent, trusted roadmap
Development funding
Distributor margin
Maintenance overhead
Don't push too hard
Build engineering links
13th August 2013 Business Model and Customer Development 20 -$10,000,000
-$5,000,000
$0
$5,000,000
$10,000,000
$15,000,000
$20,000,000
Year 1 Year 2 Year 3 Year 4 Year 5
Best
Bull
Baseline
Bear
Worst
13th August 2013 Business Model and Customer Development 21 -$10,000,000
-$5,000,000
$0
$5,000,000
$10,000,000
$15,000,000
$20,000,000
Year 1 Year 2 Year 3 Year 4 Year 5
Best $$
Bull $$
Baseline $$
Bear $$
Worst $$
13th August 2013 Business Model and Customer Development 22 -$10,000,000
-$5,000,000
$0
$5,000,000
$10,000,000
$15,000,000
$20,000,000
Year 1 Year 2 Year 3 Year 4 Year 5
Best
Bull
Baseline
Bear
Worst
Best $$
Bull $$
Baseline $$
Bear $$
Worst $$