the lean launchpad lecture 2: value proposition

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The Lean LaunchPad Lecture 2: Value Proposition. Steve Blank Jon Feiber Jon Burke http://i245.stanford.edu /. Agenda. Team Bus Model Presentations Value Proposition Product Service Ecosystem. VALUE PROPOSITIONS. - PowerPoint PPT Presentation

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The Lean LaunchPad Introduction to the Class

The Lean LaunchPad

Lecture 2: Value Proposition

Steve BlankJon FeiberJon Burke

http://i245.stanford.edu/

Agenda

Team Bus Model PresentationsValue PropositionProductServiceEcosystem

2

VALUE PROPOSITIONSimages by JAMwhat are you offering them? what is that getting done for them? do they care?Step 1. Spec. the Value PropositionProduct(s)?Service(s)?Ecosystem?

Is it a company or product?Value Proposition Common MistakeIs it just a feature of someone elses productIs it a nice to have productIs it a got to have productCan it scale to a company?

Value Proposition - DiscoveryProduct Long term visionfeatures BenefitsMinimum Viable Product spec For a web/mobile appLow fidelity MVP live and runningUnderstand Customer Problem and SolutionTest Market TypeProductProblem Statement: What is the problem?Technology / Market Insight: Why is the problem so hard to solve?Market Size: How big is this problem?Competition: What do customers do today?Product: How do you do it? Step 2: Whats the Minimum Viable Product PhysicalFirst, test your understanding of the problemNext test your understanding of the solutionProves that it solves a core problem for customers The minimum set of features needed to learn from earlyvangelistsInterviews, demos, prototypes, etcLots of eyeball contact

Step 2: Whats the Minimum Viable Product Web/MobileNOW low fidelity web/app for customer feedbackFirst, tests your understanding of the problemLATER, high fidelity web/app tests your understanding of the solutionProves that it solves a core problem for customers The minimum set of features needed to learn from earlyvangelistsAvoid building products nobody wantsMaximize the learning per time spent

Step 2: Whats the Testing the Minimum Viable Product Web/MobileSmoke testing with landing pages using AdWordsIn-product split-testingPrototypes (particularly for hardware)Removing featuresContinued customer discovery and validationSurveysInterviewsStep 2: Whats the Testing the MVP Web/Mobile - TacticsInterview customers make sure they have a matching core problemSet up web site landing page to test for conversionWhat offers are required to get customers to use the product (e.g. prizes, payment)Use problem definition as described by customers to identify key word list plug into Google search traffic estimator - high traffic means there is problem awarenessDrive traffic to site using Google search and see how deep into a registration process customers are willing to go through

Pivot ExampleRobotic WeedingTalked 75 Customers in 8 Weeks

Our initial plan

20 interviews, 6 site visitsWe got OUR Boots dirty

WeedingVisited two farms in Salinas Valley to better understand problem

Interviewed:Bolthouse Farms, Large Agri-Industry in BakersfieldWhite Farms, Large Peanut farmer in GeorgiaREFCO Farms, large grower in Salinas ValleyRincon Farms, large grower in Salinas ValleySmall Organic Corn/Soy grower in NebraskaHeirloom Organics, small owner/operator, Santa Cruz MtsTwo small organic farmers at farmers marketAg Services of Salinas, Fertilizer applicatorMowingInterviewed:Golf: Stanford Golf course Parks: Stanford Grounds Supervisor, head of maintenance and lead operator (has crew of 6)Toro dealer (large mower manufacturer) User of back-yard mowing systemMaintenance Services for City of Los AltosColony Landscaping (Mowing service for stadiums)

Autonomous Vehicles for Mowing & Weeding

We reduce operating cost- Labor reduction- Better utilization of assets (mow or weed at nights)- Improved performance (less rework, food safety)Mowing- Owners of public or commercially used green spaces (e.g. golf courses)- Landscaping service provider

Weeding- Farmers with manual weeding operationsDealers sell, installs and supports customer

Co. trains dealers, supports dealers- Mowing Dealers- Ag Dealers - Innovation- Customer Education- Dealer trainingDealer discount COGS seek a 50-60% Gross MarginHeavy R&D investment - Dealers (Mowing and Ag)- Vehicle OEMs (John Deere, Toro, Jacobsen, etc)

- Research labs

Asset saleOur revenue stream derives from selling the equipmentEngineers on Autonomous vehicles, GPS, path-planningFound weeding in organic crops is HUGE problem; 50 - 75% of costs

Crews of 100s-1000

Back-breaking task

(Ilegal) labor harder to get

1-5 weedings per year/field

$250-3,500 per acre and increasing

Food contamination risk

Decision to make mowing vs weedingApplicationIf ROI is < 1 yr they will buyLabor costs significant?Autonomous would solve problem?TAMMowing of large fieldsYes.Professionally run organizationsYesYesAdjusted up toxxx Weeding in Agriculture Agri Industry: YES!

Large Growers: Yes

Small Growers: NoYES! for organic crops

They are spending $500/ac!

Not necessarily

Key need is weed vs. crop differentiationTAM increased to $2.6 B (Total organic)

Target Market (organic specialty) 162 M/yr18%/yr growthAutonomous vehicles WEEDING

We reduce operating cost- Labor reduction (100 to 1)- Reduced risk of contamination- Mitigate labor availability concerns- Low density vegetable growers- High density vegetable growers- Thinning operations- Conventional vegetablesDealers sell, installs and supports customer

Co. trains dealers, supports dealers- Ag Dealers- Ag Service providers - Innovation- Customer Education- Dealer trainingDealer discount COGS seek a 50-60% Gross MarginHeavy R&D investment - Ag Dealers- Ag Service providers

- Research labs

Asset saleOur revenue stream derives from selling the equipmentEngineers on Machine VisionTwo problems:- Identification- Elimination

1 Week 1 CarrotBot

ConfidentialCarrotBotMachine Vision data collection platformMonochrome & Color CamerasLaser-line sweep (depth measurement)Encoders (position/velocity)Onboard data acquisition & power

CarrotBot 1.0The Canvas Updated

Research LabsEquipment ManufacturersDistribution NetworkService ProvidersTechnology DesignMarketingDemo and customer feedbackCost ReductionRemove labor force painsEliminate bio-waste hazardsIP PatentsVideo Classifier FilesRobust TechnologyFarming conventions.Demo, demo, and demo!!Proximity is paramountOrganic FarmersWeeding Service ProvidersConventional FarmersDealersDirect ServiceIndirect Service then DealersAsset SaleDirect Service with equipment rental then Asset SaleValue-Driven

Visit HighlightsAbove: Organic Carrots, 7wks. Top right: Conventional carrotsBottom Right: Very weedy. Will require multiple passes of hand weeding

Visit Highlights

Carrot vs. WeedsDue to small root systems, carrots have no chance against weeds Visit Highlights

Organic Broccoli, closely cultivated. Weeds close to plants are hand-pickedVisit Highlights

State of the Art in Weeding Technology for Organic CropsCustomer HypothesisHypothesis Confirmed Growers interested in own equipment Industrial (10,000s of acres) Large (1,000s of acres) Willing to pay $100k for one unit

Smaller growers (100s of acres) usually subcontract the labor services or rent equipment

All purchases through local dealers Customer service is essentialPre-TestPost-TestCustomer Map #1 Industrial GrowersExample: Bolthouse Farms Large Industrial Carrot Producer 8K acres/yr Equipment Operator Director, Ag Technology Justin Grove, interviewed VP, Growing Operations CFO, CEO (Jeff Dunn) Local Farm Mgr Cliff Kirkpatrick, visited

Equipment OperatorCliff, Farm MgrCustomer Map #2 Service ProvidersExample: Ag Services Service Provider, Salinas Valley Equipment Operator Service Mgr ?? (service mgrs boss)Me (left), Marty (middle, Service Mgr), Doug (right, Grower)

GrowerThe Business Plan Canvas Updated

Research LabsEquipment ManufacturersDistribution NetworkService ProvidersTechnology DesignMarketingDemo and customer feedbackCost ReductionRemove labor force painsEliminate bio-waste hazardsIP PatentsVideo Classifier FilesRobust TechnologyFarming conventions.Demo, demo, and demo!!Proximity is paramountMid/Large Organic FarmersAgricultural corporationsWeeding Service Providers

Mid/Large Conventional FarmersDirect ServiceIndirect Service then DealersDirect Service with equipment rental($1,500/d; 120d/yr )Low density: $1,500/dHigh density: $6,000/dValue-Driven

World Ag Expo interviews:the need is real and wide spread10+ interviews at showEveryone confirmed the needRobocrop, UK based, crude competitor sells for $171 K

Revenue StreamMid to small growers prefer a serviceLarge growers prefer to buy, but OK with service until technology is provenCharging for labor cost saved is OK, as we provide other benefits (food safety, labor availability)

The Business Canvas Updated

Research LabsEquipment ManufacturerDistribution NetworkService Providers 2 or 3 Key FarmsTechnology DesignMarketingDemo and customer feedbackCost ReductionRemove labor force painsEliminate bio-waste hazardsIP PatentsVideo Classifier FilesRobust TechnologyFarming conventions.Demo, demo, and demo!!Proximity is paramountMid/Large Organic FarmersAgricultural corporationsWeeding Service Providers

Mid/Large Conventional FarmersDirect ServiceIndirect Service then DealersDirect Service with equipment rentalLow density: $1,500/dHigh density: $6,000/dValue-Driven R&D Bill of Materials Training & Service Sales

Autonomous weeding - Final

We reduce operating cost- Labor reduction (100 to 1)- Reduced risk of contamination- Mitigate labor availability concerns- Low density vegetable growers- High density vegetable growers- Thinning operations- Conventional vegetablesDirect- Provide high quality service at compe