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BETTER BY MEASURE | WEEK 2: SEPTEMBER 11, 2014
BETTER BY MEASURE
VALUE CREATION
Class 2 | September 11, 2014
BETTER BY MEASURE | WEEK 2: SEPTEMBER 11, 2014
BETTER BY MEASURE | WEEK 2: SEPTEMBER 11, 2014
OUTLINE
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BUSINESS MODEL CANVAS CRITIQUE
BUSINESS SCHOOL: BETTER KNOW A BUSINESS MODEL
TEAM ASSIGNMENTS
CONCEPT GENERATION
BETTER BY MEASURE | WEEK 2: SEPTEMBER 11, 2014
BUSINESS MODEL CANVAS CRITIQUE
STARTUPS
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BUSINESS SCHOOL
BETTER KNOW A BUSINESS MODEL
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FOR PROFIT, NON PROFIT OR SOMETHING ELSE?
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V. $
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YOU USED TO HAVE TO PICK A LANE
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FOR PROFITMAKE MONEY
NON PROFITDO GOOD
V.
“The social responsibility of corporations is to increase profits.” – Milton Friedman, 1970
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NOW IT’S A PARADOX OF CHOICE
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501 (c) 3
501 (c) 4
501 (c) 7
501 (c) 9
Social Enterprise
Social Impact
Social Business
Sustainable Enterprise
S Corp
LLC
C Corp
B Corp
Coop
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YOU NO LONGER HAVE TO CHOOSE
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$NON PROFIT
with sustainable revenuesFOR PROFIT
out to change the world
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KEY DIFFERENCES
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$NON PROFIT
• Defined to fulfill a mission• Tax exempt• Does not retain profits• Does not distribute ownership• Assets belong to organization• Can’t use funds other than to
fulfill the mission for which it
was formed
FOR PROFIT• Pays taxes on profit• Can distribute ownership to
employees and investors• Assets belong to the owners• Can have a capital exit,
benefitting the owners of the
company
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BOTH REQUIRE MONEY (& LOVE) TO SUSTAIN AND GROW
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$ $
$$NON PROFIT
with sustainable revenuesFOR PROFIT
out to change the world
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$FOR PROFIT
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FOR PROFIT FUNDING SOURCES
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FOR PROFIT FUNDING SOURCES
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ARE YOU A STARTUP OR A SCALABLE STARTUP?
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• “A startup is a human institution designed to deliver a new product or service under
extreme uncertainty.” – Eric Ries
• “A startup is a company designed to grow fast.” – Paul Graham, Y Combinator
• For a company to grow bit, it has to make something a lot of people want. To reach
and serve all of those people.
• “A startup is a temporary organization formed to search for a scalable repeatable
business model.” – Steve Blank
• Most startups change their business model multiple times.
• A scalable startup is a special class of startup – world class team, large vision,
large target market, passionate belief and a reality distortion field.
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STAGES OF INVESTMENT CAPITAL REQUIREMENTS
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NOT ALL NEW COMPANIES ARE GROWTH STARTUPS
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Consulting29%
Services: Other17%
Technology: Internet14%
Real Estate14%
Service: Business Service
13%
Retail Store13%
New companies formed in 2012
Source: Kaufman foundation, Legal Zoom Startup Environment Index 2012
BETTER BY MEASURE | WEEK 2: SEPTEMBER 11, 2014
NOT ALL COMPANIES ARE GROWTH STARTUPS
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Consulting29%
Services: Other17%
Technology: Internet14%
Real Estate14%
Service: Business Service
13%
Retail Store13%
New companies formed in 2012
Source: Kaufman foundation, Legal Zoom Startup Environment Index 2012
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FOR PROFIT HYBRIDS
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• SOCIAL ENTERPRISE: Social or environmental
purpose, may be willing to limit scale opportunities
to meet more local goals, or directly serve the
need.
• B-CORPS: A type of social enterprise that also
agrees to transparently share financial results.
• SOCIAL BUSINESSES (Yunnus): For profits that
reinvest to meet a social need.
• SOCIAL IMPACT GROWTH: Aiming for scale and
for social/environmental outcomes, and high
growth returns to investors.
Source: http://www.ssireview.org/articles/entry/in_search_of_the_hybrid_ideal
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$NON PROFIT
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NON PROFIT FUNDING SOURCES
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NON PROFIT FUNDING SOURCES
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$
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SCALE IS ALL THE RAGE IN NON PROFITS
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• The average founding year of the 10 largest U.S.
non profits is 1903
• Not for profits are one of the U.S.’s fastest growing
sectors, which grew 60% to more than 1MM
organizations from 1999 to 2011
• How more recent organizations got big:
1. Developed funding in one concentrated source
rather than across diverse sources
2. Found a funding source that was a natural match
to their mission and beneficiaries
3. Built a professional organization and structure
around this funding model
“The jury is out on whether
scaling organizations will
translate into scaling impact.
There is an emerging set of
questions about how to scale
links to local community
engagement, which may be the
linchpin of lasting social
change.”
-Bridgespan Group
Source: http://www.bridgespan.org/Publications-and-Tools/Funding-Strategy/Why-More-Nonprofits-Are-Getting-Bigger.aspx#.U6RblY1dU7s
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WHERE THE MONEY COMES FROM
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Fees for Services & Goods from Private
Sources53%
Other2%
Government Grants9%
Private Contributions13%
Fees for Services & Goods from Gov-
ernment23%
Sources of Revenue for Reporting Public Chari-ties, 2009
Source: The Nonprofit Sector in Brief, 2011. National Center for Charitable Statistics, The Urban Institute
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STILL DON’T KNOW WHICH WAY TO GO?
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$NON PROFIT
with sustainable revenuesFOR PROFIT
out to change the world
V.$
WHAT DO I DO FIRST?
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WHERE TO START? CUSTOMER DISCOVERY
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• Lean startup, lean
launchpad (the focus of the
next few classes, and the
approach in class)
• Form a hypothesis about
how you will grow
• Define your total
addressable market, or the
size of your total addressable
beneficiaries
• Business model canvas
• Validate your early
hypothesis
• Test and learn
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TEAM ASSIGNMENTS
THE MOMENT OF RECKONING
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THE PLATFORMS
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THE ACCELERATOR TEAMS
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May, George & Berk Eliz, Elisa & Heath Miguel, Lusha & Steve
Brandon, Andres & Lucy Lance, Julia & Vidhi
[See us after class if to know whether we categorized you as a Maker,
Mover Shaker or Marketer]
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YOUR CHALLENGE
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• This semester, each team will launch a growth startup
• Each startup will be designed to either leverage and build off the platform of the
company you’ve been assigned (Uber etc.), or to disrupt the company you’ve been
assigned (you will make this choice next week)
• Your startups will be designed to build economic value by critically embracing civic,
environmental, and human health challenges
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THE APPROACH
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• Following Lean startup model: Hypothesis driven, customer centric business model,
rapid iteration, designed for growth
• Use measured impact assessment as lens to build business: Will evaluate
scenarios for potential environmental, civic, and human health impacts your startup
may create, and refine your business models to:
• Redefine impact as opportunity: Reframe potential impacts as opportunities
to build stronger more resilient business models
• Create benefits: Create a demonstrable net positive impact to environmental,
civic, and/or human health challenges
• Adapt: Be flexible to build for unforeseen consequences
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CONCEPT GENERATION
EXERCISE
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BRAINSTORM TIME
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YOU HAVE FIVE MINUTES (PER PROVOCATION) TO BRAINSTORM NEW BUSINESS
MODELS BUILT OFF OF YOUR COMPANY’S PLATFORM, WHICH:
1. Create as much EVIL as possible – how could you destroy civic society, the
environment and human health at the same time?
2. Would make money THIS WEEKEND (aka in two days) – what could you get up and
running right away and how?
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HOMEWORK
FIVE CONCEPTS
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HOMEWORK
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FIVE NEW START-UP CONCEPTS (PER TEAM)
PRESENT VALUE PROPOSITION FOR EACH CONCEPT
SUBMIT TO CLASS DROPBOX FOLDER BY 4PM NEXT THURSDAY
READINGS: All about disruption – Reading: The Disruption Machine
http://www.newyorker.com/magazine/2014/06/23/the-disruption-machine– Reading: Clayton Christensen Responds to New Yorker Takedown of 'Disruptive
Innovation' http://www.businessweek.com/articles/2014-06-20/clayton-christensen-responds-to-new-yorker-takedown-of-disruptive-innovation
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FOLLOW THE CLASS UPDATES
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PRESENTATIONS: http://www.slideshare.net/Silvereb