BUSINESS MODEL INNOVATION

Eitan Katz@eitank

The story about the dentist software(based on Fred Wilson’s blog post)

$25,000 per dentist

$100mm annual revenue

Dentasoft

Goes public (IPO)

Photo credit: Kevin Krejci via VisualHunt / CC BY

$5,000 per year per office

Raise $10mm from Seqouia

Dent.io

Misses the quarter projections

Stock crashes

Dentasoft

Photo credit: ॐFouquier via Visual hunt / CC BY-NC

Open source communityandHosted solution

DentOps / DentHub

“Let’s Disrupt the dental industry” -- @NitrousOxide

Photo credit: arecity via Visualhunt.com / CC BY-NC-SA

Dentasoft files for bankruptcy and restructure their $100mm debt round they took after going public.

NitrousOxide is featured on the cover of Wired as the man who disrupted the dental industry.

The Dent.io board fires its CEO and begs the founders to come back and take control.

Lessons

1.Software alone is a commodity. There is nothing stopping anyone from copying the feature set, making it better, cheaper, and faster. And they will do that.

2.Startups should include something other than features and functions. Something that was not a commodity

What will provide defensibility?

Product and technology

MarketPeople

Simple?

Not quite!More complicated than that.

(Technology can be copied)

Product/Market fit is all that matters

“The true product of a successful entrepreneur is not just a great solution or an innovative piece of technology, but a repeatable process that connects your solution with paying customers -- in other words, finding a working business model.”

-Ash Maurya

What is a business model?

“A business model is a story about how an organization creates, delivers and captures value.”

-- Saul Kaplan, The business model innovation factory

Business model innovation Examples

•American Express and the Travelers Checks (revenue before cost)

•The credit card (loan that the seller pays the interest)•AirBnB•Peer-to-peer lending

Business model archetypes

Photo via Visualhunt

Direct

Multi-sided model

Marketplace

HOW TO PROTECT YOUR BUSINESS MODEL

Network effect:

Value = f(number of users)

Takeaways

1. Think value, not features

2. Use a business model that will help you disrupt and protect

3. Bake network effects into your product

Thank you

Eitan Katz@eitank or LinkedIn: eitankatz