heuristics-140510014225-phpapp01

8/17/2019 heuristics-140510014225-phpapp01

1/35

STARTUPSCORECARD

!"#$%&$'%#$%()*+$,


2/35

Diligent Neg

S u c c e s s

F a i l u r e

IS HARD WORK THE ANSWER?

Hard work alone is NOT a reliable

predictor of success. Hard working

people sometimes fail and negligent

people sometimes succeed.

PROBLEM STATEMENT

Conventional Wisdom

NOT ENTIRELY


3/35

!

Working hard is analogous to throwing a ball hard. The velocity is an import

reaching the target, but you cannot ignore other interactive forces like gravit

.$#/0%1

23"04,5

60$&73+427('%+"&$ 4&&85

What Is the Whole Story?PROBLEM STATEMENT

6$#,27+")&33+45

9&:+70%12;#$8


4/35

STARTUP STRATEGY

The 6 Market Dynamics

CAPTURING THE WHOLE STORY

THE 3 APPLIED TOOLS

We’ve identified 6 market dynamics

That are interactively defining the

Market opportunity at any time. The

conceptual framework is the basis of

the Startup Scorecard.

7('%+"&$

3"04,

>4#470#:

%"?;& @

A#$=&%

614#"07'


5/35

Evaluate your startup idea

scorecard criteria and be mindful

described in each one. Give yours

and then an overall score, for

provides a structured approach t

opportunity and helps to impro

accounting for a full spectru

criteria and reducing blind spots.

Evaluatin

Startup Id

Startup Scorecard

Finance

• Low Capital Requirement

• Clear Profit Model

• Economies of Scale

Finance Score ______

Timing

• Recent Innovation Enabler

• Demand Already Established

• No Signs of Commoditization

Timing Score ______

Competition

• Clear Market Inefficiency

• Low Barriers to Entry

• Differentiable Position

Competition Score ______

Team

• Subject Matter Expertise

• Functional Competence

• Supplier Partnerships

Team Score ______

Product

• Customer Focused Solution

• Low Barriers to Adoption

• Clear Value Proposition

Product Score ______

Customer

• Unmet Need or Desire

• Right Size Market or Segment

• Reliable Customer Channels

Customer Score ______

Overall Score _______SmarterStartup.org

Title _____________________________________________________________________

A A

B- B+

D A-

B

Real Estate IDX Integrated CRM


6/35

WHAT’S A GOOD CUSTOMER?

The ideal customer has an unmet need or

desire. The size of this market should

match your ability to compete and ability

to deliver justify solving the problem.

Validate you can control means of customer

acquisition along the way.

STARTUP HEURISTICS

Customer Criteria

UNMET NEED OR DEUnsatisfied Customer

RIGHT-SIZE MARKET ORNeed to Segment? Too

RELIABLE ACCESS TO CDiversified Channels? Ga


7/35

FOCUS ON HELPING OTHERS

FOCUS ON CREATING VALUE

Mom was right! Focus on helping others and

everything else will fall into place. Find a need

or desire that is not yet sufficiently addressed,

where the customer is so passionate they’d

happily pay for a solution. This approach is

much more likely to create real value than

copying an existing solution.

CUSTOMER CRITERIA

Unmet Need or Desire


8/35


9/35


10/35

WHAT’S A GOOD PRODUCT?

A good product will be a direct response to

a customer need or desire. If the value is

well articulated and the customer is

passionate about your new solution, the

reason to buy will be compelling. Consider

deterrents also – are their high switch costs

and is the solution easy to use and

understand?

STARTUP HEURISTICS

Product Criteria

CUSTOMER FOCUSED SOSolves Unmet Need or

LOW BARRIERS TO ADLow Switch Cost, Usa

CLEAR VALUE PROPOCompelling Reason t


11/35

PRODUCT CRITERIA

Customer Focused Solution (bene

ADDRESS NEED OR DESIREFOCUS ON CLEAR GOAL

KEEP IT SIMPLE!DON’T AMBIGUATE THE VALUE

The purpose of your product is to create value by addressing a specific need or desire. Sta

Don’t ambiguate the value created with distracting features that aren’t aligned with


12/35

Albert Einstein

Physicist, Professor

Any intelligent fool can make things bigger and more comp

touch of genius - and a lot of courage to move in the opposit

PRODUCT CRITERIA

Customer Focused Solution (bene


13/35

PRODUCT CRITERIA

Low Barriers to Adoption (cost

LEARNING CURVEINVESTED TIME & NEW COSTS

FINANCIAL IMPACTPRIOR INVESTMENT & NEW COSTS

WORKFLOW INTEGRATIONDOES IT EASILY INTEGRATE?

Even if you create new value, customers may hesitate to adopt your product if they’ve al

too much in an existing solution that is good enough, or if adopting your solution is to


14/35

Ea

A(

Existing Inv estments

Lear ning Cur v e

IS THE VALUE CLEAR?

VALUE = BENEFIT - COST

PRODUCT CRITERIA

Clear Value Proposition (valu

B&$7&0/&8 /#:(& "('% &C7&&8 7+'%* DE 1+( 7#4 7:$:1 8&'7$0F& 1+($ )$+8(7% 0' F&4&>70#: #48

7#'& E+$ )($7;#'04, 0%G %;&4 1+( ;#/& 7$%&8 '(H70&4% /#:(& %+ +/&$7+"& 7+'

TheodoreLevitt

People don’t want quarter-

inch drills. They want

quarter-inch holes.7+'%


15/35

WHAT IS GOOD TIMING?

Every market has a natural lifecycle

driven by innovation and circumstance.

Look for new demand or interest in

something that wasn’t possible just a

couple years ago. Be a “fast follower”

into a validated emerging market rather

than speculating on new opportunity.

STARTUP HEURISTICS

Timing Criteria

RECENT INNOVATION EWas it Possible 2-5 Yea

DEMAND ALREADY ESTBuild It & They Might N

NO SIGNS OF COMMODIShrinking Margins. More


16/35

Every market has a natural lifecycle driven by innovation and circumstance. Look for s

wasn’t possible just a couple years ago & ramp up before the market capitulates (supp

TIMING CRITERIA

Innovation Life Cycle

Innovators

(2.5 %)

Early adopters

(13.5 %)

Early majority

(34 %)

Laggards

(16 %)

Late majority

(34 %)

The Golden Era #$% &'(%%)%

ConsolidatiEarly Movers

Capitulation

I

Innovation Adoption Curve


17/35

Opportunity to enter diminishes as the market matures. Geoff Moore suggests en

chasm” after demand is validated but still early enough to ramp before the market capi

TIMING CRITERIA

Innovation Life Cycle

Innovators

(2.5 %)

Early adopters

(13.5 %)

Early majority

(34 %)

Laggards

(16 %)

Late majority

(34 %)

C h a s m

Innovation Adoption Curve

Ideal point to

enter a market- Geoff Moore

N e w E n t r a n t O p p o r t u n i t y

C d T h l


18/35

Nicholas Carr

Harvard Business Review, 2003

TIMING CRITERIA

Commoditization of Technolo

It is difficult to imagine a more perfect commodity than a byte

As information technology’s power and ubiquity have grow

strategic importance has diminished .


19/35

$5,000,000

What cost $5 mill

12 years ago can

less than $5,00

observed that com

availability of mo

has radically redu

of developing a s

CommoTechn

Hosting Commoditized

Open Source Software

Cloud Services (SaaS/PaaS)

!"# %&'()*+# ,--./0

#-1.234. *56470 -89

:;3.


20/35

As cost has fal

competitive b

Competitive posit

key strateg

technological ca

consumer Interne

do you cut thro

Commo

Comm

2000 2002 2004 2006 2008 2010 2012 2013

!

#!$!!!$!!!

%!!$!!!$!!!

%#!$!!!$!!!

&!!$!!!$!!!

!$!!!$!!!

!"#$% '%()*+%)

Data From NetCraft 2013 Web Server Survey

JKC

C t t C t


21/35

GOOD COMPETITIVE LANDSCAPE?

Avoid being marginalized by excessive

undifferentiated competition. That

drives margin compression, commodi-

tization and market consolidation. Look

for inefficient markets where there’s still

‘play’ and find ways to develop a

sustainable competitive advantage.

STARTUP HEURISTICS

Competition Criteria

CLEAR MARKET INEFFStagnant or Fragmented

LOW BARRIERS TO EEasy & Cheap to Com

DIFFERENTIABLE POSSomething Special or D


22/35

L B i t E t


23/35

Sun Tzu

War Strategist, Wrote The Art of War

The general who makes many calculations before battle is wisknows when he can fight and when he cannot will be victo

COMPETITION CRITERIA

Low Barriers to Entry

L B i t E t


24/35

Avoid a fight you cannot win! A market can be much harder to enter if

competitor already has a mature offering that you must catch up to.

THINGS TO AVOID

• Existing Economies of Scale

•

Existing Mature Product (feature set)

• Well-Established Brand (halo)

• Price Competition


Low Barriers to Entry

Diff ti bl P iti


25/35

SEGMENTED MARKETFOCUS ON SPECIFIC CUSTOMER

LOW PRICE LEADERSHIPFOCUS ON VOLUME & COMMODITY

DIFFERENTIATED PRODUCTDISRUPTIVE OR INNOVATIVE

HOW ARE YOU DIFFE

WHAT MAKES YO


Differentiable Position

In order to be a desirable signal that stands out against a background of noise, you n

compelling value to some customers that others do not. There are 3 viable positioning

Porter’s Generic Competitive Strategies

Fi i l C it i


26/35

GOOD FINANCIAL PROFILE?

Look for opportunities to maximize

returns without excess capital risk.

Look for opportunities to start cheap

and to realize higher margins through

focused efforts and economies of scale.

Avoid locking up too much capital.

STARTUP HEURISTICS

Financial Criteria

LOW SUNK COSTUp Front Capital at R

WORKING CAPITAL FGap Between Payable/R

ECONOMIES OF SCMargins Increase With V

Lo S nk Costs


27/35

How much up-front capital must you commit to

develop this product or business? Sunk capitalrepresents risk since you don’t know if you’ll get it

back, as well as opportunity cost since that money

could be committed to other opportunities.

FINANCIAL CRITERIA

Low Sunk Costs

HOW MUCH CAPITAL RISK?

OPPORTUNITY COST


28/35

Some businesses r

outlay every month

take 3-4 months to

the business may nor credit to cover

months of operati

both a cost (inter

Work

Capita

DO YOU NEED A LINE OF CREDIT?

WHAT’S THE COST & RISK?

Accounts

Receivable

60 - 120 Day"Capital

Float"AccountsPayable


29/35

Look for opportunities whe

increase with volume (scal

development, and distribut

diminish on a per-unit bas

in volume. As a result profi

competitive advantage bot

Economi

of Scale

Q u a n t i t y

Profits

Marginal Cost S c a l a b l

e P r o fi t s

Team Fit & Fitness Criteria


30/35

WHAT’S GOOD TEAM FIT?

Just because an opportunity exists, doesn’t

mean your team is likely to succeed. Are

you fit to compete? Does your team have a

competitive advantage? Do you possess

deep knowledge, technical skills to deliver,

& access to key partners and resources?

STARTUP HEURISTICS

Team Fit & Fitness Criteria

SUBJECT MATTER EXPDeep Knowledge of M

FUNCTIONAL COMPETechnical Skills to D

SUPPLIER PARTNERSAccess to Materials at G

The Hacker & The Hustler


31/35

TEAM-FIT CRITERIA

The Hacker & The Hustler

“The Hacker”

Technical skills to design

develop a well-crafted a

scalable solution.

“The Hustler”

Knowledge of customer or desire, and

understanding of market dynamics to

effectively position an offering.

A team needs deep subject matter expertise and technical skills to design a solution

succeed. It is difficult for a single person to be efficient at “heads up” and “heads do

The Functional ExpeSubject Matter Expert

Supplier Partnerships


32/35

TEAM-FIT CRITERIA

Supplier Partnerships

Preferred Sourcing

Are you able to procure

supplies at competitive prices?

If affiliate mktg, can you get

preferred commissions?

Available Data APIs

Are you able to access the data

or integration APIs needed to

build your product?

Outsourc

If planning

physical produ

you have a q

can

Consider the dependencies you may have on external sources of materials, data, and

you have access to the necessary resources to deliver your product and to price com

St t S d


33/35

Evaluate your startup idea

scorecard criteria and be mindful

described in each one. Give yours

and then an overall score, for provides a structured approach t

opportunity and helps to impro

accounting for a full spectru

criteria and reducing blind spots.

Evaluatin

Startup Id

Startup Scorecard

Finance

• Low Capital Requirement

• Clear Profit Model

• Economies of Scale

Finance Score ______

Timing

• Recent Innovation Enabler

• Demand Already Established

• No Signs of Commoditization

Timing Score ______

Competition

• Clear Market Inefficiency

• Low Barriers to Entry

• Differentiable Position

Competition Score ______

Team

• Subject Matter Expertise

• Functional Competence

• Supplier Partnerships

Team Score ______

Product

• Customer Focused Solution

• Low Barriers to Adoption

• Clear Value Proposition

Product Score ______

Customer

• Unmet Need or Desire

• Right Size Market or Segment

• Reliable Customer Channels

Customer Score ______

Overall Score _______SmarterStartup.org

Title _____________________________________________________________________

A A

B- B+

D A-

B

Real Estate IDX Integrated CRM

Identifying & Locating Opportu


34/35

Identifying & Locating Opportu

Timing

Customer Product

CompetitionStartup

Opportunity

Finance Team

We cannot work simp

expect to have a des

There are many dyna

all determine whethe

succeed. Some ma

they are the excepti

STARTUP HEURISTICS

SmarterStartup org


35/35

CONCLUSION

SmarterStartup.org

We have posted in-depth articles,

diagrams, and downloadable references

and worksheets on our website.

Everything is free to use, so check it out.

www.SmarterStartup.org

heuristics-140510014225-phpapp01

Documents

Transcript of heuristics-140510014225-phpapp01