International Business Model Competition - Information (Rules) Packet

The founders and administrators of the competition retain the right to alter this packet at any time and for any reason without notice International Business Model Competition - Info Packet • 1

International Competition

2014 INFORMATION

PACKET

BusinessModelCompetition.com [email protected]

801-422-7437 470 Tanner Building

Rollins Center for Entrepreneurship & Technology Brigham Young University

http://www.businessmodelcompetition.com/

mailto:[email protected]


The founders and administrators of the competition retain the right to alter this packet at any time and for any reason without notice

International Business Model Competition - Info Packet • 2

TABLE OF CONTENTS CASH PRIZES TO BE AWARDED .......................................................................................................... 3

2014 COMPETITION TIMELINE ............................................................................................................... 3

WHAT IS THE BUSINESS MODEL COMPETITION? ........................................................................ 4

HOW DOES A BUSINESS MODEL DIFFER FROM A TRADITIONAL BUSINESS PLAN? ......... 4

WHAT DO WINNING TEAMS DO? .......................................................................................................... 4

COMPETITION DETAILS .......................................................................................................................... 5

ELIGIBILITY CRITERIA ............................................................................................................................................................. 5

STRUCTURE OF THE COMPETITION .................................................................................................................................. 6

SUBMISSION REQUIREMENTS ............................................................................................................................................. 7

JUDGING CRITERIA & PANELS ............................................................................................................................................. 8

CASH PRIZES & DISBURSEMENT ........................................................................................................................................ 8

APPENDIX .................................................................................................................................................... 9

CERTIFICATIONS AND AGREEMENTS................................................................................................................................ 9

ELIGIBILITY CRITERIA ........................................................................................................................................................... 10

ADDITIONAL RESOURCES ................................................................................................................................................... 11



CASH PRIZES TO BE AWARDED

1st Place $25,000 2nd Place $10,000 3rd Place $7,500 4th Place $5,000 5th – 8th

Place $2,000

9th – 40th Place

$1,000

(Prize amounts are subject to change)

2014 COMPETITION TIMELINE



WHAT IS THE BUSINESS MODEL COMPETITION? Over 85% of new businesses fail within a few years, often because they try to plan their way to success. What’s worse, research suggests that writing a business plan has no correla-tion with success. It’s time to change. The International Business Model Competition represents a radical departure from the past and the crest of a new para-digm in entrepreneurship. The IBMC is not a business plan competition. Rather than focusing on developing a robust business plan, complete with financials and slick presenta-tions, the business model competition focuses on identifying and precisely defining the assumptions of the new venture, testing those assumptions in the field, and then pivoting (changing) based on the lessons learned. The IBMC rewards students for 1) breaking down ideas into key business model assumptions, 2) getting outside the building and testing their assumptions with customers, 3) applying customer develop-ment and lean startup principles to nail the solution, and 4) learning to pivot (change) until arrival at a customer-validated business model. Ultimately we believe this will dramatically improve the suc-cess rate of new ventures. The IBMC is the first international competition of its kind and is open to all students enrolled at an accredited institution of higher education anywhere in the world. Each year thousands of student teams from hun-dreds of schools all over the world participate. The IBMC is sponsored by the Rollins Center for Entrepre-neurship & Technology at Brigham Young University and is co-hosted by Harvard and Stanford.

HOW DOES A BUSINESS MOD-EL DIFFER FROM A TRADI-TIONAL BUSINESS PLAN? The International Business Model Competition is about rec-ognizing that any new venture is just a guess at a problem / solution and the only valid way to test whether those guesses are right is to “get outside the building” and start working with customers. So what exactly is the difference between a business model and a business plan?

Outside versus Inside the Building: Most business plans are written using library research. Successful business models are achieved through talking to customers and making changes based on feedback from those conversations. Input versus Output Focus: Most business plan competi-tions are focused on compelling write-ups and slide presenta-tions that check all the right boxes. In the IBMC, sleek presentations are not going to cut it. And the boxes that do need to be checked are completely new and impossible to fake. The goal is to identify your assumptions and turn them into facts by getting outside the building. And when a startup has done this, the story is compelling and it is an awesome one to tell because it is based on facts. Validated learning about what customers really want is the stuff a business mod-el is made of and music to the ears of potential investors. Lean Development versus Product Development: Most business plans imply a careful development process to opti-mize the final outcome. Forget it. Apply Lean Startup princi-ples to radically compress your development cycle and take a prototype (even if it is just a picture drawn in the late hours of the night) to jump start the learning process. Find the most creative but minimally viable product and start learning. Change versus Fortify: Most business plans attempt to forti-fy/prove the core idea with evidence. Judges of the IBMC will be looking for instances where teams learned they were wrong and made a pivot in a new and right direction. Your application should focus on the lessons learned and “pivots” made—the more the better. Chasing Customers versus Chasing Funding: Let’s face it, many business plans are written to raise money. Unfortunate-ly the business plan formula doesn’t capture the answers VCs most want to see: real validation you can make a product cus-tomers want. Instead of chasing the money, chase customers. Getting into the field you will validate the model and raising money will be easy (see appendix for more). Launching versus Talking: Business plans often talk about what will happen in the future. The IBMC is about what you learned by applying a Customer Development / Lean Startup / Nail It then Scale It process.

WHAT DO WINNING TEAMS DO? Still not convinced how a customer-validated business model differs from a business plan? Here is a condensed work plan for what a team actually does to have a chance of winning the IBMC (an alternate extended work plan is available in the appendix). These are not formulas for success but illustra-tions of how forging ahead with a business model should be different from writing a business plan.

http://marriottschool.byu.edu/cet/

http://marriottschool.byu.edu/cet/



Business Model Development (based on, Steve Blank’s Cus-tomer Development process/course, Alexander Osterwalder’s Business Model Generation book, and Nathan Furr’s Nail It then Scale It process. For an extended process, see appendix).

1. Find a Problem: Find a big customer problem worth solving and write down all your key hypothe-ses about the business model to solve this problem. We recommend that you use Alex Osterwalder’s Business Model Canvas as a scorecard to track your assumptions and the changes that you make.

2. Nail the Pain: Get outside the building and inter-view customers face-to-face to understand the “job” customers are trying to do, their current pain, and how they solve that pain. Pivot when you discover you are wrong.

3. Nail the Solution: Develop a minimum viable prod-uct prototype and get outside the building face-to-face with customers to test your vision of the solu-tion. Pivot when you discover you are wrong. Re-peat these tests until you nail the solution.

4. Nail the Go-to-Market Strategy: Get outside the building to understand the end-to-end customer buy-ing process, the market communication infrastruc-ture, the distribution infrastructure. Identify the lev-erage points. Pivot.

5. Nail the Business Model: Use the facts discovered to validate the revenue model for the business.

6. Pivot: Throughout the process learn to change course whenever you discover you are wrong.

Whichever particular method you use, the key steps are to 1) identify your assumptions, 2) get outside the building to test those assumptions, 3) validate the facts with customers and pivot as needed, and 4) identify lessons learned. For the com-petition, you will tell us about the process you went through, revealing the dead ends and surprises that you discovered along the way. Remember, the goal is validated learning about the business model assumptions and failing early is a success compared to failing late. If you fail but have a compelling story, submit anyway—you may get the award! Your final submission for the competition will be a narrated multimedia presentation (PowerPoint, Keynote, Prezi, etc.) saved as a video file and uploaded to YouTube that tells your story. Remember that rather than focusing on a business plan or trying to sell your idea, your presentation needs to focus on telling the story of how you tested your unex-amined assumptions in the field and developed a validated business model. You will manifest this by demonstrating a deep understanding of customers and revealing the details of how you may have discovered that some of your assumptions were wrong and how you changed accordingly. Resources to help you include:

• Steve Blank:

o The Startup Owner’s Manual and www.steveblank.com

• Nathan Furr:

o Nail It then Scale It and www.nailitthenscaleit.com

• Alex Osterwalder:

o Business Model Generation and www.alexosterwalder.com

• Rhoads, Swenson & Whitlark o Boom Start

www.boomstart.com • IBMC Website:

o BusinessModelCompetition.com

COMPETITION DETAILS The International Business Model Competition focuses on identifying and precisely defining the assumptions of the new venture, testing those assumptions in the field, and then piv-oting (changing) based on lessons learned. The IBMC re-quires a focus on testing assumptions rather than the typical approach of gathering secondary data, developing validated learning rather than writing a business plan, getting outside the building rather than researching inside the building, ap-plying lean development rather than relying on product de-velopment, and “reinventing” or changing course rather than executing on the plan. Prizes are based on the Judging Crite-ria & Process (see later section in this document). Student directors and volunteers lead the IBMC and are ad-vised by some of the best academic and business minds around. This packet includes everything you need to know to compete in the final event of the International IBMC. ELIGIBILITY CRITERIA The organizers of the International Business Model Competi-tion (IBMC) recognize that no set of criteria can apply to every circumstance and therefore reserve the right to deter-mine eligibility or to disqualify any team that it determines to be in violation of the spirit of the competition. Similarly, stu-dents who feel they fit the spirit of the competition, but may be in minor violation of the eligibility criteria, may submit a petition to [email protected]. Petitions will be evaluated on a case by case basis. All decisions will be made by the IBMC organizers and are final. Team Composition Competing teams should consist of at least 2 and no more than 5 degree-seeking students enrolled part-time (6 credit hours or more) or full-time at an accredited institution of higher education during the competition year. Non-students

http://www.steveblank.com/

http://www.nailitthenscaleit.com/

http://www.alexosterwalder.com/

http://www.boomstart.com/




may be part of the venture but cannot participate in the com-petition (e.g., video submission, pitching, Q&A, etc.). In general, a member of the student team should be CEO, COO, or President of the venture, or members of the student team should occupy 50% or more of the functional area man-agement positions that report directly to the CEO, COO, or President. Ownership The student team must have a minimum of 20% ownership in the venture. Control The student team must control a minimum of 51% of the ven-ture’s voting rights. (The IBMC organizers recommend main-taining this control for at least 2 years beyond the date of the competition.) Revenue Because revenue is often the best form of validation, minimal revenues gained in the process of validation are allowable for the competition. Excessive revenues will be evaluated on a case-by-case basis by the IBMC organizers. Investment No more than $100,000 will be allowed from friends and family, debt (any source -- convertible, venture, traditional), and accelerators. Any convertible debt must be in the form of a standard debt note with a separate agreement specifying the rules for conversion. Conversion cannot occur for at least 2 years from start date of competition. NOTE: We do not encourage investment prior to the competition because investment encourages scaling. Premature scaling is a leading cause of startup failure. Nature of Venture Ventures cannot be a buyout, an expansion of an existing company, a real estate syndication, a tax shelter, a franchise, a licensing agreement for distribution in a different geograph-ical area, or a spin-out from an existing corporation. Licens-ing technologies from universities or research labs is encour-aged, assuming they have not been commercialized previous-ly. Prior Activity Ventures may compete in the IBMC only once. Dropping Out of the Competition – If a team with-draws, or does not compete in the competition after accepting a bid, the team and university will be subject to disqualifica-tion from competing in the International Business Model Competition for that year and the following year—a two year ban.

Professional Mentor – We suggest that all teams utilize at least one outside professional familiar with “business model-ing and lean startup principles” as a mentor. STRUCTURE OF THE COMPETITION Phase I – Apply: Fill out the submission form on the Inter-national Business Model Competition’s Apply Page. In order to successfully complete this form you will need:

• the link to your narrated multimedia presentation (PowerPoint, Keynote, Prezi, etc.) saved as a video and uploaded to YouTube,

• a digital copy of the signed Certifications and Agreements page found in the Appendix of this packet

• a brief description of your company • a company logo • a picture of all the members on your team • contact information for two team members

Your video must be no more than 8 minutes long. If you need help creating your video submission, check out the Pre-paring Your Submission Page of the IBMC website.

Your entry must be submitted before 11:59pm on Mon-day, March 31st, 2014.

Phase II – Pitching, Mentoring & Networking: The semi-finalists will have the opportunity to pitch to, receive mentoring from, and network with a variety of lean startup experts on Thursday, May 01, 2014. Formal and informal networking amongst semi-finalist teams will also take place. Phase III – Semi-Finals: The semi-finalists will present their business models at Brigham Young University on Fri-day, May 02, 2014 from 9:00am-12:00pm. These 10 minute pitches should include a multimedia presentation and detail the business model process in a persuasive and professional manner. While Q&A with the judging panel is not required during this round, teams should be prepared to answer ques-tions. The top models will be selected as finalists.

Phase IV – Finals: The finalists will present their business models at Brigham Young University on Saturday, May 03, 2014 from 10:00am-12:00pm. All are welcome to attend this event. Each team will present for 10 minutes followed by up to 10 minutes of Q&A with the judging panel. Fit with Other Competitions – Students participating in the IBMC may participate in other types of competitions, including business plan competitions. However, it is im-portant to clarify the fit with a business plan competition. Participation in the International Business Model Competi-tion should occur before writing a business plan. It is the strong belief of the competition founders that most businesses and business plans fail because entrepreneurs act

http://www.businessmodelcompetition.com/apply.html

http://www.businessmodelcompetition.com/preparing-your-submission.html




on untested assumptions. However, entrepreneurs who first identify, test, and validate their business model assumptions in the field with customers are much more likely to develop businesses that succeed and are well positioned to dominate business plan competitions because they have facts, not guesses. SUBMISSION REQUIREMENTS Participants of the International Business Model Competition must adhere to the following submission requirements: Submission Entry – Your submission entry for the compe-tition is completed online at the IBMC website’s Apply Page. In order to complete the submission form you will need:

• the link to your narrated multimedia presentation (PowerPoint, Keynote, Prezi, etc.) saved as a video and uploaded to YouTube and

• a digital copy of the signed Certifications and Agreements page found in the Appendix of this packet.

• a brief description of your company • a company logo • a picture of all the members on your team • contact information for two team members

Your video must be no more than 8 minutes long. If you need help creating your video submission, check out the Pre-paring Your Submission Page of the IBMC website. Your entry must be submitted online before 11:59pm on Monday, March 31st, 2014. Submission Guidelines – Although there is not one for-mat for successful models, we suggest that business model submissions contain certain components to communicate effectively:

• Title Slide: Who are you and what does the business do (pain and solution)?

• Assumption Slides: What were your initial hypothe-ses? Did you identify a customer problem? What were the key hypotheses about the business model? Remember some of your most important hypotheses are about customer pain and your solution to that pain.

• Action Slides: How did you test these hypotheses? What specific tests did you conduct? What did you discover? What facts were uncovered? What facts remain to be uncovered? One of the major purposes of the competition is to see if you have truly NAILED THE PAIN—but what data do you have?

• Pivot Slides: How were your initial assumptions proved right or wrong? What pivots did you make?

• Validated Business Model Slides: Diagram your business model and present the facts? How does the business make and deliver value? Consider the fol-lowing critical points to communicate:

o Solution Slides: Explain your current solu-tion to the customer problem. What evi-dence do you have of this solution (custom-er statements, pilot commitments, purchase orders?)

o Go-to-Market Strategy: Indicate the deci-sion-makers and influencers of getting to a consummated sale. Share the facts and opinions you have gathered from customers that show you understand and can convinc-ingly communicate with customers.

o Size of Market: Be able to show TAM, SAM, your target market, and your apex for entry into the market.

• Lessons Learned: Be sure to communicate the les-sons learned, including pivots and failure.

• Appendices: Appendices should be included only when they support the body of the model. These ad-ditional slides need to be available for giving context and for answering questions judges might have. Be-cause judges might not read all the material in the appendices, the body of the model must contain all information pertinent to the model.

In general, remember that the goal of the International Busi-ness Model Competition is to 1) identify your early hypothe-ses (or guesses), 2) test these assumptions in the field with customers, 3) turn your guesses into facts or pivot based on the new information, and 4) identify lessons learned. Your slides should clearly highlight the initial hypotheses and how the process of investigating the business model with custom-ers has generated learning that has validated the model or led to changes in the business model. Confidentiality – Participants should be aware that neither administrators of the competition nor judges of the business models will be required, nor should they be asked, to sign non-disclosure agreements (NDA). Participants are encour-aged to be selective about what they disclose, to label models and contents with the words “CONFIDENTIAL AND PRO-PRIETARY” and to seek legal counsel if they have any fur-ther questions regarding the legal protection of their ideas. Contestants are responsible to protect any information con-cerning the model that they share with mentors, team mem-bers, and fellow participants in the competition. The Interna-tional Business Model Competition directors take no respon-sibility for unwanted disclosure in these instances. Contestants should be careful about disclosing information concerning patentable concepts. Although a patent applica-tion can be filed in the U.S. up to one year after the first pub-lic disclosure of an invention, many foreign countries do not allow patent applications unless they are implemented before any sort of public disclosure.

http://www.businessmodelcompetition.com/apply.html





JUDGING CRITERIA & PANELS Each round of the International Business Model Competition is generally judged using the following questions:

• Did the team use the Business Model Canvas or sim-ilar tool to identify and track assumptions?

• Did the team clearly state their assumptions / hy-potheses?

• Did the team identify the most crucial assumptions to test first (the ones that will kill their business)?

• Did the team design low cost, rapid, but reliable tests of these hypotheses?

• Did the team conduct the tests in a reliable manner? o Number of tests - should be adjusted for in-

dustry, product type (web vs physical prod-uct), and business type (B2B vs B2c)

o Quality of tests - interviews are high quali-ty, surveys & focus groups are much lower quality (you don’t know which questions to ask) unless interviews have been conducted first

• Did the team clearly state what they learned and how that learning informed a pivot?

• Was a pivot the team made supported by evidence or did they fail to pivot when the evidence clearly stat-ed it?

• Has the team developed a prototype or minimum vi-able product (we want to reward prototypes over full products unless the product is the result of many prototypes tested with customers—in other words, we want to reward working from prototypes up to products, we do not want to reward just building products from the start)?

• Is the team solving a significant problem (defined in terms of money or impact)?*

• Does the team have significant evidence that the so-lution is validated (includes letters of intent, pur-chase contracts, sales, and partners)?*

* these criteria serve as tie breakers NOTE: Because web-based businesses are easier to test, these companies can often pivot faster. We tend to treat phys-ical products, services, and web/software as slightly different categories in the judging, then pick the best of these catego-ries to compete. The composition of the judging panels for each round of the competition will be as follows:

• Preliminary Round – The preliminary round will be judged by a contingent of Brigham Young Uni-versity personnel and other external investors and entrepreneurs acquainted with the lean startup ap-proach.

• Semi-Finals – The semi-finals will be judged by a contingent of Brigham Young University and per-sonnel and other external investors and entrepre-neurs acquainted with the lean startup approach.

• Final Event – The final event will include a panel of judges who represent some of the foremost though leaders in the lean startup movement. Past final event judges have included Steve Blank, Alex Osterwalder, Nathan Furr, and Tom Eisenmann.

CASH PRIZES & DISBURSEMENT Through the support of university and corporate sponsors, the IBMC is able to recognize top performers with cash awards. The competition is funded by generous donors whose mission is to help build great entrepreneurial leaders and ventures. Cash prizes for the International Business Model Competition will be as follows:

• 1st Place: $25,000 • 2nd Place: $10,000 • 3rd Place: $7,500 • 4th Place: $5,000 • 5th - 8th Place: $2,000 • 9th – 40th Place: $1,000

All winnings are only to be used for business expenses that will help launch and/or grow your business. Cash prizes for 5th through 40th place will be awarded in full upon award, Cash prizes for 1st through 4th will be issued 50% upon win-ning, and then the balance in a scheduled milestone achieve-ment plan negotiated with the winning teams and the IBMC organizers. The purpose of the milestones are to encourage that money be used for business development.



APPENDIX

CERTIFICATIONS AND AGREEMENTS

By submitting a Business Model ("the Model") to the International Business Model Competition ("the Competi-tion"), each Contestant listed below agrees to the following conditions:

Originality of Model—The ideas and concepts set forth in the Model are the original work of the Contestants and no Contestant is under any agreement or restrictions that prohibit or restrict his or her ability to disclose or submit such ideas or concepts to the Competition.

Compliance with the Eligibility Guidelines of the Competition—Each Contestant has reviewed the Eligibility Guidelines ("Guidelines") and by his or her signature below certifies that this entry and the team or individual it represents complies with the Guidelines and agrees to abide by the Guidelines. Each Contestant also certifies that the venture had no revenues and raised no outside equity capital and did not undertake any other formal startup activities prior to the current academic year.

Waivers and Releases—Each Contestant understands that the IBMC organizing committee, any co-sponsors, judges, mentors, co-organizers ("Competition Officials") and its directors, officers, partners, employees, consult-ants, and agents (collectively "Organizer Representatives") are volunteers and are under no obligation to render any advice or service to any Contestant. The views expressed by the judges, co-sponsors, co-organizers, and the Organizer Representatives are their own and not those of the IBMC organizing committee or any other person or entity.

Each Contestant also understands and agrees that although the Competition Officials have taken and will take the steps described in the Guidelines regarding confidentiality of the ideas and models submitted by the Contestants, the legal protection of the ideas and the Models submitted by the Contestants to the Competition is otherwise the sole responsibility of the Contestant. In consideration of the time, expertise, and other resources provided by the Competition Officials and Organizer Representatives to the Competition, each Contestant hereby voluntarily re-leases each Competition Official and each Organizer Representative from any further liabilities, responsibilities, and accountabilities relating to or arising out of such Competition Officials or Organizer Representative's partici-pation in the Competition.

TEAM (OR COMPANY) NAME: _________________________________________________

CONTESTANTS (TEAM MEMBERS): List all team members, team contact first.

NAME EMAIL SCHOOL AFFILIATION SIGNATURE DATE

Please indicate an industry (retail, manufacturing, medical, etc) for your business:



International Business Model Competition 2014 ELIGIBILITY CRITERIA

The organizers of the International Business Model Competition (IBMC) recognize that no set of criteria can apply to every circumstance and therefore reserve the right to determine eligibility or to disqualify any team that it determines to be in violation of the spirit of the competition. Similarly, students who feel they fit the spirit of the competition, but may be in minor violation of the eligibility criteria, may submit a petition to [email protected]. All decisions will be made by the IBMC organizers and are final. Team Composition Competing teams should consist of at least 2 and no more than 5 degree-seeking students who are enrolled part-time (minimum of 6 credit hours) or full-time in a semester during the competition year. Non-students may be part of the venture but cannot participate in the competition (e.g., video submission, pitching, Q&A, etc.). In general, a member of the student team should be CEO, COO, or President of the venture, or members of the stu-dent team should occupy 50% or more of the functional area management positions that report directly to the CEO, COO, or President. Ownership The student team must have a minimum of 20% ownership in the venture. Control The student team must control a minimum of 51% of the venture’s voting rights. The IBMC organizers recommend maintaining this control for at least 2 years beyond the date of the competition. Revenue Because revenue is often the best form of validation, minimal revenues gained in the process of validation are allow-able for the competition. Excessive revenues will be evaluated on a case-by-case basis by the IBMC organizers. Investment No more than $100,000 will be allowed from friends and family, debt (any source -- convertible, venture, tradition-al), and accelerators. Any convertible debt must be in the form of a standard debt note with a separate agreement specifying the rules for conversion. Conversion cannot occur for at least 2 years from the date of the competition.

NOTE: We do not encourage investment prior to the start of the competition because investment encourages scaling. Premature scaling is a leading cause of startup failure.

Nature of Venture Ventures cannot be a buyout, an expansion of an existing company, a real estate syndication, a tax shelter, a fran-chise, a licensing agreement for distribution in a different geographical area, or a spin-out from an existing corpora-tion. Licensing technologies from universities or research labs is encouraged, assuming they have not been commer-cialized previously. Prior Activity - Ventures may compete in the IBMC only once.





International Business Model Competition 2014 ADDITIONAL RESOURCES

Business Model Development Guidelines: The following is a set of guidelines for how to develop a business model adapted from Steve Blank’s course on Business Model Development / Lean Launchpad. The guidelines are designed as a series of action-based steps to get entrepreneurs outside the building and testing their as-sumptions with customers:

1. Analyze the idea: Write down the key hypotheses about each area of the nine areas of the business model based on Alex Osterwal-der’s Business Model Generation (see below).

a. Central questions: i. What is the core customer pain, or “job” that you are doing for the customer?

ii. What is the business model? iii. What are the hypotheses about each of the 9 parts of the business model? iv. What is the Minimum Feature Set to test these assumptions? v. What are experiments needed to run to test business model hypotheses?

vi. What is market size? In other words, how will you determine whether this is a business model worth pursuing?

2. Test the value proposition: Get out of the building and talk to 10-15 customers face-to-face. Use Survey Monkey or other tools to

get more data but be sure to talk to customers. Use Steve Blank’s Customer Development model or Nathan Furr’s Nail It then Scale It model as a guide

a. Central questions: i. What is the job customers are trying to get done? How significant is the pain?

ii. What is your solution to the pain (product or service)? iii. Why will people want it? iv. What’s the minimum feature set to satisfy those customers? v. Who’s the competition or alternatives to your solution?

vi. What’s the market type (new, established, re-segmented)?



3. Test the customers / users: Get out of the building and talk to 10-15 customers face-to-face to understand who is the customer? Who uses the product, who pays, and how are they different?

a. Central questions: i. What were your hypotheses about who your users and customers were?

ii. Did you learn anything different? iii. Did anything change about Value Proposition? iv. What are your customer acquisition costs?

4. Test demand creation: Test and understand how to build demand. If you are building a web site, actually do SEM, spend $20 as a team, test customer acquisition cost. Change messaging on site during the week to get costs lower, team that gets lowest delta costs wins. If non-web, build demand creation budget and forecast. Get real costs from suppliers.

a. Central questions: i. How do you create end user demand?

ii. How does it differ on the web versus other channels? 5. Test channels: Get out of the building and talk to 10-15 channel partners. If you’re building a web site, get the site up and running

with the minimal feature set. a. Central questions:

i. For web teams: 1. What were your hypotheses about your website? 2. Did anything change about value proposition or customers/users? 3. What is your customer lifetime value?

ii. For non-web teams: 1. Interview 10-15 people in your channel (salesmen, OEM’s, etc.). 2. Did anything change about Value Proposition or Customers/Users? 3. What is your customer lifetime value?

6. Test the revenue model: Using the facts gathered so far, analyze the revenue streams, expenses, and key metrics for how your busi-ness makes money. Get outside the building to test the model.

a. Central questions: i. What’s your revenue model?

ii. How will you price your product? iii. What are the key financials metrics for your business model? iv. Test pricing in front of 100 customers on the web, 10-15 customers non web

7. Test partners: Get outside the building to talk to potential partners to understand the partnership channels, resources, and cost. a. Central questions:

i. Who are your potential partners and the relationship (strategic alliances, coopetiton, joint ventures, buyer suppli-er, licensees)

ii. What partners will you need? iii. Why will they partner with you? iv. What’s the cost of the partnership? v. Talk to partners

8. Test Key Resources and Expenses: Analyze what resources you need and when to build the business. a. Central questions:

i. What resources do you need to build this business? ii. How many people? What kind?

iii. Any hardware or software you need to buy? iv. Any IP you need to license? v. How much money do you need to raise? When? Why?

vi. What’s your expense model? What are the key financials metrics for costs in your business model? 9. Lessons Learned: Identify the validated learning from customers, what you learned throughout the process, and how your business

model has changed. What is the new, validated business model? Is it worth pursuing (remember even failure is a valuable lesson if you learn from it early and effectively).

Pivot: Don’t forget that with every assumption overturned, be ready to pivot to the new and valuable business. Additional resources of interest include Steve Blank’s post on business models and funding: http://steveblank.com/2009/11/05/raising-money-with-customer-development/ http://steveblank.com/2009/11/12/“lessons-learned”-–-a-new-type-of-vc-pitch/

http://steveblank.com/2009/11/05/raising-money-with-customer-development/

http://steveblank.com/2009/11/12/

International Business Model Competition - Information (Rules) Packet

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