Startup Strategy

PREPARED FOR WEBVISIONS

BY NEAL CABAGE

Startup Strategy

INTRODUCTION

Author & Speaker

NEAL CABAGE Digital Product Architect

•  Product manager and entrepreneur.

•  Founded ProductCamp.LA and PMA.LA.

•  Built and sold two startups.

•  Principal authored, The Smarter Startup.

[email protected] @NealCabage

THE SMARTER STARTUP

STRATEGY FOR STARTUPS

The Smarter Startup looks at why some

startups succeed while others fail. By taking a

more strategic approach to entrepreneurship,

founders can improve their own outcomes.

Written by Neal Cabage and Sonya Zhang, PhD,

and published by Pearsons/NewRiders.

INTRODUCTION

The Book

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

INTRODUCTION

Overview

Problem Statement

Startup Heuristics Vision Definition

Value Creation

Business Models Introduction

We’ll establish the challenges that startups face and introduce strategic principles

and frameworks to better understand and reach your startup’s objectives.

INTRODUCTION

Startup Strategy Framework

PROBLEM STATEMENT

The Great Mystery

8 in 10 Startups Fail in the First 5 yrs

WHY DO SOME SUCCEED?

We’ve all met people who worked very

hard to make a business succeed and yet it

failed. We’ve also met people who did

seemingly everything wrong and yet they

succeeded. Hard work is a necessary

component but it is not the entire story.

WHY DO SOME NOT?

Benjamin Franklin

PROBLEM STATEMENT

Conventional Wisdom

Diligence is the mother of good luck.

Thomas Edison

Genius is one percent inspiration and

ninety-nine percent perspiration.

Benjamin Franklin

PROBLEM STATEMENT

Conventional Wisdom

Diligence is the mother of good luck.

Thomas Edison

Genius is one percent inspiration and

ninety-nine percent perspiration.

It is True?

Diligent Negligent

Success

Failure

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

x

Working hard is analogous to throwing a ball hard. The velocity is an important part of

reaching the target, but you cannot ignore other interactive forces like gravity and drag.

Gravity (:ming)

Direc:on (customer need)

What Is the Whole Story? PROBLEM STATEMENT

Drag (compe::on)

Velocity (hard work)

James Carville Political Straegist

PROBLEM STATEMENT

A More Strategic Approach

It’s the economy STRATEGY, stupid!

Why are some startups more likely to succeed?

Startup Heuristics

Startup Strategy

Best Practices

THE FUNDAMENTAL CRITERIA

START HERE

There are 6 fundamental criteria to

consider when developing a startup

concept. Every new idea should be

considered from this starting point.

STARTUP HEURISTICS

The 6 Heuristic Categories

customer

product

compe::on

:ming

financial

team Startup Strategy Heuris:cs

STARTUP HEURISTICS

The 18 Rules of Startup Strategy

Startup Heuristics

Finance

13. Low Sunk Costs

14. Working Capital Float

15. Economies of Scale

Timing

7. Recent Innovation Enabler

8. Demand Already Established

9. No Signs of Commoditization

Competition

10. Clear Market Inefficiency

11. Low Barriers to Entry

12. Differentiable Position

Team

16. Subject Matter Expertise

17. Functional Competence

18. Supplier Partnerships

Product

4. Customer Focused Solution

5. Low Barriers to Adoption

6. Clear Value Proposition

Customer

1. Unmet Need or Desire

2. Right Size Market or Segment

3. Reliable Access to Customers

© 2014 Cabage & Zhang

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 DESIRE Unsatisfied Customer Desire

RIGHT-SIZE MARKET OR SEGMENT Need to Segment? Too Niche?

RELIABLE ACCESS TO CUSTOMERS Diversified Channels? Gatekeepers?

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

CUSTOMER CRITERIA

Right-Size Market (or segment)

BIG FISH STRATEGY PURSUE QUIET NICHES

BIG MARKET STRATEGY PURSUE LARGE MARKETS

Select a market to service that meets your needs and abilities. You must have enough opportunity to warrant

the effort. Be weary of large markets however, if you do not have significant funds and plan to be aggressive.

MARKET MANIPULATION GOVERNMENT, MONOPOLIES

CHANNEL DEPENDENCE SINGLE POINT OF FAILURE

0

5000

10000

15000

20000

25000

30000

35000

March April May June July

CUSTOMER CRITERIA

Reliable Access to Customers

A sustainable business requires control over customer supply. Don’t rely on a single marketing channel (Google

SEO). Government or monopolistic manipulation of markets can also be challenging (Online Gambling).

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 SOLUTION Solves Unmet Need or Desire?

LOW BARRIERS TO ADOPTION Low Switch Cost, Usability

CLEAR VALUE PROPOSITION Compelling Reason to Buy

PRODUCT CRITERIA

Customer Focused Solution (benefit)

ADDRESS NEED OR DESIRE FOCUS 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. Stay Zen focused.

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

Albert Einstein Physicist, Professor

Any intelligent fool can make things bigger and more complex... It takes a

touch of genius - and a lot of courage to move in the opposite direction.

PRODUCT CRITERIA

Customer Focused Solution (benefit)

PRODUCT CRITERIA

Low Barriers to Adoption (cost)

LEARNING CURVE INVESTED TIME & NEW COSTS

FINANCIAL IMPACT PRIOR INVESTMENT & NEW COSTS

WORKFLOW INTEGRATION DOES IT EASILY INTEGRATE?

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

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

Easy Workflow Integration

Addt’l Benefits (value complex)

Solves My Problem

Existing Investments

Learning Curve

IS THE VALUE CLEAR?

VALUE = BENEFIT - COST

PRODUCT CRITERIA

Clear Value Proposition (value)

Perceived value must exceed cost. If you can clearly describe your product is beneficial and a compelling

case for purchasing it, then you have created sufficient value to overcome cost.

Theodore Levitt

People don’t want quarter-

inch drills. They want

quarter-inch holes. cost benefit

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 ENABLER Was it Possible 2-5 Years Ago?

DEMAND ALREADY ESTABLISHED Build It & They Might Not Come!

NO SIGNS OF COMMODITZATION Shrinking Margins. More Products.

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

wasn’t possible just a couple years ago & ramp up before the market capitulates (supply > demand).

TIMING CRITERIA

Innovation Life Cycle

Innovators(2.5 %)

Early adopters(13.5 %)

Early majority(34 %)

Laggards(16 %)

Late majority(34 %)

The Golden Era The Squeeze

Consolidation Early Movers

Capitulation

*

Innovation Adoption Curve

Opportunity to enter diminishes as the market matures. Geoff Moore suggests entering at “the

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

TIMING CRITERIA

Innovation Life Cycle

Innovators(2.5 %)

Early adopters(13.5 %)

Early majority(34 %)

Laggards(16 %)

Late majority(34 %)

Chas

m

Innovation Adoption Curve

Ideal point to enter a market

- Geoff Moore

New Entrant Opportunity

Nicholas Carr

Harvard Business Review, 2003

TIMING CRITERIA

Commoditization of Technology

It is difficult to imagine a more perfect commodity than a byte of data.

As information technology’s power and ubiquity have grown, its

strategic importance has diminished.

$5,000,000

What cost $5 million to accomplish

12 years ago can now be done with

less than $5,000. Mark Suster

observed that commoditization and

availability of more building blocks

has radically reduced cost and risk

of developing a software product.

Commoditized Technology

Hosting Commoditized

Open Source Software

Cloud Services (SaaS/PaaS)

MLS IDX/RETS Feeds, SendGrid Email, etc

WordPress Pla=orm, Real Estate Themes, RESO & Placester IDX Plugins,

$500,000

$50,000

$5,000

A Web/Mobile App

As cost has fallen, so has the

competitive barrier to entry.

Competitive positioning is now the

key strategic issue, not

technological capability for most

consumer Internet products. How

do you cut through the noise?

Commonplace Commodity

2000 2002 2004 2006 2008 2010 2012 2013

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Data From NetCraft 2013 Web Server Survey

50x

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 INEFFICIENCY Stagnant or Fragmented Market

LOW BARRIERS TO ENTRY Easy & Cheap to Compete?

DIFFERENTIABLE POSITION Something Special or Different?

COMPETITION CRITERIA

Inefficient Market

FRAGMENTED MARKET NO CLEAR MARKET LEADER

NEW MARKET DEMAND EXCEEDS SUPPLY

STAGNANT MARKET READY FOR DISRUPTION?

When a market is efficient, a single entity captures

all of the value of a market. Look instead for a

market that isn’t efficient either because it is new,

stagnant, or splintered (fragmented).

Sun Tzu

War Strategist, Wrote The Art of War

The general who makes many calculations before battle is wise. He who

knows when he can fight and when he cannot will be victorious.


Low Barriers to Entry

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

SEGMENTED MARKET FOCUS ON SPECIFIC CUSTOMER

LOW PRICE LEADERSHIP FOCUS ON VOLUME & COMMODITY

DIFFERENTIATED PRODUCT DISRUPTIVE OR INNOVATIVE

HOW ARE YOU DIFFERENT?

WHAT MAKES YOU SPECIAL?


Differentiable Position

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

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

Porter’s Generic Competitive Strategies

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 COSTS Up Front Capital at Risk?

WORKING CAPITAL FLOAT Gap Between Payable/Receivables

ECONOMIES OF SCALE Margins Increase With Volume?

How much up-front capital must you commit to

develop this product or business? Sunk capital

represents 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

Some businesses require large cash

outlay every month and payment can

take 3-4 months to arrive. As a

result the business may need to have

cash or credit to cover the gap of 3-4

months of operating costs. This is

both a cost (interest) and a risk!

Working Capital Float

DO YOU NEED A LINE OF CREDIT?

WHAT’S THE COST & RISK?

Accounts Receivable

60 - 120 Day "Capital Float"Accounts

Payable

Look for opportunities where profits

increase with volume (scale). Supply,

development, and distribution costs all

diminish on a per-unit basis when working

in volume. As a result profit margins and

competitive advantage both increase.

Economies of Scale

Quantity

Profits

Marginal CostSca

lable

Profits

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 EXPERTISE Deep Knowledge of Market?

FUNCTIONAL COMPETENCE Technical Skills to Deliver

SUPPLIER PARTNERSHIPS Access to Materials at Good Cost

TEAM-FIT CRITERIA

The Hacker & The Hustler

“The Hacker”

Technical skills to design &

develop a well-crafted and

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, in order to

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

The Functional Expert Subject Matter Expert

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?

Outsourced Vendors

If planning to manufacture

physical products or software, do

you have a quality vendor you

can rely on?

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

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

Evaluate your startup idea across the six

scorecard criteria and be mindful of the attributes

described in each one. Give yourself a letter

grade and then an overall score, for the idea. This

provides a structured approach to evaluating the

opportunity and helps to improve objectivity by

accounting for a full spectrum of important

criteria and reducing blind spots.

Evaluating a Startup Idea

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

Business Model Archetypes

The 7 Fundamental

Business Personalities

BUSINESS MODEL ARCHETYPES

What is a Business Model?

A business model describes the rationale of

how an organization creates, delivers, and

captures value … Well-known business models

can operate as "recipes" for creative managers.


Business Models Everywhere!

BRICKS & CLICKS

COLLECTIVE

CUT OUT THE MIDDLE MAN

DIRECT SALES

DISTRIBUTION MODEL

VALUE ADDED RESELLER

FREE IN, FREE OUT

FREEMIUM

AUCTION / ONLINE AUCTION

ALL-IN-ONE

LOW-COST BARRIER

LOYALTY

MONOPOLISTIC

MULTI-LEVEL MARKETING

NETWORK EFFECTS

PRO OPEN SOURCE

PYRAMID SCHEME

RAZOR & BLADES

SERVITIZATION OF PRODUCTS

SUBSCRIPTION

etcetera, etcetera …

There are many disparate business models that were defined in isola:on but nothing comprehensive

that describes the fundamentally unique paPerns in a single and concise framework that suited our needs.

Describes 7 abstract business model

archetypes (fundamental personalities)

from which every business model is

inherited. Two prototypes (applied

examples) are given for each archetype.

This represents a holistic view of the

possibilities.



Trade

ProductService

Marketplace

Ecosystem

Subscription

Brokerage

prototypes: • e-commerce• lead generation

prototypes: • software • content

prototypes: • service platform • service agency

prototypes: • ad network • dropship program

prototypes: • content as a service • software as service

prototypes: • products market • services market

prototypes: • technology platform • media platform

Carl Jung Psychologist


What is an Archetype?

A philosophical idea, referring to pure

forms which embody the fundamental

characteristics of a thing.

The concept is based on Carl Jung’s Personality Archetypes, describing fundamental

personalities and roles that we draw from to develop our own unique personality.

PRODUCT TANGIBLE SOLUTION

SERVICE CUSTOM SOLUTION

TRADE CONNECT BUYERS & SELLERS

The Business Model Archetypes framework

takes a step back from specific business

models to say there are 7 abstract archetypes

(fundamental personalities) from which every

business inherits. Two prototypes (examples)

are given for each archetype. This represents

a holistic view of the possibilities.


Primary Archetypes


Product Archetype

HALLMARKS OF A PRODUCT

TRADE

PRODUCT SERVICE Properties:

•  Up-front Investment

•  Sell for One-time Fee

•  Highly Scalable

Online Prototypes: •  Software Product

•  Content Product

Develop a tangible good and sell on a one-time fee

basis (purchase or license). Requires high up-front sunk

capital but is able to leverage economies of scale.


Service Archetype

Intangible work for a client, monetized on a per-use

basis. Low sunk costs but high float cost

requirements. Professionals or technicians with

expert knowledge and limited capital prefer it.

TRADE

SERVICE

PRODUCT HALLMARKS OF A SERVICE

Properties: •  Intangible Value Creation

•  Low Sunk / High Float Cost

Online Prototypes: •  Service Agency

•  Platform as a Service

PRODUCT

TRADE

SERVICE


Trade Archetype

Connecting prospective buyers with a product they

seek, making profit on the spread between sell price

and cost of acquisition. Requires moderate capital

and good sourcing connections.

HALLMARKS OF TRADE

Properties: •  Connect Buyers/Sellers

•  Sourcing is key

•  Profit from Arbitrage

Online Prototypes: •  Ecommerce

•  Lead Generation

Carl Jung Psychologist


What is an Archetype?

The meeting of two personalities

(archetypes) is like the contact of

two chemical substances; if there is any

reaction, both are transformed.

MARKETPLACE TANGIBLE SOLUTION

SUBSCRIPTION CUSTOM SOLUTION

BROKERAGE CONNECT BUYERS & SELLERS

Secondary Archetypes are created by

combining the primary archetypes, similar to

how new colors are derived by combining 2or

more colors. In this way, all archetype

possibilities are accounted for, starting with a

model of three simple types of businesses.


Secondary Archetypes

ECOSYSTEM CONNECT BUYERS & SELLERS

SERVICE TRADE


Brokerage Archetype

BROKERAGE

Sourcing on behalf of a client for a retainer or per-transaction fee. The client then profits from any

arbitrage spread rather than the sourcing partner.

HALLMARKS OF A BROKERAGE

Properties: •  Trading for Clients

•  Paid by retainer not arbitrage

Prototypes: •  Real Estate Broker

•  Ad Network

TRADE PRODUCT


Marketplace Archetype

MARKETPLACE

Create a platform that facilitates trade, rather than actually trading. This is a network effects business

that depends heavily on bringing together sufficient

demand and supply.

HALLMARKS OF A MARKETPLACE

Properties: •  Network Effects

•  Build Trade Platform

Online Prototypes: •  Products Marketplace

•  Services Marketplace

SERVICE PRODUCT


Subscription Archetype

SUBSCRIPTION

Building, maintaining, and supporting ongoing use of a product, rather than a one-time sell. Customers

pay a monthly subscription service and benefit from

continued improvements.

HALLMARKS OF A SUBSCRIPTION

Properties: •  Monthly Billing

•  “Freemium” Pricing

•  Ongoing Updates

Online Prototypes: •  Software as Service

•  Content as Service

SERVICE

TRADE PRODUCT


Ecosystem Archetype

ECOSYSTEM A mature market leader may expand as a result of success. They develop a marketplace and/or

community for customers and/or service/support

vendors to offer augmented solutions.

HALLMARKS OF AN ECOSYSTEM

Properties: •  User Community

•  ISV or Dev Community

•  Enhanced Product Marketplace

Online Prototypes: •  Tech Platform

•  Media Platform



Trade

ProductService

Marketplace

Ecosystem

Subscription

Brokerage

prototypes: • e-commerce• lead generation

prototypes: • software • content

prototypes: • service platform • service agency

prototypes: • ad network • dropship program

prototypes: • content as a service • software as service

prototypes: • products market • services market

prototypes: • technology platform • media platform

Primary archetypes Review:

•  Trade, Product, Service

Secondary archetypes Review:

•  Product + Trade = Marketplace

•  Service + Trade = Brokerage

•  Product + Service = Subscription

•  Product + Service + Trade = Ecosystem

Value Creation

Its Not What

You Think!

Howard Schultz CEO, Starbucks

VALUE CREATION

Creating Value

If I went to a group of consumers and

asked them if I should sell a $4 cup of

coffee, what would they have told me?

Why would someone pay $4 for a cup of coffee from Starbucks when they can brew it at home for $0.50 per cup? Clearly there’s more to this story…

VALUE CREATION

Selling a Commodity

If you sell the same commodity at two different prices, which one will the customer

choose? So why would you “waste money” going to Starbucks?

Cup of Coffee

Cup of Coffee

Maxwell House Starbucks

Cost: $4.00Cost: $0.50

VALUE CREATION

Sell the Benefits NOT the Commodity

Starbucks has successfully created a complex of value around a simple commodity.

Comparing the coffee out of context misses the core of their value proposition.

Cup of Coffee

Maxwell House

Starbucks

Premium Coffee

Value $1.00

Ease &Convenience

Entertainment (desert/break)

Productivity(lounge, wifi)

Value $5.00

Value $1.00 Value $5.00

Benefits ComplexValue!$0.50!!

Value!$12.00!!

Take a systematic approach to

identifying all the possible

opportunities. You will identify a

startup idea for every business model

archetype, for each business vertical

you are considering

The Value Creation Plane

VALUE CREATION

Entertainment(emotional desire)

Productivity(logical need)

Innovation(create new

value)Mon

etiz

atio

n(c

aptu

re e

xist

ing

valu

e)

primary functionpe

rcei

ved

valu

e

Starbucks repositioned their offering

by creating a value complex around

the coffee commodity. We’re paying

$4 for the entire experience, and the

commodity is only a component of it.

They innovated the value and made it

a more fulfilling experience.

Shift the Business Function

VALUE CREATION




value)Mon

etiz

atio

n(c

aptu

re e

xist

ing

valu

e)

primary functionpe

rcei

ved

valu

e

X"cheap

caffiene"

Starbucks

Starbucks Lounge

(free Wifi, etc)

Apple took a commoditizing

technology and added an emotional

connection through design and

inspiration. LinkedIn found a

productive application for social

networking. They differentiated their

products in a way that added value.

Shift the Perceived Value

VALUE CREATION




value)Mon

etiz

atio

n(c

aptu

re e

xist

ing

valu

e)

primary functionpe

rcei

ved

valu

e

X

AppleX

LinkedIn

Netflix has shifted from monetization of

products to innovating their own

content. Google has done the same by

integrating enhanced content into their

search results (maps, flight search, etc).

They stay ahead of competition through

continued innovation.

Shift the Business Function

VALUE CREATION




value)Mon

etiz

atio

n(c

aptu

re e

xist

ing

valu

e)

primary functionpe

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valu

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X Google

X Netflix

Vision Definition

Begin With a

Clear Hypothesis

Mark Twain Author

VISION DEFINITION

Clarity of Vision

I didn't have time to write a short

letter, so I wrote a long one instead.

A concise statement about a complex topic requires an investment of time and the clarity of thought. That critical analysis can reveal weaknesses in a plan, before you

begin developing it. Its time to do this for your new startup.

Provide a concise answer to

each question on the worksheet.

Keep them as short as possible.

Then compose a 3-4 sentence

elevator pitch that includes as

many of the key answers as

possible. Then you’ll be ready to

talk to prospects!

Defining a Startup Vision

VISION DEFINITION

Successful Real Estate agents, earning $100k / year

1. Phone sales & webinars2. Conferences

Real Estate IDX WordPress Themes May 9

Customer

Start with a concise description of the customer segment and how you’ll

reach them (channels).




IDX System to capture & nurture online leads

1. Own don't Rent (your website)2. Beautiful original design

Value Creation

Clarify the value you are creating for that customer.

(Value = benefit-cost)



Marketing Automation CRM

Software Product




Product

What is the manifest solution you’re proposing that will convey new value

to your customer?




Software Product

WordPress Theme *Product*(not SaaS) for the DIY agent

Tech disruption. First mover (the Spark API for IDX)




Competition

What’s your competitive position that will enable you to provide a

better or more authentic solution?




Software Product



1. Me (product/tech)2. John (BizDev/Sales)

1. Spark Platorm API2. Access to all MLS IDX Feeds




Team

What are your teams credentials? What’s the reason you’ll prevail over

competition in offering a compelling solution?




Software Product





$50,000 to build core product

$50,000 line of credit



1. Own don't Rent (your website)2. Beautiful original designFinance

What is the financial cost of developing the proposed solution? Consider the

cost against potential gains.




Software Product





$50,000 to build core product

$50,000 line of credit

IDX Website/CRM software for serious RE agents to capture & nurture online leads and grow their business. Built on Wordpress so they can"own the system, not rent". First-mover advantage by integratingthe Spark IDX API which makes it possible.



1. Own don't Rent (your website)2. Beautiful original designElevator Pitch

Finally, develop a 3-4 sentence description of your proposed startup that concisely articulates the important points you’ve developed

earlier on this worksheet. This is the 30 second pitch you can use to talk to investors and client prospects about your new startup.

Validate Your

Hypothesis

The Lean “build, learn, measure”

feedback look is fantastic for

optimizing a product concept, once a

customer or hypothesis is defined.

Lean Feedback Loop

Measure

Learn

Build

Ideas

ProductData

HYPOTHESIS VALIDATION

LEAN METHODOLOGY

FINDING PRODUCT-MARKET FIT

Validate Your Hypothesis


Test Early, Test Often

PROSPECT INTERVIEWS Do They Like the Idea? Feedback?

TEST MARKETING Do ‘Vaporware’ Campaigns Convert?

MINIMAL VIABLE PRODUCT Users Engaging & Using Product?

With a well-articulated vision

ready, you can begin sharing the

concept with investors and customer

prospects. If the idea is well received,

advance to vapor-ware test campaigns

and finally to building the “MVP”.

…But don’t just guess. Start with a well-

formed hypothesis to maximize odds of

finding product-market fit and to avoid the

number of pivots along the way.

Hypothesize, Don’t Guess

PIVOT ASPROCESS


START WITH A HYPOTHESIS

DON’T JUST GUESS

THE SMARTER STARTUP

STRATEGY FOR STARTUPS

The Smarter Startup looks at why some

startups succeed while others fail. By taking a

more strategic approach to entrepreneurship,

founders can improve their own outcomes.

Written by Neal Cabage and Sonya Zhang,

PhD, and published by Pearsons/NewRiders.

SMARTER STARTUP

The Book

SMARTER STARTUP

Created By

NEAL CABAGE Digital Product Architect

•  Product manager and entrepreneur.

•  Founded ProductCamp.LA and PMA.LA.

•  Built and sold two startups.

•  Co-author, The Smarter Startup.

[email protected] @NealCabage

SMARTER STARTUP

SmarterStartup.org

The framework, including the part

described here, are posted on the

website, along with downloadable

worksheets and reference material.

Everything is free to use, so enjoy!.

www.SmarterStartup.org

Startup Strategy

Small Business & Entrepreneurship

Transcript of Startup Strategy