1. Business Modeling for Startups
AIFB Seminar: Developing Business Models
for the Semantic Web (WS 12/13, KIT)
Julius Parrisius, Center für Innovation & Entrepreneurship 30.10.2012

2. The story
What is a Design and Connection How does
Business Model Testing of between Business Model
and how does Business Design and and Business
it relate to Models. Testing. Plan fit
startups? together?

3. The story
What is a Design and Connection How does
Business Model Testing of between Business Model
and how does Business Design and and Business
it relate to Models. Testing. Plan fit
startups? together?

4. Def.:
A business model describes the rationale
of how an organization creates, delivers,
and captures value.
Business Model Generation, A. Osterwalder, Yves Pigneur, Alan
Smith, and 470 practitioners from 45 countries, self published, 2010

5. Def.:
Or in English: A business model describes
how your company makes money.
What’s a startup? First Principles, Steve Blank, Blog article,
www.steveblank.com (Retrieved Oct 26, 2012)

6. An ad-based freemium-model.
Advertiser
Money
Lead to music fans
Free music service Music-fan
(free)
Subscription fee $9.99/month
Music-fan
Ad-free premium music (premium)
service
So far 15mio users are signed up, 4mio of them as
paying customers (at: 08/2012).

7. A one-sided Match-making plattform.
Match-making service
Visitor
Room to rent Money
Match-making service
Renter
Community
6-12 % commission
More than 200.000 offers in more than 26.000 cities
(192 countries) and over 1mio users (at: 07/2012).

8. A marketplace for fund seekers.
Large micro-funding
Small micro-funding
exposure exposure member member
Fund seeker
Crowd of backers
5 % Gebühr
Small reward
Large reward
74.000 projects (success rate of 44%) have been
funded with roughly $381mio (at: 10/2012).

9. Def.:
A startup is a human institution designed
to create a new product or service
under conditions of extreme uncertainty.
The lean startup, Eric Ries, Crown Business, 2011

10. Def.:
[…] a startup is an organization formed
to search for a repeatable and scalable
business model. Teaching Entrepreneurship – By Getting Out of the Building, Steve
Blank, Blog article, www.steveblank.com (Retrieved Oct 26, 2012)

11. business model
© kevin dooley, Flickr.com

12. The story
What is a Design and Connection How does
Business Model Testing of between Business Model
and how does Business Design and and Business
it relate to Models. Testing. Plan fit
startups? together?

13. Design
Testing

14. Design

17. “[…] building a product is NOT
“the product” of your startup.
Your business model is “the product”.
Running Lean (2nd edition), Ash Maurya, O‟Reilly, 2012

19. What Value are we delivering?

20. Which Customer are we serving?

21. Value Customer

22. Why is this so important?
Life is too short to build something
nobody wants. Running Lean (2nd edition), Ash Maurya, O‟Reilly, 2012

23. Customer focus should be on the
early adopters in the beginning.
Technology adoption lifecycle
(Everett Rogers„ bell curve)
Early adopters Early majority
Refined with „the Chasm“
(Crossing the Chasm, Geoffrey Moore, Harper, 1991)

25. © Alex Osterwalder, Flickr.com

26. Goal: Product-Market Fit
Which „Jobs“ is my customer
trying to get done?
(functional, social, emotional, basic …)
What are her „Pains“?
(emotions, costs, situations, risik …)
What „Gains“ is she hoping for?
(functional, social, emotional, costs …)
All graphics © Alex Osterwalder, Flickr.com

27. What products/services is the
VP built around?
(in-/tangible, digital/virtual, financial …)
How are they „pain relievers“?
(emotions, costs, situations, risks …)
How are they producing „Gains“?
(functional, social, emotional, costs …)
All graphics © Alex Osterwalder, Flickr.com

28. You are not alone.
© Luix90, Flickr.com

29. Blue Ocean
Red Ocean
Blue Ocen Strategy, Kim and Mauborgne, Harvard Business School Press, 2005

30. The Strategy Canvas
© Kim and Mauborgne, 2012, www.blueoceanstrategy.com

31. Hows does my VP measure up against competing VPs?
Can I fill the „open slot“?
© Alex Osterwalder, Flickr.com

32. Avg. Income:
$12.50/hr
A search saves the Savings:
user 6min (avg). $1.25/search
Creating value
at $1.25/search
Google creates
Google in U.S.:
$1.5bln value/day
1.2bln searches/day
in U.S.
Creating value
at $1.25/search
Cost for Google: Cost to customer
0.2 cents/search value ratio: 625!!!
„ [..] a stunning value proposition by any measure.“
IT-Driven Business Models, Kagermann et al., John Wiley & Sons, 2011

33. Design
Testing

34. Testing

35. “Get out of the building!”
Steve Blank has preached this for over a
decade wherever and whenever he could.
© iagoarchangel, Flickr.com

36. The old way
The Four Steps to the Epiphany, Steve
Blank, printed by Lulu.com, 2006, p. 2.

37. The new way
Lean Startups Aren’t Cheap Startups, Steve Blank, Blog
article, http://venturebeat.com/2009/11/03/lean-startups-
aren‟t-cheap-startups/ , (Retrieved Oct 26, 2012)

38. Customer Development
© Steve Blank„s Customer Development by Brant Cooper, www.custdev.com (Retrieved Oct 26, 2012)

39. Validated Learning
A scientific method to
build your business.
3
1
1. 3.
In your mind:
1. What do I
want to test?
2. How can I
measure it?
3. What do I 2. 2
have to build?
© Eric Ries, The Lean Startup, 2011

40. © Brintam, Flickr.com
The goal is to
minimize the total time through the loop.

41. The story
What is a Design and Connection How does
Business Model Testing of between Business Model
and how does Business Design and and Business
it relate to Models. Testing. Plan fit
startups? together?

42. Where is the connection?
Design
Testing

43. © Alex Osterwalder, Flickr.com

44. © Alex Osterwalder, Flickr.com
Make sure to build stuff people want.

45. © Alex Osterwalder, Flickr.com
Build a viable business.

46. The story
What is a Design and Connection How does
Business Model Testing of between Business Model
and how does Business Design and and Business
it relate to Models. Testing. Plan fit
startups? together?

47. How do they fit together?
Business Plan
Model

48. Quote:
A good plan violently executed now is
better than a perfect plan executed
next week. US Army General George S. Patton

49. A famous Silicon Valley mantra:
“Better done than perfect”.
Reported by PionierGarage after their Silicon Valley Tour, 2011.

50. © Sharon Drummond, Flickr.com
“A study recently released by Babson College analyzed 116
businesses started by alumni [and] found no statistical difference in
success between those businesses started with formal written plans
and those without them...”
Enterprise: Do Start-Ups Really Need Formal Business Plans, Wall Street Journal, 1/9/07

51. Planning is ok, but we don„t know the
future, so it has to be appropriate.
high
high
Business
Plan Waste Waste
USE OF USE OF
RESOURCES RESOURCES
Irresponsible Business
Model Irresponsible
Planning
low Planning
low
low RISK high low RISK high
Both graphics: © Julius Parrsius

52. Today many resources are free or cheap
=> we can run experiments.
Time is the only resource that will always
be limited => we have to fail fast.
„Fail fast“ concept applied from: Fail Fast, Jim Shore, IEEE Computer
Society, 2004, www.martinfowler.com/ieeeSoftware/failFast.pdf

53. Why is the Business Model Canvas great?
fast. concise. portable.
Running Lean (2nd edition), Ash Maurya, O‟Reilly, 2012

54. The business modell canvas
is a first step towards a
complete business plan.
© Thomas Leth-Olsen, Flickr.com

55. A business plan is
necessary in the
right stage.
© Karthick R., Flickr.com
It should be seen as a conversation with
stakeholders (employees, partners, investors …).

56. Inhalte eines Business Plans
Cover Page and Table of Contents
Executive Summary
Business Description
Business Environment Analysis
Industry Background
Competitive Analysis
Market Analysis
Marketing Plan
Operations Plan
Management Team
Financial Plan
Attachments and Milestones

57. Operations Plan Market Analysis
Business
Description
Marketing Plan
Financial Plan

58. Perfect your pitch, then write your plan.
Use the business-plan exercise as a way to get your team on the
same page.
Keep it short: ten to twenty pages.
Spend no more than two weeks writing it.
Don‟t get obsessed with details in your financial forecast because it
should be one page long.
Is a business plan necessary, Guy Kawasaki (Silicon Valley VC, bestselling
author), blog article, blog.guykawasaki.com (Retrieved Oct 27, 2012)

59. Thank you!
Julius Parrisius
Startup Manager, Center für Innovation & Entrepreneurship
E-Mail: parrisius@cie-kit.de