Michael Skok, Co-Founder and Partner of Underscore.VC was invited to give the keynote presentation at the 2016 Innovation Roundtable Summit in Copenhagen.
Uncommon Grace The Autobiography of Isaac Folorunso
2016 Innovation Roundtable Keynote by Michael Skok
1. Proprietary and Confidential@mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable
START UP
SECRETS
An insider’s guide to unfair competitive advantage
Hi
Copenhagen Innovation Roundtable Keynote
Tweet questions to: @mjskok #startupsecrets
startupsecrets.com
November 2016
Michael J Skok
3. Proprietary and Confidential@mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable @mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable
Startup Secrets - Tasters
Our agenda today includes some small samples from the Startup Secrets
series:
Value proposition - Fundamentals
Products to companies – Friction free, “slippery” products
Business model - Basics
For the full details of these and other workshops see:
startupsecrets.com / twitter: @mjskok
@mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable
4. Proprietary and Confidential@mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable @mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable
If you want to build a billion dollar
business…
Start with a MULTI billion dollar problem
@mjskok @underscorevc startupsecrets.comCopenhagen Innovation Roundtable
5. Proprietary and Confidential@mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable @mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable
E.G. eCommerce…
Market:
eCommerce:
• $4.7 trillion
• ~7% penetrated
• Growing in mid teens
Problem:
“Under siege”, Disruptions
• Offline -> Online
• Physical -> Digital
• Mobile -> Omni Channel
@mjskok @underscorevc startupsecrets.comCopenhagen Innovation Roundtable
7. 7Copyright 2012 Demandware, Inc. – CONFIDENTIAL |
Demandware is at the Confluence of
Three Significant Markets
$317 Billion
$12 Trillion
Global Retail
$10 Billion
Global eCommerce
16%
CAGR
(‘10 – ’15)
Global SaaS
18%
CAGR
(‘10 – ’15)
Data Reflects 2010
Source: Gartner (Global SaaS Market) and Euromonitor
(Global Retail and Global eCommerce)
8. 8Copyright 2012 Demandware, Inc. – CONFIDENTIAL |
Demandware Delivers the Best of Both Worlds
A Unique and Better Approach to eCommerce
The Best of
Both Worlds
Build and Run Internally
The Pros:
Control
Customization
The Cons:
Costly
IT-Constrained
Performance/Security
Responsibility
Slow Pace of Innovation
✗
Outsource / ASP
The Pros:
Less Hassle
No Infrastructure
The Cons:
Inflexible
No Merchant Control of
Merchandising
Limited Customization
✗
11. Proprietary and Confidential@mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable @mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable
Amazon’s problem?
Internal software projects were taking too long
• Causing competitive issues
• Internal scaling challenges
• Reinventing the wheel
If they could solve it for themselves, could it solve it for others?
Andy Jassy / AWS team were a level 8 problem solver.
• What level will you be?
http://www.startupsecrets.com/amazon
12. Proprietary and Confidential@mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable
www.startupsecrets.com
VALUE PROPOSITION
(excerpt)
13. Proprietary and Confidential@mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable @mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable
Evaluate Build
Gain Pain
Value
Prop
Define
Ideas
Problem
Solution
Agenda - Define
13@mjskok startupsecrets.com@underscorevc
14. Proprietary and Confidential@mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable @mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable
Unworkable
Unavoidable
Urgent
Underserved
Problems worth solving
are usually 4U …
Problem
14@mjskok startupsecrets.com@underscorevc
15. Proprietary and Confidential@mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable @mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable
Broken business process
Consequences ?
If the consequences are costly or painful,
so much the better.
E.g. who gets fired if this doesn’t work?
Unworkable
15@mjskok startupsecrets.com@underscorevc
16. Proprietary and Confidential@mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable @mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable
Accounting
Regulation
Is the problem so fundamental you can’t
avoid it and just have to comply?
Unavoidable
16@mjskok startupsecrets.com@underscorevc
17. Proprietary and Confidential@mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable @mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable
Relative to other needs …
Priority
• Determines resources allocated
If you’re not at the top of the list, are you at least in the top 3?
If not will you get moved up or down over time and why?
Urgent
17@mjskok startupsecrets.com@underscorevc
18. Proprietary and Confidential@mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable @mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable
You will compete in a zero-sum game
Finite:
• $
• Time
• People
• Attention
Underserved – Business…
18@mjskok startupsecrets.com@underscorevc
20. Proprietary and Confidential@mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable @mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable
Evaluate Build
Gain Pain
Value
Prop
Define
Ideas
Problem
Solution
Agenda - Evaluate
20@mjskok startupsecrets.com@underscorevc
21. Proprietary and Confidential@mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable @mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable
Is it “blac” & white?
Blatant
Latent
Aspirational
Critical
Blatant
Latent
Aspirational Critical
Blatant
Critical
Qualify the problem
21@mjskok startupsecrets.com@underscorevc
22. Proprietary and Confidential@mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable @mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable
The gain delivered to the customer
vs.
The pain and cost for the customer to adopt
“Gain/Pain ratio"
Gain Pain
35@mjskok startupsecrets.com@underscorevc
23. Proprietary and Confidential@mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable @mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable
• Revenue
• Cost savings
• Time
• People
• Competitive advantage
• Reputation
• Etc..
Gain
Gain Pain
36@mjskok startupsecrets.com@underscorevc
25. Proprietary and Confidential@mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable @mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable
• Switching costs?
• Default = do nothing
• Alternatives?
• Good enough =
good enough!
• RISK on a startup
Inertia,
RISK
Inertia
Gain Pain
39@mjskok startupsecrets.com@underscorevc
26. Proprietary and Confidential@mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable @mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable
What’s the right ratio?
Inertia,
RISKGain Pain
40@mjskok startupsecrets.com@underscorevc
27. Proprietary and Confidential@mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable @mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable
Customer view = Gain/Pain
• Revenue
• Cost savings
• Time
• People
• Competitive advantage
• Reputation
• Etc.
• Inertia
• Switching costs?
• Default = do nothing
• Alternatives?
• Good enough =
good enough!
• RISK on a startup
• Find (See)
• Try
• Buy
• Implement
• Deploy
• Own – e.g.TCO
Inertia,
RISKGain
Pain
27@mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable
28. Proprietary and Confidential@mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable @mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable
“An order of
magnitude”
Customer view = Gain/Pain
Inertia,
RISK
Gain
Pain
>10
28@mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable
• Revenue
• Cost savings
• Time
• People
• Competitive advantage
• Reputation
• Etc.
• Inertia
• Switching costs?
• Default = do nothing
• Alternatives?
• Good enough =
good enough!
• RISK on a startup
• Find (See)
• Try
• Buy
• Implement
• Deploy
• Own – e.g.TCO
29. Proprietary and Confidential@mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable
www.startupsecrets.com
PRODUCTS TO COMPANIES
(excerpt)
30. Proprietary and Confidential@mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable @mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable
How do you take away the pain,
and reduce friction?
… make it SLIPPERY
(Reduce the Pain in
the Gain/Pain Ratio)
@mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable
31. Proprietary and Confidential@mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable @mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable
• Simple
• Low to no initial cost
• Installs easily
• Proves value quickly
• Plays well with others
• Easy to use
• ROI is obvious
• Your customers can’t live without it – it’s stickY
Friction Free, SLIPPERY products
31@mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable
33. Proprietary and Confidential@mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable @mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable
Microsoft Sony
Which is better?
@mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable
34. Proprietary and Confidential@mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable @mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable
Microsoft, Sony Apple
Neither! = Less is More!
@mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable
35. Proprietary and Confidential@mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable @mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable
Simple ≠ Easy !
Simple often means complex technology
that makes your product “magic”
Simplification Innovation
(search algorithms in the cloud)
Simple ≠ Easy to do
@mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable
36. Proprietary and Confidential@mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable @mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable
features are the enemy of function
functionality can overwhelm users
applicability is all that ultimately matters
@mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable
Less is More…
37. Proprietary and Confidential@mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable
www.startupsecrets.com
BUSINESS MODEL
(excerpt)
38. Proprietary and Confidential@mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable @mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable
New Market
& GTM
Disruptive
Business Model
Disruptive
Technology
@mjskok @underscorevc startupsecrets.com
Perfect Startup Storm
38
39. Proprietary and Confidential@mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable @mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable
How can your Business Model…
Change the game?
Rewrite the rules?
Cause an innovator’s dilemma
Be as disruptive
as your technology?
New Game
New playing field
New boundaries
New rules
YOU choose players
@mjskok @underscorevc startupsecrets.com 39
41. Proprietary and Confidential@mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable @mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable
Process or Product?
Software or Services?
Open or Proprietary?
Content or Data?
Freemium or Premium?
Subscription or License?
Business Model – Sample Questions
@mjskok @underscorevc startupsecrets.com 41
42. Proprietary and Confidential@mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable @mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable
Your
Capabilities
Of
Really
Exceptional
Value
Focus on it!CORE
First key question
What is your CORE value?
@mjskok @underscorevc startupsecrets.com 16
43. Proprietary and Confidential@mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable @mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable
Where is your CORE value?
Software/other technology
Data
Content
Service, support
User network
Disruptively monetize it!
• To your competitive advantage
• Where are others most vulnerable?
COR
E
Cut to the CORE!
@mjskok @underscorevc startupsecrets.com 43
44. Proprietary and Confidential@mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable @mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable
Google Apps vs. Microsoft office
• What is the C.O.R.E for each ?
Software, Data, Advertising ?
Don’t compete head-on
• MS Office = enterprise market
• Google Apps = consumer market
• Free vs $500 license
• Simple vs Complicated
• 80% solution vs Professional Tool
- Ex 1 Apps
@mjskok @underscorevc startupsecrets.com 44
45. Proprietary and Confidential@mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable @mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable
How can you compete with a market leader who has 80% to 90%
market share?
1. Don’t compete head-on
2. Innovators Dilemma – go for low end
3. Disruptive technology, business model, or market approach
4. Examples: Gmail, Google Apps, Chrome
– Competing with Market Leaders
@mjskok @underscorevc startupsecrets.com 45
46. Proprietary and Confidential@mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable
BUSINESS MODEL
& PRODUCT
(example)
www.startupsecrets.com
49. Proprietary and Confidential@mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable
OK, BUT NOW WHAT ABOUT
ME ?!
(LEADING GLOBAL INNOVATORS)
50. Proprietary and Confidential@mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable @mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable
You: Large Global 1000 Innovator…
50
• Resources
• Brand
• Credibility
• Distribution
• Etc…
• Speed, agility
52. Proprietary and Confidential@mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable @mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable
Innovate!
Get out!
• Not just technology
• Business Model,
GTM etc
There is no failure,
only learning
• #nofailure
• #onlylearning
What can I learn from
you?
52
Evaluate Build
Gain Pain Value
Define
Ideas
Problem
Solution
53. Proprietary and Confidential@mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable @mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable
Thank you for listening.
But what can we learn from you?
I’ve shared a small sample of some of the Startup Secrets …
Value proposition - Fundamentals
Products to companies – Friction free, “slippery” products
Business model - Basics
startupsecrets.com
twitter: @mjskok / @underscorevc
@mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable
54. Proprietary and Confidential@mjskok startupsecrets.com@underscorevcCopenhagen Innovation Roundtable
START UP
SECRETS
An insider’s guide to unfair competitive advantage
Hi
Copenhagen Innovation Roundtable
Tweet questions to: @mjskok #startupsecrets
startupsecrets.com
November 2016
Michael J Skok
Notas del editor
Intelligent line art only
Text in box resizable
Amazon
Be sure to emphasize fact that eCommerce continues to take larger & larger share of Retail. Happening due to measurability of everything (war story about large CPG prospect just as interested in measuring consumer reactions as revenue) & fact that costs automatically flex with revenues with no big upfront capital investments to grow (unlike stores). Connect this to examples like Tory Burch, Marks & Spencer, Columbia, expanding to many international sites.
In IR 500 for 2010 (last full yr), over 50% of 70 non pure plays had eC as >10% and 25% had eC>25%. Indicative of how much room within existing customers.
Our belief that we have approximately 1-2% market share by customer count.
We still have our first customer, Zabar’s. Note P&G, Columbia, Lands End, Barney’s, Jones New York, Tory Burch, New Balance. (different set in UK)
Our customers as channel.
Defining the problem….
Customer problem or need
And ultimately applicability to the customer’s need and job to be done…
Disruptive to the industry and the competition and NOT the customer (remember the gain/pain ratio)
Arbitrage - ?
AirBnB – commission on P2P rentals
Mint – lead gen, not software – caused Intuit to acquire them
Think about this for the customer too eg – Capex or Opex
Sell or rent ?