You’ve figured out your value prop and you’ve got a great product under development. Now what? How can you develop a roadmap to build a company? Venture Capitalists often qualify deals as being a “feature”, a “product” or a “company”. Which do you have and how will you get where you want to go? This presentation addresses how to think about designing your product as a foundational element of your business. This includes thinking beyond UX and Architecture to Whole Product, Ecosystems, and Strategic partners. It also focuses on formulating how to design your go-to-market strategy and business model into your product (with a modular architecture, distinctive packaging and a frictionless approach).
HomeRoots Pitch Deck | Investor Insights | April 2024
Turning Products into Companies
1. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi
Hi Harvard innovation lab
#innovationlab @mjskok #startupsecrets www.mjskok.com
START UP
SECRETS
An insider’s guide to unfair competitive advantage
Turning Products into Companies
by Design & Architecture
MICHAEL J SKOK
North Bridge Venture Partners
twitter: @mjskok mjskok.com
1
2. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Welcome
• Gregg
Favalora, Principal, Optics for
Hire
– Founder Actuality Systems
– @gfavalora
• John McEleney, CEO Belmont
Systems
– Previously CEO Solidworks
– @johnmceleney 2
3. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Startup Secrets - Series
• Company Formation
– Culture
– Hiring
• Value Proposition
• Go-To-Market Strategy
– Strategic (Brand, Positioning, Segmentation etc.)
– Tactical (Driving your Marketing and Sales Funnel)
• Business Model
• Turning Products into Companies
• Perfect Pitch
• Raising Funding
3
4. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Feature, Product, Company?
• Which do you have?
• How will you get where you want to go?
4
5. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Feature, Product, Company?
Messaging
Photo Sharing
Check-In
Directory
5
6. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Feature -> Product is easier…
Messaging
Photo Sharing
Check-In
Directory
6
7. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
It’s just a big iPod…
7
8. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
The problem…
Even if we have a product
It takes several years to build a company
Markets change and
Shift happens!
We have a GAP…
8
9. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
The Product - Company GAP
GAP
9
10. Inventing and almost
commercializing 3-D
displays:
When “tech looking for a market”
goes from awesome, to painful, to a
patent sale 12 years later
April 2013
Gregg Favalora
Principal, Optics for Hire
* Founder, Actuality Systems (1997 – 2009)
gregg@opticsforhire.com
Client Confidential
12. Gregg Favalora, re: Actuality Systems
Phase 1: $1.5M, Proof-of-concept
1997-2001
• 100 million pixel display
• undocumented sole-sourced
component (DLP)
• only 6 people
Client Confidential
13. Gregg Favalora, re: Actuality Systems
Phase 1: $1.5M, Proof-of-concept Phase 2: $8M, Look for Market
1997-2001 2002 – 2006
• 100 million pixel display • CEO #3
• undocumented sole-sourced • Started selling prototypes
component (DLP) • For “whole product” added an API for
• only 6 people standard 3D graphics (OpenGL)
• Sell products not components
• Failed to identify segment with
sufficient ROI for a $100k product
Client Confidential
14. Gregg Favalora, re: Actuality Systems
Phase 1: $1.5M, Proof-of-concept Phase 2: $8M, Look for Market
1997-2001 2002 – 2006
• 100 million pixel display • CEO #3
• undocumented sole-sourced • Started selling prototypes
component (DLP) • For “whole product” added an API for
• only 6 people standard 3D graphics (OpenGL)
• Sell products not components
• Failed to identify segment with
sufficient ROI for a $100k product
Phase 3: $2M, Pivot out of HW
2007 – 2009
• CEO #4
• Good clinical studies, but no VC
interest. PIVOT: become a medical
software company for prostate cancer
• Attend procedures in OR, understand
reimbursement, hire VP Clinical, study
successful competitors... * recession *
Client Confidential
15. Gregg Favalora, re: Actuality Systems
Phase 1: $1.5M, Proof-of-concept Phase 2: $8M, Look for Market
1997-2001 2002 – 2006
• 100 million pixel display • CEO #3
• undocumented sole-sourced • Started selling prototypes
component (DLP) • For “whole product” added an API for
• only 6 people standard 3D graphics (OpenGL)
• Sell products not components
• Failed to identify segment with
sufficient ROI for a $100k product
Phase 4: Wind down, asset “sale” Phase 3: $2M, Pivot out of HW
2009 2007 – 2009
• ~70 shareholders (!) approve sale to • CEO #4 [yes, difficult business!]
my new employer, OFH • Good clinical studies, but no VC
• Patent broker, 150 prospects, sale in interest. PIVOT: became a medical
2010, gave some $ back to investors software company for prostate cancer
• Attend procedures in OR, understand
INTRIGUED? Find the whole story on reimbursement, hire VP Clinical, study
Michael’s website – www.mjskok.com successful competitors... * recession *
Client Confidential
16. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
The Product - Company GAP
GAP
16
17. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
The Product - Company GAP
Go-To-Market
Business Model
Execution
17
18. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
The Product - Company GAP
Solidworks
Develop
Design
Architect
18
19. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Your product…
19
20. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
It’s all about the product right?
20
21. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Your expenses will flip
• From all R&D, engineering …
Development
STARTUP
Sales &
Marketing
21
22. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Your expenses will flip
• From all R&D, engineering …
to prove market acceptance, gain
repeatability
Development Market Sales &
Acceptance Marketing
22
23. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Your expenses will flip
• From all R&D, engineering …
to prove market acceptance,
• Then repeat & scale using Sales and
Marketing
Sales &
Marketing
SCALE
Development
23
24. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Your expenses will flip – Apple…
APPLE 2012 2011 2010
R&D $3,381 $2,429 $1,782
% of net sales 2% 2% 3%
SG&A $10,040 $7,599 $5,517
% of net sales 6% 7% 8%
SG&A = 3x R&D
SG&A
SCALE
Development
24
25. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Target Business Model -
Demandware
2010 Q4 2010 2011 Q4 2011 Target
Revenue 100% 100% 100% 100% 100%
Cost of Revenue 40% 36% 35% 28% 30%
Gross Margin 60% 64% 65% 72% 70%
R&D 17% 14% 20% 15% 12%
Sales and Marketing 30% 27% 35% 30% 25%
Sales & Marketing = 2x
G&A 11% 9% 11% 11%
Development 8%
Operating Income
3% 15% (1)% 16% 25%
(Loss)
25
26. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Your expenses will flip
• From all R&D, engineering …
to prove market acceptance,
• Then repeat & scale with SG&A
SG&A= 2-3x (!)
Development
Sales &
Marketing
SCALE
Development
26
27. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
What if…
You thought like an Architect
and planned for this upfront?
LET’S DO IT!
27
28. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Closing the Product - Company GAP:
Develop, Design & Architect
• Develop foundations
– Validated Value not just features
• Design to fit
– Product Go-To-Market Fit
• PVP – Primary Value Prop
• MVP – Min Viable Product
• MVS – Min Viable Sector
• MRP – Min Repeatable Product
• Architect to attract
– Business Model
• SLIPPERY Products
• Russian Doll Pricing and Packaging
• Whole Product
• Services
28
29. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Develop foundations
Validated Value not just features
29
30. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Developing value
• Develop less
– Focus on your CORE, partner for whole product
• Develop faster
– Crowd source
• Develop cheaper
– Offshore (carefully!)
• Develop smarter
– Co create…
30
31. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Startup Secret: Co-creating Value
• Build on yourself
– Eat your own cooking
– Be your own customer
• Be Open and Extensible (eg Software APIs)
– Be Modular
– Enable external multipliers to your value
• Use Open Source
– Leverage through community
– Make the customer the product manager
• Scratching their own itch 31
32. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
1,000 people contributed to Drupal 7
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33. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Value…
• BEFORE you build even a feature, let alone a
product
– What problem are you solving?
– How significant is it?
33
34. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
PRIOR to MVP
• Check, recheck and triple check your Value
Prop
– If you’re not solving a valuable problem…
– YOU’RE NOT SOLVING A VALUABLE PROBLEM
!
– And unsurprisingly you won’t build any value
34
35. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Qualitative Validation
Before After
Vitamin vs. Penicillin
Acute Pain Absolute Joy
35
36. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Agile Validation
• Tools
– 3D printing See session by Abby Fichtner
– Paper prototypes
– Web landing pages
– Online surveys
– In product A/B testing
– Kickstarter
– Prepay customers (my favorite)
– Funding
– etc
36
37. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Value Proposition…
• See Building a Compelling Value Proposition
http://www.mjskok.com/resources/value-proposition
37
38. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Gain/Pain Validation
Pain
Inertia,
RISK
Gain
>10
38
39. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Start with a
Primary Value Prop! (PVP)
• Focus on a PRIMARY value prop for a single
audience
• Multi faceted are harder
– Chicken and Egg problems
– Serving too many masters
39
40. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Value Prop: Recap & Intersection
– 3D Solution
• Discontinuous
• Defensible
• Disruptive
Unique
– 4U Need
• Unworkable
• Unavoidable
• Urgent For targeting &
• Underserved market Segmentation
40
41. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Design to fit:
Product Go-To-Market fit
MVP and introducting MVS, MRP
41
42. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
The Product Market Fit
Product Market
Fit 42
43. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
The Product Market Fit
MV Market
P
43
44. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Adding to Lean Startup thinking…
Minimum Viable Product (MVP)
MV
P
44
45. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
The Product Market Fit Problem
Market
here?
here?
here?
MVP
++ here?
Fit ?
stretch ? here?
MV 45
46. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
The Product Market Fit Solution
Market
not here
not here
not here
not here
Fit
MV
46
P
47. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Adding to Lean Startup thinking…
Minimum Viable Product (MVP)
+ Minimum Viable Segment (MVS)
Repeat?
MV MV
P S
47
48. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Adding to Lean Startup thinking…
Minimum Viable Product (MVP)
+ Minimum Viable Segment (MVS)
Repeat for …
MV MV = same NEEDS
P S
48
49. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Adding to Lean Startup thinking…
Minimum Viable Product (MVP)
+ Minimum Viable Segment (MVS)
= Minimum Repeatable Product (MRP)
Repeatable
MV MR MR MV = same NEEDS
P P P S
49
50. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Adding to Lean Startup thinking…
Minimum Viable Product (MVP)
+ Minimum Viable Segment (MVS)
= Minimum Repeatable Product (MRP)
Repeatable, Referencable
MV MR MR MV = same NEEDS
P P P S
Smaller target to reference
lead, dominate
50
51. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Minimum Viable Segment…
Segment according to the same NEEDS
MV MR MR MV = same NEEDS
P P P S
Maintains MVProduct footprint
• Same functionality needed by all customers
People reference according to the same NEEDS
• Customers can compare solutions
Potential for leadership, domination
• At least initial Beachhead
51
52. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Targeting, Segmentation
+ Blatant Critical need if possible:
Mobile Professionals vs. Office Worker
Field Workers vs. White Collar
Services vs. Sales
Medical Equipment vs. Office Equipment
Hospitals vs. Medical Clinics
Critical Care
vs. Diagnostics
52
53. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
No longer just Product Market Fit
• It’s about Product Go-To-Market Fit
– Narrow your target
– Segment it by need
– Focus your product
• Vital for
– Positioning, Messaging, Communication
– Packaging and Pricing
– Channels & Distribution, Partner Alignment
• Enables
– Reference selling, network effects, virality
– Overall Business alignment
53
54. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
NUMBER ONE Startup Secret
Don’t be afraid to FOCUS!
• Narrow as possible to start!
– Think small targets to dominate
• Which would you rather…
– Expand on success?
– Contract on failure?
• Balance Vision vs. Execution
#1
– See post on mjskok.com
54
55. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Roadmap: Vision -> Execution
Vision Demo Team ROI Executio
s n
Technology
Breakthrough ?
55
56. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Roadmap: Vision -> Execution
Vision Demo Team ROI Executio
s n
Feature Product Solution Market Company
+ usability + partners + customers, + segments + product line
+ services references + beachheads + scalability
+ whole product (+ product RASS) + repeatability + profitability
56
57. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Roadmap: Vision -> Execution
(more likely parallel than literal)
Vision Demo Team ROI Executio
s n
Feature Product Solution Market Company
+ usability + partners + customers, + segments + product line
+ services references + beachheads + scalability
+ whole product (+ product RASS) + repeatability + profitability
57
58. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Roadmap: Vision -> Execution
Always validate from Customer viewpoint eg
NPS
Vision Demo Team ROI Executio
s n
Feature Product Solution Market Company
+ usability + partners + customers, + segments + product line
+ services references + beachheads + scalability
+ whole product (+ product RASS) + repeatability + profitability
Retention, Upsell
58
59. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Closing the Product - Company GAP:
Develop, Design & Architect
• Develop foundations
– Validated Value not just features
• Design to fit
– Product Go-To-Market Fit
• PVP – Primary Value Prop
• MVP – Min Viable Product
• MVS – Min Viable Sector
• MRP – Min Repeatable Product
• Architect to attract
– Business Model
• SLIPPERY Products
• Russian Doll Pricing and Packaging
• Whole Product
• Services
59
60. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Architecting to Attract
SLIPPERY Products
60
61. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Gain/Pain ratio
• Revenue • Inertia • Find (See)
• Cost savings • Switching costs? • Try
• Time • Default = do nothing • Buy
• People • Alternatives? • Implement
• Competitive advantage • Good enough = • Deploy
• Reputation good enough! • Own – eg TCO
• Etc.. • RISK on a startup
Pain
Inertia,
RISK
Gain
>10
61
62. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Gain/Pain ratio
• Revenue • Inertia • Find (See)
• Cost savings • Switching costs? • Try
• Time • Default = do nothing • Buy
• People • Alternatives? • Implement
• Competitive advantage • Good enough = • Deploy
• Reputation good enough! • Own – eg TCO
• Etc.. • RISK on a startup
Pain
Inertia, Product
RISK Lifecycle
Gain
>10
62
63. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Get To Market – product facilitation
What if you could
literally slip into the
lead?
63
64. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Friction Free, SLIPPERY products
• 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
64
65. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Simple
65
66. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Simple
Complexity
Simplicity
FIRST PRINCIPLES
Advantage
Disadvantage
66
68. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Even Simpler = Less is More!
Microsoft Apple
68
69. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Example
Knowledge Management vs. Note Taking
69
70. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Simple
• Simplify to your C.O.R.E. value
– Create a whole product with partnerships, open source
etc
• See http://www.mjskok.com/resource/startup-secrets-game-changing-
business-models
Capabilities
Of
C.O.R.E. Focus on it!
Really Value
Exceptional
Value
70
71. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Low to no initial cost
• Potential for
– Frictionless trials
– Lower initial CARC
– Self identifying Freemium prospects
• “Freeconomics”
http://www.wired.com/techbiz/it/magazine/16-03/ff_free
71
72. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Low to no initial cost
• Potential for
– Frictionless trials
– Lower initial CARC
– Self identifying Freemium prospects
• Free-fall, free-fail ?
– It’s worth what people are paying for it = nothing
= no proof of value
– And perceived value can also be zero
– Ultimately have to upsell
72
73. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Low to no initial cost
– Value
– Network
– Monetization
Design for VIRAL if possible
73
74. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Installs easily, integrates well
• Slippery not Trip-up-ery!
74
75. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Installs easily, integrates well
• Reducing the Pain for customers to
try, adopt, deploy
Pain
Inertia,
RISK
Gain
>10
75
76. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Installs easily, integrates well
• Integrates well:
– “Embrace & Extend”
Open & Extensible…
http://blog.programmableweb.com/2012/11/26/8000-apis-rise-of-the-enterprise/
76
77. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Installs easily, integrates well
• Integrates well
– “Embrace & Extend”
• Open & Extensible…
• Assume
http://blog.programmableweb.com/2012/11/26/8000-apis-rise-of-the-enterprise/
– Change = risky, painful, time consuming & costly
• Incumbents far and wide
– Applications
– Operating environments
– Business processes
– Human skills
77
78. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Products that integrate, play well with others…
• Encourage
others to
play with
them… ®
LINK Technology
Partners
LINK program
78
79. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Proves value quickly
• Consumer
– Instant gratification
• Enterprise,
– Rapid payback
• ≤3 months is great
• >12 months is bad
79
80. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Self proving value
• For example
– If your product is about improving a process…
• Provide proof as part of the product!
– Baseline current before the product usage
– Provide key metrics, visibility into progress
– Integrate analytics, dashboards
– Clearly surface reports that prove the value
80
81. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Package and progressively disclose
value
VS.
81
82. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Package and progressively disclose value
Example: Acquia, Drupal Gardens
82
83. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Package and progressively disclose value
Example: Acquia, Drupal Gardens – Results...
83
84. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Easy to use and apply
• “OOBE!”
– Out Of the Box
Experience
– Delight & entrance users
– E.G. Templates
84
85. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
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#innovationlab @mjskok #startupsecrets
Easy to use and apply
• Example Salesforce.com vs SIEBEL
VS.
85
86. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
ROI is Obvious
• Quantifiable
– Increase revenue
– Reduce time, resources, costs
• Or
– Reduce risk
– Drives competitive advantage
(ties to fast payback)
86
87. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
ROI is Obvious
(Supported by Self Proving Value)
• Example: Unidesk
87
88. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
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#innovationlab @mjskok #startupsecrets
StickY
• Your customers can’t live without it!
• Fulfills a real need
• Leaves customers
wanting more !
88
89. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
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#innovationlab @mjskok #startupsecrets
Friction Free, SLIPPERY products
• 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
89
90. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Friction Free, SLIPPERY products
• Simple
• Low to no initial cost
Gain
• Installs easily
Pain
• Proves value quickly
• Plays well with others
Think of how this improves
• Easy to use the Gain/Pain Ratio in our
Value Proposition
• ROI is obvious Workshop
• Your customers can’t live without it – it’s stickY
90
91. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Startup Secret…
Disruptive innovation
Yet..
NON disruptive adoption
91
92. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Startup Secret…
high
Disruptive innovation = GAIN
Yet..
low
NON disruptive adoption =
PAIN
92
93. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Example - Apperian
• Increase revenue by 40% at counters
• Saved $2.5M+ in direct IT costs
• Roll out 17,000 iPads
• Deliver worldwide no IT touch required
93
94. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Example - Apperian
• Increase revenue by 40% at counters
PAIN
• Saved $2.5M+ in direct IT costs
• Roll out 17,000 iPads
GAIN
• Deliver worldwide no IT touch required
94
95. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Architecting to Attract
Russian Doll Packaging & Pricing
95
96. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Build a Russian Doll!
• Multi purpose strategy
– Packaging
– Pricing
– Distribution
– And more …
96
97. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Incent
Free
97
98. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Freemium …
Limited
Free
98
99. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
OEM Solution…
Personal
Limited
Free
99
100. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Premium …
Workgroup
Personal
Limited
Free
100
101. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Sales enabler …
Corporate
Workgroup
Personal
Limited
Free
101
102. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Adoption …
Enterprise
Corporate
Workgroup
Personal
Limited
Free
102
103. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Russian Doll Packaging enables:
“Addiction before Adoption”
Gives you, your partners &
your customers:
• Digestible starting point
• Upsell Options
• Channel Flexibility
… and more
103
104. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
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#innovationlab @mjskok #startupsecrets
Russian Doll Packaging enables:
“Addiction before Adoption”
Acquia example = increasing LTV
“Land & Expand”
Upsell
LTV
On- / Cross
$400
board Sell $300
$200
Acquire $100
$0
104
105. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Architecting to Attract
WHOLE product
105
106. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Whole Product –
Reinventing the wheel
106
107. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Example – MP3
Rip...
107
108. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Whole product…
MP3
+
Player
(Parallel port, ~ 8 songs)
108
109. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
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#innovationlab @mjskok #startupsecrets
Whole product ?
MP3
+
The iPod
“1000 songs in your pocket”
109
110. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Whole product
MP3
+
The iPod
“1000 songs in your pocket”
+ Firewire
+ iTunes
+ Legal Music
= WHOLE PRODUCT !
110
111. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
The ideal whole product
• Is a win / win with a partner
• Where the partner needs you
• And can take you to market
111
112. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Strategic Partnership
EG: “Whole Product” Strategic Partnership
Multipliers: Levers:
• Increase revenue • Reduce time to market
through fuller Services • Reduced dev costs
solution Multipliers Application
s
Lever
• Increase reach CORE
Database
through their sales
Storage
force, channel etc.
• Credibility
Integrate your CORE
into their technology stack
112
113. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
What makes a partner strategic?
• Symbiotic multipliers & levers (win-win)
+ Product
+ Distribution
+ other
• 1+1 > 2 in joint market leverage
– Ousting competitors, driving share
• Can create potential exit
113
114. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
An ideal ideal (win-win)
Strategic Partner Example
What You Get What They Get
• Complete your • Competitive advantage
“WHOLE Product” • Increased ARPU
- Increase Value (LCV)
• Faster Time to Market
• Channels to reach YOUR
target customer
- Reduce Selling Cost
(CARC)
• Credibility
114
115. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
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#innovationlab @mjskok #startupsecrets
Architecting to Attract
Services
115
116. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Services can be a lethal weapon
“One of the most controversial subjects I
hear raised between Entrepreneurs and
Investors is the use of Professional
Services in a product company. “
116
117. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Startup Secret:
Professional Services – 7 golden nuggets
1. Pre-sales facilitation
2. Post- sales implementation & support
3. Customer breadth of deployment & growth
4. Predictable revenue and contribution
5. Free Product Management
6. Best practices buildup
7. Upgrade acceptance, deployment
117
118. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Startup Secret:
Professional Services – 7 Deadly Sins
Wrath Customers get angry, thinking your product should work without
services
Greed You start gouging customers for extra revenue
Sloth You get lazy in fixing product issues in the product versus covering them up
with PS
Pride You become so proud of the revenue PS is adding to your top line, that
you forget to pay attention to your business model
Lust You Lust after acquiring more customers instead of partners. Ultimately
partners that can take services on for you are a much more scalable way
to grow your business.
Envy Envy between sales and services builds divided loyalty.
Gluttony You get hooked on a services model. This is a real risk that I’ve seen
from startups who get too used to the predictable services revenues.
118
119. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Closing the Product - Company GAP:
Develop, Design & Architect
• Develop foundations
– Value not just features
• Design to fit
– Product Go-To-Market Fit
• PVP – Primary Value Prop
• MVP – Min Viable Product
• MVS – Min Viable Sector
• MRP – Min Repeatable Product
• Architect to attract
– Business Model
• SLIPPERY Products
• Russian Doll Pricing and Packaging
• Whole Product
• Services
119
120. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Blueprint for success:
Develop, Design & Architect a COMPANY
1. Develop foundations
2. Design to fit
3. Architect to attract
120
121. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
What we did we NOT cover:
materials & cases on www.mjskok.com
• Product Branding
• How to develop a compelling Value Proposition
• Co-creation
• Distribution
• Product lifecycle,
• Supportability
and more…
… let us know what you feel is important
@mjskok #innovationlab #startupsecrets
121
122. 4/1/13
Belmont Technology Confidential
Turning Products Into Companies
J. McEleney, CEO Belmont Technology Inc.
April 2013
122
123. Background
• Former CEO of SolidWorks (2001-2007):
• $600M supplier of Windows 3D CAD software
• Acquired by Dassault Systemes
4/1/13
• Former CEO of CloudSwitch (2009-2012)
Belmont Technology Confidential
• Enterprise cloud software
• Acquired by Verizon
• CEO of Belmont Technology (2012)
• $9 M Series A (North Bridge, Commonwealth)
• $25 M Series B (NEA)
• Based in Cambridge 123
124. CAD is the Basis of Every Product
Belmont Technology Confidential 4/1/13
124
125. Does anyone know what this is?
4/1/13
1-5-0-3
Belmont Technology Confidential
125
126. Where to sell?
11+ 1 2
4/1/13
Belmont Technology Confidential
# Units 6-10
1-5 3
0-3 4-6
126
# Months
127. Why did we care where VARs sold?
• Under-capitalized +$
• Need profitable, quick
4/1/13
sales Making Money
Belmont Technology Confidential
• New account penetration Losing Money
was critical to our long
term success
- $
127
128. “1503” = Execution Philosophy
• From 1st customer touch -> product delivery:
• Minimize friction
• High touch, low cost
4/1/13
• Broad, stable revenue predictability
Belmont Technology Confidential
• Upgrades became an optimization challenge
• >500K boxes to be shipped
• 15.9 oz vs 16 oz (different UPS pricing schedule)
• “Land and Expand” sales strategy for major accounts
128
129. Eco-system “CATCH-22”:
4/1/13
Partners only want your customers, but…
You can’t get customers without partners
Belmont Technology Confidential
129
130. So how did we break the cycle?
Step # 1 Step # 2 Step # 3
4/1/13
Belmont Technology Confidential
Marketing Cold Leaders Set The Followers Will
Fusion Pace Follow
Credibility through #’s Get one partner, make The others (including
them successful leaders will join)
130
131. Meet your enemy:
4/1/13
Belmont Technology Confidential
1. Events force action
131
2. The perfect is the enemy of the good
132. What you think vs. What you know
4/1/13
Belmont Technology Confidential
132
Important MORE Important
133. Subscription: What price to charge?
• Situation:
• Competitors charged 18%
• Wanted VAR’s to provide end user support
4/1/13
• SolidWorks always wanted to take calls->help customers get into
production
Belmont Technology Confidential
• Action:
• Start with the VAR:
• How many customers could a support person handle?
• How much would they cost?
• What % margin does VAR expect?
• How do we make sure they call VAR first?
• Statistical Process Control
133
• Today this generates $300M (all of the profit of the company)
134. Some Other Things I have Learned:
• It’s easy to start a company, it’s hard to build a business
• Events force actions
• The perfect is the enemy of the good
•
4/1/13
Hiring is the most important thing we do
• It should be part of your culture
• You are going to make mistakes, fire quickly
Belmont Technology Confidential
• Sales people:
• Look for the coin slot
• Look for people who want recognition
• Your job as the CEO: create the culture
• Hand written notes – go a lot further than you think
• Celebrate victories, anniversaries…
• As a leader NEVER take credit, give it to the team
• You will get enough, don’t worry
• If you’re doing your job, they did the work 134
• Have Fun – it’s the journey NOT just the outcome!
135. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi www.mjskok.com
#innovationlab @mjskok #startupsecrets
Thank you!
• Gregg
Favalora, Principal, Optics for
Hire
– Founder Actuality Systems
– @gfavalora
• John McEleney, CEO Belmont
Systems
– Previously CEO Solidworks
– @johnmceleney 135
136. Harvard innovation lab : Michael J Skok : Startup Secrets : Product to Company
Hi
Hi Harvard innovation lab
#innovationlab @mjskok #startupsecrets www.mjskok.com
Thank you !
START UP
SECRETS
An insider’s guide to unfair competitive advantage
Turning Products into Companies
by Design & Architecture
MICHAEL J SKOK
North Bridge Venture Partners
twitter: @mjskok mjskok.com
136
Messaging goes with twitterEtc.Left side as text, right side as logos
Messaging goes with twitterEtc.Left side as text, right side as logos
Designed it inReduced frictionLower CARCAccelerate adoption to extend LCVEnabled self service Reducing costs
Beware of:Single outliers customers like Fidelity in Finserv in B2BOr in Consumer, of assuming you know the consumer – are you really representative?List resources such as- usertesting.com
5th U - Unique
Product shrinks
Product shrinks
a set of actual or potential customers for a given set of products or services who have a common set of needs or wants, and who reference each other when making a buying decision.Moore, Geoffrey A. (2009-03-17). Crossing the Chasm
Alwaysvalidat from customer viewpoint- NPS
Alwaysvalidat from customer viewpoint- NPS
By Chris Anderson 02.25.08
By Chris Anderson 02.25.08
“NPG!”
Fast path to value
Wheel in a build. Spare tire. Warranty.
http://www.theregister.co.uk/2008/03/10/ft_first_mp3_player/Saehan's MPMan F10: held up to eight songs
http://www.theregister.co.uk/2008/03/10/ft_first_mp3_player/Saehan's MPMan F10: held up to eight songs
http://www.theregister.co.uk/2008/03/10/ft_first_mp3_player/Saehan's MPMan F10: held up to eight songs
http://www.theregister.co.uk/2008/03/10/ft_first_mp3_player/Saehan's MPMan F10: held up to eight songs
But it has to be win/winOEM, relies on upsell
Could you find a larger strategic partner who needed you to complete their “whole product” AND that had channels to reach your target customers AND that multiplied your Go-To-Market value and effectiveness?