Startup opportunity discovery and evaluation. In this presentation the authors of The Smarter Startup demonstrate a systematic approach to surfacing and evaluating startup ideas to increase likelihood of success. This is product strategy for startups.
2. Sonya Zhang
Professor
INTRODUCTION
Introductions
Neal Cabage
Entrepreneur, Product Manager
Digital product architect. Founded
ProductCamp.LA and PMA.LA. Built
and sold two startups. Authored the
book, The Smarter Startup.
PhD in Information Systems and
Technology, M.S. in Computer
Science, and MBA. Researched
Internet Entrepreneurship and
Digital Product Strategy.
3. THE SMARTER STARTUP
PRODUCT 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
Our Book
7. Diligent Negligent
SuccessFailure
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.
There’s more to the story!
PROBLEM STATEMENT
Conventional Wisdom
NOT ENTIRELY
8. 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
(0ming)
Direc0on
(customer
need)
What Is the Whole Story?
PROBLEM STATEMENT
Drag
(compe00on)
Velocity
(hard
work)
9. Work Smart, Not Just Hard
Timing
Customer Product
CompetitionStartup
Opportunity
Finance Team
We cannot work simply work hard and
expect to have a desirable outcome.
There are many dynamics at play that
all determine whether we’re likely to
succeed. Some may get lucky but
they are the exception not the rule.
INTRODUCTION
11. We’ve developed a method for
systematically discovering startup
opportunities by leveraging the
Business Model Archetypes model
and the Startup Opportunity
Scorecard to identify ideas and
objectively evaluate them.
FRAMEWORK OVERVIEW
Startup Opportunity Framework
Opportunity Scorecard
Finance
Timing Competition
Team
ProductCustomer
Idea Idea
Idea
Business Model Archetypes
VerticalMarkets
A B+ F
A
A-
Scorecard Criteria
BusinessIdeas
+ =
Business Model Archetypes Startup Opportunity Scorecard
Ideation Matrix Evalaution Matrix
#1
Trade
Product
Service
Marketplace
Ecosystem
Subscription
Brokerage
IDEATION PROCESS EVALUATION PROCESS
12. Opportunity Scorecard
Finance
Timing Competition
Team
ProductCustomer
Idea Idea
Idea
Business Model Archetypes
VerticalMarkets
A B+ F
A
A-
Scorecard Criteria
BusinessIdeas
+ =
Ideation Matrix Evalaution Matrix
#1
Trade
Product
Service
Marketplace
Ecosystem
Subscription
Brokerage
IDEATION PROCESS EVALUATION PROCESS
FRAMEWORK OVERVIEW
Startup Opportunity Framework
Start by considering the possible
business model archetypes (eg
personalities) for every market actor
you’re considering serving. Take
note of all of the possibilities you
uncover in the ideation matrix.
STEP 1: IDEATION
13. Opportunity Scorecard
Finance
Timing Competition
Team
ProductCustomer
Idea Idea
Idea
Business Model Archetypes
VerticalMarkets
A B+ F
A
A-
Scorecard Criteria
BusinessIdeas
+ =
IDEATION PROCESS EVALUATION PROCESS
Ideation Matrix Evalaution Matrix
#1
Trade
Product
Service
Marketplace
Ecosystem
Subscription
Brokerage
FRAMEWORK OVERVIEW
Startup Opportunity Framework
Objectively evaluate all of the ideas
you’ve developed against a set of
entrepreneurial heuristics that will
help you to identify weaknesses.
Based on this, score each idea to
determine the best idea.
STEP 2: EVALUATION
15. 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.
BUSINESS MODEL ARCHETYPES
Business Model
Archetypes
Trade
Product
Service
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
16. BUSINESS MODEL ARCHETYPES
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
isola0on
but
nothing
comprehensive
that
describes
the
fundamentally
unique
paCerns
in
a
single
and
concise
framework
that
suited
our
needs.
17. Carl Jung
Psychologist
BUSINESS MODEL ARCHETYPES
What is an Archetype?
A philosophical idea, referring to pure
forms which embody the fundamental
characteristics of a thing.
The concept was based on Carl Jung’s Personality Archetypes which describes fundamental
personalities and roles that we draw from to develop our own unique personality.
18. 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.
BUSINESS MODEL ARCHETYPES
Primary Archetypes
19. BUSINESS MODEL ARCHETYPES
Product Archetype
PROTOTYPES WITH EXAMPLES
TRADE
PRODUCT
SERVICE Software:
• Rovio (mobile apps)
• AheadWorks (plugins)
• WooThemes (themes)
Content:
• AdvantageMedia (ebooks)
• DemandMedia (articles)
• MakerStudios (videos)
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.
20. BUSINESS MODEL ARCHETYPES
Service Archetype
Doing work for a client and monetized on a per-use
basis. Professionals or technicians with expert
knowledge and skills in a specific domain provides
intangible solutions to clients.
PROTOTYPES WITH EXAMPLES
TRADE
SERVICE
PRODUCT
Platform as a Service:
• SendGrid (email)
• MaxMind (geo ip)
• DemandWare (eCom)
Service Agency:
• BlueAcorn (magento)
• Appirio (salesforce)
• ReachLocal (adwords)
21. PRODUCT
TRADE
SERVICE
BUSINESS MODEL ARCHETYPES
Trade Archetype
Connecting prospective buyers with a product they
seek to buy and making profit on the spread
between what a buyer will pay versus the cost of
acquisition.
PROTOTYPES WITH EXAMPLES
LeadGen:
• Lending Tree (financial)
• Capterra (software)
• Shopzilla (consumer)
Ecommerce:
• Target.com (retail)
• Kinerase.com(source)
• Intellius (data)
22. Carl Jung
Psychologist
The meeting of two personalities (archetypes) is like the contact of
two chemical substances; if there is any reaction, both are transformed.
BUSINESS MODEL ARCHETYPES
Secondary Archetypes
23. MARKETPLACE
TANGIBLE SOLUTION
SUBSCRIPTION
CUSTOM SOLUTION
BROKERAGE
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.
BUSINESS MODEL ARCHETYPES
Secondary Archetypes
ECOSYSTEM
CONNECT BUYERS & SELLERS
24. SERVICE TRADE
BUSINESS MODEL ARCHETYPES
Brokerage Archetype
BROKERAGE
PROTOTYPES WITH EXAMPLES
Ad Network
• DoubleClick (cpm)
• Kontera (in-text)
• Chitika (ppc)
Dropship
• Doba (dropship)
• Ordoro (dropship)
• Simplx (dropship)
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.
25. TRADE PRODUCT
BUSINESS MODEL ARCHETYPES
Marketplace Archetype
MARKETPLACE
PROTOTYPES WITH EXAMPLES
Service Marketplace
• oDesk (outsourcing)
• Elance (freelancing)
• Care.com (nannies)
Product Marketplace
• eBay (auction)
• Etsy (crafts)
• ThemeForest (themes)
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.
26. SERVICE PRODUCT
BUSINESS MODEL ARCHETYPES
Subscription Archetype
SUBSCRIPTION
PROTOTYPES WITH EXAMPLES
Content as Service:
• Ancestry.com (genealogy)
• Lynda.com (education)
• Match.com (dating)
Software as Service:
• Mint.com (finance)
• Wordpress.com (site)
• HubSpot.com (mktg)
Building, maintaining, and supporting an online
product in an on-going fashion rather than a one-
time sell. Customers pay a monthly subscription
service and benefit from continued improvements.
27. SERVICE
TRADE PRODUCT
BUSINESS MODEL ARCHETYPES
Ecosystem Archetype
ECOSYSTEM
PROTOTYPES WITH EXAMPLES
Media Platform:
• Facebook (social)
• Google (search)
• Yahoo (content)
Technology Platform:
• Apple (hardware/OS)
• Magento (eCommerce)
• SalesForce (CRM)
A mature market leader begins as another archetype
but expands as a result of success. What may begin
as a product will also develop a marketplace,
services, and even a program for ISV vendors.
28. BUSINESS MODEL ARCHETYPES
Business Model
Archetypes
Trade
Product
Service
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
29. Business Models
Archetypes
Ideation
Matrix
Evaluation
Matrix
Opportunity Discovery Process
Trade
Product
Service
Marketplace
Ecosystem
Subscription
Brokerage
A B+ F
A
A-
Scorecard Criteria
BusinessIdeas
STEP BY STEP PROCESS
Idea #1 Idea #2 Idea #3
Idea #4 Idea #5 Idea #6
Idea #7 Idea #8 Idea #9
Business Model Archetypes
VerticalMarkets
Identifies the spectrum of
fundamental business
“personalities” that you can
consider consider when
defining your own unique
business model.
Identify an applied business
concept for every archetype
personality, across all of the
vertical markets you are
considering.
Grade each of the ideas
you’ve identified in the
ideation matrix, based on the
six scorecard success criteria
and compare to determine
the best opportunity.
6
6 Market
Dynamics
The 6 market dynamics are a
set of known impact that
need to be considered for
success that can be used to
evaluate an ideas potential.
30. 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. Once you have
done this, you can begin to evaluate
these ideas.
Ideation Matrix
Idea #1 Idea #2 Idea #3
Idea #4 Idea #5 Idea #6
Idea #7 Idea #8 Idea #9
Business Model ArchetypesVerticalMarkets
STEP BY STEP PROCESS
31. IDEATION MATRIX
Create a matrix with the business model archetypes across the x-axis, and vertical market
segments you’re interested in exploring on the y-axis. Cancel out any business model archetypes
you already know aren’t a good fit for your team.
Identifying Opportunity
Product Service Trade Subscrip3on Marketplace Brokerage Ecosystem
Real
Estate
Agents
Real
Estate
Brokers
Property
Managers
Can’t
Start
Here!
Don’t
Possess
Trade
Func0onal
skills
32. IDEATION MATRIX
Develop a business idea for each market actor that you’re considering, for each of the
business model archetypes. Fill them into the grid.
Identifying Opportunity
Product Service Subscrip3on Marketplace Brokerage
Real
Estate
Agents
Real
Estate
Brokers
Property
Managers
IDX
Wordpress
Theme
Marke0ng
CRM
Property
Search
Site
Virtual
Assistant
Lead
Genera0on
34. Business Models
Archetypes
Ideation
Matrix
Startup
Heuristics
Evaluation
Matrix
Opportunity Discovery Process
Trade
Product
Service
Marketplace
Ecosystem
Subscription
Brokerage
Idea Idea
Idea
Business Model Archetypes
VerticalMarkets
A B+ F
A
A-
Scorecard Criteria
BusinessIdeas
STEP BY STEP PROCESS
Identifies the spectrum of
fundamental business
“personalities” that you can
consider consider when
defining your own unique
business model.
Identify an applied business
concept for every archetype
personality, across all of the
vertical markets you are
considering.
Grade each of the ideas
you’ve identified in the
ideation matrix, based on the
six scorecard success criteria
and compare to determine
the best opportunity.
The 6 market dynamics are a
set of known impact that
need to be considered for
success that can be used to
evaluate an ideas potential.
6
35. STARTUP STRATEGY
The 6 Market Dynamics
THE FUNDAMENTAL CRITERIA
START HERE
There are 6 fundamental market dynamics
to consider when developing a startup
concept. We’ve developed 18 startup
heuristcis (3 per market dynamics).
customer
product
compe00on
0ming
financial
team
The
6
Market
Dynamics
37. WHAT’S A GOOD CUSTOMER?
The ideal customer wants something the
market hasn’t yet delivered. 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 SCORECARD
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?
38. FOCUS ON HELPING OTHERS
FOCUS ON CREATING VALUE
The best opportunities come from helping
others. Find a need or desire that is not yet
solved, 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
39. 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 fund and plans to be aggressive.
40. 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).
41. 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 SCORECARD
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
42. PRODUCT CRITERIA
Customer Focused Solution
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.
43. 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
44. PRODUCT CRITERIA
Low Barriers to Adoption
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.
45. Easy Workflow
Integration
Addt’l Benefits
(value chain)
Solves My
Problem
Existing
Investments
Learning
Curve
IS THE VALUE CLEAR?
VALUE = BENEFIT - COST
PRODUCT CRITERIA
Clear Value Proposition
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.
46. 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 SCORECARD
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
47. 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 %)
48. 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 %)
Chasm
New Entrant Opportunity
Ideal point to
enter a market
49. 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 capitulated (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
ConsolidationEarly Movers
Capitulation
*
50. 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.
51. What cost $5 million to
accomplish 10 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
$5,000,000
$500,000
$50,000
$5,000
2000
2005
2009
2012
Open Source Software
The Cloud
Hosting Commoditized
52. As cost has fallen, so has the
competitive barrier to entry.
Competitive positioning is now the
key strategic issue, not
technological capability for most
consumer Internet products. How
do you cut through the noise?
Commonplace
Commodity
2000 2002 2004 2006 2008 2010 2012 2013
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%#!$!!!$!!!"
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&#!$!!!$!!!"
!"#$%&'%()*+%)&
Data From NetCraft 2013 Web Server Survey
53. 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 SCORECARD
Competition Criteria
CLEAR MARKET INEFFICIENCY
Stagnant or Fragmented Market
LOW BARRIERS TO ENTRY
Easy & Cheap to Compete?
DIFFERENTIABLE POSITION
Something Special or Different?
54. 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 of splintered (fragmented).
55. 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
COMPETITION CRITERIA
Low Barriers to Entry
56. 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.
COMPETITION CRITERIA
Low Barriers to Entry
57. SEGMENTED MARKET
FOCUS ON SPECIFIC CUSTOMER
LOW PRICE LEADERSHIP
FOCUS ON VOLUME & COMMITY
DIFFERENTIATED PRODUCT
DISRUPTIVE OR INNOVATIVE
HOW ARE YOU DIFFERENT?
WHAT MAKES YOU SPECIAL?
COMPETITION CRITERIA
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
58. 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 SCORECARD
Financial Criteria
LOW SUNK COSTS
Up Front Capital at Risk?
WORKING CAPITAL FLOAT
Gap Between Payable/Receivables
ECONOMIES OF SCALE
Margins Increase With Volume?
59. 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
60. 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
61. 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 Cost
Scalable
Profits
62. WHAT’S GOOD TEAM FIT?
Just because an opportunity exists,
doesn’t mean your team is likely to
succeed. Does your team have an
inherent competitive advantage for the
endeavor? Do you possess deep
knowledge, technical skills to deliver, &
access to key partners and resources?
STARTUP SCORECARD
Team Fit Criteria
SUBJECT MATTER EXPERTISE
Deep Knowledge of Market?
FUNCTIONAL COMPETENCE
Technical Skills to Deliver
SUPPLIER PARTNERSHIPS
Access to Materials at Good Cost
63. 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 deep needs 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 ExpertSubject Matter Expert
64. 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?
65. Evaluate your startup idea across the six market
dynamics 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 IdeaA
B
D
B
A
B
B-‐
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
66. Business Models
Archetypes
Ideation
Matrix
Evaluation
Matrix
Opportunity Discovery Process
Trade
Product
Service
Marketplace
Ecosystem
Subscription
Brokerage
Idea Idea
Idea
Business Model Archetypes
VerticalMarkets
STEP BY STEP PROCESS
A B+ F
A
A-
Scorecard Criteria
BusinessIdeas
Identifies the spectrum of
fundamental business
“personalities” that you can
consider consider when
defining your own unique
business model.
Identify an applied business
concept for every archetype
personality, across all of the
vertical markets you are
considering.
Grade each of the ideas
you’ve identified in the
ideation matrix, based on the
six scorecard success criteria
and compare to determine
the best opportunity.
6
6 Market
Dynamics
The 6 market dynamics are a
set of known impact that
need to be considered for
success that can be used to
evaluate an ideas potential.
67. The last step of the process is to take
all of the ideas we generated in the
ideation matrix (step 2) and grade them
using the Startup Opportunity
Scorecard. This will provide an easy
point of comparison of strengths and
weaknesses of the opportunities being
considered and facilitate a decision.
STEP BY STEP PROCESS
Evaluation Matrix
A B+ F
A
A-
Scorecard Criteria
BusinessIdeas
68. EVALUATION MATRIX
Score Your Ideas
Customer
Product
Timing
Compe33on
Finance
Team
Overall
IDX
WordPress
Theme C
B
B
B
A
A
Virtual
Assistant
Marke3ng
CRM
Property
Search
Site
Lead
Genera3on
Now we’ll evaluate each idea against each of the 6 market dynamics. We’ll be able to see relative
strengths and weaknesses and will give a final overall score accordingly.
69. EVALUATION MATRIX
Score Your Ideas
Customer
Product
Timing
Compe33on
Finance
Team
Overall
IDX
WordPress
Theme C
B
B
B
A
A
B+
Virtual
Assistant
Marke3ng
CRM
Property
Search
Site
Lead
Genera3on
Now we’ll evaluate each idea against each of the 6 market dynamics. We’ll be able to see relative
strengths and weaknesses and will give a final overall score accordingly.
70. EVALUATION MATRIX
Score Your Ideas
Customer
Product
Timing
Compe33on
Finance
Team
Overall
IDX
WordPress
Theme C
B
B
B
A
A
B+
Virtual
Assistant C
C
B
B
C
C
C+
Marke3ng
CRM C
C
D
D
C
A
C-‐
Property
Search
Site C
A
D
F
D
A
D+
Lead
Genera3on C
A
B
B
B
B
B
Now we’ll evaluate each idea against each of the 6 market dynamics. We’ll be able to see relative
strengths and weaknesses and will give a final overall score accordingly.
71. Now we’ll evaluate each idea against each of the 6 market dynamics. We’ll be able to see relative
strengths and weaknesses and will give a final overall score accordingly.
EVALUATION MATRIX
Score Your Ideas
Customer
Product
Timing
Compe33on
Finance
Team
Overall
IDX
WordPress
Theme C
B
B
B
A
A
B+
Virtual
Assistant C
C
B
B
C
C
C+
Marke3ng
CRM C
C
D
D
C
A
C-‐
Property
Search
Site C
A
D
F
D
A
D+
Lead
Genera3on C
A
B
B
B
B
B
Think
twice
about
any
idea
that
earns
only
a
D
or
F
–
this
may
mean
its
non-‐viable.
WARNING!
72. EVALUATION MATRIX
Score Your Ideas
Customer
Product
Timing
Compe33on
Finance
Team
Overall
IDX
WordPress
Theme C
B
B
B
A
A
B+
Virtual
Assistant C
C
B
B
C
C
C+
Marke3ng
CRM C
C
D
D
C
A
C-‐
Property
Search
Site C
A
D
F
D
A
D+
Lead
Genera3on C
A
B
B
B
B
B
Two
ideas
that
pass
the
test.
You
could
choose
one
of
these
or
keep
searching.
CONGRATULATIONS!
73. IDX WordPress Themes
IDEA #1
EVALUATION MATRIX
Selecting an Idea
Lead Generation
IDEA #2
A B+ F
A
A-
Scorecard Criteria
BusinessIdeas
In the final analysis, there are two ideas from our original pool that appear to be most viable. They
have the best overall score and also do not have a particular challenge on any single criteria.
74. IDX WordPress Themes
IDEA #1
EVALUATION MATRIX
Selecting an Idea
Lead Generation
IDEA #2
A B+ F
A
A-
Scorecard Criteria
BusinessIdeas
In the final analysis, there are two ideas from our original pool that appear to be most viable. They
have the best overall score and also do not have a particular challenge on any single criteria.Select the idea you’re going to explore
(first).
75. Mark Twain
Author
VISION DEFINITION
Finally, Define Your 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.
76. Once you’ve decided on your
idea, its time to begin clarifying
the idea, who you’re serving,
and how you’ll position yourself
in the competitive marketplace.
Defining Your
Startup Vision
VISION DEFINITION
77. Once you’ve decided on your
idea, its time to begin clarifying
the idea, who you’re serving,
and how you’ll position yourself
in the competitive marketplace.
Defining Your
Startup Vision
VISION DEFINITION
Vision Definition
Answer each question concisely in the Vision Definition worksheet. It
takes effort to distill your thoughts into small soundbytes that answer
these questions but it is a necessary step on the way to clarity. Once
that is done, compose a 3-4 sentence elevator pitch you can share
with client prospects and investors.
78. Successful Real Estate agents,
earning $100k / year
1. Phone sales & webinars
2. Conferences
Marketing Automation CRM
Software Product
WordPress Theme *Product*
(not SaaS) for the DIY agent
Tech disruption. First mover
(the Spark API for IDX)
1. Me (product/tech)
2. John (BizDev/Sales)
1. Spark Platorm API
2. Access to all MLS IDX Feeds
$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.
Real Estate IDX WordPress Themes May 9
IDX System to capture &
nurture online leads
1. Own don't Rent (your website)
2. Beautiful original design
79. PREPARED FOR SXSWi 2014
BY NEAL CABAGE & SONYA ZHANG, PhD
Thank You!
NealCabage.com SonyaZhang.com