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Innovation Management Workshop - #2

Innovation Management Workshop - #2

How to start a scalable business

Manish Chiniwalar

October 01, 2016
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  1. HOW-TO
    START AND SCALE
    IMPACTFUL BUSINESS IDEAS
    Kuldip Chakraborty
    @cooldip
    Manish Chiniwalar
    @manishrc
    Karthik Gupta
    @karthikvgupta

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  2. WHY ARE WE HERE?

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  3. 1.8 MILLION
    BOOKS ON BUSINESS & MONEY

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  4. GOODKARMA ● 4 Customers
    ● 3 Pivots
    ● 0 Lines of code
    “Help yoga practitioners grow with
    consistent and deliberate practice.”

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  5. GOODKARMA
    PIVOTS 1. Inconsistent Students → Consistent
    Students
    2. Add Teachers
    3. Teachers → Yoga Studio Founders
    “Help yoga practitioners grow with
    consistent and deliberate practice.”

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  6. CUSTOMER
    FACTORY
    LEAN
    CANVAS
    TRACTION
    MODEL

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  7. 1961
    John F.
    Kennedy
    I believe that this nation should commit itself to
    achieving the goal,
    before this decade is out,
    of landing a man on the moon
    and returning him safely to the earth.

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  8. WHERE DO YOU WANT TO BE?
    “If you don’t know where you are going,
    any road will take you there.”

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  9. DO IT NOW 1. Write your Minimum Success Criteria
    in terms of revenue per year
    Is it $1k, $10k, $100k, $1M, $10M?
    2. Write when do you want to reach there
    Anytime between 2-5 years is a good
    timeframe
    5 MIN

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  10. “Don’t sell what you can build. Build what you can sell.”
    BUSINESS, NOT BUSYNESS.

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  11. CREATE
    VALUE

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  12. CREATE
    VALUE
    CAPTURE
    VALUE

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  13. CREATE
    VALUE
    CAPTURE
    VALUE
    AT FRACTION
    OF THE COST

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  14. CREATE
    VALUE
    CAPTURE
    VALUE
    AT FRACTION
    OF THE COST
    DO THIS WITH A LOT OF PEOPLE

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  15. “It's not about ideas. It's about making ideas happen.”
    - Scott Belsky
    THE LEAN CANVAS

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  16. ASH MAURYA’S LEAN CANVAS

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  17. CUSTOMER
    SEGMENT
    1. Identify your key customer segment
    2. Identify the roles that will interact
    with this customer
    3. Identify early adopters
    #1

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  18. PROBLEM 1. List the top 3 problems
    2. List existing alternatives
    #2

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  19. UVP
    1. Single, clear, compelling message that
    states why you are different and worth
    paying attention.
    2. Tips for UVP:
    - Be different, but make sure your difference
    matters
    - Target early adopters
    - Focus on finished story benefits
    - Pick your words carefully and own them
    - Answer: what, who, and why
    - Study other good UVPs.
    3. Good Formula
    Instant Clarity Headline
    = End Result Customer Wants
    + Specific Period of Time
    + Address the Objections
    4. Create a high-concept pitch.
    #3

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  20. SOLUTION Simply sketch out the simplest thing you
    could possibly build to address each
    problem.
    #4

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  21. CHANNELS
    1. Failing to build a significant path to
    customers is among the top reasons
    why startups fail.
    2. Write both inbound and outbound
    paths to your customers.
    #5

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  22. REVENUE
    STREAMS
    List your sources of revenue.
    Don’t let cost drive your price. Base it on the
    “Perceived Value” and existing alternatives.
    #6

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  23. Image credits: vox.com

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  24. “What we document is that price is not just
    about inferences of quality, but it can
    actually affect real quality,”
    BABA SHIV

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  25. “What we document is that price is not just
    about inferences of quality, but it can
    actually affect real quality,”
    “So, in essence, [price] is changing people's
    experiences with a product and, therefore,
    the outcomes from consuming this
    product.”
    BABA SHIV

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  26. REVENUE
    STREAMS
    List your sources of revenue.
    Don’t let cost drive your price. Base it on the
    “Perceived Value” and existing alternatives.
    #6

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  27. COST
    STRUCTURE
    List your fixed costs and variable costs
    #7

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  28. KEY METRICS What will tell you how your business is
    doing?
    #8

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  29. A B

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  30. UNFAIR
    ADVANTAGE
    Something that cannot be easily be copied
    What will prevent a big company ripping off your
    product?
    #9

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  31. “If you want to unleash more creativity in your company, you need to allow for a little
    contamination. It is the sand in the oyster that creates the pearl.”
    - Fred Wilson
    LOCAL MAXIMA

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  33. DO IT NOW
    1. Copy the canvas
    & create more versions
    2. Start with changing the
    Customer Segments
    3. Rank and pick one, based on:
    - Customer Pain Level
    - Ease of Reach
    - Gross Margins
    - Market Size
    - Tech Feasibility
    60 MIN

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  34. How many trees are left in Bangalore today?
    FERMI ESTIMATE

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  35. Enrico Fermi

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  36. REQUIRED CUSTOMERS =
    REVENUE/YEAR
    REVENUE/CUSTOMER/YEAR

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  37. REQUIRED CUSTOMERS =
    REVENUE/YEAR
    REVENUE/CUSTOMER/YEAR
    Minimum Success Criteria

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  38. REQUIRED CUSTOMERS =
    REVENUE/YEAR
    $1,000,000
    REVENUE/CUSTOMER/YEAR
    (Number of Students/Studio) x (Price per Student)

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  39. REQUIRED CUSTOMERS =
    REVENUE/YEAR
    $1,000,000
    REVENUE/CUSTOMER/YEAR
    = (STUDENTS/STUDIO) x (PRICE/STUDENT) x (12 MONTHS)

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  40. REQUIRED CUSTOMERS =
    REVENUE/YEAR
    $1,000,000
    REVENUE/CUSTOMER/YEAR
    = (50 STUDENTS/STUDIO) x ($4/STUDENT) x (12 MONTHS)

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  41. REQUIRED CUSTOMERS =
    REVENUE/YEAR
    $1,000,000
    REVENUE/CUSTOMER/YEAR
    $2,400

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  42. REQUIRED CUSTOMERS = 416 ACTIVE CUSTOMERS

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  43. REQUIRED CUSTOMERS = 500 ACTIVE CUSTOMERS
    Over 100,000 yoga studios in
    the world

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  44. CUSTOMER
    PRODUCTION RATE =
    REVENUE/YEAR
    $1,000,000
    CUSTOMER LIFETIME VALUE
    = (REVENUE/CUSTOMER/YEAR) x (LIFETIME)

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  45. CUSTOMER
    PRODUCTION RATE =
    REVENUE/YEAR
    $1,000,000
    CUSTOMER LIFETIME VALUE
    = ($2,400 REVENUE/CUSTOMER/YEAR) x (2 YEAR LIFETIME)

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  46. CUSTOMER
    PRODUCTION RATE =
    REVENUE/YEAR
    $1,000,000
    CUSTOMER LIFETIME VALUE
    $4,800

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  47. REQUIRED CUSTOMERS = 208 ACTIVE CUSTOMERS

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  48. REQUIRED CUSTOMERS = 200 NEW CUSTOMERS/YEAR

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  49. REQUIRED LEADS =
    CUSTOMER PRODUCTION RATE
    CONVERSION RATE

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  50. REQUIRED LEADS =
    CUSTOMER PRODUCTION RATE
    200
    CONVERSION RATE

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  51. REQUIRED LEADS =
    CUSTOMER PRODUCTION RATE
    200
    CONVERSION RATE
    1% OR 0.01
    For SaaS Companies,
    It’s usually single digit

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  52. REQUIRED LEADS = 20,000 LEADS PER YEAR

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  53. 200 NEW CUSTOMERS EVERY YEAR
    500 ACTIVE CUSTOMERS
    $1M REVENUE/YEAR
    20,000 LEADS PER YEAR

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  54. REQUIRED CUSTOMERS =
    REVENUE/YEAR
    $1,000,000
    REVENUE/CUSTOMER/YEAR
    = (50 STUDENTS/STUDIO) x ($4/STUDENT) x (12 MONTHS)
    $4 → $8

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  55. 200 100 NEW CUSTOMERS EVERY YEAR
    500 250 ACTIVE CUSTOMERS
    $1M REVENUE/YEAR
    20,000 10,000 LEADS PER YEAR

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  56. DO IT NOW
    30 MIN
    1. Determine time-boxed minimum
    success criteria
    Keep time box under 3 years
    Frame the outcome in terms of revenue (or
    throughput) goal
    2. Estimate LTV
    3. Calculate the required Throughput
    4. Refine and adjust your model
    Can you Increase Pricing?
    5. Eliminate any models that don’t work

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  57. To achieve a large fuzzy goal, it is best to break it down into smaller measurable steps
    STARTUP STAGES

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  60. PROBLEM-SOLUTION FIT PRODUCT-MARKET FIT SCALE
    Understanding the
    value that can be
    delivered
    Delivered value >
    Captured value
    Delivering value to
    more and more
    customers

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  61. Lean Canvas : Business Plan :: Traction Model : Financial Model
    THE TRACTION MODEL

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  62. GROWTH
    (#Customers)
    TIME
    3 months 1 year 2 years

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  63. GROWTH
    (#Customers)
    TIME
    3 months 1 year 2 years

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  64. PROBLEM-SOLUTION FIT PRODUCT-MARKET FIT SCALE

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  65. GROWTH
    TIME
    3 months 1 year 2 years
    10X
    PROBLEM-SOLUTION FIT
    PRODUCT-MARKET FIT
    SCALE 100X
    MINIMUM
    SUCCESS
    CRITERIA
    RISK - CUSTOMERS RISK - TECH

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  66. WHY 10X WORKS

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  67. You have a single goal from ideation to scale
    The 10X model requires non-linear thinking
    The 10X model works to expose the riskiest
    parts of your business

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  68. GROWTH
    TIME
    3 months 1 year 2 years
    10X
    PROBLEM-SOLUTION FIT
    PRODUCT-MARKET FIT
    SCALE
    GOODKARMA TRACTION MODEL
    400 studios
    $1MM Revenue
    40 studios
    4 studios
    7 months
    RISK - CUSTOMERS 100X
    RISK - TECH

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  69. PROBLEM-SOLUTION FIT PRODUCT-MARKET FIT SCALE
    Don't have a product just yet!
    No product - No Customers.

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  70. 100 Leads
    10 Trials 1 Customer

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  71. IN EVERY STAGE FOCUS ON
    REPEATABILITY
    GROWTH
    TIME
    3
    months
    2 years 3 years
    10X
    PROBLEM-SOLUTION FIT
    PRODUCT-MARKET FIT
    SCALE
    1 year
    100X

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  72. GROWTH
    TIME
    3
    months
    2 years 3 years
    10X
    PROBLEM-SOLUTION FIT
    PRODUCT-MARKET FIT
    SCALE
    1 year
    100X
    SINGLE BIGGEST THING TO BUILDING TRACTION
    GET OUT OF THE BUILDING

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  73. DO IT NOW
    30 MIN
    Stage: PS Fit
    1x
    PM Fit
    10x
    Scale
    100x
    Timebox 3 months 1 year 2 years
    Customer
    Throughput
    30 300 3000
    Timebox and customer throughput:
    Using the funnel, come up with the throughput
    for Problem-Solution Fit:
    Stage: Leads Trials Customers
    Conversion 10% 10%
    Numbers ??? ?? 30

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  74. “I’m Gonna Make Him An Offer He Can’t Refuse”
    -Don Corleone
    VALIDATE WITH AN “OFFER”

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  75. - UVP
    - Demo - https://invis.io/ME8GASP8N
    - Pricing - 5% of the fees collected from
    students through the app
    GOOD KARMA
    OFFER

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  76. DO IT NOW
    15 MIN Create an OFFER

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  77. Now that you have defined a goal and a path, you now need a repeatable process to keep
    delivering value one customer at a time.
    THE CUSTOMER FACTORY

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  78. CUSTOMER
    FACTORY

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  79. ACQUISITION
    GoodKarma: Identify the yoga studio
    founder and set up a call to place the
    offer
    Disneyland: People queuing up
    outside Disneyland

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  80. ACQUISITION ACTIVATION
    GoodKarma: Install the Manager’s
    App at the studio and have the manager
    send an invite to enquiry
    Disneyland: After the visitor has taken
    the first ride

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  81. ACQUISITION ACTIVATION REVENUE
    GoodKarma:
    Student makes a
    payment to the studio
    through the app
    Disneyland: Visitor
    is happy and takes all
    the rides

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  82. ACQUISITION ACTIVATION REVENUE
    RETENTION
    GoodKarma: Student continues
    to use the app and maizntains the
    relationship with the studi
    Disneyland: Visitor takes more
    rides and spends more time

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  83. ACQUISITION ACTIVATION REVENUE
    REFERRAL
    RETENTION
    GoodKarma: Student talking to
    another student in another studio
    Disneyland: Visitor talks to her
    neighbours

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  84. AARRR!

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  85. DO IT NOW
    1. Identify the events corresponding to
    each of the steps in the customer
    factory:
    - Acquisition
    - Activation
    - Retention
    - Revenue
    - Referral
    2. If you already have paying customers,
    Add current numbers.
    30 MIN

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  86. THEORY OF CONSTRAINTS

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  87. “The chain is as strong as the weakest link”

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  88. GOODKARMA’S CONSTRAINTS

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  89. GoodKarma: Install the Manager’s
    App at the studio and have the manager
    send an invite to enquiry
    ACQUISITION ACTIVATION REVENUE
    REFERRAL
    RETENTION
    GoodKarma: Identify the yoga studio
    founder and set up a call to place the
    offer

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  90. GoodKarma: Install the Manager’s
    App at the studio and have the manager
    send an invite to enquiry
    ACQUISITION ACTIVATION REVENUE
    REFERRAL
    RETENTION
    GoodKarma: Identify the yoga studio
    founder and set up a call to place the
    offer

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  91. Taiichi Ohno

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  92. You can contact any of us:
    [email protected]
    [email protected]
    [email protected]
    Would you like to attend the follow-up
    workshop?
    WHAT’S NEXT?

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  93. “If I have seen further, it is by standing on the shoulders of giants.”
    - Isaac Newton
    THANKS TO...

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  94. ASH MAURYA
    #RunningLean, #ScalingLean
    ERIC RIES
    #TheLeanStartup
    JAKE KNAPP
    #GoogleDesignSprint

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  95. YOU GUYS
    :)

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  96. CREDITS
    Icons from TheNounProject
    - Factory by David
    - Graph by chance smith
    - Einstein by oksana latysheva
    - Dollar by thomas bruck

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