Innovation Management Workshop

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HOW-TO START AND SCALE IMPACTFUL BUSINESS IDEAS Kuldip Chakraborty @cooldip Manish Chiniwalar @manishrc Karthik Gupta @karthikvgupta

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WHY ARE WE HERE?

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1.8 MILLION BOOKS ON BUSINESS & MONEY

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CUSTOMER FACTORY LEAN CANVAS TRACTION MODEL

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

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

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CREATE VALUE

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CREATE VALUE CAPTURE VALUE

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CREATE VALUE CAPTURE VALUE AT FRACTION OF THE COST

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

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

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ASH MAURYA’S LEAN CANVAS

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

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

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

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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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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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Image credits: vox.com

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“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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“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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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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COST STRUCTURE List your fixed costs and variable costs #7

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

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

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“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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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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How many trees are left in Bangalore today? FERMI ESTIMATE

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Enrico Fermi

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REQUIRED CUSTOMERS = REVENUE/YEAR REVENUE/CUSTOMER/YEAR

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

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

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

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

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

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REQUIRED CUSTOMERS = 416 ACTIVE CUSTOMERS

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

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

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

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

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REQUIRED CUSTOMERS = 208 ACTIVE CUSTOMERS

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REQUIRED CUSTOMERS = 200 NEW CUSTOMERS/YEAR

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REQUIRED LEADS = CUSTOMER PRODUCTION RATE CONVERSION RATE

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REQUIRED LEADS = CUSTOMER PRODUCTION RATE 200 CONVERSION RATE

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

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REQUIRED LEADS = 20,000 LEADS PER YEAR

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

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

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

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

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GROWTH TIME 3 months 2 years 3 years 1X 10X 100X PROBLEM-SOLUTION FIT PRODUCT-MARKET FIT SCALE 1 year 1000X MINIMUM SUCCESS CRITERIA RISK - CUSTOMERS RISK - TECH

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GROWTH TIME 3 months 2 years 3 years 1X 10X 100X PROBLEM-SOLUTION FIT PRODUCT-MARKET FIT SCALE GOODKARMA TRACTION MODEL 400 studios $1MM Revenue 40 studios 4 studios 7 months RISK - CUSTOMERS 1 year 1000X RISK - TECH

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IN EARLY STAGES IT IS ABOUT DECELERATION, NOT ACCELERATION! GROWTH TIME 3 months 2 years 3 years 1X 10X 100X PROBLEM-SOLUTION FIT PRODUCT-MARKET FIT SCALE 1 year 1000X RISK - CUSTOMERS

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GROWTH TIME 3 months 2 years 3 years 1X 10X 100X PROBLEM-SOLUTION FIT PRODUCT-MARKET FIT SCALE 1 year 1000X SINGLE BIGGEST THING TO BUILDING TRACTION GET OUT OF THE BUILDING RISK - CUSTOMERS

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GROWTH TIME 3 months 2 years 3 years 1X 10X 100X PROBLEM-SOLUTION FIT PRODUCT-MARKET FIT SCALE 1 year 1000X IN PROBLEM-SOLUTION FIT STAGE FOCUS ON REPEATABILITY RISK - CUSTOMERS

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GROWTH TIME 3 months 2 years 3 years 1X 10X 100X PROBLEM-SOLUTION FIT PRODUCT-MARKET FIT SCALE 1 year 1000X IN PRODUCT-MARKET FIT STAGE FOCUS ON 10X RISK - TECH

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DO IT NOW 30 MIN Stage: PS Fit 1x PM Fit 10x Scale 100x Timebox 3 months 1 year 3 years Customer Throughput 30 300 3000 Timebox and customer throughput:

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YOU ARE DAMN RIGHT, IT ISN’T!

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

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Stage: PS Fit 1x PM Fit 10x Scale 100x Timebox 3 months 1 year 3 years Customer Throughput 30 Customers 300 Customers 3000 Customer

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DO IT NOW 10 MIN 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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“I’m Gonna Make Him An Offer He Can’t Refuse” -Don Corleone VALIDATE WITH AN “OFFER”

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DO IT NOW 15 MIN Create an OFFER

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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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CUSTOMER FACTORY

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

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AARRR!

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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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THEORY OF CONSTRAINTS

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“The chain is as strong as the weakest link”

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GOODKARMA’S CONSTRAINTS

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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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Taiichi Ohno

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You can contact any of us: ● kuldip.c@multunus.com ● manish.c@multnus.com ● karthik.g@multunus.com Would you like to attend the follow-up workshop? WHAT’S NEXT?

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

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

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YOU GUYS :)

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