Entrepreneurship: Disciplined Entrepreneurship Course Review / Summary

Entrepreneurship
Disciplined Entrepreneurship
Course Review / Summary
Who is your customer?
What can you do for your customer?
How does your customer acquire your product?
How do you make money off your product?
How do you design and build your product?
How do you scale your business?
01. Market Segmentation
02. Select a Beachhead Market
03. Build an End User Profile
04. Calculate the Total Addressable Market (TAM) Size
for the Beachhead Market
05. Profile the Persona for the Beachhead Market
06. Full Life Cycle Use Case
07. High‐Level Product Specification
08. Quantify the Value Proposition
09. Identify Your Next 10 Customers
10. Define Your Core
11. Chart Your Competitive Position
12. Determine the Customer’s Decision‐Making Unit (DMU)
13. Map The Process to Acquire a Paying Customer
14. Calculate the TAM Size for Follow‐on Markets
15. Design a Business Model
16. Set Your Pricing Framework
17. Calculate the Lifetime Value (LTV) of an Acquired Customer
18. Map the Sales Process to Acquire a Customer
19. Calculate the Cost of Customer Acquisition (COCA)
20. Identify Key Assumptions
21. Test Key Assumptions
22. Define the Minimum Viable Business Product (MVBP)
23. Show That “The Dogs Will Eat the Dog Food”
24. Develop a Product Plan
Who is your customer? Two Types of Entrepreneurship
How do you make money off your product? • Small Medium Enterprise
• Innovation‐Driven Enterprise
Who is your customer? Innovation‐Driven Enterprise
How do you make money off your product? • Focus on global/regional markets.
• The company is based on some sort of innovation
01. Market Segmentation (tech, business process, model) and potential
competitive advantage.
for the Beachhead Market • “Tradable jobs”—jobs that do not have to be
performed locally.
08. Quantify the Value Proposition • More diverse ownership base including a wide array
09. Identify Your Next 10 Customers of external capital providers.
12. Determine the Customer’s Decision‐Making Unit (DMU) • The company starts by losing money, but if
13. Map The Process to Acquire a Paying Customer successful will have exponential growth. Requires
15. Design a Business Model investment. When you put money into the company,
16. Set Your Pricing Framework the revenue/cash flow/jobs numbers do not respond
quickly.
Who is your customer? Innovation‐Driven Enterprise
Who is your customer? Important to Remember
• Innovation
– Innovation = Invention * Commercialization
03. Build an End User Profile • Entrepreneur
– Successful Entrepreneurs = Spirit + Skill
07. High‐Level Product Specification – Serves primarily as the commercialization agent
10. Define Your Core • The single necessary and sufficient
condition for a business is a paying
customer.
Three Ways to Start New Business
How do you make money off your product? • Idea
How do you scale your business? • Technology
• Passion *
Ideation
09. Identify Your Next 10 Customers • Market Pull
11. Chart Your Competitive Position • Technology Push
• Hybrid
18. Map the Sales Process to Acquire a Customer • Founding Team
21. Test Key Assumptions Is this something the world could benefit from, and
22. Define the Minimum Viable Business Product (MVBP) is it something I do well and would love to do for an
extended period?
Who is your customer? 24 Step Process/Framework
The process can help you succeed, or it can
How do you scale your business? help you fail faster if failure was inevitable for
01. Market Segmentation the path you were on.
How do you make money off your product? • Need to Create a New Market
How do you scale your business? – Creating an innovative product where no market
currently exists is essential to the success of a startup.
03. Build an End User Profile • Need to Identify Target Customer
– A target customer is a group of potential customers
06. Full Life Cycle Use Case who share many characteristics and who would all have
07. High‐Level Product Specification similar reasons to buy a particular product.
10. Define Your Core • Three stages of Market Segmentation:
12. Determine the Customer’s Decision‐Making Unit (DMU) – Brainstorm a wide array of potential customers and
13. Map The Process to Acquire a Paying Customer markets for your business.
16. Set Your Pricing Framework – Narrow your list down to your top 6–12 markets.
18. Map the Sales Process to Acquire a Customer – Gather Primary Market Research on your top 6–12
19. Calculate the Cost of Customer Acquisition (COCA) markets.
Who is your customer? 02. Select a Beachhead Market
• Well Defined Market:
– Same Product
03. Build an End User Profile – Same Sales Process
05. Profile the Persona for the Beachhead Market – Word of Mouth
08. Quantify the Value Proposition • Refine Market Segmentation
11. Chart Your Competitive Position • Select a Beachhead Market
Who is your customer? 03. Build an End User Profile
• Why Build an End User Profile?
– To keep focus on the customer
03. Build an End User Profile – To validate your selection of Beachhead Market
05. Profile the Persona for the Beachhead Market – To estimate the Total Addressable Market (TAM)
08. Quantify the Value Proposition • End User Profile
– Demographics
13. Map The Process to Acquire a Paying Customer – Psychographics
16. Set Your Pricing Framework – Proxy Products
– Watering Holes
21. Test Key Assumptions – Day in a Life
24. Develop a Product Plan – Biggest Fears & Motivators
Who is your customer? 04. Total Addressable Market (TAM) Size
How do you make money off your product? • The TAM for your beachhead market
– The amount of annual revenue you could achieve in
01. Market Segmentation your Beachhead Market if you achieved 100 percent
market share.
• Estimate the number of end users in the
06. Full Life Cycle Use Case Beachhead Market, using a combination of
08. Quantify the Value Proposition top‐down and bottom‐up analysis.
•
11. Chart Your Competitive Position Estimate the annual revenue that each end
13. Map The Process to Acquire a Paying Customer user is worth to your company.
15. Design a Business Model – How much are they spending today to accomplish what
17. Calculate the Lifetime Value (LTV) of an Acquired Customer your product does?
19. Calculate the Cost of Customer Acquisition (COCA) – How much have they paid in the past for other new
products?
23. Show That “The Dogs Will Eat the Dog Food” – How much value does your product create for them?
Who is your customer? 05. Profile the Persona
• Identify one actual real end user in your
Beachhead Market who best represents your
End User Profile and do a detailed profile on
that specific individual.
How do you make money off your product? • To map out the Full Life Cycle Use Case, first
How do you scale your business? sketch out a visual diagram or flowchart showing
how customers currently attempt to solve their
02. Select a Beachhead Market pain, or what processes result in their customer
04. Calculate the Total Addressable Market (TAM) Size pain.
• The Full Life Cycle Use Case should be visual, using
diagrams, flowcharts, or other methods that show
09. Identify Your Next 10 Customers sequence.
12. Determine the Customer’s Decision‐Making Unit (DMU) • Describe in detail how your Persona finds out
about your product, acquires it, uses it, gets value
15. Design a Business Model from it, pays for it, and buys more and/or tells
17. Calculate the Lifetime Value (LTV) of an Acquired Customer others about it.
20. Identify Key Assumptions • Creating a visual representation of the full life
cycle of your product enables you to see how the
23. Show That “The Dogs Will Eat the Dog Food” product will fit into the customer’s value chain
and what barriers to adoption might arise.
Who is your customer? 07. High‐Level Product Specification
• A High‐Level Product Specification is a visual
representation of what your product will be
when it is finally developed based on what you
know at this point of the process.
06. Full Life Cycle Use Case • It is something you draw without
08. Quantify the Value Proposition understanding all the underlying details, but
10. Define Your Core which gains consensus within your team on
12. Determine the Customer’s Decision‐Making Unit (DMU) where you are going.
15. Design a Business Model • Check Product
17. Calculate the Lifetime Value (LTV) of an Acquired Customer Alignment with
19. Calculate the Cost of Customer Acquisition (COCA) Persona.
•
22. Define the Minimum Viable Business Product (MVBP) Create a
24. Develop a Product Plan Product Brochure
Who is your customer? 08. Quantify the Value Proposition
How do you make money off your product? • In simple terms, benefits fall into three
How do you scale your business? categories:
– Better
04. Calculate the Total Addressable Market (TAM) Size – Faster
– Cheaper
• The goal of the Quantified Value Proposition is
10. Define Your Core to clearly and concisely state how your
12. Determine the Customer’s Decision‐Making Unit (DMU) product’s benefits line up with what your
14. Calculate the TAM Size for Follow‐on Markets customer most wants to improve.
17. Calculate the Lifetime Value (LTV) of an Acquired Customer • Talk with persona about how to measure their
top priority quantitatively & what unit to
measure it in.
• Using “As‐is” State –vs‐ “Possible” state, visually
summarize quantified value proposition.
Who is your customer? 09. Identify Your Next 10 Customers
• Create a list of the next 10 end users after the
Persona who closely fit the End User Profile.
03. Build an End User Profile • Engage them in a dialogue on your plans and
for the Beachhead Market validate or invalidate what you have done so
06. Full Life Cycle Use Case far.
09. Identify Your Next 10 Customers • This step will provide you with extremely
11. Chart Your Competitive Position valuable data points to refine the work you
13. Map The Process to Acquire a Paying Customer have done in previous steps
•
16. Set Your Pricing Framework Either you will end up having greater
18. Map the Sales Process to Acquire a Customer confidence in your selection of Persona or you
20. Identify Key Assumptions will have to change your selection.
Who is your customer? 10. Define Your Core
• Determine the single thing that you will do
better than anyone else that will be very
difficult for others to copy.
for the Beachhead Market • Core is not a benefit. It is an asset or a
06. Full Life Cycle Use Case capability.
– Unique: This asset will be difficult for anyone else to
10. Define Your Core replicate.
13. Map The Process to Acquire a Paying Customer – Important: This asset ties directly to your ability to
14. Calculate the TAM Size for Follow‐on Markets produce something your target customer values very
16. Set Your Pricing Framework highly.
– Grows: To be a strong Core, it should increase in
20. Identify Key Assumptions strength over time relative to competitors.
23. Show That “The Dogs Will Eat the Dog Food” • A moat is a competitive advantage that slows
down competitors but can be overcome.
Who is your customer? 11. Chart Your Competitive Position
How do you make money off your product? • Defining your Competitive Position is a quick
How do you scale your business? way to validate your product against your
01. Market Segmentation competition, including the customer’s status
quo, based on the top two priorities of the
Persona.
21. Test Key Assumptions • If you have properly defined a strong Core, this
23. Show That “The Dogs Will Eat the Dog Food” exercise turns out to be relatively easy.
Who is your customer? 12. Determine the Customer’s Decision‐
How does your customer acquire your product? Making Unit (DMU)
• Your target customer almost surely has a
02. Select a Beachhead Market decision‐making group of more than one
04. Calculate the Total Addressable Market (TAM) Size person.
•
06. Full Life Cycle Use Case Primary Roles in DMU
09. Identify Your Next 10 Customers – Champion
11. Chart Your Competitive Position – End User
14. Calculate the TAM Size for Follow‐on Markets – Primary Economic Buyer
17. Calculate the Lifetime Value (LTV) of an Acquired Customer • Additional Roles in DMU
20. Identify Key Assumptions – Primary and Secondary Influencers
– Person with Veto Power
Who is your customer? 13. Map The Process to Acquire a Paying
How does your customer acquire your product? Customer
How do you scale your business? • You will build directly off Step 6, Full Life Cycle Use
01. Market Segmentation Case; however, there are two major differences.
03. Build an End User Profile – First, you will look at the same process from your
perspective as opposed to the customer’s perspective,
05. Profile the Persona for the Beachhead Market which was the case in Step 6. The two should be similar and
06. Full Life Cycle Use Case consistent but not exactly the same.
– Second, this map will link directly to the players in the
10. Define Your Core DMU and the customer’s budgetary process.
• You will then use that information to develop a
first draft of your Sales Funnel, which takes the
16. Set Your Pricing Framework information from the Full Life Cycle Use Case and
18. Map the Sales Process to Acquire a Customer turns it into an action plan for your company.
20. Identify Key Assumptions – Lead > Suspect > Prospects > Qualified Prospects >
Customers > Satisfied Customers > Repeat Customers or
23. Show That “The Dogs Will Eat the Dog Food” Evangelists
Who is your customer? 14. Calculate the TAM Size for Follow‐on
How does your customer acquire your product? Markets
• Your goal is to identify the TAM for at least five
02. Select a Beachhead Market follow‐on markets, so you have a better sense
04. Calculate the Total Addressable Market (TAM) Size of your startup’s potential beyond the
05. Profile the Persona for the Beachhead Market Beachhead Market.
Who is your customer? 15. Design a Business Model
How do you make money off your product? • The business model is your framework by
How do you scale your business? which some fraction of the value you create for
01. Market Segmentation your customer gets paid back to your startup.
04. Calculate the Total Addressable Market (TAM) Size • Business Model = Method to Extract Value for
Your Company
• It is important to understand that business
09. Identify Your Next 10 Customers model is not pricing.
12. Determine the Customer’s Decision‐Making Unit (DMU) – Google Search
14. Calculate the TAM Size for Follow‐on Markets – Apple iTunes
17. Calculate the Lifetime Value (LTV) of an Acquired Customer • Business models are not easy to change once
19. Calculate the Cost of Customer Acquisition (COCA) you commit to one, so think through your
21. Test Key Assumptions decision carefully before you lock into a
business model.
How do you make money off your product? • Pricing is primarily about determining how much
How do you design and build your product? value your customer gets from your product and
capturing a fraction of that value back for your
01. Market Segmentation business.
04. Calculate the Total Addressable Market (TAM) Size • Costs are irrelevant to determining your pricing
structure.
07. High‐Level Product Specification – Value Creation
09. Identify Your Next 10 Customers – Customer Acquisition Analysis
11. Chart Your Competitive Position – Nature of the Customer (Technological enthusiast, Early
12. Determine the Customer’s Decision‐Making Unit (DMU) adopter, Early majority, Late majority, Laggard)
15. Design a Business Model – Strength of Your Core
17. Calculate the Lifetime Value (LTV) of an Acquired Customer – Competition
19. Calculate the Cost of Customer Acquisition (COCA) – Maturity of Your Product
22. Define the Minimum Viable Business Product (MVBP) • Unlike your business model, pricing will
continually change in response to market
conditions.
Who is your customer? 17. Calculate the Lifetime Value (LTV) of
How does your customer acquire your product? an Acquired Customer
• Estimate the total profit you will get from a
new customer, on average, over the time
03. Build an End User Profile period that the customer would stay with you.
05. Profile the Persona for the Beachhead Market • The LTV is an important number because you
07. High‐Level Product Specification will compare it against your Cost of Customer
09. Identify Your Next 10 Customers Acquisition (COCA) to see if your startup will
make more money from a customer than it
costs to advertise and otherwise convince a
14. Calculate the TAM Size for Follow‐on Markets customer to buy your product.
17. Calculate the Lifetime Value (LTV) of an Acquired Customer • As a rule of thumb, LTV should be at least three
19. Calculate the Cost of Customer Acquisition (COCA) times greater than the COCA in order for you to
be profitable, though this factor varies wildly
from industry to industry.
Who is your customer? 18. Map the Sales Process to Acquire a
How does your customer acquire your product? Customer
• In this step you will focus on the sales process,
mapping out your short‐term, medium‐term,
03. Build an End User Profile and long‐term sales channels.
05. Profile the Persona for the Beachhead Market – 2nd Draft Sales Funnel (Lead > Suspect > Prospects >
06. Full Life Cycle Use Case Qualified Prospects > Customers > Satisfied Customers
> Repeat Customers or Evangelists)
• In the next step (COCA), you will use this
12. Determine the Customer’s Decision‐Making Unit (DMU) information to calculate what the cost of your
14. Calculate the TAM Size for Follow‐on Markets sales and marketing initiatives are per
16. Set Your Pricing Framework customer.
19. Calculate the Cost of Customer Acquisition (COCA) • There are four main categories of sales
channels to consider: Field Sales, Inside Sales,
Internet Sales, Third Party Resellers
Who is your customer? 19. Calculate the Cost of Customer
How does your customer acquire your product? Acquisition (COCA)
• Take the total marketing and sales expenses
(TMSE), less customer retention and support
03. Build an End User Profile for each time period also called Install Base
for the Beachhead Market Support Expense over Time (IBSE) and divide
06. Full Life Cycle Use Case by the number of new customers (NC) in that
same time period. That will be your COCA for
that time period.
12. Determine the Customer’s Decision‐Making Unit (DMU) – Cost of Customer Acquisition = (Total Marketing and
13. Map The Process to Acquire a Paying Customer Sales Expenses ‐ Install Base Support Expense) /
15. Design a Business Model Number of New Customers
• Sales Forecasting & Expense Forecasting for
Short, Medium & Long terms.
22. Define the Minimum Viable Business Product (MVBP) – Don’t let your optimism blind you in doing the
23. Show That “The Dogs Will Eat the Dog Food” calculations. Make the numbers real and not what you
want them to be.
How do you design and build your product? • Now that you have completed 19 steps worth
of product/market fit planning, you can
02. Select a Beachhead Market identify those assumptions that stand out
04. Calculate the Total Addressable Market (TAM) Size overall as the most critical for your success.
– Determine which assumptions about your business
07. High‐Level Product Specification have not been thoroughly tested.
10. Define Your Core – Rank your top 5 to 10 assumptions in order of
11. Chart Your Competitive Position importance.
Who is your customer? 21. Test Key Assumptions
• Use a series of small and inexpensive
How do you scale your business? experiments to test each of the individual
01. Market Segmentation assumptions you identified in the previous
03. Build an End User Profile step.
05. Profile the Persona for the Beachhead Market • To decrease the risk of your startup.
• This scientific approach will allow you to
understand which assumptions are valid, which
11. Chart Your Competitive Position ones are not, and which ones you can’t know
13. Map The Process to Acquire a Paying Customer for sure yet.
•
16. Set Your Pricing Framework As a result, you’ll have time to make
18. Map the Sales Process to Acquire a Customer adjustments to your planning while the cost
and time to do so is much less than it will be in
the very near future when you launch the
23. Show That “The Dogs Will Eat the Dog Food” product development process.
Who is your customer? 22. Define the Minimum Viable Business
How does your customer acquire your product? Product (MVBP)
How do you scale your business? • To create a Minimum Viable Business Product
01. Market Segmentation (MVBP), your goal is to do the least amount of
work possible to achieve three key objectives:
for the Beachhead Market – The customer gets value out of your product (Validate Step
05. Profile the Persona for the Beachhead Market 8 – Quantify the Value Proposition).
08. Quantify the Value Proposition – The economic buyer pays for the product.
10. Define Your Core – You start a meaningful feedback loop with your customer.
•
13. Map The Process to Acquire a Paying Customer While the MVBP is minimal, the customer should
see it as a product at this point (hence why
16. Set Your Pricing Framework “business product” is in the name) and not as
18. Map the Sales Process to Acquire a Customer simply a prototype for feedback.
21. Test Key Assumptions • One key tactic that startups have used to
successfully demonstrate MVBPs is “concierging”
24. Develop a Product Plan elements of their solution. (e.g., Amazon).
23. Show That “The Dogs Will Eat the
Dog Food”
• Offer your Minimum Viable Business Product
(MVBP) to your target customer and obtain
quantitative metrics regarding the adoption
rate of the product,
08. Quantify the Value Proposition – the value the customer is getting from the product, and
11. Chart Your Competitive Position – that someone is paying for the product.
14. Calculate the TAM Size for Follow‐on Markets • You do this step now because you finally have
16. Set Your Pricing Framework the MVBP and you need to validate it before
18. Map the Sales Process to Acquire a Customer moving forward.
How do you design and build your product? • In this step, you need to describe how you will
improve your product over the next several
02. Select a Beachhead Market versions so that you can fully capture your
04. Calculate the Total Addressable Market (TAM) Size Beachhead Market and then start to address
05. Profile the Persona for the Beachhead Market follow‐on markets.
Who is your customer? 24 Step Process/Framework
The process can help you succeed, or it can
How do you scale your business? help you fail faster if failure was inevitable for
01. Market Segmentation the path you were on.

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