Disciplined Entrepreneurship
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The document outlines a structured 24-step approach to disciplined entrepreneurship, emphasizing critical elements such as market segmentation, product specification, and customer acquisition. It distinguishes between small and medium enterprise (SME) and innovation-driven enterprise (IDE) entrepreneurship, while debunking common myths about entrepreneurship success. The guide aims to provide aspiring entrepreneurs with the tools and frameworks to effectively launch and manage a startup.
Disciplined Entrepreneurship
- 1. Disciplined Entrepreneurship 24 Steps to a Successful Startup Sahand Samiei Executive Coordinator & Content Provider @MedLean Creativity & Innovation Secretary @TUMS Health Entrepreneurship Association Entrepreneurship Olympiad Bronze Medalist @shnd_s [email protected]
- 2. Reference 2
- 3. Introduction - Three Common Myths That Must Go Gene vs. Skill Individuals vs. Teams Charismatic vs. Communicators 3
- 4. Introduction - Three Common Myths That Must Go 4
- 5. Introduction - What Explains MIT’s Success in Entrepreneurship? Extremely intelligent students Access to leading-edge technologies Combination of spirit & skills Entrepreneurship virus ! Social herding mentality not-so-subtle competitiveness Positive feedback loop 5
- 6. 6
- 7. Introduction - Distinguishing Two Distinct Types of Entrepreneurship Small and Medium Enterprise (SME) Entrepreneurship Innovation-Driven Enterprise (IDE) Entrepreneurship 7
- 8. Introduction - Distinguishing Two Distinct Types of Entrepreneurship 8
- 9. Introduction - Distinguishing Two Distinct Types of Entrepreneurship 9
- 10. Introduction - What Is Innovation? Innovation = Invention x Commercialization 10
- 11. Six Themes of the 24 Steps 11
- 12. Six Themes of the 24 Steps 12
- 13. Step 0 – Getting Started 13
- 14. Step 0 – Getting Started • Knowledge • Capability • Connections • Financial assets • Name recognition • Past work experience • Passion for a particular market • Commitment 14
- 15. Step 0 – Getting Started 15
- 16. Step 0 – Getting Started User Entrepreneurship 16
- 17. Step 1 – Market Segmentation 17
- 18. Step 1 – Market Segmentation The single necessary and sufficient condition for a business is a paying customer Create a new market that you will dominate 18
- 19. Step 1 – Market Segmentation Two common pitfalls you may encounter if … Selling to everyone The China syndrome 19
- 20. Step 1 – Market Segmentation How to do a market segmentation 1. Brainstorm 3. Primary Market Research 2. Narrow 20
- 21. Step 1 – Market Segmentation 1. Talk about their life instead of your idea. 3. Talk less and listen more. 2. Ask about some specifics from the past instead of regarding about generics or opinions about the future. 21
- 22. Step 1 – Market Segmentation Example: 22
- 23. 23
- 24. Step 2 – Select a Beachhead Market 24
- 25. Step 2 – Select a Beachhead Market Your beachhead market is where, once you gain a dominant market share, you will have the strength to attack adjacent markets with different offerings, building a larger company with each new following. 25
- 26. Step 2 – Select a Beachhead Market Three conditions that define a market Similar products Similar sales cycle WOM 26
- 27. Step 2 – Select a Beachhead Market Example: 27
- 28. Step 2 – Select a Beachhead Market Examples: 28
- 29. Step 3 – Build an End User Profile 29
- 30. Step 3 – Build an End User Profile • Customer • End User • Decision-Making Unit ▪ Champion ▪ Primary Economic buyer ▪ Influencers, Veto Powers, Purchasing Department, and so on … 30
- 31. Step 3 – Build an End User Profile Potential characteristics to include in your end user profile 31
- 32. What is their income range? What is their geographic location? What motivates them? What do they fear most? Who is their hero? 32
- 33. Step 3 – Build an End User Profile Example: 33
- 34. Step 4 – Calculate the TAM Size for the Beachhead Market 34
- 35. Step 4 – Calculate the TAM Size for the Beachhead Market TAM SAM SOM Target Market 35
- 36. Step 4 – Calculate the TAM Size for the Beachhead Market Unit ?? Dollars per year 36 Range ??
- 37. Step 4 – Calculate the TAM Size for the Beachhead Market Bottom-up analysis Top-down analysis 37
- 38. Step 4 – Calculate the TAM Size for the Beachhead Market Compound Annual Growth Rate 38
- 39. Step 4 – Calculate the TAM Size for the Beachhead Market Example: 39
- 40. Step 5 – Profile the Persona for the Beachhead Market 40
- 41. Step 5 – Profile the Persona for the Beachhead Market The Persona is a person who best represents the primary customer for the beachhead market * The Persona should be a real person, not a composite ! * No one end user represents 100 percent of the characteristics of every end user in your End User Profile ! * Multiple Personas … 41
- 42. Step 5 – Profile the Persona for the Beachhead Market 42
- 43. Step 6 – Full Life Cycle Use Case 43
- 44. Step 6 – Full Life Cycle Use Case 1. How end users will determine they have a need and/or opportunity to do something different. 2. How they will find out about your product. 3. How they will analyze your product. 4. How they will acquire your product. 5. How they will install your product. 44
- 45. Step 6 – Full Life Cycle Use Case 6. How they will use your product. 7. How they will determine the value gained from your product. 8. How they will pay for your product. 9. How they will receive support for your product. 10. How they will buy more product and/or spread awareness (hopefully positive) about your product. 45
- 46. Step 6 – Full Life Cycle Use Case Example: 46
- 47. Step 7 – High-Level Product Specification 47
- 48. Step 7 – High-Level Product Specification It is a drawing/visual representation of what your product will be when it is finally developed based on what you know at this point of the process * The product should not have to be built ! 48
- 49. Step 7 – High-Level Product Specification Feature? Function? Benefit?Exercise: a. Better security for the phone allows important data and information to be stored with peace of mind, which improves your productivity. b. Patented active capacitance sensing technology. c. Fingerprint recognition is integrated into the phone. 49
- 50. Step 8 – Quantify the Value Proposition 50
- 51. Step 8 – Quantify the Value Proposition Better, Faster, Cheaper & … 51
- 52. Step 8 – Quantify the Value Proposition Example: 52
- 53. Step 9 – Identify Your Next 10 Customers 53
- 54. Step 9 – Identify Your Next 10 Customers 1. List more than 10 potential customers (aside from your Persona). 2. Contact each of the potential customers on your list and present your Full Life Cycle Use Case, High-Level Product Specification, and Quantified Value Proposition (Steps 6–8). 3. Ask the customer if they would consider providing a letter of intent to buy your solution. 4. If a customer’s feedback is not aligned exactly with your assumptions, take good notes and think how this affects your analysis. 54
- 55. Step 9 – Identify Your Next 10 Customers 5. Go back and modify your earlier assumptions and determine whether to contact additional customers. 6. If you find that you cannot create a list of 10 customers, you may need to reconsider your beachhead market. 7. Do not share this list of customers or the information you gather with others outside your company. 55
- 56. Step 10 – Define Your Core 56
- 57. Step 10 – Define Your Core The Core is something that allows you to deliver the benefits your customers value with much greater effectiveness than any other competitor. • Network Effect (+Metcalfe’s Law ?( • Customer Service • Lowest Cost • User Experience (+UI/UX ?) • … 57
- 58. Step 10 – Define Your Core * What about intellectual property? Or culture? * Core vs. Competitive Position * First-mover advantage is not a core ! * Locking up suppliers is typically not a core ! 58
- 59. Step 10 – Define Your Core Examples: 59
- 60. Step 11 – Chart Your Competitive Position 60
- 61. Step 11 – Chart Your Competitive Position The Competitive Position is the link between your Core and your Persona’s priorities, and shows that they logically make sense for the target market you have chosen. 61
- 62. Step 11 – Chart Your Competitive Position Priority #2 Priority#1Bad Bad Good Good Competitive Positioning 62
- 63. Step 11 – Chart Your Competitive Position 63 Example: Efficiency Reliability HighLow W/BatteryNoBattery
- 64. Step 12 – Determine the Costumers DMU 64
- 65. Step 12 – Determine the Costumers DMU * The DMU for each customer should be similar. - If not, 1. Your customers do not match the Persona ! 2. You have not segmented the market enough ! 65
- 66. Step 13 – Map the Process to Acquire a Paying Customer 66
- 67. Step 13 – Map the Process to Acquire a Paying Customer By creating a map of the Process to Acquire a Paying Customer, you will: • Understand the length of the sales cycle • Build the foundation for the COCA • Identify hidden obstacles → Budgeting, purchasing authority, Time, B2C vs. B2B, … • Be able to show that you understand the customer’s buying process 67
- 68. Step 13 – Map the Process to Acquire a Paying Customer 68 Examples: for Kids
- 69. Step 14 – Calculate the TAM Size for Follow-on Markets 69
- 70. Step 14 – Calculate the TAM Size for Follow-on Markets Similar markets that you will target once you have dominated the beachhead market. 1. Selling the same customer additional products or applications (upselling). 2. Sell the same basic product to adjacent markets. 70
- 71. Step 14 – Calculate the TAM Size for Follow-on Markets CurrentProductNewProduct Current Market Segment New Market Segment 71
- 72. Step 14 – Calculate the TAM Size for Follow-on Markets 72
- 73. Step 14 – Calculate the TAM Size for Follow-on Markets 73 Example:
- 74. Step 15 – Design a Business Model 74
- 75. Step 15 – Design a Business Model A business model describes the rationale of how an organization creates, delivers, and captures value. 75
- 76. Key Partners Key Activities Key Resources Cost Structure Revenue Streams Channels Customer Relationships Customer Segments Value Proposition 76
- 77. Problem Solution Key Metrics Cost Structure Revenue Streams Channels Unfair Advantage Customer Segments Unique Value Proposition Early Adopters Existing Alternatives 77
- 78. Sales Revenue Profit Margin Burn Rate Runway ARPU LTV CAC MAU DAU Churn Rate Repurchase Rate NPS Engagement Virality Rate Key Metrics Examples
- 79. Step 15 – Design a Business Model 1. Freemium 2. One-time Up-Front Charge plus Maintenance 3. Cost Plus 4. Hourly Rates 5. Subscription or Leasing Model 6. Licensing 7. Consumables 8. Upsell with High-Margin Products 9. Advertising 79
- 80. Step 15 – Design a Business Model 10. Reselling the Data Collected—or Temporary Access to It 11. Transaction Fee 12. Usage-Based 13. “Cell Phone” Plan 14. Parking Meter or Penalty Charges 15. Microtransactions 16. Shared Savings 17. Franchise 18. Operating and Maintenance 80
- 81. Step 15 – Design a Business Model 81 @MedLeanMag
- 82. Step 16 – Set Your Pricing Framework 82
- 83. Step 16 – Set Your Pricing Framework Basic pricing concepts 1. Costs shouldn’t be a factor in deciding price. 2. Use the DMU and the process to acquire a paying customer to identify key price points. 3. Understand the prices of the customer’s alternatives. 4. Different types of customers will pay different prices. 5. Be flexible with pricing for early testers and “Lighthouse customers.” 6. It is always easier to drop the price than to raise the price. 83
- 84. Step 16 – Set Your Pricing Framework Moore breaks customers down into five waves: 1.Technological enthusiasts 2.Early adopters 3.The early majority (pragmatists) 4.The late majority (conservatives) 5.Laggards/skeptics 84
- 85. Step 16 – Set Your Pricing Framework Responsibility for Setting Pricing ?? a. Sales b. Finance c. Product Management d. Engineering 85
- 86. Step 16 – Set Your Pricing Framework 1.99 $ 2.99 $ 3.99 $ 86
- 87. Step 17 – Calculate the LTV of an Acquired Customer 87
- 88. Step 17 – Calculate the LTV of an Acquired Customer Key inputs to calculate LTV 1. One-time Revenue Stream, If Any. 2. Recurring Revenue Streams, If Any. 3. Additional Revenue Opportunities. 4. Gross Margin for Each Of Your Revenue Streams. 5. Retention Rate. 6. Life of Product. 7. Next Product Purchase Rate. 8. Cost of Capital Rate For Your Business. 88
- 89. Step 17 – Calculate the LTV of an Acquired Customer Present Value = Profit × (1 − Cost of Capital Rate)t t = number of years after year 0 The LTV is the Net Present Value of your profits from year 0 through year 5. LTV/COCA ≥ 3 89
- 90. Step 17 – Calculate the LTV of an Acquired Customer Important considerations • The business model decision is very important. • LTV is about profit, not revenue. • Overhead costs aren’t negligible. • Gross margins make a big difference. • Retention rates are very important as well. • Finding additional real upselling opportunities can be very attractive. 90
- 91. Step 17 – Calculate the LTV of an Acquired Customer 91
- 92. Step 17 – Calculate the LTV of an Acquired Customer Example: 92
- 93. 93 سوال طراح:پور حاتم کسری دکتر
- 94. Step 17 – Calculate the LTV of an Acquired Customer Exercise: Estimate the LTV : a. Google b. Bicycle shop c. Used-car dealership d. A new Lamborghini sales and service dealership 94 X0 $ X00 $ X’000 $ X00’000 $
- 95. Step 18 – Map the Sales Process to Acquire a Customer 95
- 96. Step 18 – Map the Sales Process to Acquire a Customer Four factors entrepreneurs often overlook about CAC 1. The cost behind all of the sales and marketing efforts required to reach their prospects. 2. Long sales cycles that cost a lot of money. 3. All the customers who did not buy their product, and the sales and marketing costs associated with reaching those customers. 4. Corporate shake-ups that affect the customer’s Decision-Making Unit. 96
- 97. Step 18 – Map the Sales Process to Acquire a Customer Short Term Medium Term Long Term 97
- 98. Step 18 – Map the Sales Process to Acquire a Customer Examples: 98
- 99. Step 19 – Calculate the COCA 99
- 100. Step 19 – Calculate the COCA * Your COCA does not include any fixed production costs or expenses outside of the sales and marketing department, such as research and development, finance and administration, or overhead. In determining the COCA, you must quantify all the sales and marketing costs involved in acquiring a single average customer in steady state. 100
- 101. Step 19 – Calculate the COCA LTV 101
- 102. Step 19 – Calculate the COCA Bottom-up analysis How not to calculate COCA 102
- 103. Step 19 – Calculate the COCA A top-down perspective The right way to calculate COCA 103
- 104. Step 19 – Calculate the COCA 104
- 105. Step 19 – Calculate the COCA How to reduce COCA 1. While very powerful, use direct sales judiciously as it is very expensive 2. Automate as much as possible 3. Improve conversion rates in sales 4. Decrease the cost of leads and improve the quality of leads 5. Speed through the sales funnel 6. Choose your business model with COCA in mind 7. Word of mouth 8. Stay focused on the target market 105
- 106. Step 19 – Calculate the COCA 106
- 107. Step 19 – Calculate the COCA 107
- 108. Step 20 – Identify Key Assumptions 108
- 109. Step 21 – Test Key Assumptions 109
- 110. Step 21 – Test Key Assumptions ❖Prepay for your solution (best) ❖Put down a deposit (good) ❖Provide a letter of intent (okay) ❖Agree to a pilot (acceptable) ❖Express a strong interest in purchasing if certain conditions are met (not too reassuring but may be acceptable) 110
- 111. Step 21 – Test Key Assumptions Examples of easily testable assumptions 111 ✓ Smartphone users aged 25–34 access weather forecasts on their phone to decide what to wear. ✓ “Neohippies” aged 25–35 use their smartphones to help them shop in the grocery store. ✓ Conducting opinion polls is much better on facebook than with traditional telephone- based methods. ✓ People will be inspired to contribute to chalkboards that have writing prompts on them.
- 112. Step 22 – Define the MVBP 112
- 113. Step 22 – Define the MVBP Three conditions of a MVBP 1. The customer gets value out of use of the product. 2. The customer pays for the product. 3. The product is sufficient to start the customer feedback loop, where the customer can help you iterate toward an increasingly better product. 113
- 114. Step 22 – Define the MVBP 114 Example: StyleUp Beta
- 115. Step 23 – Show that “The Dogs Will Eat The Dog Food” 115
- 116. Step 24 – Develop a Product Plan 116
- 117. Step 24 – Develop a Product Plan Example: 117
- 118. What Is Missing in the 24 Steps? o Building a company culture o Selecting a founding team o Growing and building the team (HR processes) o Developing the product o Selling and sales execution o Servicing the customer and building customer service processes o Building your financials and managing cash flow o Raising money to scale the business o Entrepreneurial leadership and scaling the business o Building and utilizing good company governance o And much more … 118
- 119. “Everything should be made as simple as possible, but not simpler!” Albert Einstein 119
- 120. @MedLeanMag @shnd_s [email protected] www.MedLean.ir [email protected] (اندازیراه حال در) @sahandsamiei 120