Session 1 – What did we learn?
So the main learning point from the first entrepreneurship and business planning session was how to build a business model. Basically, this describes how a company works, how it creates and captures value in the eyes of the customer. We did an example in class using the iPod and visioning it’s business model canvas. The business model canvas illustrates the 4 building blocks of a business: The customers, the offer, infrastructure, and financial viability. The 4 blocks are covered by 9 elements in the Business Model Canvas (We will come back to this)
One of the key things we took away from the class, is that our business model should change and update throughout the project. We are going to propose hypothesis concerning the modelling of the business, and many of these will fail tests.
As they say, it’s better to have a Class B product and a Class A team, than an excellent Product with a Class B team! So right the way through our project we should create an initial model, then move on to a testing or hypothesis stage before creating the final business model. This way, we’ll ensure it’s well planned and thoroughly thought out, and by doing so, the overall product should better represent what the market wants. And if we didn’t do this, well then our project may be unsuccessful!
One final point is that your project must be doable, if you can’t figure out how to make it or how to get it to market then there is no point in pursuing it. If possible it should be carried out on a global scale, be innovative and viral (obtain the help of modern technology to get your product out there). It should also be scalable, We guess the end goal for your business is to decrease your costs as you grow so that you can enjoy more and more profit.
Session 2 – A recap:
We learned the importance of a “winning team”. We believe that ours will be successful.
We are a team of 4 nationalities and we have an equal weight of genders. We have Erick which is an undergraduate in Engineering, Manuel and Charlotte in Management and Martine in Business and Economics. Maybe Manuel is the hustler, Martine the visionary, Charlotte the designer and Erick the hacker, or maybe it´s completely the other way around. No matter who takes what role, we are very different people. We believe that all of us will take on different and sometimes overlapping roles. Well, time will show. In any case, we are still convinced that our diversity will prove to be useful!
During the session we presented our ideas and without spoiling the surprise for later: Ours is really good. It solves a problem for the consumer. It will point out a need the consumer did not know he/she had. It is not as much a product as it is a solution to an issue every person who works away from home with no access to a proper kitchen. In conclusion, our idea is on topic concerning our experiences so far in this course: Do not focus too much on the product, but focus on what the customer wants, what are the benefits?
The session itself was more on, and deeper into what we posted on session 1. Hence, we will not bore you with a repetition.
Session 3
In the beginning of last weeks class we had a short elevator pitch about our idea. After that, each of the 3 teams in our class presented their first version – Business Model 1.0. Our professors feedback was good and it seems like it was okay for the first time. However, I think it is going to change a lot!
From what we have learned in class and from what we have read in the book we know very well now, that it is crucial to move away from the traditional approach of a Business Plan. The Business Model Canvas brings several advantages: It is more visual and more dynamic. It is all there at one sight and the sticky notes we attached to it can easily be changed or moved around. The Business Model Canvas is focusing on activities – not results. It is full of hypotheses which are our assumptions/guesses and during the next sessions we will determine whether they are true or not. I read an article and there was a statement I want to mention at this point: “You can’t think your way into a new way of acting, but you can act your way into a new way of thinking.” This is somehow true but somehow I believe it can work both ways.
During class we learned that the Customer Development is made up of 4 stages. During the first stage it is important to listen. It is not about what you think – it is about what the customer thinks. At the second stage hypothesis are validated. If they turn out to be wrong it is uncomplicated to change the model, while taking in consideration what you have learned from the customer. Only after all important hypothesis have proven to be true and when there is certainty that there is a market for a product, a Start-up should move on to the Customer creation phase, which is about 3 things: Marketing, Selling and SELLING!
We learned about different tools we can use for testing our hypothesis. This was very interesting because I haven’t heard of some of them and part of it was a very new approach to me. Among other things we learned about AdWords, Crowd funding, Landing pages and Prototyping.
At the moment we are continuing to read Steve Blank’s book and we really enjoy reading it. Now we are about to “get out of the building” and start with our validation process and to develop an understanding of potential costumers and the importance of the problem we want to solve. Our professor and the book have provided us with some tools that will help us to do that.
I am looking forward to out group meeting on Tuesday where all of this will be discussed in more detail and where will move forward and get things done. Stay tuned 😉
Session 4
Another week has passed and we have had another interesting class with Prof. João. In the beginning of the class the three groups have presented their most important hypothesis they have made up for their business model. In the course of that presentation we discussed why we consider these assumption crucial / a “Knock-Out Criteria” for our business model. At this stage we realized that the most important assumptions are in the category Value Proposition, which is the fundamental part of the business model canvas.
The first concept we were dealing with in class was P-S-M, which stands for Problem – Solution – Fit. This concept is used to determine whether a product/service is worth doing. I just want to shortly conclude which essential question have to be answered in order to know that.
Problem: What is the problem you want to solve and is it significant enough to represent a compelling need?
Solution: Does the product solve that problem solve that problem in a way that is desired by customers? Can it be done efficiently?
Market Fit: Which customer segment are you focusing on? Is that market big enough to be profitable?
We also learned about different market segmentation criteria in B2B and B2C. (Consumer and Organizational Criteria). Different segmentations criteria are easier to determine than others. Demographics for example can be easily measured and consumer behaviour is rather predictable, whereas psychological segmentation is more complex and involves more uncertainty.
Another topic was Market sizing – Are there enough potential costumers in our target market?
There are two different approaches to tackle that issue – “Buttom-up” and “Top-down”. We believe that in our case the “buttom-up” approach would give us a more appropriate estimate of our potential market.
Session 5
Session five started with presentations of the teams’ SWOT analysis and evaluation of main competitors. We believe presentations are a useful tool for learning among the teams and hey also make us gather and organize information in a systematic manner.
We were the only team that presented both our direct, but also indirect competitors . See our presentation here:
After presentations we talked about the Problem – Solution – Market fit (S-C-P). The importance of this cannot be emphasized enough. The problem refers to a perceived problem or need potential customers have, the pain of the problem must be strong enough to make customers want to solve it. This takes us to the solution. Can our business idea solve the problem and meet the needs? And if it does, are there enough customers having the problem we have the solution for?
Last session we sized the market using TAM, SAM and SOM. In this process it is profound to segment the market. Who are our customers? To answer this we looked at 3 tools:
- The empathy map is a map of a typical person in our customer segments mind. It tries to answer what makes the customer tick? What is important to the customer? What do they see, hear, do, think, and need
- The day in our customer’s life is an overview of a typical day in a typical customer’s life based on research, especially surveys. For us it can be important to figure out how many eat lunch at their work? At a restaurant? At a café? How many bring their own lunch? How many many prepare their own dinner? And so on.
- Personas is a fictional character who represent different types in the selected segment. We will make personas during the week, so keep reading!
These tools will make us to understand our customer segment better.
This week we will also start interviewing people in our customer segment. This is of substantial importance as it will give us answers to the statements we have assumed. We will test our first and most important hypothesis regarding our value proposition. Do people have a problem with access to preferred food, are they looking to solve this problem and can our Heat Able Lunch Box help them?
Session 6
Hello everybody!
We have had another session last Thursday with João and we also had an interesting guest who is an entrepreneur and former Catolica student. Once again we want to share with you what we learned and what we experienced during the last week:
Before last weeks class we were having 20 interviews with Portuguese people in order to validate our most important hypothesis. Most of the interviews where held on the Catolica Campus. Since we are all international students we have rather few contacts outside university at the moment. However, we managed to get several interviews with several professionals which was important for our sample. The results of our interviews are quite positive. It was confirmed that there is a problem and that it is significant enough. At the end of the interviews the big majority of our interviewees thought that a heatable lunchbox is a fantastic product idea and that it is a great alternative to hot food from the canteen/cafeteria/restaurants. Some of the interviewees, who are used to bring food (e.g. sandwiches and other cold snacks) to work/university, said that they would prefer hot food might change their habits if they were able to heat their food on the go.
However, the interviews have also shown that several interviewees do not look for a solution for the problem. They are not bringing food to university because preparing it or even just carrying it is considered inconvenient by them. Not matter how well the product would be designed or how good its functionality would be, they would never change their habits and start bringing food. It was interesting to see, that almost exclusively male students samples had that opinion. However, they thought it would be a great product for people who bring food, even though they never would.
Last class:
In the beginning all the teams were presenting their Personas and empathy maps, which lead to an interesting discussion among the class member.
Later we had a guest lecture, held by young entrepreneur and former Catolica student was very interesting. She gave us very useful tips and shared her experiences with us. She told us her personal story how her first start-up has failed and it seems like most entrepreneurs have failed before succeeding at some point. She gave us a lot of useful instructions on how to build a landing page for a product and that is exactly what we will start working on right now! We will share it with you as soon as it is finished. Stay tuned!
Session 7
Hello again!
So this week we had another class with Joao and again, it began with each team presenting their work from the past week. We presented both our landing pages and the Values Curves, it was really helpful this week because we gained lots of constructive feedback from the professor, and from this, we understood that we needed to improve our landing pages to make them more effective. By the time of this weeks class we will have perfected our landing page and will be well on our way to gaining 200 views! Other than that, our presentation went well and our value curves were a hit!
Session 7 focused on channels. We discussed their roles, for instance: Marketing, Sales, Distribution and After-sales Support. We discussed the various different means of marketing our product and the most affective ways of raising awareness and attention. We also differentiated between free and paid marketing channels. We carried out an exercise, picking the six most effective channels for our product, three from the free segment and three from the paid. For the free channels we chose a website, of course. Our professor stated that everybody needs a website in these times to be successful and it can be considered the most important marketing tool! The second free channel we chose was social media, social media has become a large part of many peoples lives and because of this it just makes sense to gain exposure by marketing our product through this channel. The final free channel we picked was SEO (Search Engine Optimization), being that we’re selling a product, it adds credibility to our brand, but also the earlier our page appears in the search results, the more visitors it is likely to receive from the search engine’s users.
For the paid marketing channels, we picked PPC (Pay per Click), SEM (Search Engine Marketing) and Direct Mail. We chose SEM because it is a way of promoting our website by increasing its visibility in search engine results, this is likely to increase traffic to our website and as a result may increase sales. For that reason we also picked PPC, as it is also a model of advertising that directs traffic to our website. Finally, we chose Direct Mail because it is a good way of increasing awareness, particularly if we use it to advertise in student and professional areas of both residence and work.
We also decided that our sales channels would mainly be online through our website and others such as Amazon but that we would also sell some through retail stores, such as El Corte Ingles and other smaller retailers, but for this we may need the help of a distributor to get our product placed.
In the second part of the class our professors taught us about developing and maintaining relationships, we feel that our product maintains a transactional and fairly automated relationship, however we hope to retain customers so that we can sell more lunchboxes to them and their families.
The final part of the class was all about how to raise awareness online. This started with a presentation about AdWords, I didn’t know that much about this before the class but having listened to the professor, they sound really useful and I’m excited to start using them for our project. For the remaining part of the class we discussed Facebook, Linkedin Groups and Blog Posts. We were once step ahead in this respect, in previous weeks we created a Facebook page for our product before the professor mentioned this as a marketing channel! He also discussed “Fake Sales” through the likes of Amazon or Ebay. Through this we can both direct people to our Facebook Page/Blog and gain feedback on our product to understand better our customers needs and if it will sell.
We then completed one final exercise before the end of class. For this we picked our most important channels (as discussed earlier) and decided upon how we could test and validate them. We decided that a fake sale on Ebay would best to test if online would be our main channel. We decided against using Amazon for the single reason that do not have a finished product and with Ebay, there’s many more points throughout the process where we can pull out of the sale before it is finalised and is therefore less likely to cause any problems. For the retail channel, we decided it would be most efficient to approach retail stores and distributors to see if they would carry/distribute our product. If some said yes, then it would be a success!
That’s all for this week! See you in week 8
The focus of this session was on the revenue streams:
One can say that a direct revenue stream show that you actually have customers.
The direct streams are: Transactions, usage, renting, subscription, pre-pay, freemeium ( free + premium), and pay-per-use which are the normal customer sales. In addition we have intermediation (Selling other firms stuff on your webpage for instance), and advertisement, which do not involve the sale of the product.
The indirect streams can be renting out your excess capacity or sales by referrals by others.
REVENUE STREAM EXERCISE:
As always we did an exercise which ha importance for our business model and idea. We did a rather quick analysis of what our main revenue streams will be, and these are the ones we decided on:
– Transactions: We might sell the Tempbox through channels like our webshop and through retail stores. With time it might develop to be a box in different colors and shapes, and it can be sold with or without the plugs for heating.
– Intermediation: We are considering intermediation in our webshop. For instance we might sell books and accessories which complement a lunchbox like cooking books or preparation tools.
– Advertisement: We have a webshop and an internet community and will use some space on it for advertisement.
– Licensing: We might consider selling the license to the box to other firms in markets we are not able to, or willing to serve ourselves due to costs, uncertainty, too little knowledge of the market etc.
We also calculated the streams in price and quantity for the different streams, however, the numbers we got have to be done again, and we will post them when we have!
PRICING MODELS
What are the pricing models?
– Cost based: Cost + Margin à is not focused on the client
– Value based: Price based on the perception of the client. Can be used for high valued products or services. Not based on the cost of the resources à Depending on the value the clients gives the product.
– Competitive: You set your price close to the competitors because you are not too different. To high no-one buy, too low no-one buy
– Volume: price set to sell in a bigger quantity à Cost saving
– Portfolio price: Bundling services together, different products etc.
– Shaver price: The machine is sold at a low price, and then the cost of usage like the cartridge for a printer, is very high.
– Feature pricing: adding features like our customization increase the price – we can let them customize their own designs, share them with each other in the community.
THE MINIMUN VIABLE PRODUCT –MVP 3
In previous sessions and group-work we have been through the MVP 1 & 2, now it is time for 3. The MVP is a version of the product which gives the team the opportunity to collect the maximum amount of validated learning about the customers with the least effort.
We have decided to make a 3D design version of the product. We could make a box with a plug in it, but it would not represent very important features to our product like the design and flexibility. Hence, the 3D version will be the best MVP for us. With this version we will set up a fake sale and build a new landingpage to test the viability.
Thank you for reading, and until later!
The Lean Explorers 