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Week 4: Product / Market Fit

Welcome to Bootcamp!
Network: Googleguest @incubatenyc #IncNYCBC

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Pitch Off Redux
IT’S A PITCH OFF!

After three weeks, let’s see how your business pitches have evolved?

Rules:
• • • 2 people come up Each gives a 30 second pitch The crowd gives feedback on what they liked and didn’t like

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Homework Review

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Week 3 Assignment: Business Model Analysis
Step 1: [My business model is..] Step 2: Key Assumptions
What is your revenue model? How often do customer purchase? How important is pricing? [ [ ] ]

Key Assumptions
What is the cost of creating the product? What is the cost to deliver the product to customers? How will customers get your product? What is your customer conversion? [ ]

Step 3: [See excel document for completing the model ]

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Week 3 Assignment: Customer Acquisition Strategy
Customer 1: [ ]
1. Describe the marketing / customer acquisition strategy used 2. What was the cost of execution of this strategy (estimated) 3. What impact did the strategy have on customer / user growth 4. Why did the startup use this strategy 5. How can you leverage a similar strategy for your business

Response

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Product Market Fit

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Product / Market Fit As an entrepreneurs your sole responsibility is to find product / market fit…and do this as fast as possible!!
50 45

Customers / Users

40 35

(millions)

30 25 20 15 10 5 0 1 2 3 4 5 6 7 8 9 10 11 12

Discovery Product / Market Fit

Time

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Finding Product / Market Fit is Hard
Finding product market fit is like find a needle in the haystack…

So how do you reduce the time associated with this search?
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Flip the Model…
Instead of starting with a product and searching for its market…first identify the market and create a product that it demands

Market

+

Product =

Fit

Understanding your Customer

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Understanding Your Customer will Look Like..
1. Knowing EXACTLY what features they want

2. Know EXACTLY what price they will purchase the product

3. Know EXACTLY where they will purchase your product

4. Know EXACTLY where they will hear your message / looking for a solution

https://www.youtube.com/watch?v=vfal56SqKI8&feature=BFa&list=UUC69dxCZQB9VURlHQ8wesPA

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Now Let’s Go Get the Customer!!
Once we understand our customer, we can then work to acquire these customers to prove that there truly is demand beyond one or two…

Customer Acquisition = Channel + Messaging

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Old Customer Acquisition

Search marketing

Email marketing

Your website

Affiliate marketing

Offline and Display advertising

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New Customer Acquisition…Creative Engagement

Email

Newsletter Alerts Updates

Product Design Pricing Word of Mouth
Viral
Your site

Blogs

Authors Staff Readers

Competitions Discussion Connection

Social Network brand pages

RSS feeds

News Alerts Updates

Team Breakout

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Tonight’s Group Breakout: Instructions Instructions
1. Break into three groups 2. Each group will be assigned a company 3. For your company, develop a customer profile – who is the target customer? 4. Create a customer acquisition / marketing campaign to generate 100K paid customers • • • • Describe in detail the strategy you will implement Identify the channels you will use Determine the messaging you will use to attract your target customer Identify the time and cost to achieve 100K paid customers

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Tonight’s Competition: Teams
Company A: New Age Consumer Blender

Company B: Online Ticketing Software

Company C: Hedge Fund Research Firm (20 paid customers)

Company D: Cloud Storage Service
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Case Study: Drop Box
1. MIT Cloud Services – was the target customer 2. Y Combinator Blog - Talked to Target Customer 3. Splash Page – Product built in 3 months 4. Digg – Marketed on tech blogs / knew customer well 5. Signups – In order to access someone’s drop box had to sign up 6. Referrals – Encouraged people to refer through incentives

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Your Goal…Starting Tonight…
Get to Product / Market Fit as Fast as Possible

1. True Lean Startup – is customer first

2. Focus 100% on of your time on finding market / product fit – its your job

3. Your limiting factor is your time – Maximize it!!

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What’s Next

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Entrepreneurial Timeline
Phases of Entrepreneurship
Pre Product / Market Fit Post Product / Market Fit Phase 4: Expansion and Innovation (Enterprise)

Measure of Growth (e.g., sales, users)

Phase 3: Maturity and Stability (Enterprise)

INCUBATENYC
Bootcamp Focus

Phase 2: Growth and Market Penetration (Business)

Phase 1: Concept Development & Customer Discovery (Startup)

Product / Market Fit

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24 36 Time (e.g., months)

48

60
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Building a Business

Raising Capital

Board of Advisors CRM Tools

Office Space

Hire Employees
Legal documents Accounting work

Business Dept.

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Raising Capital Starts with the Investor Deck

Even family asks for the business plan…

…Business Plan 2.0 is your investor deck
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The Key Sections of the Investor Deck
1. Your Idea
Week1: Business Purpose

2. Why You 3. The Problem
Week 2: Product Focus

4. Your Solution 5. Traction / Validation
Week 3: Business Model

6. Revenue / Business Model 7. Identification of Key Business Drivers 8. Growth Opportunities 9. The Ask (Sources and Uses)
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Week 4: Product / Market Fit

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Exercise: Headline
For each key page of the investment deck write out a headline that would go at the top of the page:
1. 2. 3. 4. Your Idea – We are creating the a new branded tablet for the teen market Why You – My team has 10 years experience selling digital hardware to teens The Problem – Parents do not want to set up a separate data plan for their teens Your Solution – The branded tablet will have all functionality of a tablet without having to
connect to a national carrier (text, voice, apps, music, etc.)

5. 6. 7.

Traction / Validation – We have developed a prototype with the help of Accer Revenue / Business Model – We will make money through the sale of tablets Identification of Key Business Drivers – Product development costs and developing
channel partners with companies like BoostMobile

8. 9.

Growth Opportunities – We want to eventually add online content specifically for this market The Ask (Sources and Uses) – We are asking for $500K to pilot in LA
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Homework
This Week: Assignment 1: Create a 5-6 page presentation that explains your idea. Focus on the following areas: 1. 2. 3. 4. 5. The problem you are solving The solution for the problem Your revenue model Your Key assumption / business drivers Why You are the right person to execute

Assignment 2:

Work on your MVP!!

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Parting Reminders
1. Tweet what you enjoyed about today’s session (#IncNYCBC)

2. MVP Fair (Wednesday – March 20th) – • Invite 3-5 people who you think will be great for the next Bootcamp • Have your MVPs ready…let us know if you have questions • Be Creative 3. Submit your homework to your facilitator by 12pm next Wednesday Email address: marcus@incubatenyc.com or through Incubate Online

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Have a GREAT week!
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Week 4

INCUBATENYC WEEK 4: HOMEWORK

1. BUSINESS IDEA SUMMARY
FOCUS
Summarize the key points of your business idea

APPLICATION
This summary presentation will become the foundation for a longer investment deck that can be used to pitch your idea to investors, customers, or interested individuals

ASSIGNMENT EXPLANATION
Create a 5-6 page presentation that explains your business idea and summarizes the work you have done over the last 4 weeks. Focus on answering the following questions (Remember to use the research, analysis, key learnings that you uncovered during the Bootcamp):

1. The problem you are solving 2. The solution for the problem 3. Your revenue model 4. Your key assumptions / business drivers 5. Why you are the right person to execute

CONTENT INCUBATE BUSINESS SUMMARY
Source: IncubateNYC Assignment Link: PowerPoint
Length: 1 page

==Week 1 1

Week 4

2. MVP
FOCUS
Develop an MVP for the MVP Fair

APPLICATION
You will have the opportunity to demo / pitch your MVP during a science fair style event

ASSIGNMENT EXPLANATION
As you know, a targeted milestone of our program will be to have your prototype (aka your minimum viable product or “MVP”) up and running in order for you to start seeking out traction. As part of our program schedule, we are planning an MVP Fair during the last week of the Bootcamp. This fair will be a science fair style fair in which you will display your product or prototype in some way (display boards, website on a laptop, etc), and share with your cohort peers as well as friends and family you’d like to invite.

Remember, it doesn’t have to be perfect or pretty, it just needs to solve the need you see in the market.

CONTENT MINIMUM VIABLE PRODUCT GUIDE
Source: Eric Reiss (Lean Startup) Assignment Link: http://bit.ly/17y72P
Length: 1 page

==Week 1 2

Week 4

3. PRODUCT MARKET FIT
FOCUS
The importance of understanding your market (customer) in order to achieve product market fit

APPLICATION
This article is one of the more popular articles when explaining product market fit

ASSIGNMENT EXPLANATION
Marc Andreessen is often considered the founder of the Internet. From his dorm room at the University of Illinois, he developed an online interface called Mosaic. This interface became the foundation for what we now call the web browser. Marc went on to start Netscape, which eventually sold to AOL for $4.2 billion. He is currently a founder and partner of one Silicon Valley's hottest VC firms, Andressen Horowitz. In this posting, he explains in great detail, what he considers the only thing that matters for a startup…

CONTENT THE PMARCA GUIDE TO STARTUPS: THE ONLY THING THAT MATTERS
Source: Marc Andreessen's blog Assignment Link: http://bit.ly/2xjapg
Length: 7 pages

4. THE COST OF CUSTOMER ACQUSITION
FOCUS
Detail the process for calculating the cost of customer acquisition

APPLICATION
Provide additional context for why customer acquisition cost is so important to the success (financial model) of an early startup

ASSIGNMENT EXPLANATION
In this article, David Skok goes into detail on how to calculate customer acquisition costs (CAC) and ways to create businesses models around a startup's CAC and customer life time value.

==Week 1 3

Week 4

"Failure to get product/market fit right is very likely the number 1 cause of startup failure. However in all these articles, I have not seen any discussion about what I believe is the second biggest cause of startup failure: the cost of acquiring customers turns out to be higher than expected, and exceeds the ability to monetize those customers."

CONTENT STARTUP KILLER: THE COST OF CUSTOMER ACQUISITION
Source: David Skok (Forentrepreneurs.com) Assignment Link: http://bit.ly/6XYL6V
Length: 16 page

==Week 1 4

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Week 4 Assignment: Business Idea Summary
Page 1: Summarize the business problem

Page 2: Explain your product and key feature (solution)

Page 3: Explain how you are going to make money

Page 4: Show the key assumptions and the profit model

Page 5: Explain why you are the right person to execute on this business idea

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