The Business Model Canvas

This talk – plus the posters I see at my coworking space every day ;) – has started me off to the world of the Business Model Canvas and I have to admit that I fell in love with the concept.

In the meantime I have finished the book Business Model Generation by Alexander Osterwalder et al. to deepen my knowledge of this concept:

  • It’s a very simple, yet powerful framework how to think about businesses and business models
  • It allows you to generate a big-picture description of a business idea or established business in a matter of minutes
  • It provides a common language to talk about and analyze businesses
  • A “Business model” is not just the part that generates the revenue. It’s the complete picture of a business, including the cost structure, key partnerships, key activities etc.
  • When reading the book, I discovered how important it is to start with either the customer segments (who exactly am I serving? Who is my customer?) and/or the value proposition (what problems do my customer segments have? How can I solve them?).
  • Based on the Customer Segements/Value Proposition it’s very important to see the bridge between the two: the channels. How exactly am going to reach those customers? Do I need salespeople? Will I do pay-per-click advertising? What is my assumption regarding conversion rate? What will be my customer acquisition costs?
  • From that, you can derive your needed resources (e.g. sales people), your key partners (e.g. Google AdWords freelancer or agency) etc.
  • Another great angle is the key resources, key activities and key partners triangle that leads to your cost structure. Do you really need to do everything in-house? Can you use off-the-shelf components? This analysis made me realize, how strongly web-companies rely on open-source. PHP, MySQL, Apache etc. are very crucial building blocks for today’s businesses. So far I took these things for granted. But in reality they are the basis for many things.
  • When I look at my former businesses/products I have to admit that I didn’t think enough about the customer segments, value proposition, and channels. Knowing your customer and providing real value is the basis for every business. That’s why Lean Startup and the concept of validation is so important. I really like the following essence offered by Eric Ries: The question is not: Can it be built? The question is: Should it be built? Very powerful question.
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How To Validate Mobile Apps

Great talk about how to prototype and validate mobile apps

The 520 or 90 app is another great example

Remember the purpose of validation:
The question is not: “Can it be built?” The question is: “Should it be built?”

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How to Acquire Your First Users For Free

Great, inspirational and actionable talk by Kathryn Minshew about how to acquire your first users with no budget.

Guest Posting:
Another great case study of how Buffer went from 0 to 100.000 users with guest posting alone.

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How Product/Market Fit Feels Like

Great conversation with Marc Andreessen and Eric Ries about how product/market fit feels like, and some deep thoughts about the Lean Startup methodology.

  • People who ask themselves whether they have achieved product/market fit usually haven’t achieved it
  • You know when you get there. You feel it. The space ship is taking off. Customers are pouring in. The wind has turned. It’s not ‘OMG it’s so difficult to get customers’ anymore. It’s more like ‘OMG, so many customers, we’re exploding’.
  • A great pre-requisite to product/market fit is product/founder fit. When the founders are power-users themselves, that’s a good sign. When the product is used by employees enthusiastically, that’s a very good sign.
  • Before Gmail launched, they made sure the product made 100 Google employees very happy (watch the talk by Paul Buchheit, co-creator of Gmail). They have iterated so long until this was achieved. Once they made those 100 Googlers happy, they knew they would make happy many more.

By above standards, I have to admit that I have never reached product/market fit so far in my career.

  • In 2004 we had some serious traction with webmasterforum.ch but unfortunately this traction got killed by a stupid mistake of mine that cost us 80% of our traffic (we changed the domain to ayom.com and fell out of Google – our main traffic source – because the domain has been burned by the previous owners. The worst thing: before switching I felt there was something fishy because we tried to index something and it didn’t, but I didn’t take any action. Very stupid mistake, hurts until today. This product would have been 2x, 5x or 10x more popular without this mistake.)
  • In 2005/2006 Parlaris lost traction because we didn’t have any working revenue model. Should have pivoted earlier.
  • In 2007 Trigami was very close to product/market fit, but we didn’t really get there. The main issue was Google again. 6 months after launch Google launched it’s attack against paid links (and several of our bloggers temporarily lost some or all of their PageRank – ouch). As backlinks were the main value in the eyes of our customers, our value proposition got much weaker. Probably should have taken this opportunity to pivot. We did introduce new offerings (many of them, probably too many) but failed to kill off the non-working ones. On a sidenote: whenever someone starts offering ‘consulting’ services, that’s a sign that something might not be working ;)

We’ll keep experimenting. Maybe someday we’ll get there. Without Google getting in our way :).

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Lean Startup Essentials

Even though I have pre-ordered the Lean Startup book in 2011, and started reading the first few pages in 2013, I have actually never finished it. So recently – as a usual Late Adopter – I have started studying the methodology. And I instantly fell in love with it.

Here are some essentials if you want to get started with Lean Startup – or get a refresher.

Great talks by Eric Ries (you can find more here):

Great case study of how to validate a business idea in 24 Hours instead of 6 Months:

Lean Canvas – Capture your Business Model in 20 Minutes

Bonus:
In case you get excited (like I did), I highly recommend the videos of the Lean Startup Conferences

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