So before we get started with the entire
course, let’s take a look at what a team
actually could accomplish at the end of this process.
Now imagine you had 10 weeks or months
or a year to go do this. You’d actually be
able to do a lot. But what if we gave you five days?
Let me give you an example of a team from
one of our classes that decided they were
going to provide a rental service for
professional sports jerseys. And in five days
– five days they personally got out of the
building and spoke to 169 customers and
had 190 people come to their website. And
as we saw two things, they were in the
class. Let’s take a look at what their
business model canvas started with and evolved to.
So on day one, these were their initial
hypothesis coming into the class. They
thought their customer segments was going
to be professional sports game attendees,
who were going to be male, adult, less than
a $100,000 income, and attend 10 games
per year. That is they were beginning with a
series of hypothesis about their customer
archetype. And they thought their value
proposition was going to provide a cheaper
way to officially license sports jerseys to a
game, eliminate the risk of owning a player
whose jersey is traded and to provided
alternatives to purchasing counterfeit jerseys.
And their sales channel was going to be
websites or stadium shops or ticket
websites or direct mail. And how they were
going to create demand was through
search ads, social media, stadium
promotions. And their revenue stream was
going to be through a annual subscription model.
And on the left hand side, kind of the
backstage of the business model canvas,
their activities we’re going to be rental
tracking, shipping, dry cleaning, marketing
and customer service. And they were going
to have to have those resources, inventory
of jerseys, warehouses, logistic systems.
And their key partners might be the
professional sports league, and the
suppliers, and the dry cleaners, and the
shop vendors, and envelope suppliers, and
UPS, and FedEx, and Postal Service. And
their cost structure was going to be for
warehousing, shipping, cleaning, logistics
tracking, website development and
maintenance. And this sounds particularly
reasonable. You would look at this and go,
absolutely, why do I even need to begin this class.
But they got out of the building and spoke
to 60 people – 60 people by going to
Yankee Stadium and actually meeting a
bunch of customers on the first day. And
look happened. They realized that actually
women wore sports jerseys as well and
there was no way you could have
convinced them with that until they stood in
front of the customers at Yankee Stadium
and said, hey, it’s a 50-50 split. And then it
was actually young adults, 18 to 30, and
they actually were casual sports fans. And
now they started to get a better
understanding of what customer
relationships were, about getting
customers, keeping them and growing
them. And they realized that people would
maybe, also be interested in a pay-per-
rental model as well as an annual
subscription. Next, they got out of the
building again. And now they started
expanding who their customer segment
was and they actually split the segment into
two. They realized there were different
archetypes; sports jersey owners, who were
male, 13 to 35 but there was also another
archetype which were people who attended
a single game. And they were male and
female 18-30 and they were casual fans.
And so now they actually were able to take
their revenue stream and match it to their
archetype. So for sports jersey owners, an
annual subscription made sense, but for
single game attendees, pay-per-rental
made sense. And their value prop differed
for again those two different archetypes. As
you will see later, what we need is every
time we have a unique archetype, we need
to have minimum a matching value
proposition and matching revenue model
for each archetype.
On the fourth day, they’ve learned some
more things. Most importantly they learned
how much would some of those sports
jersey owners actually pay in an annual
subscription. They actually started asking,
some serious solid numbers. And the
answer they got back was $200. And they
also understood that social media would be
big component in customer acquisition.
The next day, they learned some more.
They actually learned another alternative
for sports jersey owners would be a
monthly subscription and also a one time
rental. And they started thinking about how
would you keep those customers, that is,
how would you eliminate churn and
increase royalty. And they started to think
about seniority royalty programs and how
they would grow those customers by cross
selling and up selling them with premium
subscriptions and family plans.
So you could see after five days, just five
days after talking to 160 customers you
could see how the business model evolved
dramatically from something that looked like
this on day 1 to something that looked like
this on day 5. Day 1, a series of untested
hypothesis, a faith based enterprise. On
day 5 the faith has turned into facts. And
this start up is on the road to actually
building something that customers might want.
So in the rest of these lectures, we’re going
to take you through each one of the business
model components and hoping you will get
out of the building just like this team to test
each one of your hypothesis