![]() 7Īlthough planning is important, adaptability within the planning process is equally important. eBay and Airbnb are well-known examples of marketplace models. Marketplace models are a more complex variant of multisided models made up of two different customer segments of buyers and sellers. Ad-based models, big data, and enterprise are common examples where the products are free to users, and their value is monetized by a different customer base. ![]() ![]() In multisided models, users and customers-multi-actors-are usually different people. A coffee shop is a classic example other examples include retail stores, software as a service (SaaS), many mobile apps, hardware stores, and stores that sell physical goods. Direct businesses are the most common and involve one-sided actors-that is, users-becoming your customers. (credit: “FieldofDreamsMay06” by “JoeyBLS”/Wikimedia Commons, CC BY 2.5) Business ModelĪlthough there are countless varieties of business models, the Scaling Lean author Ash Maurya offers three common types: direct, multisided, and marketplace. 6įigure 11.2 This field in Dyersville, Iowa, was used in the filming of Field of Dreams. This is an oversimplification, but if we extend the Field of Dreams analogy before blindly believing in the magic, you would want to talk to prospective players and fans to see if a field is needed, what type of field (corn-to-baseball?), why that field is needed, how that field would be used, and what features of the field would be most useful- before you go to bat ( Figure 11.2). 5 In other words, don’t just build a baseball field and expect players to show up. 3, 4 In a complementary approach, the Mosaic/Netscape founder Marc Andreessen discussed the need to achieve product-market fit. 2 Current trends in entrepreneurial thinking reflect a customer-centric approach: From the start, entrepreneurs infuse their insights into the planning process through a process called “customer discovery.” The entrepreneurial journey should begin with finding what the serial entrepreneur, author, and educator Steve Blank, one of the founders of modern entrepreneurship, calls the problem/solution fit. One study by the data analysis firm CBInsights of why 101 startups failed found that 42 percent of them joined the “entrepreneurial afterlife” because there was “no market need,” which suggests a customer (or lack thereof) problem. ![]() You have to work to gain a customer and work even harder to get her to return. The juicer squeezed packs of cut up fruits and vegetables, but customers found they could just as easily squeeze the juice out of the packs by hand and avoid the hefty price of the juicer.Ĭustomer acquisition and customer retention are not easy processes by any means. A cold press juicer made by this San Francisco startup cost $699 at launch. Juicero is one recent example of product that conducted little-to-no customer discovery before launch. (Seventy-five percent of venture-backed startups fail, according to one recent study.) 1 Thus, you don’t want to blindly build a product and hope that customers will come. In fact, the entrepreneurial graveyard is littered with ghosts of startups that never gained traction with customers, never to be heard from again. Although it’s a fun saying for film buffs and sports fans, this approach is one you will want to avoid in entrepreneurship. The movie coined the popular axiom that “if you build it, they will come,” just as the players appeared after the field of dreams was built. In the 1989 film Field of Dreams, Kevin Costner plays an Iowa farmer who hears a voice that tells him, “If you build it, he will come.” Inspired by this vision, Costner’s character turns his cornfield into a baseball field (of dreams), and eventually the ghosts of deceased baseball players such as Shoeless Joe Jackson appear on the field as younger versions of themselves. Describe and be able to construct a value proposition for a new business idea (product or service).Understand the concepts of product and service innovation, and define and understand key business models.By the end of this section, you will be able to:
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