Harvard i-lab | Startup Secrets Part 3: Business Model – Michael Skok

Marketing Management


Okay I think we’ll get started um so we can have time to get through all of Michael’s material tonight on it
then timely manner for all of you who have been here before you know Michael Scott he’s running a
five session series on startup secrets how to give yourself an unfair competitive advantage tonight’s
discussion is going to be around business model analysis and I know he’s brought a number of his portfolio
companies to present as well so it’s going to be a lively session I’m really looking forward to it without further
ado I’m going to hand you over to Michael and his team of people well welcome everybody we should have a lot
of fun this evening we’re going to talk about one of a journey sense of these multiple things that we put on the
original topic and that being business for those of you being at the other sessions this will feel like it’s in
context those of you who haven’t been I just want to get a show of hands who’s new here therefore I can try to tell us
on the background ok quite a number of you people actually ok so I will get this right before I get going in which
case the value proposition session which is up on the website called catalyst comm provides the background to what is
it that you do and how do you do it uniquely well for who that’s the simplification of very long one-hour
monologue by me so there you go you skip the one hour you’ve got the essence of it and based on the value proposition
the business model is all about figuring out how you take that to market as a viable financial sales marketing it and
even service in support model so even though you’ve missed that just think about whatever idea it is you’ve got
we’re going to figure out a business model around it today if you miss the company formation piece that
was really around building the team and obviously hiring the people to make that successful basis to take your enterprise
and execute and next session is very much the other side of the coin to the business model because business model is
so closely aligned to go to market strategy so that gives you a little bit of context for those you haven’t been
here all right first of all I just like to make some introductions we’ve got a number of the portfolio companies being
kind enough to come in as case studies this evening and also to help out in the workshop so you’ve got real executives
who have real dangers real entrepreneurs who have real ideas that can help you as you try to take yours and figure out
what your business model is so first of all like to introduce the active endpoints to representative same October
and Eric Atkinson if you just like Stella marks our CEO and Eric heads up sales thank you guys for coming
and then aquiline we have David McFarlane and Orion staff the CEO and Founder respectively and then from demag
Webb who is represented by James Driscoll I’ve just say before he says anything they are on the roadshow and so
he’s basically been told not to say me so I don’t exist I was never here so unfortunately we can’t use this case
study because it showed we will use one when they get through the rotation such a thank you for coming he’ll be part of
at least the workshop so you can engage with you and then I’m lucky to have two of my pockets here tonight too I’m quite
sure why that here except to check that I don’t say something out of order but Jim arrived from North Bridge and then
we also have Carmichael Roberts who’s also brought some special guests with they’re coming
Oh Michael no okay well we have don’t worry we’ll introduce him when he comes in he’s brought up another of his
companies actually because Jim and I mostly work on software but we did want to make sure that people were not
focused on software have a sense that business mall techniques is going to talk about tonight actually do apply
many different kinds of ventures and so in fact he’s going to talk about one of his companies called MC 10 which is the
material space very good so let’s jump in with our agenda as I said this is all about building a business model and I’m
particularly going to focus on just all things first of all finding a disruptive business model you can all go and
discuss what a business model is you can read about it many different ways but if your startup the really important thing
you’re going to try to do is bring disruptive innovation into the marketplace and that shouldn’t just be
about technology the business model is a fundamental piece of it but how do you find that or I’m going to show you three
key things first of all finding your core differentiation that is absolutely critical to building a business model
secondly what are the multipliers that help you spread that value proposition in an effective way getting great market
share great reach and ultimately great revenue and then third very importantly how do you take the cost out of the
equation Alvin levers and the levels as you’ll see are things that can be highly advantageous to companies that figure
out how to use them in their business model and then last I’m going to give you a very quick insight into how that
plays out in the life cycle of work with your customers and particularly important here is an example I’m going
to bring to life for you how this plays out in the software world but again I would say it’s applicable to many
different areas I mentioned earlier that this is really one side of the point the other side of it is go to market so you
will feel in some cases like I’m transgressing a little bit into what does it take to go to market but that’s
because there’s clear linkages here and then the most important thing about tonight is of course the workshop and we
can have a lot of fun with that we’ve got ten teams again tonight and ten hoppers and journeys organized
for us to have the white walls you see around the room everybody can go write their business
models up and come in and present them we’ll have the usual voting at the end excellence over that in mind I’m going
to get the boring stuff right out the way right away everybody can go read this on the web there are actually some
great books on it the basics of business models are around creating the value so that’s things like creating your product
or service delivering it that’s things like obviously how you take it to market and then how you harness or monetize or
capture the value but we’re here for a reason we want to talk about startups and if you’re a startup I want you to
stop thinking about business models creatively right away don’t take somebody else’s business was my first
piece of advice to you there are plenty of business models around in fact it will be true to say that the best
example of business models of a business model probably hasn’t been invented yet and that’s what I hope we’ll get from
you is the next generation of interesting business models because this is all about how can you make a
breakthrough here it’s not about picking somebody else’s business model and just applying it to your situation the
chances are at that point you’re writing very little value in your startup and you’re probably not making any major
impact so I really want you to think about this literally as how do you change the game if you could come in for
example to a market place and literally rewrite the rules on your own game and call somebody else to have an innovative
style em’ly much more powerful empathy I would argue that that is at least as important as having a disruptive
technology there are many examples like that what I encourage you to do is to think about whatever it is you’re
bringing to market in those kinds of ways don’t let somebody else write the rules you write them who could attract
to find the whole new game the way that you have so what’s an example I’m really going to date myself I put an
exclamation on here 20 years ago believe it or not there was this little company called Symantec it’s a multi-billion
dollar company today that’s the good news but the bad news is at the time we were actually a struggling company in
many ways and I will say that with tongue-in-cheek because you know
it’s become very successful but I think in more 20 products we had everything from add-ins for Lotus 1-2-3 if those of
you remember back to that was the first spreadsheet to we had languages you know think si think Pascal on the Mac get all
sorts of products we have database we have WordPress I mean it was just unbelievable and I’m particularly being
brought this is all being brought back to me right now because we’re about to have a 20-year reunion for the first 20
years of Symantec this weekend all these parts and so forth been coming to life and so this example just stuck in my
mind it’s really a business model example the product that was selling best on the Macintosh back then
something called symantec antivirus for mac and believe it or not the Mac was plagued with viruses in those days
system 6 or 7 or whatever it was at the time was was really an issue it was very successful product for us and we were
selling it as a licensed product so you know whatever it was dollars perpetual license you bought it through at the
time you know your local retailer and because it was a chart-topping product you’d have said at that point great
we’ve got that business model Dell we now to produce that product package and distribute it sell it top of the charts
what should we do when we introduced the PC version the answer is when you just copy to this one I just told you I think
that’s a really bad idea and so we also stopped and thought about that and initially we got it slightly right in
that we decided it was important to introduce the PC model with more of a flavor of and upgrade service than an
update service because there were many more viruses coming out for the PC and so in fact we were having to get people
updates initially once a quarter now we rise while it’s happening sort of once a month then we realize hey this is
happening regularly it’s probably hard to believe this at the time there were probably a maximum about 100 viruses on
the planet when this came out now there are tens of thousands and they regulate so of course what we did was we
flipped it all on its head we actually decided the software was worth nothing because we needed to get that out there
as a platform for people to be able to get the virus definitions downloaded to prevent the viruses and so the real
value was not in the software at all the real value was in having the virus definition before it ever attacked
anyways machine and so that literally was the Italian point if you would ask because Li I think you are pretty much
anyway it’s mad at the time on the fortunes of that company because we suddenly created a subscription model
that was not a nice to hand it was essential for enterprises and they didn’t care about the software they
cared about the person who had that virus definition first and suddenly we had a very predictable business because
every time a virus came out we knew people were gonna want to download there for you they were going to want a
subscription fee off today therefore we knew them and pay monthly therefore we can see what our revenue was going to be
and it was very very game-changing so that’s an example from a price standpoint any questions on that before
I go forward so did you after that tubes the Mac module yes yes we did and in fact I’ll give
credit to one of my sales guys here who was one of the first guys who actually even flipped the entire product line on
its head and said you know what we’re selling a bunch of things like backup for example and Norton utilities was
another product we sold but people really don’t want to pay for the software what they’re really doing is
trying to get deep security and prevent data loss and so forth so we came up with what he called and he really
deserves a credit for a total solution today security and in the UK for example we took out full-page ads in the
Financial Times and we went to an extraordinary lengths to get people to understanding what’s the most important
thing to them that they’re actually producing with all the software is their data it’s their information so they
really shouldn’t put that top in terms of creating data protection and suddenly as a result of that thinking we actually
started selling a data protection service and we bundled all of our products together in what we call the
total solution and sales just took off and if I would go into it even one more deep level of detail
I tell you this which is we used to on average sell one to one and a half products per major enterprise per seat
and by bundling five or six products together the actual natural average of that turned out to be 2.6 so in others
we went from 1.5 to 2.6 the value just by bundling that correctly and by taking the game up to being a data security and
information protection game extraordinarily successful and my investment the time we were quite
concerned to say the least about us going and taking full-page ads out in major newspapers very quickly lost their
concern saw tremendous results okay so next example this is not a technology example this is absolutely a pure-play
business example at the time I was based in the UK and I was observing that every major product that came into the UK from
a US publisher was largely failing failing because they didn’t have that investment in management marketing
distribution sales services for wine because we look at the US market is 10 times roughly bigger than the UK market
so let’s say you’re a 10 million dollar company in the u.s. you may have some at that point relative critical maxing 20
million dollars going to the UK take the size and market you could be maybe a two million dollar company doesn’t really
give you much room to invest in marketing or management the distribution of translation localization all these
other things so it’s very tough for US companies to be successful and they typically went to just distributors and
said here we go to great product you know put it in distribution well project that sell themselves and so
without the marketing support or of translation in some cases it was very unsuccessful so I decided to come up
with a business model that basically enabled US companies to bring them to bring their parts us as one entity
Europeans ultra publishing and because we have multiple products we could get the critical mass in all the things I
just put up on that management all the way through the distribution and as a result of that we were able to provide
for example introductions to the top times 100 companies that’s a fortune well positive
and if we already got that connection on one product when we took on another product very easy to open the door and
say okay here’s the next product we do very selectively so it wasn’t like a you know a long list it was very successful
financially for the US companies too because we would get these companies to about twenty to thirty million dollars
in other words highly scaled highly profitable at that point and then we would enable them to acquire them back
but it was also acquired back on a basis that of something called pooling of interest in those days but just think of
it as a tax efficient way to do it it was non-dilutive so it cost them nothing in terms of earnings per share if you
will and it was ultimately acquiring something that had growing earnings so the minute they acquired it was adding
to their top line as well as the bottom line is therefore to their overall stakeholder value so it was like
incubating if you will these companies till they go to the point that they were successful and then acquiring them back
on this anti diluted basis it’s just highly profitable lists and as an example Symantec itself which is one of
the companies that we brought over was a huge win I put this picture up there because I say it’s a huge win but then
my wife always reminds me that the two Bibles that it took us that they were huge thick things conclude that deal was
the pain involved in it so it was a lot involved in doing that but the win-win here for investors for the early
investors was a 97x and their money your sense of it and yet semantics themselves doubled the value on a accretive basis
acquiring the company so the day of the acquisition was acquired that was announced the company’s share price went
up but also more importantly the continuing learning streams continued to contribute and Symantec in the UK was
their most profitable business outside of us at the time so everybody want we make customers happy we obviously made
our shareholders happy and the middle this thing we made Symantec as an entity most successful adam-
technology absolutely nothing although by the way it was very passionate about Debrecen stayed on and continued to
actually really enjoy working with them but my point is here this is an example of something that you should be thinking
about even if you’ve got a breakthrough technology what are the things that will make a win-win for you so tonight I’m
going to talk to you about that and hopefully give you enough examples about it I don’t think I need to say more
about this but I’ve hopefully made it clear to you that it is at least as important but now I want to give you a
specific reason why the business model is as important technology so before I give you the answer and even tell me why
in financial terms business model should be considered as important technology pain thoughts I’ve given you some
examples but can anybody give me sorry go ahead technology doesn’t matter yeah you’re on exactly the right track
products don’t sell themselves people don’t even know about them how they can even find them even if they are great so
what does it cost to for people to find out about your product is that relatively the same as developing the
product is it more is it less anybody somebody heard saying more I’m sure of hands who thinks it’s more this is an
easy way to okay well those of you who said more you’re right the staggering thing is how much more it’s usually
doubled if you look at a software company for example PNL you’ll see that on average companies will settle out and
run 15 to 20 percent of their P&L being spent on R&D and 30 to 40% motors double on sales Mario so what I’m pointing out
to you here is you need to go to a brilliant product how it’ll end up playing out your business model is that
double the amount that you’re spending on your product is going to be spent just as we’ve all teared from the back
then on taking the market and that’s what this business wall is all about it’s
about how you get multipliers and levels to actually take the cost out and the revenue up and in fact I’ll go one step
further I will say that a perfect startup storm by the time you finish this session of the next session should
be very easy for you to fine it should be a disruptive business model with a disruptive technology and
then you obviously focusing on a new market opportunity or target segment with an innovative way to get back you
get those things things you have my attention now I’m not saying by the way the great companies that have formed one
or even two of those but again all three you really have the perfect startup store so let’s get you started on
thinking about some of these models give me why we attached my mic these models here are just a sampling of the ones
that I want to pick out the wonderful thing about them the reason I picked the list many of these companies didn’t
exist you know five or ten years ago one of the fastest growing companies ever is Groupon and they came out with
completely new as number one one of my favorites which I use for a while and didn’t understand their business fall
until I sort of thought about it was mint it’s not a company that’s actually trying to make money out of the software
the way into it did to process your finances it’s actually a legion business that’s actually driving lead generation
and many of the financial services providers in a neuro portfolio even though Jamis can’t talk about it
Demandware has a very innovative business model which written in the s-1 is all about revenue share and i can say
no more than that with but it’s an example of what I think I’m making a point over here that is every one of
these companies is at least in part being successful because of it is drop you first of all and we will talk about
some of these examples but there might be things that you’ve never even thought about associated technology pool such as
for example how do you do crowdsourcing it’s an innovative company in Boston but you test that’s actually taking people
from around the world to test mobile phones in all the different environments around the world you might say well why
is that a big deal in a business model we’ll think about the alternative there are so many different phone types and so
many different carriers that can be used in so many different places there’s no possible way you could recreate an
environment so it would test all the different scenarios for mobile phones and mobile
occasions but if you crowdsource it all around the world you can get a real sampling of what might be the way of
testing so their business model actually not only solves that problem but actually applause and averages low-cost
labor around the world as a lever to help them be very effective in that test so I would say any one of these examples
is one of many I could pick two again hopefully get you thinking about what could you do to be this Roger so what
are the sample questions I recommend you start with well amazingly people come in and they almost invariably say we have a
product yes you may have a product but is it really a product or is there a process associated that product being
used in which case is the process more valuable or the product do you really only have software or do you have to
have services to actually make this successful which case is the service more important than the software in
open-source you will find that software’s free so unless you have services there’s no value in is it open
or proprietary and so on and so forth here’s why I’ll pick up for you which i think is rapidly emerging as an
interesting business for as we get networks of people working around these products and services we’re collecting
tremendous amounts of data on people and in fact the best example of that is probably going to be one of the most
interesting new IPOs this year that’s Facebook Facebook’s values not as software means great software it’s
impressive the PHP scale to be able to do you know to serve hundreds of millions of users but that’s not going
to be painful we’re paying for ability to connect to people and guess what they’re monetizing
they’re monetizing the fact that we’ve all connected and told them what we are doing all day so they can figure out
what really is rather than the data behind that target us more effectively so their
value is in that content or their data maybe they would say simply that data my point being here this is an example of
where I would encourage you to question early what is the set of values that is at the core of your business so let’s go
to exactly that your first key question should be what is your core value those of you haven’t heard me talk before I’ve
said this many times I was one of those students who needed mnemonics to remember anything
so you’ll find I use mnemonics everywhere I translate corny but just forgive me this is a way that hopefully
you’ll remember these things the core of your capabilities should be literally what is it that you’ve got a really
exceptional value at the center of your proposition that you could build around that you could create a model run and
when you tell me it’s cool nine times out of ten I’m sitting with an entrepreneur and I’m really questioning
they haven’t defined the core then define a bunch of stuff and what we really press are we can actually get
even more focused so I’ll open here or we’ve got a great software product okay let’s talk about what that product
doesn’t for who and then when we really get down to it we’ll find out that a small piece of what somebody’s actually
building is really the core innovation so in the case that we’re going to talk about tonight with a given you’ll find
out that they actually are in the database business but the core of their innovation is actually a very critical
new piece of how you process data and they didn’t need to recreate the entire database infrastructure they’re
leveraging a lot of open source to do that so let’s have a look at some examples from the ones we just talked
about I already gave you a sense of how to think about core in the example of Facebook they’re real innovation is
probably the user network but if you went to the core I think it’s data and what they do with that data obviously in
terms of using it for advertising is really interesting now they may change that they may decide at some
point there are the battery if they haven’t got that cool right earlier I think we’re being very difficult another
one I think that’s it’s just gone public so it’s topical would be yelled Yelp could have been thought about as
community could have been monetized in many different ways but in the end the contents become really the core of the
value that again if you look at what’s going on now in the world of the net in particular a lot of times where people
are building is some form of user-generated content around the network and there are many ways you can
monetize that but I would say to you the most important thing you should do is again instead of just saying well how
can i monetize it just say oh well advertise this always think before you do that say well who else might painting
with and if everybody is advertising I started using advertising in the same way as you are people don’t have a
competitive advantage so try to flip it try to create an innovative Stiletto you think about what christian centers has
talked about many years which is creating some way to do something that can’t be followed as opposed to just
falling what everybody else has done and so when you think about monetizing your core
think about where others are most vulnerable where you could do something but again change the game go back to
that bad bug and rewrote the rules and gave you somewhere monetizing there was really tough for others to follow
I’m a huge proponent of open source if you haven’t figured that out do a lot of investments in that space the reason I
love it is that it’s tough to compete with free which is really what open sources is at its core but it’s very
easy for open source companies therefore to attack existing market places with an offering that is delivering the same
value at no cost and focused on making a custom successful with support because a customer loves that and the competitor
can’t compete with free so think of things in those ways whatever whatever it is that you’re addressing and if open
source helps you think about it and having to talk to you more about we love that as a business form okay so
core is first point now I’m going to introduce you to the next two concepts multipliers and levers and they work
around your core so these are not in a separate term once you know what your pull value is how can you multiply it
meaning increase the revenue increase the reach of customers you get two or increase the coverage or market share
that you get that’s really what multipliers are all about and I’m going to bring this to life with some examples
of that on the other side levers reduce the costs reduce the time and reduce the resources involved in
producing a product or getting it to market or in capturing that value and if you get both of these things working for
you as the diagram suggests they really can create extraordinary value on top of your business form and core or your
value proposition so what are some examples as you all know my experience comes from software so let me pause the
question I’m going to go to use resources above unit to have a lot of it great question so the question just so
everybody heard it is what did I mean by reducing resources when we just said that for example taking products the
market requires a lot of resources what I mean is how could you reduce the resources that are required still to the
market so I’ll give you a simple example just I’m going to preview what I’m about to talk about but if you could create
viral marketing where your user was actually selling for you that’s obviously going to reduce your cost does
that make sense so that’s an example of a level and by the way people talk about viral marketing all the time it’s a very
tough thing to define they’re all sort of models people have and coefficients they create everything else I can be a
really example about important example of viral marketing record selling if you really love something and you refer it
to somebody else that’s that’s the beginning of viral marketing like that so making happy customers is the
beginning of viral marketing and figuring out get a very happy customer armed with the right way to wrap itself
just giving them the basics of you know what typically is in most people which is they want to justify the purchase
they’ve already made if they like it anyway so give them the tools to do that and then of course you can do all sorts
of offers and things to promote it anyway does that answer your question oh great any other questions before I
move on okay so for examples as I said I’m in software so I’m going to use these as talking points but I think this
apply to many different businesses so the first category that we’re talking about is exactly what we just discussed
which is sales marketing it’s usually such a huge part of the P&L that if you can start to get a multiplier working
for you here it’s very valuable and things that MIT may make the difference here are things like tiered pricing so
in other words if you start a product at one price in all flavors that’s possibly they’re exactly the right thing to do
for simplicity sake but wouldn’t it be better if you could get people to get it free first of all so it was literally
frictionless to start off with and then upgrade an upsell and add value and obviously add capabilities and so forth
going forward because every time you acquire a customer song as you keep them the ability to upsell is
obviously a lot less expensive than creating a whole new customer relationship so I know that sounds
obvious but that’s right they’re an example of a multiplier and it’s a reason why tiered pricing and models
like freemium can be so helpful the other typical mod multiply you’ll hear is channels this is definitely
applicable to almost any business you could go I haven’t create a sales force for every product I’m sure but wouldn’t
it be more effective to use somebody else’s sales force do you somebody has already got the customer relationship
who’s already written the contracts with major part enterprises and just leverage those I can tell you that’s one of the
biggest challenges for startups is that just the contracting process alone in the Fortune 1000 is horrifying I sing a
few smiles at the front here because constantly sit in boardrooms with you know the forecast and we know that the
deal is closed but the contract is still to come and like okay is it emc we’re dealing with
or is it HP and you know everybody knows their stories that the point is the channel in many instances will already
have the relationship with that end customer and so they were rewritten and contracts and angular to just add this
an addendum or slide it in on an existing contract you just pull that fresh now reduced your cost of selling
and obviously are able to get a multiplier in your business so next example will be in the product
most people think about products in a very straightforward way as being you know it’s obvious that this is going to
be great value and therefore people should want to buy it that should be the case but you can get a lot smarter than
that I’m going to introduce two concepts to you tonight Slippery products yes I said slippery another Vitamix which is
another way of saying friction free and what I call Russian doll packaging and I think you’ll have some fun with these
tonight when you get to the workshop but the last of which is technology stacks and again
example of it this is how you can insert yourself if somebody else’s technology stack again a multiplier I’m going to
market your room so consider the levels I would take the crosstab well the world has changed
dramatically since that 20 year old example I was talking about the semantic will use that itself through two-tiered
distribution and we used to have to spit salespeople at these ridiculously large distributors that sold thousands of
products and so we have to get their attention and now you can get anybody’s attention anytime you want on the web
and focus on doing it in a very cost-effective way with inbound marketing using inside sales for example
and creating things such as we were talking about like viral campaigns that dramatically takes down the cost of
stock market that will need an emotion when I started this industry and so I would use it and I would spend time
thinking right from the get-go about how would you get your awareness your interest your understanding up using web
and low-cost techniques like that and that’s why I said this is one side of the coin the other side bingo to market
that we’ll talk about in the next session the second example is less obvious and people typically think about
this too late in the game so I’m encouraging you to think about it right up front which is how do you take the
cost out of producing your product creating a product and supporting it and there are many ways you can do this you
can do it through offshoring or outsourcing or crowdsourcing in that example we talked about or something
called co-creation which I’m going to give you an example of tonight and again technology stacks so probably a lot of
words up there all I’ll say is every one of them can be thought of as a potential level I don’t think I need to explain
everyone but I will pick as I said co-creation to go into as a differentiation and then here’s the last
piece of this startup secret which is you really want to find examples of things that we work together you’ve got
to kill a strategy on your hands if you can figure out how you can get focused on your core find a partner to work with
who will give you a multiplier market and a lever in taking the cost out of either building or delivering or
supporting a product and so two examples of that laughter ooh now first of all while I’m
creating value then another and delivering and captioning so what is co-creating well the idea here is pretty
simple and it’s going to come to light in a software world I think fairly easily you could sit has a single
organization and build your product with one development team or you could say what is that the core of our product and
let’s take an example that would make it easy for everybody to think of Linux it’s an operating but at the absolute
core of Linux is literally a car and Linus thought about that and realized that the problem of the existing
operating systems was they’ve got huge and bloated why they got bloated because basically people had to have different
versions that for every single different kind of laptop or PC or server and every kind of device driver and everything
else that went associated along with it was yet another piece that had to be added onto it so he wrote a brilliant
call superfast super efficient and he made it possible in a modular way for people to add on to it using open source
created a community and got people thinking about how could they extend the product and as a result of that people
liked idea it was literally the time nowhere any other existing business in fact because argue was really struggling
with many different operating systems as 400 the Z series on mainframes etc were able to take learn Linux and unify their
entire platform strategy with it and they themselves using open ap is add the open source nature of this were able to
write all the drivers for all of our different products and get what they needed which is a unified operating
system what that did till the next was unbelievable it literally accelerated actually I should have Carlos telling a
story since he’s been involved in first time but it literally accelerated the adoption of a single operating system
that swept through the enterprise very quickly because it was free open source and instantly much more valuable to
people and they were able to focus on their differentiation and people started
building on phone so that’s an example that’s an open-source example but if I jump to the top and I give you just a
little bit of thinking around extensibility this is a simple concept if you build something that everybody
wants to add value to needless to say that’s going to multiply your value I’m going to start at the most basic level
that you can think of imagine you went to the kitchen you put on a pot of boiling water and you knew that
everybody wanted soup the first thing they’re going to need is the pot of boiling water if you’re the only guy
who’s got the pot of boiling water people are going to come to you and put the ingredients in the good news is they
can add the stock to start off with and if they decide oh they want to add vegetables to that they could add
vegetables but maybe some people don’t want that so they’ll take a little out of it and they’ll create their own
version derivative of it and they’ll add you know lot of vegetables but maybe need to because those where they are the
next thing comes on wants to pasta to the point is somebody thought about that in a very basic way and it’s exactly
what I encourage you to do with the product they said what is the core thing at the base of soup boiling water
think about your value prop in that same way and then think about how easy would it be for people to come in and take a
ladle and take some out and create their own version of it or add to it if you can find ways to do that that’s why I
love extensible open api is for software for example which is just a fabulous way for people to do this and if you can do
that really early on you’ll be very successful here’s the next little detail but a super important one if you do it
in a way that internally you test that right away so in other words let’s say you’re building an application but the
application requires certain core services like for example user input user
why did you write those as capabilities in your platform that you had to build on internally so you had your team of
apps builders you know what the app application logic should be but they have to internally build on the api’s
for user validation user input user experience etc immediately you’re creating a customer internally that is
testing your openness in your extensibility of those api’s and when I see software companies to do that they
build on themselves i watch product development go way way way quicker and I’ve seen it over and over again the
Monro actually although James can’t talk has done super probably well internally and exactly that very classification of
disagree so it’s a smooth tip but it’s a good starting point figure out how even entirely you can build around your core
and you can have customers from you know one part of your organization working on another piece of the capability that’s
where it’s literally eating your own cooking being around customer summarizing this I would say as follows
you can get smart about creation by thinking about who will the other people can contribute and if you can find a way
to actually incent them to get value out of co-creating with you you’re in a great starting point it’s going to be
both the lever in terms of taking your cost down it’s going to be a multiplier terms of those people obviously
spreading the word okay now it’s sort of another example of levers and multipliers in delivering and capturing
by delivering and capturing value here is one which is pulled from a list of 20 I could have talked about which again is
a favorite for me it’s as simple as a strategic partnership and yet it’s a significant as to be a major level
multiplier here again every software company I work with figuring this out and I’m going to give
you a specific example of what what might make a great strategic function we’re both levers and multipliers around
the core connectivity so if you are a software company you’ll notice without me telling you you have to figure out
what the key capabilities the available drive and it always involves basic things when computing network and
storage database I’m going to added 20 things you probably don’t have those as distinctions unless you’re a security
company or David’s home and you want to go to ultimately exposure applications and services at the top of them if your
core capability can fit into somebody else’s stack right in the middle and fill a gap for that for example if you
are able to be a load bouncer that enables people to scale out and you do that on top of people’s database storage
capabilities then why not fit into that stack why not go build for their capabilities so that you literally
neatly can integrate and create a much more fulfilled product experience anybody is trying to build applications
at scale and each load box or obviously that’s what the opportunity is in a hole provide strategic partnership and whole
product is in jeopardy more term as you know I’m a student of his he’ll be here at the end of the series and it really
describes how you deliver a complete solution to your customer so if you’re going to got a piece of it you can find
partners you’ve got the rest of it I would say this is a great example of a lot of I remember they can work for me
what happens when you do this is best discovered and subscribe to an example in one of the companies I started in the
analytics world we had a capability to do what we call real time inline analytics but how did that mean it meant
that before that point everybody who was doing analytics was typically getting reports you know week after things
happened or maybe a laughter in some cases and we said guess what before you even transact with a
customer wouldn’t be helpful to find out if they’re a profitable customer to deal with what their preferences are what the
things are that they might also want to buy from you and that required real-time inline analytics for the trouble that is
analytics is a tiny piece of the challenge of getting that data putting in a database cleaning it with what’s
called ETL systems and then getting into a place where you could actually do what we did which was the real-time inline
analytics and then on top of that you had all things people want to do with them like present them and you know even
allies them further in Excel etc so we rise the big giant in this space was idea so guess what we did an
unbelievably obvious thing which was we worked right into the core of IBM stack and make sure we work better than
anybody else did with IBM’s db2 product settles so that WebSphere products and the middleware and also with that
tooling even and the result was not terribly surprising we ended up getting huge revenue out there not just because
people were able to sell our product in IBM but because it brought credibility to us that IBM was actually partnering
with us and was taking our products to market it opened all the doors and on the other side of things of course it
dramatically reduced our time to market because we weren’t waiting all their technology around us and reduced our
development costs excuse me and ultimately resulted in them acquiring the company which in many instances by
the way even though it wasn’t our intention is a great backstop for a small company to have had that strategic
partnership be so successful that you know that if nothing else plays out in your own you know ultimate success
somebody’s going to have you so integrated in to apply so I think strategic
partnerships and example getting a whole product strategic partnership on great levels great multiplies and great back
scoffs for for small companies one little detail and the devil often is in the details and certainly it’s true with
startup companies I hear people all the time so it’s fantastic I’ve got this new big company
very interested in me and they’re going to co sell everything okay who’s in sense because if they don’t have that
Salesforce incentive to do it they might be getting more advantage out of you than you are of them there are always
details like that it’s really worth paying attention to if you get them to reset it might be great but if they
suddenly bring you a thousand customers and you’ve got all the support cost you might actually find you’re losing money
likewise I often see small companies make this mistake too they go and write om deals and they think they’ve got
tremendous distribution reach but they’ve got no upsell capabilities they basically just get away the golden goose
huge mistake so here are some things you can do first is actually strategy not just om but also from in general helping
you with your products and how you get multiplies another each other it’s what I call building a Russian doll
it’s going to be very obvious I hope where you might do this and then I’m going to get one of our companies come
and talk about how they do this come up with a version that’s free then find some way to give limited access to it
for a different price some upsell give a personal addition err once it gets reused by lots of people make a work
repetition if lots of work groups start using make a corporate Edition once it goes global
make an Enterprise Edition it isn’t that hard but you’d be amazed how many times this is the difference between for
example I am deal working or not if you know you’ve got all those editions and you just do an OEM Edition for example
on the personal edition or the workgroup Edition you know you can go back itself all the capabilities that corporate
the Enterprise Edition and therefore getting the reach from area may tremendous sense because you can do the
upsell but don’t go in there without that in your back pocket know upfront what you’re going in there with know
exactly upfront what you’re going to do is it upsell and then to the point about going to market in general this strategy
works out for lots of other reasons you’ll find that it’s a great way of giving an adjustable starting on to
people it’s a great way of allowing people in the center taste the school piece of the value and if they do that
free that’s a great strategy in many instances and then it gives you all these upsell options and it gives you
tremendous channel flexibility not just for their EMS but you can go to for example different channels for a
personal addition then you would for example for an Enterprise Edition or you can go to VARs you want to build around
for example or systems integrators you want to build around a very small piece of your core functionality because they
want to differentiate though all the capabilities they might bring in a vertical market let’s say they you go to
a bar for example that takes just the core and takes it to a medical market and yet another one who takes the core
and goes after the financial market that’s a great strategy that can play out if you do rush it all packaging
others if you figure out how to get these capabilities before you come out with this one galactic Edition which has
everything for everybody in every market it’s going to be really hard for people to deal with you and you’ll be again
amazed how many times the biggest problem when we see startups is they try to put every feature for every person in
the first product and you’ll know that the result of that is it using classes under design way since I will be able to
read very recent book on Minimum Viable Product Minimum Viable Product is one example what I’m talking about I’m
really talking about the business model associated with it that’s the technology piece this is how do you create the
business flexibility around it by packaging it in a way that you can go to mock in a different okay
I’d like to introduce a keeper now they’ve fallen to give his example of how he’s created somewhat of a good
example not just in open source but also we’re packaging different options and giving himself this this capability of
David practical joint so just an opportunity to maybe walk you through how we’ve actually taken several
of these capabilities and combined them in this in this I’ve got a market strategy just to reminder some of you
might open the prime minis but at the very core of what Keaton does well I’ll keep our secret sauce isn’t it was this
man in the middle here who invented it is something we call table grouping simply put we understand how an
application uses data and then we group that data together and the net result is that transactions and queries run 10 to
100 times faster it’s a huge breakthrough in terms of capability so what we’ve done is that we’ve taken that
core capability and we’ve released that as an open source product the idea is to drive as much viral business as possible
its developers who drive these technology decisions it’s the developers that is the ten thousand 100,000 strong
sales force that we can use to compete with the likes of Oracle’s what we’ve also done is allowed those developer
communities to extend our product by integrating it into their own development environments so for Ruby and
hibernate we integrate into their environment so it becomes a value add to their stack and again they drive it
through their own distribution and they own that value and they drive that value but what we did is we created a
pluggable architecture and as a pluggable architecture it means that we can add critical additional components
that will add unique value to the product so the first is something we call my sequel replication it just means
that you can take this and now plug it into a pre-existing my sequel application if you build something on
the lamp stack it’s not scaling well it’s running slowly you can take this akedan stack plug it in redirect the
queries and we’ll run those queries really quickly for you and that’s just one example but the key point here is to
have a whole series of these capabilities that you can add and extend the product with which is what we’ve
done and you can also use that in terms of a multi-tiered pricing strategy and then finally as you build community out
there in the market we’ve added a series of electronic services that you can add things that you can deliver as a SAS
capability back out to that market it makes it easy for them to a dog but it also kind of locks them in to your
service and your brand and even within those editions there are certain community aspects like
the grouping algorithms you get lots of people to combine together to contribute to different grouping strategies that
then can be shared across the community so those are just so many examples of how we extend it okay thank you David
now to leave that up for one second I think is use pretty much every example that I’ve already said tonight there’s
effectively a calling very clearly defined and actually made a difference also people get extended and these also
say look we can have several additions in that Russian bowl model so we can sell this through many different
channels and sell different capabilities and he’s also said we’re going to have upsell and cross-sell capabilities from
that and in effect he’s got cost being taken out through open source and co-creation
he’s got multiplies being created on his thing through the community and he’s got obviously multiple options through the
Rushville packaging so it’s a great example and I can tell you that what we fencing well you tell me I shouldn’t
leave the witness have how much time have you spent on the business model than the CEO relative to other things in
your business like building product well one thing I would say is like you know from the very inception of the product
we had these ideas in mind so one of the things that was very important I would say to people is that you really want to
think about how you’re going to package this value up and deliver it to the market it isn’t necessarily that it was
hugely time-consuming for us to do that but it was really important that you think about it right up front you don’t
wait to the end of the development cycle to apply it it’s a terrific point what David’s
saying just underline it is if you develop the product in a monolithic fashion then always going to be very
hard if you lean to decide you want to slice it up sell it in different ways so thinking about the business model as
early as you’re starting your product development is actually not your own it’s exactly right so thank you Dave
great Monday okay I’ve made the launch today know Steve Jobs so I’m going to have to do is the poor substitute one
more thing and actually I think it’s a really fundamental thing there is actually a tendency for people to think
about these things ie business models as snapshots but in fact what you
do is think about on an ongoing basis how is it referring to services sold and so I’m going to take you through a
series of things that will give you a sense of the product life cycle and it starts with something that I’ve always
really enjoyed watching companies who get it right do and that is creating what I call slippery products but I told
my daughter she said that was that was got to do with price kind of miss the point because if I can get it at golf
tonight okay the first thing is creating a product that is simple to use obviously the simpler it is the more
likely it is for people to instantly get the second is low to no initial cost that takes more friction out of it the
third is installs easily you’d be shocked how many times even if something’s free as an app on your
iPhone think about it it takes a while for you to install it and it actually isn’t immediately functional it doesn’t
have some component or fill in too much data or whatever it is to get it going you’re not going to use it and then how
does it prove its value really quickly if it instantly delivers something back to you before you have to put a lot of
stuff into it you’re going to start using it next on the list is obviously does it play well with others in the
enterprise this is incredibly important because it disrupts everything even if it’s free and it’s incredibly easy to
use and you’re getting value from it a chapter a place everything before you can use that it’s going to be really
tough next is obviously ease of use but I say this and yet it’s amazing how many people spend zero time upfront thinking
about user experience the user experience is everything it’s usually what the president describes obviously
defined excuse me how often you get used gets circulated and so forth and so pay attention that up front from a business
standpoint we’ve been talking about this the customer is going to look at payback and ROI and so make it obvious make it
obvious right up front why this pays for itself why justifies itself in the end my
favorite one is the why why not why customers can’t live without this should be
they should be thinking not why might they try it but why can they literally not live without it that’s back to that
game pain equation for those of you here if you give them so much gain and there’s no pain is it’s so slippery
friction free to adopt this product diet so I would actually say well the most important elements of the business model
is in fact creating slippery products it’s creating friction free products and often times people say well are these go
back to you in business model I’d say it’s got a ton to do with it we just talked about one example which David
gave which is about how you chuck it up but actually if you right from the get-go figure out what your business
model is and you decide to create a slippery product you can take a ton of the friction in other words the cost of
marketing distribution sales service and support so it’s worth taking that thought really early on into your
thinking as you define your business plan and to help bring this to life I’m going to introduce Mark Taper our CEO
from active endpoint and his mom comes up I’m going to tell you a little bit of story to set him up because I actually
inherited this investment and that’s never an easy thing but you’re a partner at a venture firm now I didn’t inherit
mark I was lucky enough to get her a present but it was a middleware product it was a tiny piece before that she
definitely would be blended yeah doesn’t need to know what that is all just tended to feature and so building a
whole product and Mark came on and the first thing he said to me when we were going through recruiting is I don’t want
to talked about the product I’m talking about the business ball I’ve got a vision for how I could take this thing
to market in them and you can use the little slippery although I think I’ve coached him into using it now way and
it’s not up and he’s figured out how to sell complex very difficult stuff to sell anyway
well in an exciting way typically sigh you know something out of the order of tens of hundreds of thousand dollar
value over time this is a company that’s doing millions of dollars of Revenue and there’s literally being growing at
phenomenal rates every year without having a single outside salesperson sort of tamaak how did you do yeah so in
actuality we we did structure the whole company out of this concept of making it simple and how we bring it to market
process automation which is what we do it’s been around for a long time business process management the
corporate IT people have been you know able to accomplish things for their users for a long time but it’s it’s way
too hard and so the concept of active endpoints has been how can we enable the business user to make their life simpler
by doing these things themselves and so the example that I that I’ve shown here is hopefully make the life of a
salesperson easier they interact with an application most of them use something called Salesforce comm which is really
just a database to collect information but sales people don’t want to write reports they don’t want to gather the
information because of that they frequently miss common things that they that they know they should do but they
just forget and and they don’t do it consistently over time so what we did was we invented some technology to allow
a business user to do their own automation so in fact you could use a mobile phone and the text-to-speech
capability speech-to-text capability that is for example in an iPhone using Siri you can talk into the phone and say
show me my meetings today a guide will come up and you can just speak into it what happened at the meeting you can hit
a button if you want to thank you email to go out or whatever whatever it is you normally do after a meeting you want to
set up a follow-up or something like that it will automatically happen in the background and so this this is it’s
great in the fact that we’ve done the real innovation is the fact that we allow the business user to do it
themselves and so we took that concept and really our entire go to market really everything about the technology
and what we do encompasses this company you know this concept of slippery though I didn’t know the acronym until
yesterday Michael but you know it was but it but it’s exactly what it’s exactly what we do we try to make this
this product is easy to use as possible we try to make it as frictionless as possible so in fact you could just go to
our website you can just enable yourself you can try it you can use it you can interact it you interact with it you can
get a free version of it to use I have Eric Erickson our head of sales maybe you want to share like a you know how
some of our customers are doing that sure sure mark I’ll just I’ve mentioned one customer on Plymouth Rock energy
down in New York City area traditionally it in an old-line supply or a coal and oil to large facilities that business
isn’t such a great business anymore so they transform themselves into a broker of energy including electricity and
natural gas and they use salesforce.com for all of their new customer sign ups so they had to customize salesforce.com
tremendously when you sign up a new customer as an energy broker you have to specify the supplier who the
distribution channel is going to be whether they’re going to pay a premium for
energy sources and it turned out for the salesforce.com users the sales rep signed up a new customer is a very
complex process they had to go through the Salesforce screen so we met a gentleman down at a Salesforce calm
event in New York City on Wednesday the following Monday we gave him a demo via GoToMeeting via a web meeting he was
able to get on our cloud hosted product started building his little process wizard the next day that his sales reps
could use to go through this complex process of onboarding a new customer by the end of the week he had it working
and the following money plus the order little so going back to some of the points you can probably map what
happened there into these points but installs easily he’s able to sign up on the web
your crew value in just a couple of days by creating a wizard that walked their users through these complex processes
and what else do I want to pay plays well with others having the a salesforce.com integrations
been tremendously valuable to us Mike I would call those believer because it reduces our marketing cost tremendously
we know who our market is and we’re able to get to them through Salesforce and its multiplied because we’re able to
increase revenue by seven users last one was we sell it per user per month the guy was concerned he’s only have 15
users to start out we said that’s fine you can buy a 15 user license when we had 10 more next year we just fight some
more lessons Duncan guys going on and I think you know you could pick lots of companies
that the reason I chose active end points is it could be a horribly complex saleable maybe they’ll sell it away all
their competitors by the way people like IBM are going it with three legged sales sorry three person sales calls six
legged salesman’s ugly and they’re spending a lot of money and they’re having as a result to charge
orders of magnitude in some cases more for their products and services and this company is taking market share away on a
consistent doubling your own urine in some cases in in the product sells through the
slippery co-op concept and thanks to the team for being so innovative approach in that way but we’re at the technology at
the core of it it’s interesting but very highly competitive market so let’s put it all together I want to give you a
very clear metric which you’ve probably seen if you haven’t you certainly should know about and that is this notion of
coming up with an understanding of if your business model is working or not and for startups the metric that people
now are getting used to is lifetime value that is how can you how much can you get from a customer of the lifetime
of working with them divided by the cost of acquiring that customer and in general if your lifetime value from a
customer isn’t around three or greater the time times the cost of acquiring that customer you probably don’t have a
palpable desktop and unfortunately in startups most times people don’t really spend time to think about this upfront
either but all the multipliers and others that I talk to you about should be factored into what is it that you’re
doing to obviously increase on the one hand the lifetime value how can you get more out of customers over time with for
example that Russian doll packaging we’re talking about more and more questions or additions or in reducing
the cost of acquiring customer in the ways we just talked about the things like strategic partnerships and there
are many examples that I didn’t go through like channels and so forth that can give you reach and take cost up to
in the end though when you boil it all down you should find that this ratio plays out as I said to roughly three or
more x value the value you’re capturing than the cost you’re implying that happens example now that models being a
I’d say pretty successfully adopted by many my customers but I noticed something over the last few years as
it’s become accepted that’s been missing and so I want to introduce this because what we found is almost every startup
just as you heard Eric described gets in at one and that has a relationship to maintain
the customer to get the full value and I find most people ignore that latter set of engagement of the customer so I’m
going to give you a sense of what you really need to think through this refinement to me keep it interesting is
a matter of life and death I’m going to talk about a customer lifecycle a very simple methodology start with C try buy
fly diet think about it for a second that’s basically what happens when you look for products you see it you try it
you buy it you run it flying and ultimately it does somehow death and that cycle is typically described by
people in this kind of a bell curve and the problem with it at least in the software business and many b2b
businesses is if it really looks like this you have a long costly customer acquisition cost a slow payback period
and very short lifetime value and if that’s really what your business model looks like in my opinion you’re in
trouble and I’m fortunate it’s what a lot of startups I see exactly has a business model and so I’m going to try
to help you think about ways that you can get beyond that we’ll talk about this more in the go-to-market session
next week but one of the first things I always see when I do post mortems with companies is that they haven’t broken
these stages down from the sophistic see try buy fly model I talked about into much more granular stages and granule
stages just to give you an example this would be awareness how do you even discover somebody interest how do you
get their interest how do you get them to understand what your capabilities are then engage with you then try it then
purchase it and I can go I can probably pick 30 or 40 more if I really want to we’ll talk about more of this as I said
next week but just but now think about this as follows once I bought the product how do I stay engaged with you
what is it that I do intervene Duchess so I’m going to introduce an obvious constant of an obvious idea here and
that is how do you reengage the customer after they’ve bought how do you actually get them to retry the next capability
that you introduce either the upgrade or the update or the whole new version that you just came out with so in this cycle
of reengagement and repurchasing it there are a lot of steps that are basically the same as you did when you
first use the product or connect to the customer and if you get them right it turns out you really dramatically change
the cycle fact what you really want to do is of course have the cycle of caring over and over again the customer keeps
coming back to you as your preferred supplier or as your trusted source or as a person where they’ll buy the next set
of capabilities and if you can do that successfully what you’ll find you can do is dramatically extend the life cycle of
the customer and if you use things like slippery products just go to that you’ll have a much more simple experience
upfront and take a reproach nap you’ll have a much rapid more rapid adoption with that Russian gold packaging as
things are how you might do that and then very importantly you’ll have a much extended life cycle because you’ll find
ways to re-engage the customer over and over again so it’s a lot to take in and what I felt like I should do is give you
an example of how actually you can avoid the death that happens here in the software world with an example
executive so how you’re going to have a long happy life is really the question in the Zocalo
well when I started out as I said I’m dating myself ah IT was the only person who installed stuff they were the only
people have customized it they were in frequent upgrades most of the stuff actually sat a shelf where as we called
it it was all proprietary and people licenses on perpetual basis the poster child for this probably would have been
Oracle quite frankly but it’s all changed and in fact you use all the techniques we’ve just said what you can
use is the web to make it easy for people to trial stuff you can then make it easily self-service as you just heard
you know Eric give that example their customers enough to come in for training or figure out how to configure or
install the thing they were just using it on their way of life trying it in their own situation it can be on-demand
so there’s absolutely nothing for them to actually buy initially can be available literally over the cloud and
software as a service is very much the poster child for that and now see if you make it open source or extensible
somewhere they can extend it right to those capabilities themselves and ultimately through a subscription model
they can buy as they need it and pay for it as they use it the result of all of that is what is extended lifecycle he
praises incredibly easy basically people try things about them and I’ll say again startups is they
think they’ve got the customer and they think that just continuing to introduce new innovations is the answer maybe you
might have that kind of customer but how many times have you downloaded an iPhone app recently for example and then never
used it again sure has okay Laurie that’s exactly lining by this blue circle I will tell you that’s a big
problem for mobile app developers and it’s just a bigger problem or than every example result great in b2b or other
worlds too so you really got to think about this blue circles I put up there this notion of acquiring I’ll just go
inquire I’m going to reengage your customers so let’s bring that back to the model I said earlier and just add
that extra layer what this is about is not just the levers and multipliers around your core but also thinking about
how you’re not just acquire the customer but re-engage them and continuously stay in touch with them so that you don’t get
that iPhone app dying but in fact you find some way to reconnect them it might be a new map if you send them out of the
GPS or it might be some new set of content movie set about it’s a recommendation service or might be some
new data that you send them out that makes it obvious for them how they can connect if it’s a dating application
those things turn out to be the difference between products that have long life cycles that engage the
customers they get more lifetime value either than anything else and so I reinvented that acronym and pull it
across multiple customer acquisition and we engage the author and instead of it being lifetime value its lifecycle value
that’s the L a C in there and it really is important to think about LCV the lifecycle value of your customer what
can you get out of them over and over again not just once and also was it cost you to re-engage so
when I describe this to startups I find that most people have initially getting all right Dean by
those kinds of things so here’s an example reengagement costs are typically things like support support should
absolutely be factored into it it’s not just sales and marketing keeping up customers often involves customer
service and if you’re in a b2b environment that you’re selling anything like a complex product it often involves
professional services so all those costs should be factored in to the CA RC and cost of acquiring and reengagement
customers any questions before I move on we nearly be able to get you to your workshop okay so now you have a model
which i think is really quite compelling to be able to work with things and for those of you who were here when we
talked through the value proposition on game pane it also is exactly the same concept and
principle as we talked about in game pane they’re just two views of the same
problem those of you worked with therefore this workshop we talked about how could you take the pain out of a
customer getting to grips with your product and give them all visibility of the game well think about it for a
second that is how the customer view what you’re going to view on the other side is the measurement of how much cost
is it taking for you to actually get the customer to describe that’s the C AR C and how much can you get from that
customer as they get those gains over time throughout that lifecycle that’s the LCB so they’re just two sides of the
same principle and they work around this whole notion of the core of your value proposition so good business models
you’re constantly going back I can make this single template a basis for discussion in every startup what we does
to take the pain out how is that reducing our cost to acquiring the customer what are we going to make
obviously cuspidor game [ __ ] right upfront and how can you make that work overtime will be a very large lifetime
value I psychological company so with that I’m going to summarize and get us onto a
workshop I have a question I guess I I was it wasn’t clear to me the concept around in Russian trolls yeah it’s a
message that if you’re recommending to have various versions of a probably the single you hear a small
enterprise I guess the counter for that is what happens if your product is only geared towards enterprise large company
I no you actually got a great example for challenging so in your product new super
heat question does the Russian gold strategy work for example if you’ve got a part is only valuable for such an
entire front the answer is yes I believe it does because very ready will you be able to get an entire encrusted of
product in Monga it’s just an adjustment I mean I made this mistake as Jelena I’ve tried to go sell people like wiser
an entire Salesforce package for analytics and say hey why’d you buy this whole thing is your car sales because
we’re getting value out of it people please see in the data or robots or so Oh kind of work because it’s so
difficult to get up again price to adult any change the huge pain doing that and it’s going to take you months of a sales
cycle and because my lot of my dreams but even though the value might be the whole sales force if you gave them
something right off your back itches look here is some data on the benchmark or chosen one of your sales teams maybe
not yes a small region for example of how they’re well to be a point in terms of that sale effectiveness that’s an
injury valuable craft and a small team kabocha very quickly about team see success rate they’ll recommend where
every single gap of groups divisions of campuses that so the reason why most excited is that
it’s all down to the same paying game equation good take the upfront cost daebak come and you make me suggestible
easy for the custom so if you don’t go to Russian doll you are –court and chunky alpha the point is find
adjustable ways to get that first interest with any introduction to your customer as painlessly as possible and
then obviously if it’s if it’s a great product that you can keep me engaging and that’s why this piece is separate or
you can keep me engaging in adding more value opening up more more of a adult if you will be sizable by then you will get
more more lifetime value of that customer that awesome and it sounds like it’s a way those who graduated absolute
absolutely the biggest how much dollars have it’s amazing how many times struggle this is just that one word is
credibility I think I mentioned it up on my slides oftentimes the strategic culture is at the top of the list
providing a company credibility an example from artful failures to give people another real-world case study was
we had a great entrepreneur in fact him again actually Ashutosh in a storage world came up with a concept the company
called have IQ to make it possible people to store there’s an independently underlying infrastructure so those
storage from the application above we use out like to store em across the track of time so brilliant idea
compromise applications on mission critical storage is sold by big companies that I fight over the world is
on that marketplace and how the heck was a little company that can the middle of those two very you know the genius thing
had found a way to make it possible for that to become effectively very simple for people hang-ups between petroi and
then he went to the deal with Wanda major vendors and then it made it obvious that all the other four needed
to play otherwise that would be compared increasing he owned that marketplace had a great accident ended up being CEO
storage and HP and now we’re back years later start articulating it all over again but he really understands this
very very well maybe I’ll get up to one of the workshops so that answer your question maybe any other questions from
people before we summarize here okay so as you go off your workshop what I want to try to get you being about is what is
your disruptive model going to be how can you make it as significant as your technology can you focus on a core
differentiation not twenty things that you do but hopefully one and what will be the multipliers and leverage that you
will get it with innovations like you talked about seem like co-creation or strategic
partners Russian doll packaging or slippery products and then how would you measure that not just once but over the
extended customer lifecycle with LCD and CA RC so I hope everybody had some fun this evening I must say I continue to be
blown away by what a great group this is because if you look at some of the things we were trying to do and we were
trying to figure out you know could you come up with a core value problem number of you took some pretty bold moves and
not declare it as the obvious thing that technology but focused on things like data or data analytics or content in one
case you were quick to figure out what your multipliers and your levers were some of you found some really great ways
to make partnerships that win-win that would work on both sides of that so multipliers and levers and that
a lot of you were talking very clearly about just as you heard how important the slippery product concept is to make
it easy for people to get instant value out of this and and instantly they’re obviously start spinning the wheel a few
people definitely picked up all this lifecycle concept in this notion of keeping people engaged and I heard some
good examples of that and overall although we didn’t try to get you down to you know actually calculating your
lifecycle value and your customer acquisition and reengagement cost I felt that order you’ve crossed us so well
that you can have no problem doing those kinds of things so I want to take my hats off to
Source : Youtube