2016 Innovation Roundtable Keynote by Michael Skok

Proprietary and Confidential@mjskok startupsecrets.com @underscorevcCopenhagen Innovation Roundtable

START UP

SECRETS

An insider’s guide to unfair competitive advantage

Hi

Copenhagen Innovation Roundtable Keynote

Tweet questions to: @mjskok #startupsecrets

startupsecrets.com

November 2016

Michael J Skok


Innovation

Hi

Proprietary and Confidential@mjskok startupsecrets.com @underscorevcCopenhagen Innovation Roundtable @mjskok startupsecrets.com @underscorevcCopenhagen Innovation Roundtable

Startup Secrets - Tasters

Our agenda today includes some small samples from the Startup Secrets

series:

Value proposition - Fundamentals

Products to companies – Friction free, “slippery” products

Business model - Basics

For the full details of these and other workshops see:

startupsecrets.com / twitter: @mjskok

@mjskok startupsecrets.com @underscorevcCopenhagen Innovation Roundtable

http://www.startupsecrets.com/building-compelling-value-proposition

http://www.startupsecrets.com/turning-products-into-companies

http://www.startupsecrets.com/building-a-highly-valued-business-model

http://www.startupsecrets.com/

http://www.twitter.com/mjskok


If you want to build a billion dollar

business…

Start with a MULTI billion dollar problem

@mjskok @underscorevc startupsecrets.com Copenhagen Innovation Roundtable


E.G. eCommerce…

Market:

eCommerce:

• $4.7 trillion

• ~7% penetrated

• Growing in mid teens

Problem:

“Under siege”, Disruptions

• Offline -> Online

• Physical -> Digital

• Mobile -> Omni Channel

@mjskok @underscorevc startupsecrets.com Copenhagen Innovation Roundtable


STARTUP EXAMPLE:

DEMANDWARE

7Copyright 2012 Demandware, Inc. – CONFIDENTIAL |

Demandware is at the Confluence ofThree Significant Markets

$317 Billion

$12 Trillion

Global Retail

$10 Billion

Global eCommerce

16%

CAGR(‘10 – ’15)

Global SaaS

18%

CAGR(‘10 – ’15)

Data Reflects 2010

Source: Gartner (Global SaaS Market) and Euromonitor

(Global Retail and Global eCommerce)


Demandware Delivers the Best of Both Worlds

A Unique and Better Approach to eCommerce

The Best of

Both Worlds

Build and Run Internally

The Pros: Control

Customization

The Cons: Costly

IT-Constrained

Performance/Security

Responsibility

Slow Pace of Innovation

✗

Outsource / ASP

The Pros: Less Hassle

No Infrastructure

The Cons: Inflexible

No Merchant Control of Merchandising

Limited Customization

✗


Leading Brands Choose Our Model

‘08

16 17 19 23 28 32 38 40 46 53 6069 75 78

91101

110124

137

39 39 43 5060

70

95104

123

143

175

215

237

253

321

361

402

445

517

Customers

Websites

‘12‘09 ‘10 ‘11

http://www.google.com/imgres?imgurl=http://i.bnet.com/blogs/crocs_logo.jpg&imgrefurl=http://www.bnet.com/blog/secdocuments/crocs-footwear-loses-novelty/152&usg=__oJfzhKbM4XwgKQv6ooT5lFIZZ_c=&h=377&w=328&sz=24&hl=en&start=2&zoom=1&tbnid=04ndiMJtLrzj0M:&tbnh=122&tbnw=106&ei=yGCiTbf_ErCN0QHxmOyMBQ&prev=/images?q=crocs+logo&hl=en&biw=1276&bih=813&gbv=2&tbm=isch&itbs=1

http://www.google.com/imgres?imgurl=http://i.bnet.com/blogs/crocs_logo.jpg&imgrefurl=http://www.bnet.com/blog/secdocuments/crocs-footwear-loses-novelty/152&usg=__oJfzhKbM4XwgKQv6ooT5lFIZZ_c=&h=377&w=328&sz=24&hl=en&start=2&zoom=1&tbnid=04ndiMJtLrzj0M:&tbnh=122&tbnw=106&ei=yGCiTbf_ErCN0QHxmOyMBQ&prev=/images?q=crocs+logo&hl=en&biw=1276&bih=813&gbv=2&tbm=isch&itbs=1


LARGE COMPANY EXAMPLE:

AMAZON


Amazon’s problem?

Internal software projects were taking too long

• Causing competitive issues

• Internal scaling challenges

• Reinventing the wheel

If they could solve it for themselves, could it solve it for others?

Andy Jassy / AWS team were a level 8 problem solver.

• What level will you be?

http://www.startupsecrets.com/amazon

http://www.startupsecrets.com/amazon


www.startupsecrets.com

VALUE PROPOSITION(excerpt)



Evaluate Build

Gain PainValue Prop

Define

Ideas

Problem

Solution

Agenda - Define

13@mjskok startupsecrets.com @underscorevc


Unworkable

Unavoidable

Urgent

Underserved

Problems worth solving

are usually 4U …

Problem



Broken business process

Consequences ?

If the consequences are costly or painful,

so much the better.

E.g. who gets fired if this doesn’t work?

Unworkable



Accounting

Regulation

Is the problem so fundamental you can’t

avoid it and just have to comply?

Unavoidable



Relative to other needs …

Priority

• Determines resources allocated

If you’re not at the top of the list, are you at least in the top 3?

If not will you get moved up or down over time and why?

Urgent



You will compete in a zero-sum game

Finite:

• $

• Time

• People

• Attention

Underserved – Business…



Examples…

• Social

– Find

– Connect

– Communicate

– Meet

– Share

– Entertain

– Date

Needs…

• Social

• Security

• Physical

• Economic

• Recognition

• Responsibility

• Achievement

• Growth

Underserved – Unmet Needs,

Consumers…



Evaluate Build

Gain PainValue Prop

Define

Ideas

Problem

Solution

Agenda - Evaluate



Is it “blac” & white?

Blatant

Latent

Aspirational

Critical

Blatant

Latent

Aspirational Critical

Blatant

Critical

Qualify the problem



The gain delivered to the customer

vs.

The pain and cost for the customer to adopt

“Gain/Pain ratio"

Gain Pain



• Revenue

• Cost savings

• Time

• People

• Competitive advantage

• Reputation

• Etc..

Gain

Gain Pain



• Find (See)

• Try

• Buy

• Implement

• Deploy

• Own – eg TCO

Pain

Gain Pain



• Switching costs?

• Default = do nothing

• Alternatives?

• Good enough =

good enough!

• RISK on a startup

Inertia,

RISK

Inertia

Gain Pain



What’s the right ratio?

Inertia,

RISKGain Pain



Customer view = Gain/Pain• Revenue

• Cost savings

• Time

• People


• Reputation

• Etc.

• Inertia



• Alternatives?

• Good enough =

good enough!


• Find (See)

• Try

• Buy

• Implement

• Deploy

• Own – e.g.TCO

Inertia,

RISKGain

Pain

27@mjskok startupsecrets.com @underscorevcCopenhagen Innovation Roundtable


“An order of

magnitude”

Customer view = Gain/Pain

Inertia,

RISK

Gain

Pain

>10


• Revenue

• Cost savings

• Time

• People


• Reputation

• Etc.

• Inertia



• Alternatives?

• Good enough =

good enough!


• Find (See)

• Try

• Buy

• Implement

• Deploy

• Own – e.g.TCO



PRODUCTS TO COMPANIES(excerpt)



How do you take away the pain,

and reduce friction?

… make it SLIPPERY

(Reduce the Pain in

the Gain/Pain Ratio)



• Simple

• Low to no initial cost

• Installs easily

• Proves value quickly

• Plays well with others

• Easy to use

• ROI is obvious

• Your customers can’t live without it – it’s stickY

Friction Free, SLIPPERY products



Simple



Microsoft Sony

Which is better?



Microsoft, Sony Apple

Neither! = Less is More!



Simple ≠ Easy !

Simple often means complex technology

that makes your product “magic”

Simplification Innovation

(search algorithms in the cloud)

Simple ≠ Easy to do



features are the enemy of function

functionality can overwhelm users

applicability is all that ultimately matters


Less is More…



BUSINESS MODEL(excerpt)



New Market

& GTM

Disruptive

Business Model

Disruptive

Technology

@mjskok @underscorevc startupsecrets.com

Perfect Startup Storm

38


How can your Business Model…

Change the game?

Rewrite the rules?

Cause an innovator’s dilemma

Be as disruptive

as your technology?

New Game

New playing field

New boundaries

New rules

YOU choose players

@mjskok @underscorevc startupsecrets.com 39


Shared ownership (Zipcar)

Flash sales (Vente Privee)

Crowd sourcing (uTest - Applause)

Lead Gen (Mint.com)

Virtual goods/currencies (Tapjoy)

Combinations

• Acquia - OSS, SaaS

• AirBnB - Commission on P2P rentals

• Demandware - SaaS, success based rev share

• Groupon - broker, revshare

• Spotify -adbased, freemium

Sample Models



Process or Product?

Software or Services?

Open or Proprietary?

Content or Data?

Freemium or Premium?

Subscription or License?

Business Model – Sample Questions



Your

Capabilities

Of

Really

Exceptional

Value

Focus on it!CORE

First key question

What is your CORE value?



Where is your CORE value?

Software/other technology

Data

Content

Service, support

User network

Disruptively monetize it!

• To your competitive advantage

• Where are others most vulnerable?

COR

E

Cut to the CORE!



Google Apps vs. Microsoft office

• What is the C.O.R.E for each ?

Software, Data, Advertising ?

Don’t compete head-on

• MS Office = enterprise market

• Google Apps = consumer market

• Free vs $500 license

• Simple vs Complicated

• 80% solution vs Professional Tool

- Ex 1 Apps



How can you compete with a market leader who has 80% to 90%

market share?

1. Don’t compete head-on

2. Innovators Dilemma – go for low end

3. Disruptive technology, business model, or market approach

4. Examples: Gmail, Google Apps, Chrome

– Competing with Market Leaders



BUSINESS MODEL

& PRODUCT(example)




Frictionless, SLIPPERY

= fastest growing software companies

See: “Addiction before Adoption & Absorption”

@mjskok startupsecrets.com @underscorevc

http://www.startupsecrets.com/the-power-of-one-or-many


ADDICTION

(Free, Open Source)

Delight,

ADOPTION

Upsell

ABSORBTION

$0

$50

$100

$150

$200

$250

$300

$350

$400

LCV

Frictionless, SLIPPERY

= fastest growing software companies

“Addiction before Adoption & Absorption”

@mjskok startupsecrets.com @underscorevc


OK, BUT NOW WHAT ABOUT

ME ?!

(LEADING GLOBAL INNOVATORS)


You: Large Global 1000 Innovator…

50

• Resources• Brand• Credibility• Distribution• Etc…

• Speed, agility


David: Startup…

51

• Speed, agility

• Resources• Brand• Credibility• Distribution• Etc…


Innovate!

Get out!

• Not just technology

• Business Model, GTM etc

There is no failure, only learning

• #nofailure

• #onlylearning

What can I learn from you?

52

Evaluate Build

Gain Pain Value

Define

Ideas

Problem

Solution


Thank you for listening.

But what can we learn from you?

I’ve shared a small sample of some of the Startup Secrets …

Value proposition - Fundamentals

Products to companies – Friction free, “slippery” products

Business model - Basics

startupsecrets.com

twitter: @mjskok / @underscorevc





http://www.startupsecrets.com/

http://www.twitter.com/mjskok

http://www.twitter.com/underscorevc


START UP

SECRETS

An insider’s guide to unfair competitive advantage

Hi

Copenhagen Innovation Roundtable

Tweet questions to: @mjskok #startupsecrets

startupsecrets.com

November 2016

Michael J Skok

2016 Innovation Roundtable Keynote by Michael Skok

Presentations & Public Speaking

Transcript of 2016 Innovation Roundtable Keynote by Michael Skok