Open Source Startup

Unit 7: Designing Your Business Model

Key Takeaways

• Understand how to structure a clear business model hypothesis
• Understand how to calculate key startup values (TAM, TAM+, LTV, CAC)
• Understand how to quantify value proposition
• Understand how to set a pricing framework
• Understand how to guide a customer to a sale via their decision-making unit
• Understand how to identify what differentiates you from competitors
• Understand how to set an effective scope for the business

Readings

• Startup Owner’s Manual
• Chapter 3: State Your Business Model Hypothesis
• Chapter 4: Test if People Care
• Disciplined Entrepreneurship
• Step 4: Calculate the Total Addressable Market (TAM) Size for the Beachhead Market
• Step 8: Quantify the Value Proposition
• Step 12: Determine the Customer’s Decision-Making Unit (DMU)
• Step 13: Map the Process to Acquire a Paying Customer
• Step 14: Calculate the Total Addressable Market Size for Follow-on Markets
• Step 15: Design a Business Model
• Step 16: Set Your Pricing Framework
• Step 17: Calculate the Lifetime Value (LTV) of an Acquired Customer
• Step 18: Map the Sales Process to Acquire a Customer
• Step 19: Calculate the Cost of Customer Acquisition (COCA)
• The Innovator’s Solution
• How can we beat our most powerful competitors?
• Getting the scope of the business right
• Product Manager’s Handbook
• Chapter 9: Pricing Products and Services

Deliverables

• State your startup’s business model hypothesis
• Test your startup’s hypothesis statement against 10 customers
• Calculate your startup’s TAM for the beachhead and follow-on markets
• Quantify your startup’s value proposition
• Identify the process to sell a customer on your startup’s solution
• Draft your startup’s business model and pricing framework
• Calculate your startup’s LTV and CAC
• Identify your startup’s key differentiators
• Set the scope of your startup’s business