Okay we've talked about customers, we've talked about customer segments, we've talked about offering a value proposition to a customer segment, and we've talked about product market fit which is the state that occurs when you are satisfying your value preposition for some customer segment. And we've talked just a little bit about how you're going to find that out. You're going to get out of the building. Where are you going to write down all the information? We've said earlier that business plans are no good. Nobody uses business plans unless they're a mature business. So what are you going to do as an immature business, as a startup, as a temporary organization in search of a business model? In order to list your results, figure out what your scheme's going to be, we use a thing called the business model canvas, and I want to introduce that to you in this lecture. The business model canvas has nine parts corresponding to nine sort of main features of a business model. These are the nine sort of key things that you've gotta get right, or at least you have to have a picture of before you start your business, or you're never going to be able to make a go of it. They're numbered her in the order that we're going to talk about them in the course, and also in the order in which they are important to the business. If you look at the right hand side of the business model canvas, you have value proposition, customer relationships, channels, customer segments, and revenue streams. These are the parts of your business that face outward toward customers, and these are the elements that you're going to have to get right in order to reach customers, sell them stuff, have them want it, and have them like it. On the left hand side are key activities, key resources, cost structure, and key partners. Those are the sort of inner aspect of the business. Those are the things that you have to get right in order to stay in business and produce your product or service profitably for your customers. We're going to focus on the right hand side first because, as we said earlier, customer development comes before product development. But, we're not going to collect the left hand side. If you have a business that fails on some of the business model activities on the left hand side, you're not going to have a successful business. So let's go over these briefly one by one. Customer segments on the extreme right hand side is what we've been talking about the last couple of lectures. Who are your most important customers? We're going to be talking about a thing called a customer archetype, which is a picture of who your customer is. A soccer mom, a Joe the plumber. It's a vivid picture of somebody who's a specimen of the customer you're trying to reach. And the customer segment, you have to answer what job or jobs that you want to get done for them? We're going to be talking about jobs and needs, and many other things about customers in subsequent lectures. That's the customer segment. When you start out, you probably think there are a lot of customer segments who could benefit and as you go through the customer development process you whittle them down until you have one or two that are going to be your key ones to start out your business. Number two is value proposition. This is what your product, your service is going to do for your costumers. What costumer problems are you going to solve? What costumer needs are you satisfying, and also what features does your product have that delivers those needs and benefits to customers? And we're going to be talking about value propositions a lot as well. Channels, you don't reach customers, they don't generally beat a path to your doorstep. You have to reach them via some means. The means by which you reach customers are called channels. How do you sell to customers, how you distribute your product or service to them? How do you support them if they have a problem with your product or service? How do you accept returns? These are all questions about your channels. And what kind of channels you use and how you work with those channels intimately affects your business model. We're going to be talking about channels as well. Closer related to channels is customer relationships. What kind of relationship are you going to have with your customers? How are you going to get your customers to notice your product in the first place? In other words, how do you get customers? Once you get a customer, how do you keep them? How do you keep them satisfied? How do you sell them the product? How do you sell them more products? How do you keep them from abandoning you for another vendor? These are problems of customer relationships. And finally, how do you grow the customer? How do you get customers to find more customers for you? How do you get your customers to become repeat customers and bigger customers than they were before? These are the problems of customer relationships. Revenue stream, very important to a business. How are you going to make money? Who's going to pay? How are they going to pay? This is not how much are they going to pay, although it's related to how much are they going to pay. It's the model for who's going to pay and in what form they are going to pay. And then, pricing how much you charge them is sort of a tactic that goes off of that. But how much they're going to pay, who's going to pay, and how they're going to pay is the problem of revenue models. So, the main points about the right hand side of the Business Model Canvas are, it shows the most important features of the startup business model. The right hand side's all about customers. It's who they are. It's how you reach them. It's how they buy from you. It's what you offer them in the way of a value proposition, and it's how you get money from them. These are the critical first questions to answer, and we're going to do these first. The Business Model Canvas is a living document. So, everything that you put down here is going to be subject to change. You're going to keep changing it as you go along and you're going to keep learning. So, it is not set in stone but this is where we're going. Thank you.
