Welcome back to the second course in this MOOC specialization on social entrepreneurship. Last week's peer evaluation exam has asked you to summarize the value proposition of your startup. If you have continued working on the same project as in the first course, this should have been rather easy for you. However, if you have changed teams and joined a new group with a new problem and solution, you will have had a bit more work for yourself. A few participants may even still be in the process of identifying a team. If this is your case then you might have missed the first evaluation exam deadline. Now, there are still several submission deadlines coming, and you can pass the course if you submit to those future exams, so don't worry. But now let's turn towards last week's optional case assignment, in which we ask you to think through how Renee Madsen could apply the business model canvas to her startup, Hueforbi. The first thing this week we're going to do is have Karim and Renee walk us through the process of how to apply the business model canvas to the social enterprise idea of Renee. I hope that this will be helpful for you to understand how the business model canvas can be used in practice. And also what the challenges are at filling in some of those categories. Moreover, we have again some interesting guest speakers this week. To start, there will be Ted Ladd, who is a professor at the Hult Business School in San Francisco. We will talk about his take on the business model canvas. He actually suggests an extension, something that he calls the social business canvas. Now, importantly, Ted Ladd talks about the necessity of you road testing your idea. To go out there, and talk to beneficiaries, talk to investors, talk to stakeholders. So don't just develop this in your own little group. But go out and test your idea. Think back to the story of Johanna Mair. She talked about this in the first course. You probably have to change your business model quite a bit over the next weeks. The only way to do that successfully is by interacting with people, who know your field, who know the problems of your beneficiaries. At the end of the session today, I will introduce you to some students from the Copenhagen Business School. Actually, these three young women have started a social enterprise in Kenya that wants to help women with women's health issues. And we have a case here which is rather long. I apologize for that, but I think it's very useful because it contains the description of the social enterprise and then the real business plan that the three women have used to raise money. Please do read the business plan. it's not a perfect business plan, It's not a best practice example but it's a real example and it will help you to see how people use business plans. And we are then going to discuss next weeks, what are the advantages, and perhaps, also what are the disadvantages of this particular plan of RubyCup. Now, before we go there, let's have a look at the discussion Karim and Renee have had about the business model canvas, and Renee's startup idea. >> Okay Renee, good to see you again. It was nice talking to you last time, and I gave you this little assignment, which is to develop a business model canvas for your organization. And this is what you've come up with. >> Yes. >> So should we go through it, just quickly? >> Yes. >> And then we can look at future scenarios. So the value proposition, what would that be? >> Beanies. >> So you're selling beanies to these customer segments, here. >> Yes. >> Homeless and- >> Individuals. >> Individual buyers. >> Mm-hm. >> And homeless, they get them for free. And individual buyers pay 150 Danish kroners. >> Yeah. >> So this is actually the revenue that's being generated. So asset sales, per unit sold, you get 150, and that money goes straight to Hus Forbi, the organization that works with the homeless. >> Yeah. >> Great. The sales channel to reaching these different customer segments. What is that? >> It's all direct sales. So, I have a beanie, I show it to you, you like it, you buy it. >> Simple. And for the homeless? >> They get a selection- >> Yeah? >> That's a bit more better. So, I just give them what I have and they pick the one they like. >> Okay, so everything based on very direct sales, and very personal concept to both customer segments. >> Yes. >> In terms of the customer relationships that you're building over the months and years that you're working, you say here that it's based on personal service, makes sense. Online community, how does that work? >> I have a Facebook page where people can contact me and say, I like that beanie you put out yesterday. Can I buy that from you? And they meet up with me and I give them the beanie, and they show me a receipt of the purchase, the donation to the Hus Forbi organization. >> Excellent, so in terms of the production side, or the supply side of this canvas. You mentioned here that the key resources that you have, tools volunteers, and again, the online community that you mentioned here. Could you expand just briefly on this? >> There's not many tools required. I have a crochet hook, a little needle and [CROSSTALK] scissors. >> And essentially you're the one doing all the work. >> So it's very basic and very simple. >> And the volunteers. >> People will contact me on Facebook, on my page, and volunteer to help make beanies. And they'll make as many as they like. And- >> Yeah. >> any kind and way they like, as long as they fit in the [CROSSTALK] >> I put the fleece in because it's a special technique to do that and then I sew in the logo. >> Perfect and the online community as such is also a resource. In what sense? >> Well that's more the communication part of it, so talking to the people that are interested in helping me. >> Yeah. >> And also showing them what I do. So, the products I make, and, >> And it is an important resource, because it's through that that you're slowly building awareness, and eventually a brand for yourself. Good, the activities that you're actually engaging in, using these resources, would be- >> Well, production, first of all, which is just crocheting, making the beanies. >> Yeah. >> And partner outreach, I just meant, calling people, asking for leftover fleece blankets, they use in cafés for example. >> For example, yeah. >> Or wool, you know if a wool shop doesn't have, doesn't sell a certain color. >> Okay. >> I'll call them and they'll say, yeah we've got this color, come pick it up and I will. So that's that part of it. >> So you could say the outreach relates to a certain extent to the supply, to actually getting the equipment, or the input that you need because you don't have the money to buy it so you actually require donations? >> Yes. >> And some part of the outreach might also relates to the customer segments and how, which way? So, I guess it's important to know who the homeless people are, and where you can find them, and get the homeless to trust you. >> Yes. >> In terms of specific activities, what do you do to build the trust with the homeless people? >> I do pass a big group of homeless people every day coming to and from work. And even on days where I don't have any beanies, I will go and sit with them and talk to them, and, smoke a cigarette, or whatever you do in Denmark, yes? And it's just casual. >> Why is that important for your business that you actually take time to do this? >> It's important for me because it makes me get a bit of idea of what I'm doing and how's it's helping them. >> You might be able to gauge what the homeless people actually need. >> Yes. What they need and also that they don't all need fleece, some of them say it's too hot, you can kind of get an idea of what they need. >> Customize it, maybe. >> Yes. >> Yes, good point, and marketing, what does that encompass? And sales? >> There's not too much now. I have an Instagram account as well, so if I make a new beanie I take a photo, I put it out and people will comment on it, like it, and eventually maybe sell it. >> So I guess it's all part of, again, this online community, that you're slowly building, using the free tools at your disposal. >> Yeah, yep. >> Very good, and the sales part as an activity, how does that take place? I guess this relates to the people who are paying money for it. >> Yes. >> And you mentioned to me earlier that you also go to festivals and fairs and- >> Yeah. >> How does that work? >> Well, in autumn, I've been given a market spot where I can go and display all the beanies and people can buy with an SMS code. That's a good example. >> Okay, so you have these four categories of activities. And of course, you lean to a certain extent on some partnerships, in order to make sure that you have what you need. >> Yeah. >> Because it's a small organization, you don't have pe- money to hire people, so a lot of it is based on volunteers. And it's also based on donors. >> Yeah. >> So you write here maternity groups and retirement homes, how do they fit in? >> Well, there's a lot of idle hands, and a lot of them would like to help and give back to the community. A lot of the older generation will, they don't appreciate too much that people take care of them, they want to still be able to take care of other people and this is a good way to do that. >> Mm-hm, yes. >> And a lot of maternity groups will make a lot of baby clothes, and at one point you have enough. >> Yeah. >> And you still enjoy knitting and crocheting like I do myself. >> Mm-hm. >> And it's a good way to use that resource. >> Good. So all this together essentially creates the product that you're then selling. >> Yes. >> In terms of the costs that you have, you could say you're not carrying any of the costs since everything is donated to you. But you could still have some comments about the cost structure. You mentioned that it's variable cost and you mentioned that it's list prices. >> Yeah. >> Can you elaborate on that? >> Well >> So the fact that it's a list price, I guess it assumes that it's 150 kroners? >> Yeah. >> It's not a negotiated price. >> No. >> You can't say, well give me a discount because I'm your good friend, or you can't negotiate a better price for 500 of them. >> Well if you become homeless, I will give it to you for free. >> Okay. >> So that's the negotiation we have. >> Yeah, yeah, so list prices and variable cost, what does that imply? >> The variable costs is just... >> So the way I understand it, and please correct me if I'm wrong, is that essentially, you have very little fixed costs. You don't have a space, an office space that you rent. >> No. >> You don't have salaries that you pay out every month. So essentially, all the costs, although it's carried by others, is very variable. If you get more input, you can produce more beanies. If you get less inputs, you can produce less beanies. >> Yeah. >> So it's extremely variable and probably also very seasonal, I guess. >> Yeah. >> Good. So this is how it looks today. >> Mm-hm. >> Thinking from your personal experience where you want to go with this, what is your vision? And what are the challenges that you see, broadly speaking? >> Yeah, well, I'd like to quit my part-time job and dive into it full-time because then I can commit myself better. And I would like that. >> Okay, so what would that require? >> Well, it's not something I can do from one day to the other, but I would like to gradually get less and less hours where I am now, get more hours into this, and then eventually have it take over. I don't want to make money on this, I want things to just. >> But at the end of the day, I guess you still have an income requirement. >> Yeah, I want to keep the basics but its not something I want to profit on. >> So if you phase out your part-time job and phase in this, you should at least get the same for your basic needs that you're getting now. >> Around the same amount. If it's a little bit less, I don't mind if it's a little bit less than what I make now. >> Okay, but the point is you still need a revenue, right? >> Yes. >> And right now, the revenue that you get is none. >> Yep. >> And all the money goes straight from the people who buy the beanies to this organization called Hus Forbi. >> Yeah. >> And you don't touch the money in any ways? >> No. >> So, realistically speaking, if you were to make a living out of this, at some point you're going to need to also take money, because that is what you need to cover what you're giving away, in terms of not working. In a way, the relationship here between the buyers and Hus Forbi, and how it's distributed to the homeless people, might need to change because you're going to need to take a cut of it, otherwise you will never be able to engage more in this. >> Yeah. But if we said one day would be maybe for example, 50, 50. >> Mm-hm. >> All I'd do is take 50% to run the operation. >> Yes. >> And to have my part of it as well. And the other 50 I'd like to, in cooperation with Hus Forbi, to figure out what would be the best way to spend that part of the money. >> To spend that money, okay, and I guess. >> To help the homeless. >> To help the homeless, of course, but some of it at some point will have to end in your pocket as well to compensate for the fact that you're losing. >> So that would be when everything else is paid for, whatever production help, whatever you're going to have in the future? >> Exactly. >> Then, I would have a cut in the end, and that would be it. >> Of course. And, using Hus Forbi as a partner organization is, at this stage, and probably for a long while, a very good idea. >> Yeah. >> It probably is going to require a bit more specific, targeted, work. You mentioned doing other things, spending the money in different ways. What are you thinking about, more specifically? Making sure that Hus Forbi spends the money on the homeless in a specific way. >> Well they could be making, there's a lot of shops that have bread that is almost out of date or something, and you can buy it cheap. I would help them buy all that, make the sandwiches, and feed the homeless, or do events where you could do workshops, or so you could sit down with the homeless and help. They can help me decide. >> So essentially, the value proposition could expand beyond the beanies. >> Yes. >> So, it could for example, be workshops as you mentioned. It could be workshops that are done with the homeless so they can participate and co-creating, yeah. >> Or it could be volunteers. >> Could be volunteers, yeah. >> Volunteer workshops where people can come and learn how to make one beanie. They can take that knowledge with them home and buy their own wool and maybe give me the hats, and I give them to the homeless. >> Yes. >> So yeah. >> Events. So that could also be. >> That could be making sandwiches for them, make some coffee. Sit down, have a conversation. >> Yeah. >> Maybe invite some of the volunteers so they can get an insight into what the homeless people are like and what their lives are like. >> So essentially, this is going to require liquidity, it's going to require money. And this money so far goes straight into, Hus Forbi, the organization, so you going to need to work with them to figure out how do we split the pie and how do we target that money to actually develop these things that makes sense for you. >> Yeah. >> So that could be one avenue that this could actually take and develop. Assuming that you now get more volunteers, and people you attract, volunteers. And they learn how to crochet. >> Yeah. >> They really like it. You're going to have more production. >> Mm. >> So maybe it's going to more difficult to sell to the individual buyers, because you can't go yourself to everybody and sell. So you're going to need to change your channels, what thoughts have you got here? Things that could be above direct sales or more than direct sales. >> Well you could also, there is free templates for websites where you could start off with a free template and maybe see how that goes and eventually when the money is coming in you can start paying in for a bit of design, but to start off with a web shop would be a really good idea >> So, a good idea. People could go in, a link to your community, and then people could actually buy directly from you. >> Yes. >> Still with a payment system that gives money to Hus Forbi. >> Yeah. >> That could be a great way of growing the company. >> Yes. >> What about retail stores? We mentioned it briefly last time. Is that something that is worth considering? >> I'm thinking with the retail store, the price would now be 150. You would maybe add a 20%, and maybe the store would get that for having them in the shop. >> Yeah. >> Or something like that could be developed. I'm not sure about the exact idea yet. >> No, no. Which is very interesting. And here you have a number of different opportunities or options that you can- >> Yes. >> Work with in terms of how you price this- >> Another idea would be the one-for-one concept. >> Yes. >> Yeah, so the normal customer will come in, buy one beanie- >> Yeah. >> Actually pay for two and give the second one to the homeless people. >> Yes, so again you're marking the money directly for a beanie- >> Yeah. >> that goes to the homeless. >> Yep. >> That sounds actually really, really interesting. Now do you see any, or maybe we should think also in terms of customer segments. Could you consider other segments? We discussed companies as an option. What, is that something that you're interested in? >> Well in my apartment right now, they're building a roof, and it will take maybe a year, and they work outside all the time. And a lot of people do work outside, and in the harsh Danish winters, you do need something warm. >> Mm-hm. >> So I was considering maybe making company packs, where you sell, if you have got ten employees, you order ten hats. >> Yeah. And you can get your company logo with my logo on it. >> Yes, that could be a good idea. >> And that's an idea I also have to work on. >> And of course if there is a different customer segment, as we learned looking at the business model canvas, the value proposition most likely is going to have to be adapted to the customer segment. >> Yes. >> So that you have this fit that we're talking about. >> Yes. >> So it could be that the homeless view this as, they require quality. They want it to be very warm and durable. You could say that the individual buyers might want it to be hip and signal that they're sustainable. >> Yeah. >> And maybe the companies want something different. Maybe they- >> Maybe they want a certain color. Like a company color. >> Maybe they want a certain color that's, exactly. >> Yep. So, essentially you're going to need to find out what the companies want. >> Yeah. >> So in that sense, this tool here, is actually quite interesting, it's a good, useful tool. Because all these things are either happening, or they are about to happen and haven't happened yet. So what you're saying here in essence, is: homeless people like my beanies. >> Yep. >> Individual buyers like my beanies. And the question you should ask yourself, is this something that I know? Or something that I think I know? And so far, you know that the homeless like it, because you are already doing it. >> Yes, I get a lot of hugs and kisses, so, it must be proof [CROSSTALK] >> Exactly, so that's a good indication, yeah. >> Yes. >> The individual buyers- >> Mm-hm. >> They also like it because you're selling- >> And they recommend- >> And they recommend. >> To friends, yes. >> Exactly, so this is also tested. You might want to sell more- >> Yeah. >> Then you figure out, should it be cheaper, should it be warmer, should it be more funky? Should I just target the marketing more- >> Yeah. >> in order to increase the sale? But essentially, you already have a dialogue. >> Mm. >> It's the same kind of dialogue that you're going to need to engage with with potential companies if you want to go down that avenue. >> Yeah. >> Because, then you're going to need to figure out: is this actually something that they want? >> Yeah. >> And do you need an adaptation? Do you need an adaptation, for example, in the sales channels? Retail stores, most likely companies are not going to go down to a retail store- >> No. >> to buy beanies. They're not going to go see you at a marketplace where you're selling. Maybe a web shop, maybe not. Maybe you're going to need a whole different type- >> Yeah. >> Of sales channel. >> Yes. >> Maybe you're going to need to address them by actually going knocking on doors and having a little suitcase with different beanies and interacting. Maybe introduce- >> Maybe some samples? >> Maybe samples. So basically being inspired by other companies who sell to companies. >> Yeah. >> And figuring out what do they do to sell office supplies? What do they do to sell? And try to put in place a sales channel that is useful for companies because this is what they know. >> Yep. >> So, and also an important thing that I'd like you to take away from this is that this is an ongoing process. >> Yeah. >> So it's a good conceptual tool. You can map up what you're doing. >> Mm-hm. >> And you can play games such as, what if? >> Yeah. >> What if we engage with retail stores? How is that going to change things? What about companies? How is that going to change the sales channels, for example. And as you get a new idea, you can put it on and test it, and once you have engaged, you can say, well, now it's worthy to stay there, and it's become part of the business model. After a while, you might say, well, companies are actually more interesting than the individual buyers. So we will scale this down, and scale this one up. >> Yeah. >> You don't know, but it's something that you have to do continuously. >> Yes. >> Therefore, I usually recommend people to use this not once to do a blueprint, but use this all the time. >> Yeah. >> Use it at least once a week, once a month, so every time you have a new idea your business develops, you change these around because it gives you a good framing for where the company is going. >> Yeah. >> And it gives you specific things that you can test and work with. >> And you could actually have it in your workspace. >> You could. >> Yeah. >> And it probably is going to give you some good ideas just by looking at it. >> Yeah. >> Great, thank you very much. >> Thank you. >> I hope it's useful and I wish you all the best for your venture. >> Thank you. >> We've now gone through the business model canvas. I introduced it to you briefly. We had a nice interview with Renee, and applied her concepts on the actual board. As you understand now, the business model canvas is an excellent tool to conceptualize your business ideas. It is now up to you to map out a business model canvas for your project. Please be aware that the business model canvas is not a static model. It is a dynamic model that needs to be updated at least once a week. As you work in your teams, make sure to allocate enough time to the business model canvas. This is really important because it's the foundation of your potential venture. In order to collaborate on your specific ideas, there's a very good free website that I recommend that you use. It's called canvanizer.com. On canvanizer.com you can develop the exact same business model that we worked with today in a virtual format. You can put on virtual post-its and you can share it collaboratively and actually go back and track changes. It's a very useful tool, and I strongly recommend it. Good luck with your project and I hope you find the business model very useful.
