Designing a Customer-Centric Business Model

Thank you very much for coming everybody. I want to say that the most important thing we're going to do tonight is to try to give you a chance to figure out what your business model is. And D just gave me a perfect intro — he said he's not sure why he's here. Well, most of you probably aren't. 'Why do you need a business model?' That's a really, really good question. Now, by the end of this evening, I hope you will answer that for yourselves. Now, what is a business model? That's what I want to get to this evening. And I'm going to give you the agenda up front so you have a sense of it. We're going to talk about a few key concepts. Number one is how do you focus on the absolute essence of what you do — that's what we call the core. And then how do you multiply that to market in a way that's very efficient, and also get leverage from it in a way that it is ultimately going to become sustainable for you, so that you can operate your business for the long haul. And you'll learn five initials: RSVPD. By the end of this evening, you should be able to say to yourself, 'Okay, if I have an RSVPD model, you're great.' But how are you going to remember those initials? When was the last time you went to an invitation to something and you didn't RSVP? It's never a good thing to do, so you just remember it that way. You're going to be able to figure out a great business model by just RSVPing it.

So we've already asked this question, but I want you to all write down one thing now that I've told you that we are going to define what's important about a business model. One thing that you think it might be — just write it down for yourself. This is for you, not for anybody else. Just write down one thing. So, is anybody from HBS here, by the way? Okay, lots of HBS students. That means I'm doubly challenged tonight, because there are Harvard students from all over the campus, all the different schools here tonight. And some of them haven't had the benefit that you've had of going through business school and learning some of the fundamentals of why business models are important. So I'm immediately going to bridge for you guys with the rest of the Harvard schools.

So when you go to HBS — for those of you who don't — you will learn something from a great professor, Tom Eisenmann, and many others, something called the diamond. And he describes the business model in terms of a customer value proposition, a go-to-market model, a technology and operations model, and a cash flow formula. So as we are in a business school, you're probably going, 'Well, what are those things?' So I'm going to make it super easy for the rest of you. One, two, three, and four, in iLab terms tonight, we're going to talk about how you create, deliver, make money, and do all of this sustainably. And therefore, the MBA students should walk out of here going, 'Okay, I know how to go about building a business model.' You guys should all feel like you've been fully introduced to it and can also do the same. That's my challenge to myself tonight.

Great. So what is this framework that we're talking about? This thing that can help you create and deliver value to your customer and make money and keep that sustainable? It turns out it's a lot of different pieces, so I'm really only going to cover three of them tonight. This 'creating and delivering' will be the bulk of it, but 'making money' we're not going to get to tonight. We'll give you the essence of it, but we will have it in a follow-up class. 'Doing it sustainably' we will talk about tonight, but again, all of these elements are covered in Startup Secrets classes in more depth going forward. So I'm going to give you a sneak preview of those. Those of you who are going to be coming to future classes, we will cover a lot of these in the Startup Secrets workshops going forward. The particular one that I get excited about is next workshop, and the reason is it's the one that covers this customer value prop, or how you create this value, and it's a whole workshop unto itself. And it is the most fundamental piece of a startup, because if you haven't got the right value prop — in other words, if you're not solving a real, meaningful problem or addressing a great opportunity — there's no point doing anything else, because the number one reason startups fail is they're not creating value for anybody who cares about it. It's not a big enough or meaningful enough opportunity, or it's not a significant enough problem that's worth solving. That's the number one reason things fail, so we're actually going to tackle that next workshop. But what I'm going to do is get you settled in with a really fun way to think about it, regardless of any of this.

How many of you think that your technology or your idea or your service is really a breakthrough? It's disruptive?

I'll say. So Maria, thank you first of all for doing something that's as important as health, addressing health. What is it that you think is breakthrough about it?

I would say okay, very good. So you've seen what you might call a white space, where there's something that's not being addressed, and you think you can fill it by serving consumers, is that right? Okay, great. So even if your idea was terrible — which it isn't — if it was terrible, we would hope tonight to be able to get you to a place where the business model you come up with is itself a breakthrough. And here's the thing that most people don't really recognize when they think about business models: it can be at least as impactful, if not more impactful, than your technology or your marketplace. So what I want you to do is to think of tonight: how can you end up with such a disruptive business model that people go, 'Wow, I need to go work with Maria, because the way she's approaching this, enabling me as a consumer to get access to the healthcare I want, is such a breakthrough that even if our service isn't innovation, I would want to deal with her.' Does that make sense, Maria? So that's why business models are really exciting, because they do give you that potential. And by the end of this evening, I hopefully you will start to think that way.

So here's a way to start approaching it that way. Maria, and all the rest of you, imagine that I gave you a completely new game tonight. Let's start with one you all know. Who's played Monopoly? Okay, what if I said Monopoly was about how much money you lose? You'd all go, 'Well, you're crazy, it's all about how much money I win and the properties I get.' That's the idea that we want to come up with. We want to come up with a game that nobody's ever played before, or even if they have, we changed the rules. And so now it's your game, your rules. Guess who's got the best chance of winning? You. You do. If you write the game and the rules, you have the best chance of winning of anybody. And by the way, especially if you change them in the middle, which is what my brother always used to do to me... no, no kidding. I really love him. It's my younger brother, he's a lot younger than me. It's always great. But the point is, this is what business is about too. People do this all the time. They do change the rules. Also sometimes the rules get changed on you, but that's not what you want. You want to create the game. You want to cause an innovator's dilemma, if you can. The late Clayton Christensen's great book is a wonderful way to get a handle on this, because that's all what it's all about. And this business model approach can be as disruptive as technology.

So what's an example of this? I'm sure none of you pay attention to viruses these days. This is a long time ago, so I'm going to have to go backwards. Believe it or not, there wasn't even virus software 20 years ago, because we didn't have viruses. They didn't exist. They first came out, got prominent actually on the Macintosh, and I happen to be working at Symantec, which was the first antivirus solution on the Macintosh. And it was a great business. We used to sell package software — believe it or not — in boxes, through retailers, and people would pay a lot of money for it. That's how old I am. It's embarrassing, but it's true. All right, now the piece that's not embarrassing is that we figured out a really disruptive business model that changed the game completely. And actually, when Norton Antivirus for the PC came out — which we owned Norton too — it wasn't a good product at all. In fact, everybody's product was better than ours, that we could tell. Dr. Solomon, and then McAfee, and all these other people had much better solutions. So this was pretty embarrassing for us. The press would literally come up to our stands at exhibitions and go, 'See if you can detect this virus.' And the answer would be, 'Oh shoot, no, you know.' So what do you do? You've now got this product that's not great — the Mac product by the way was very good — and we can't even detect the viruses because we're not keeping up with them. We rewrote the rules. We said, 'We're not going to sell software.' And remember, this is a long, long time ago, so there weren't such things as SaaS models. It didn't even exist as a term. There weren't things like subscriptions, things that you've all got used to like downloading an app and doing in-app purchases. That's a subscription type model. That didn't exist. But what happened was pretty interesting. We literally ended up completely disrupting that business, and the results were really fascinating. We took out two competitors within a year. They just were gone. And we ended up serving the customer better, because guess what: customers don't want software. What do they want? To stop viruses. It's just a protection for them. All they really cared about was the notion that something somewhere would just make sure they didn't have to worry about viruses. And so by selling them that service, and then creating much, much more importantly behind the scenes the subscription model that said we would pay for the people in Ireland — it was mostly where we developed this — to sit there and get ahead of all the signatures of the viruses before they happen, or create bases to even predict them, and by selling that as a service, everybody won. We served the customers better. We started to be way ahead of the viruses. We ended up creating a basis for them to say, 'Okay, I'm paying for this for a reason, because I saw 10 new viruses came out last week and I didn't get any of them.' This is like going to the doctor and being able to say, 'Look, I don't know what the next COVID is, but give me the shot in advance.' That's what our subscription service did. Do you think people would pay for that? Hell yes. Not only do they pay for it, but it actually changed the game totally. It ended up increasing the price of our products that we were selling by 50% per seat. And then better still, we realized, 'Wow, why are we selling all these other things like backup and Norton Utilities and all these other tools that were really about one thing, which was securing your data?' We just started selling a data subscription service that got us 2.6 times the revenue and profit within some number of years. I can't remember the exact number, but the point is it completely changed the game, and it was all business model. And remember where I started: we had a worse product. That's why I wasn't meaning to be belittling to Maria. I'm sure she's got an excellent product, but even if she didn't, just as we didn't, you can have a disruptive business model that can change the game and set you off on the right direction. So that's why this evening is important.

Okay, so what are some of these models? You will know these companies, I would imagine. So how many of you have used, for example, Netflix or Spotify? I use both a bit too much. So what is their model? Anybody? Anybody who raised their hand, or anybody else who didn't? What is their model?

Yeah, what else is it?

Yes, so it's got content in it. What else about it? Do you pay for it all up front? No, that's the subscription part of it. How do you get value from it? Like, when you're watching Netflix, what value are you getting?

Yeah, it's pure joy. But how do they measure that? From how often you watch?

You know, so Abby is smart enough to have raised a whole bunch of things. First of all, she started talking about, for example, are we getting pleasure out of this? And they know that by how often we watch, and that translates into data. And that data helps them — you didn't mention it yet, but we'll see it — recommendations, right? Why do you go back to Netflix? Because hopefully they recommend something that you actually really like. So they can also sell that for ads, and they haven't yet to date, but that changed now. If you haven't already noticed it, it changed for a reason, because their stock price plummeted when they started losing subscribers and they couldn't compete with all the other services that had come out. And so they said, 'We need to be able to compete.' So they introduced this other aspect of their business model. So what I'm trying to do here is illustrate for you, you don't even realize it when you're watching a movie that actually there's a business model behind this that keeps Netflix in business. And if there isn't, guess what? They're not sustainable. So they don't meet that key criteria, which is ultimately to outlast their competitors and be the surviving winner. So you've got to think about this stuff, even though sometimes it's not obvious.

So now, how do I help you guys? Well, first thing I'm going to get you to do — and this time I'm going to get you as a group — to pick one person in the group who's working on a business. So it could be yourself, for example. And you get everybody around you and you say, 'Okay, I want to know what is an example of a business model I could use.' It doesn't mean I have to have to be the right one. And to get you going, is it a process or a product? So if it's a process, for example, to get people healthcare, then it's probably something you'll sell as a service. Is it software or is it service? So for example, Clint, remind me, is your product a software product or is it better described as a service?

Okay, that sounds very much like a service to me, rather than something you're going to go sell them software physically, because that's not what they care about. Okay, great. So content or data? So who thinks they have something that's data, for example, that they're selling? Remember, Netflix didn't say that they were selling data. Oh, sorry, they were acquiring data; they just did it in the background.

Perfect. So your product is data. Awesome. And then finally, how could you realize this? Would you do this with an open source type model or proprietary? Freemium or premium? Subscription or license? We're going to talk about that later, so I'm not going to say you have to do this now. But be thinking about that as you pick the first thing. So go to the whiteboards. I'll give you — you really don't need more than a couple of minutes. Just pick one person first of all, and then brainstorm quickly about what do you think would be the best starting point, at the core of your business model. All right, have fun.

Okay, everybody did really, really well. Just to be clear, I didn't see any team not get going once we started letting you quiz each other. So any one of you want to volunteer? Otherwise, I'll just pick somebody to talk about what you did and how you went through the thinking.

Yeah, perfect. So let's give first of all a warm round of applause. You had a great team obviously, so you can sit. Don't worry. So Nanga actually has a very clear idea of what she's doing, which is awesome. She knows who she's doing it for, she knows what she's selling them — which is potentially software or data — but is that the business model? What does anybody think? Because there's a difference. Next week we're going to talk about what you're doing and that value prop, but what's the business model? Without you answering, how could we help Nanga? So she's doing something terribly important. This boring work that's done in accounting is now going to be done by generative AI. That's fabulous. It's going to free up people's time, potentially give them much more accurate results, and all sorts of good things come from that. How should she make a business model out of that? Anybody want to volunteer?

That is an important aspect — that's sizing your market. That's something we'll talk about in the go-to-market session. But how's she going to make money? Remember what we said: we want to figure out how we create value, we deliver value, how we do that on a sustainable basis, etc. Anybody any ideas about what Nanga should do in that regard? We need an MBA student to step in here. You guys have studied this.

Since we're all going to be interested to figure out how she can get this to the customer as fast as possible and as cheaply as possible. Any ideas? And then we'll allow us.

Great, that's all I want to hear. So you already just learned the secret to this class, which is I don't actually teach you anything. All the people in this room are great peers who you can learn all this stuff from. So you don't need me. I really, seriously mean this. One of the most important things you could get out of the Startup Secrets classes is meeting each other and quizzing each other about how do you do these things. So you two need to talk. And now tell us how you're thinking about it.

Yeah, that's awesome. That's the plan. Fabulous. Not sure why you're in the class, because you're way ahead of it. It's really great. Honestly, that's exactly what we're trying to do: trying to tease this out for you and separate things like what your product is versus how you sell it, get it to market, and indeed how you're going to charge for it and make money from it. So you're in great shape. I'm going to take one more, because I want to make sure that there's an opportunity to get through the rest of the material. Anybody else really dying to bring those up and also challenge us to get some value to it, add some value to it? Yup, in the back.

Where's the round of applause for Zipporah? That's brilliant.

So anybody think that we could help Zipporah in any way? I felt like she was doing great, but is there anything you think, 'Hey, Zipporah, for what you're doing, there's something I would want to call out that's at the core of your business model, that is what you're doing, that's the essence of it.' What do you think? Anybody want to take a shot at this, like if you were going to sell one thing?

You don't have to answer. I want to just make sure. So what do you think that should do in the business model? How should that come out in the business model?

Sir, that's a fabulous example again of where I would sit down, challenge each other, have that discussion. And it's very interesting because your premium pricing immediately caused people to say, 'So why?' And so your business model somehow has got to be supporting that and also making sure that you're making money and being able to improve the supply chain that you've got. But fantastic job. Thank you very much. All right, well done.

So like I said, the beauty of this group is that you're all smart enough to be able to help each other. So what I'm going to do is provide some frameworks now so you can have the discussions amongst each other. So let's get going on that. First of all, if you haven't already taken away this key message — and you've already hopefully heard me espouse it, and I gave the example with Symantec and antivirus and going subscription — all these things are what adds up to the perfect storm for a startup. You obviously want the breakthrough technology. You obviously want to be able to discover some new market, like consumers in healthcare, or for example some different kind of way to get coffee to people. But in the end, if that can become a disruptive business model that in of itself is so significant, you have the perfect storm, because nothing's better than being in a place where nobody else is, with a product that nobody else has got, and being able to sell it in a way nobody else can. That's like, 'Wow, we're in a great place.' So that's what we're trying to get you to. And that's why this is so important. So back to what this business model is: it's about how you create, deliver, and make money, and then do that sustainably. Let's get on to the 'create' piece.

Don't disrupt it?

Very well said. So you bring up an extremely important point which I want to make on two levels. First of all, not every one of these things is an answer. Like there is no right answer to all these things. So in certain circumstances, you're going to have such a disruptive technology that the last thing you want to do is change everybody's way of buying it, because already you've got too much disruption. So you don't want to jump five steps at once, for example, because you fall down the stairs. But what's important, and what you're saying, is how you judge this. At the end of the day, it's about what your product is and who's buying it and how they will consume it best. So remember the title of this session: the Customer-Centric Business Model. So now, how could you find out whether you are disrupting too much at once?

So you don't need me to answer this question. In fact, I'm the worst person to answer it. Your most important guide to anything you do is your customer, period, end of story. Doesn't matter whether it's your value prop, your business model, or your distribution, or anything else that you get to work on. So don't take anything for granted. What I said at the beginning is what I really care about. This is the second key point: I'm here to bring you to think about the right things, not to give you answers. So none of these things I'm telling you are answers, they're just frameworks to get the right questions. So Zipporah's thinking is so good. I think she's way down the track on this. But I'm really glad that we got a challenge too. Okay, but how's she positioning this now? Honestly, it's great. You're getting challenged here because this is safe, but really what you want to do is go and ask your customers. So why would you pay a premium if I could do all these things to improve the supply chain? Why would this be something you would engage and pay money for? Does that make sense? Does that answer your question? Okay, great.

So next class, we're going to take apart the value prop statement. And at the highest level, it's 'What do you do uniquely well for who?' That's the customer value prop. On the other side of this board, it is this segment here. And you probably spent some time on that in the MBA course already. But what we'll do next week is talk about how do you actually get it down to its absolute minimum essence so that you could get in an elevator, for example, and pitch it. So that's next week. But I've got good news for you: we're going to cheat this week. We're going to give you the advantage before we even get there. We're going to tell you what the most important thing in this is, and it's what I call the core. And we really want to focus on it tonight. So what is the core? Well, as I've already told you, I was a terrible student, so everything has an acronym. So the acronym for this is: your Capability of Really Exceptional Value. It's the thing that when somebody says, they will say 'because X'. And ideally it'll be like one word, like 'incredible experience'. So it's the taste, that would be for example if you're selling a food product. Or maybe if it's Netflix, it's the recommendations. Or you pick it. But it should be something that is so easy for you to test with customers that whenever they think of you, they say, 'Yup, that's what you guys do. You're just excellent at bringing better taste, giving better recommendations, finding me the next piece of music I wouldn't have found on Spotify.' Whatever it is. So 'exploration' or 'discovery' would be the word for Spotify, by the way. That's why I use Spotify, because I'm too old to find good music, so I just go on Spotify and ask.

All right, so what do we do to cut to the core? I'm going to give you some examples and challenge you at the same time. Anybody want to say what is at the core of Harvard University?

Prestige. Anybody else have a different word?

Education. What else?

Access. Oh, this is awesome. Great. Great good news. Harvard's got lots of words, and you're all here for a reason. So I don't need to challenge that one anymore. Let's go to somewhere a little bit more interesting. How many of you use Reddit? Quite a few of you. Okay, I'm gonna pick somebody who hasn't talked. Gentleman in the back with glasses, why do you use Reddit?

So I'm going to challenge you a little bit. You don't like it, but do you use it?

Why? One word. Why?

Great. Done. So I could have given you a different answer. It might have been not the people, it might have been the actual content itself. It doesn't matter what it is, but you got to the core eventually right? It wasn't, 'Well, I love the user interface.' It actually sucks in my opinion. But that's a whole other story. The point is that there's something in all these products or services that is at the core of why you use it. Okay, anybody use or buy Patagonia stuff? I happen to be wearing my Harvard Patagonia fleece earlier this evening that was given to me. So I can't answer.

Okay, great. Anybody else do it for a different reason? Anybody else wear Patagonia or buy Patagonia?

Great, so we've got style, supply chain. What else?

Culture. Say more about that.

Fabulous. Okay, so listen to all this great feedback here. I will say that that's one of the things that Drew Claire, who helps me with Startup Secrets — she produces all this great content — thank you, Claire — she put this in here because she thought we should have something that's about social missions. Actually, a lot of people buy Patagonia because of the social mission, or the culture, or what it represents. Because you can buy the same clothing from all sorts of different places, and sometimes cheaper. I mean, you could go to REI and buy five different other kinds of alternatives to Patagonia. But a lot of people buy it because of the culture and the social mission behind it, not because of the supply chain. But by the way, you're not wrong. Everybody has their own reasons for doing things. But you get into the point here where I hope you understand. Anybody not feel that they understand what I'm talking about when I say core? Your Capability of Really Exceptional Value. And please ask me any questions.

So let's draw this like this, because Maria's asking a great question. Let's say your market's here. You're sitting in the middle of it here, and you've got all these customers telling you all these different things all over the place. Somebody in this room tell me whether that matters or not, and what you should do about it. Anybody want to help Maria with that question? Does it matter that you all came up with different reasons for buying Patagonia?

Okay, different desires for different people. And somebody had their hand up at the back, so I want to capture you.

Okay, very, very good. Now, just because of time, I'm going to stop at two views, because next session we're going to answer a lot of these questions. But what I want to recognize in this group is that you are doing a great job of describing why business model is not one thing. It's not just your value prop and how you get positioned to the marketplace. It's sometimes actually how people are going to find you and buy you, and indeed how you will actually make money from them, and also how you will in the process of supplying, for example, your coffee, make money yourself. It's all these elements. Therefore, all I was really trying to get to was one thing here, which is you still can't monetize everything. Like if Netflix decided they wanted to monetize their recommendations as well as their data as well as their advertising as well as their content, that would be a very messy business. In the end, you have to pick something that is at the core of what you're going to monetize for your business model. That's all this exercise is about. But what you're raising — and I do not want to in any way shape or form stop this great thinking — is all sorts of things that are about actually your customer value prop, and that's what we're going to talk about next session.

Now I'll give you a little guide to this, because it's this. Claire and I challenged ourselves: we took too long on it last time we did the session, so we will put this in the workbook for you. It turns out there is a trick to this, though. When you're a startup of one — like you're one person trying to build your business — and you have thousands, potentially millions of customers even, and they all pull you in different directions, what happens to your energy? It's diluted. It gets dissipated. It's pulled in all sorts of different directions. How's your business going to do? Not great. You have to pick something. And we call this a minimum viable segment, an MVS. And it's where everybody has the same need. So if everybody has the need for a faster supply chain for their coffee, or for a culture that is the basis on which they buy things, or for a better means for a consumer to get access to healthcare — that single need, if it's the same across a set of customers, is where you want to focus. And that we call a minimum viable segment. We will put that explanation up in the workbook for you, and we'll give you some examples of it, so you can go look at it. Because it's honestly the basis on which this conversation works for both of these points, which is you do need focus, because otherwise you'll never make any impetus. But your brand or your customer value proposition might be recognized — to your point with positioning — that people say, 'Well, Apple's lots of things to me. But what does it actually stand for?' When you buy a product, some people will say privacy, other people will say usability. Doesn't matter. Those are brand attributes. They're a different set of things. Can you monetize usability? Yeah, you probably can. Can you monetize privacy? Probably well. What does Apple actually monetize? A complete integrated stack from top to bottom that you can rely on. That's what I would say, for example. Anyway, great conversation. Let's keep going.

So I want to get through the material. We have got through the most important thing, which is an understanding of how you cut to the core. And now I'm going to give you a chance to see this in action. So great news: the company I'm about to introduce you to is called Tetracytes. It was started right here in the iLab, with students who were in this very room at one of the iLab Startup Secrets sessions. And they actually came up with an idea that's really incredibly obvious, which is that scientific instruments all over the world lack connectivity. You can't actually get the data off them. People all over the world in labs today still go and take readings from these instruments, and they handwrite them into their notebooks — or maybe electronic notebooks. Crazy, right? This is like everything's connected these days. No, it's not. Tens and hundreds of thousands of instruments are not. So they were addressing an emerging pain. And the first thing they did was they created a hardware device. It's like this was back six or seven years ago, where everything was IoT. So they created a box. Sounded great. I remember back in the launch lab over there, going into the inventory room, looking at that hardware and thinking, 'Oh my God, all the different versions, lots of expense, inventory, etc.' So I can tell you fast forward: that was not the right thing to monetize. And that's just giving you that answer right off the bat. It actually nearly killed the company, to be clear. The whole first round that they raised flushed on the train. Caused the founders huge challenges. They ended up having unfortunately one founder fell out, gone. So this is how badly business models can mess you up. The good news is they live to tell the tale. And because they figured out what the right business model is, and I'm going to let you try to do it for them. So now you know that IoT and hardware is not their business model. Let me tell you some of the other pain points the customers had. They really struggle with basic things. Still required hardware for this, by the way, to detect when instruments failed. They also really struggled to get the data in a form that they could use. So I just told you, you obviously don't want to handwrite this stuff. And they realized that if they could get this data in a form that they could store — and sometimes it's huge amounts of data. Any of you working in bio? Yeah, how big is a DNA data record? So imagine taking tens to hundreds of gigabytes. You can't write that stuff down, but you've got to store it somewhere. And they have it what's called in a temporal form, which means over time they need to check the DNA. So now imagine thousands of records of tens to hundreds of gigabytes. You don't store that on your floppy drive — well, those don't exist anymore — or CDs, or your hard drive. That, you're just gonna run out of space on your iPad for sure, right. So where might they put that?

Cloud. Okay, somebody's starting to think good. So what is the right business model for Tetracytes? And I'm going to give you a big clue. This is the diagram that they came up with when they realized they could connect everything to everything. So now they've figured out they could do that. So now as a group, take a minute or two. I'll give you two minutes to think: what would you pick as the business model for Tetracytes? And you might use some of the principles you're already going through. Just think: what's at the core of their business opportunity, and then how might they monetize it?

I'm hearing really good discussion about what it is. In fact, this table is in such big debate that there is a four-to-one vote against a particular viewpoint. So we're actually going to go right there. So Alan, you said hardware. Tell us why you said hardware.

Fantastic answer. I really agree with that. Absolutely agree with it. You guys, what do you think?

Okay, so as you can tell, we have fun. Four of you said that right? Okay, so let's just put this to the test in the room. Hardware? We have one. Four for software? Show of hands. Everybody thinks hardware? It's just you and me, cheap. We're in deep trouble. Really? Are the rest of you asleep? Hands up. Those of you think software? Anybody's hands not up? You've definitely had too much pizza. All right, great, so there's an overwhelming belief it's software. All right, what if I said none of you are right in terms of where the company went? Where would you go? So over here, we had some good thinking going on. Do you guys want to say what you came up with?

This is the kind of thing. This is hard. Just to say it's really, really hard.

Have an idea. Thank you by the way for digging in on that. I think a lot of things you're talking about are the right things to debate when you're trying to figure out your business model because it's not easy. And what did I just tell you? If we get it wrong, it causes you to almost implode as a business. Found a fallout, all sorts of challenges. It was literally a couple of years written off because we couldn't figure that out. Anybody have a different view?

We needed you on the founding team of TetraScience. You would have saved us years and millions of dollars if you had been able to help this team understand that. So not only is Nanga turning out to be right for TetraScience, but at the core of this, and they, by the way, in a very basic way describe this as spaghetti because that's what it looks like. This bowl of spaghetti has at the core of it the ultimate need that the customer has, which is to get at the data. It doesn't matter how it gets there. They couldn't care today whether they created the hardware to connect it or whether the instrument manufacturer did. And in fact, your point and Nanga about the ecosystem: if they kept producing the hardware, they would have ended up competing with all the instrument manufacturers who themselves need to create the connectivity. So instead they made an ecosystem, to the exact word you used, and all those people are partners to them. And on the other side of it, the people who want to use that data, the pharma, biopharma companies that they've focused on, so they picked biopharma as their MVP. Those people don't care about how the data gets there either. All they care about is that they have a data pipeline, another great word you used, that puts it in the form normalized for them and in fact makes it literally that usable to them that they think of it as Switzerland. So in the middle of this, they've become an envied leader because they connect all the data to all the places it might get used and provided in a normalized form. I'm dramatically simple like this. This business has skyrocketed: triple, triple, double, double. It's probably going to be one of the fastest companies to reach 100 million dollars in less than five years after being nearly dead. One reason: business model makes sense. Any questions? Okay, let's keep moving. Sir, I've got great news for you: you only need to start where we've already been. We already had Lisa explain to us that she had something she wanted to test. Start with your customer. So take a moment, just as a group, and write one thing that you think that your customer needs. Just one thing. So I'm giving you 30 seconds. It shouldn't take more than that. So what did this table come up with?

Personalization. Okay, great. So what is it about personalization that is going to be valuable to your customer? Not you, to them.

And that's perfect. Stop right there. Well done. Of course it is. Health is a personalized journey. Fantastic. Who else? What do we have over here? Abby?

So why is representation what the customer really needs?

Perfect. What I love about Abby's one word there is that Cohort is trying to deliver this education to people who need to be represented by the people who are teaching them. It's like the teacher is themselves, so they can understand what the student needs. Is that right, Abby? Perfect. And it wasn't me, it came up, it was you. So and you've got a great name for it too. So now you understand what I mean by figuring this out actually isn't that hard if you can get from the customer standpoint. Okay, Claire, we're back to your table. They figured it out yet? All right, what is it?

Great. And were you describing this for Cold Press AI? Perfect. Okay, so it's turnaround time. Perfect. All right, you guys are doing great. So we've got to the place now where on the second piece of the business model, and that is okay, we figured out how to create the value, but how do we deliver this value? And what is the thing that's going to make that powerful and disruptive? What we're going to try to do is think about around your core, what is it that you can do to actually get a multiplier that will take your value higher and a lever that will take your costs lower? And it starts to address this issue of how do we get to make money in the cash flow formula for those in the MS/MBA classes, or how do you make your operations model effective so it can be sustainable? So what we want to do is think about that core, that word that you all came up with, that key thing. Or for example, if you want to think about TetraScience, how they actually decided to take the data and create the ecosystem around it that would give the people on both sides of it, the instrument manufacturers and then the biopharma companies, the usage of that data in an effective way. So the two techniques are: for multipliers, we want to increase revenue. If you just sold a dollar for a dollar, you wouldn't make any money, just to stay at the office. We want to increase reach, we want to get to more people, that's part of the go-to-market. We want to increase coverage. When people buy your coffee, we want them to drink it lots of times a day. Or when people buy your healthcare, you don't want them just buying it as individuals, you want them telling friends about it, and so it spreads virally, for example. Those are all multipliers that take up, for those of you who are interested in these things, your lifetime customer value, your LTV, is often called. Or on the other side, we want to reduce the time it takes you. So you just gave a great example: if we can reduce for your customers the time it takes for them to get the data, that's huge value to them. You're nodding your head, so I think it must be right. And we obviously want to make sure that for you, while you're doing that, you're reducing your costs as well as the customers' costs of actually using your product. And anytime you're reducing things like resources, whether it's people, time, energy, etc., that's a lever. And if you're doing that around the core, you're going to increase the value, the ultimate value that the customer receives, and you're increasing your ability to be a sustainable business. So even if you have a non-profit, this is important too, because even if you're just delivering a service that you don't want people to pay for, you've got to be able to sustain your business in order to be able to keep delivering that service. All right, so let me tell you how you designed that. First off, your product needs to feed the business model, so the user's got to have an experience that they love. So I've asked this question before, but I'm going to ask it again because it's so real: how many of you downloaded an app on your phone? Hopefully all of you. Okay, good. How many of you have deleted one within the same period, you know, within like five minutes of downloading it? Okay, clearly not either a good experience or a good value, honestly. That happens all the time. I mean, it's part of experimentation. So remember that when you're thinking about designing your value, you want people to have a great experience of it right away. It leads to four startup secrets that I'm going to walk you through, and you can design these from the get-go. You don't even need to have a product. You can start with, for example, literally your paper prototype and start thinking about this. The first is my favorite. So a long time ago, I used to call this a startup secret called 'slippery,' and it's basically the same essence, which is that we want to make something simple to use and install. We wanted to make it low to no initial cost, instant and ongoing value, and then make sure it plays well in the ecosystem with everything else around it. Now I just said a lot, but actually it's all brain-dead simple. And if you think about that app experience you had, it clearly was simple to use and install, or simple to install at least, you just click to download it. But it may not have been simple to use. That may have been one of the reasons you threw it away. I see a lot of you nodding your heads. Was it delivering instant value? Well, clearly not, you threw it away. Time to value is incredibly important. It doesn't matter whether it's a service or a product or whether it's data. If it gives you instant value, you're going to keep it. And then finally, plays well in the ecosystem. If you have to change your phone to use the app, are you going to use it? I don't think so. There are things that already exist. So this is to your point, Lisa: you don't want to change too much. If it's disruptive to adopt something, it's not going to work. So I often say a startup secret that comes up lots of times is the best value props actually highly disruptive but non-disruptive to use. And for example, if you are building an enterprise product these days, you don't build it on stacks of hardware that you run under your desk, which is how it was 20 years ago. You build it in a container and you just deploy it to AWS or your favorite cloud provider. That's incredibly non-disruptive to do, and it gets you huge benefits. So this is what you're looking for. You're looking for products that have a slip, which is now turned into a term that's become popular 15 years later called product-led growth. So if you want to go and investigate more about this, how do you make products that are slippery, that are really friction-free, and how they can help you with product-led growth. Yep, go ahead, Nanga.

Wow, you came up with a whole bunch of things again, and I've thrown your board away, but that's okay. We will put it over here. Those are all great questions. So I'm going to answer some of them later just to make sure that I keep the class on track. But you said APIs and you said, for example, how do you reduce churn? And there was one other thing you said. Um, so it would be more personalized and a little bit more integrated. I imagine integrated. Yep, integrated, personalized. These are all good things. So some of them I will answer next week. One of them I'll just answer right now to give you a sense of this. So if you're selling an API, are you selling that to a developer or are you selling that to an end user? Algae department grading it. Okay, so I'm going to give you two examples of companies that have played in this world: one that was extremely successful, one that failed. And what I want you to take out of it is, well, what would you do? So anybody know Twilio? Okay, Twilio actually it's not doing terribly well at the moment on the stock market, but incredibly successful story of an API-first company. In fact, many people would say they kind of led the API economy. Not really true, Amazon did years before. But they started selling everything they did, but they sold it to developers. APIs, because developers don't actually want a product that's finished because then they've got no job. State the obvious, right? So you wouldn't sell it to a developer. End users don't know how to program, so would you sell them an API? They don't know what to do with it. So you just got to be very clear what your audience is, who your customers, who your buyer is, and what they want to buy, and what problem you're solving for them. Developers love APIs because it gives them the ability to get a multiplier on their experience and build things quicker. That's why Twilio took off. I'm actually not going to mention the name of the company because I'd rather be embarrassing for them, but a company that we have backed, so I'm admitting this, the nature of venture capital is you back things, some go wrong. Students came up with a brilliant API in the healthcare world. It failed terribly because healthcare developers didn't actually have any clout. They're not the people who hold the budget in healthcare. And so even though they love the product, they couldn't get anybody else to pay any attention to it or give them budget for it because they just wanted a solution. The healthcare provider said, 'I just want the solution. Give me the workflow, give me the process, give me anything, but I don't want to develop for six months and customize this.' So what I hope you realize, takeaway from that is one simple thing: it's about the audience. Back to the customer first. And it's about what are you giving them that gives them a solution to a problem that's really significant to them, that they can immediately use. Back to slip: simple for them, low to no initial cost, instant and ongoing value for them, and it plays well in their ecosystem. How does slip make sense? Great. All right, thank you, good question. So hopefully you wrote something down that's useful to you and you'll use after the workshop. And now, second startup secret: how you price and package. This is incredibly important. So if every app you wanted to try on the App Store cost a thousand bucks, I don't need to even say anymore. It usually is free, right? The first thing they do is say download it. But what they don't tell you in a lot of instances is that oh, when you start using it, by the way, there's an in-app purchase. I see a lot of you nodding your heads. Okay, it's true with online banking too, by the way. Oh, free banking, no fees, everything else. How do they make money? Interestingly, lots of different ways. Sometimes it's on your data, even though they don't tell you that. Sometimes it's on referring you, so it's lead generation of getting you onboarded with their bank. Sometimes it's on the back end with the credit card that they then sell you that you do pay for. There's all sorts of ways that people do this, but to start off with, it's attractive when somebody says free. So how you price and package is important. It's often, by the way, true that when you figure this out, it's a series of steps you take, and I encourage you to think about where do you want to start and how will you get to a place where you're ultimately delivering value and being paid for it. That's what the business model is really all about. So next key example is a very easy one. Anybody use Wistia by any chance? If you're in marketing, you do. So, Claire, you want to describe what Wistia does?

Great, thank you, class. So I was hoping that one of you would use it, but thank Claire, thankfully the customer in this case. It's drawn people like Claire in for a simple reason, which is there's no cost to start trying to use it. If you have a great experience of it, then you can pay for the plus piece. If it really takes off, it gets viral adoption. You might have, for example, a work group that uses it and they pay the pro subscription. And if your whole enterprise takes it, then you start paying a lot more for it. That's a classic strategy. Go ahead, Zipporah.

Great question. What does anybody else think in the class? Yeah, go ahead, Lisa.

Great. So Zipporah, I know that wasn't a complete answer to your question, but it's a good start to the thinking. So bundling, as it turns out, is a whole science into itself. We will put a link in the workbook to one of the people who has a fantastic view on bundling, has done a great video on it. It's a guy called Shishir Mehrotra. In fact, he's the founder of Coda, what the workbook is built in, and he also used to run YouTube before that, and he's an expert at this. So rather than me try to half answer your question, I will say the following: incredibly important question. There's no right answer. There's lots of times when bundling can make lots of sense, but you have to think about it as a separate science in this. But great question, it's absolutely the kind of thing you should be thinking about. All right, next startup secret: if you can co-create stuff. So in other words, not just build it on your own, but co-create it with other people, you can create tremendous win-wins. So how many of you know what open source software is? Before I explain that, all okay, so about half the class. So the notion of open source software is very, very simple, which is that anybody can build a piece of this code and put it in an open repository so that anybody can look at it, anybody can adapt it, and anybody can use it any way they want. I'm grossly simplifying. Why did open source get started? Because people realized that actually it's a lot easier if I have the problem to design a nightmare developer to design the solution myself. Why do I have to go pay some other giant company to do that? If I'm a coder, I'll just develop it. And guess what? If I want people to keep adding to it, I'll say, 'Hey, take a look at this, see if you think we should do something better.' And pretty soon, hundreds of thousands, in fact millions of people have contributed to open source projects all around the world. The one I happened to back was called Drupal, which became the largest enterprise software content management system. So it's actually used by everybody from Sony at one extreme to NBC at the other extreme to the White House at another extreme. Pretty much every website that is out there at real scale, for example the Olympics, the Grammys, etc., is all built on Drupal. But it's all open source, it's all free. The founder of it, Dries, is a brilliant guy who was solving his own problems. It turns out in his dorm room, he decided he needed to be able to share information with a friend over literally what wasn't even Ethernet, a cable, and he created his Dutch, or actually Belgium, he created what effectively was a basis to share information. And then it became sharing it on websites, and then it became Drupal. And you know, literally there are now tens of thousands of modules that are built for Drupal that everybody around the world who's a Drupal developer contributes to, but it's free. How would you make money out of that? Go ahead.

That's exactly what he did. They figured out how to give away the software and then create the services around it that made it, for example, secure, reliable, scalable. They eventually put it in the cloud, and what Drupal became is a cloud service for anybody to create any website at any scale. And it literally is used, as I said, by for example every major artist. Harvard uses it, for example. Everybody uses it as a service to be able to get their content, their website, their experience, so they call it experience management up and running. But what's the win-win in it? I'll go backwards. Who created it? Everybody did. So a huge startup secret: if you can tap a community. For example, you're going to get into healthcare, right? Is there a community around healthcare? For sure there is. Imagine if you could tap the community that could help you create your product. Would that be a good thing? Absolutely. Who else has something that they think they could tap a community to help them build their solution? Yeah, go ahead, Charles.

Sounds like a great product. Now how is the community going to help you do that?

So what's great about what you're thinking is, look, there's a lot of elements to these products, and everything to do with health and safety, but also really important for population control for certain governments probably have a basis for actually wanting that kind of product. There's lots of people who could contribute to this need, and you're going to get them involved in a community to help you build your product. Is that what you're thinking?

Okay, so I'm going to make sure that Cheryl doesn't get literally curtailed tonight by asking if you guys would actually spend a bit of time with Cheryl afterwards. What would you recommend to her to do to get the community engaged around this need? Because there must be many of you who've experienced this, who've said, 'Okay, I wish I had a better biodegradable, much more low cost or something that for example might appeal to low income.' How could you contribute to that? What I will say is as follows, which is it's really important that this word 'win-win,' it's two words I guess, is there for your community to work. So the reason that for example Drupal took off or any open source project takes off is that the person who has the problem wants to solve it. So you're going to have to find the person that's in the medical world, for example, or in the bio world, in the AI world, that is just solving this problem for that wants to solve this problem, that will contribute to your community. It has to be a win-win, otherwise they won't engage. It can't be just your need. If you keep asking that you need help, that won't work. But if you can get them to say, 'But I want to solve this problem, so I'd like to contribute,' then you're on the basis to get going on a win-win. That makes sense. It's not as easy as saying I just want to start a community. You have to find this win-win. I see lots of people nodding. Do you still have your question?

Fabulous. So what Meredith did is really smart: to go and get a win-win, you need to find out who else cares about the problem. And if they care enough about it, like there are other rowers or other athletes, and they're in the same community as you, Harvard for example, and they would like to solve that problem too, there you have the beginnings of something that could become a community. And I bet that they would love to contribute to it. It's going to help them. So great, great example. Thank you very much. So win-win doesn't always work, but I gave you an example here because I really want to make sure you understand it's actually something that can play out in different ways, not just in an open source example, but via strategic partnerships too. So I'm almost going to guarantee that none of you have what we call a whole product. What I mean by that is you're going to be a piece of the puzzle. So I'm going to pick on Cold Press AI because I think you have a very good example of this. So you're going to get your data to people faster. It's the essence of the value prop, right? What are they going to do with it? Are they just going to say, 'Great, I've got the answer'? They're going to train their models with it. Yep, they're going to train their machine learning models. Okay, and who has those models? Do you have them? One day, hopefully. Right now, it's just on the customers to find another provider. Okay, perfect. So this is a perfect example of what I'm describing now, which is that in order for Cold Press AI to have a whole product, they're going to need a lot of things. So first of all, you need a cloud provider, yeah. Okay, and then as you said, someday you hope to have models, but you don't today, so you need a partner for those models. And I'm going to go one step further: even when they've got all that, what are they going to use it for? Deploy it and use it in features on their web, on their applications. So there's something they're going to use this for. Doesn't matter whether that's a healthcare application at one extreme or a consumer application or something else, right? This is the notion of a whole product. So you can't actually be successful for your customer to run X application with AI and data in it until you get all these pieces together: you get the cloud, the storage, your product to get it there faster, the models that make it useful, and then it integrated into some application. So good news: these two people need you. And actually, because of that, they'll help you get to market, and they'll help you find customers, and they'll help you build the success of those customers, and they'll be a great multiplier for you to get to market, as well as a lever. They'll reduce your cost because you're not having to build all that stuff. So strategic partnerships are incredibly important. And the first thing I recommend you do is think about the end-to-end solution, what we call the whole product, and where do you fit in the ecosystem, and who could you partner with? And by the way, it's not optional, because if you just keep trying to sell your little feature or your little functional product, and there are all these other things that the customer needs, it won't work. But generally speaking, by the way, if you found a real need to solve, are you at the end of this? There will be people out there who are solving some part of it, and they'll be delighted that you come in and say, 'I can make it faster for you, better, cheaper, etc.' Make sense? Any questions on that one? Good.

I don't know, really. You're very smart, you've been here before, so I've got to challenge you back. What would you do?

Oh, true. So you've got a potential threat and an opportunity. The threat is that the competitors lock you out. The opportunity is that you're identifying things that they're not doing. So you've got to play that with the classic skill of an entrepreneur and say, 'I can see this competitor over here that's coming up against me cannot solve this problem.' So an example might be: they're an on-premise solution, you're the first people are going to do it in the cloud. And by the way, that's a classic thing that's happened for the last 10 years, and it's still going on. People are figuring out how to decimate old solutions that were legacy enterprise based on-premise by coming up with cloud versions of it. That's the whole SaaS movement. Another example: let's stick with Cold Press AI. Almost every application is probably going to get reinvented with AI. That's just my view of the world. So the good news is you could go along to anybody who's got an application and say, 'Hey, we could AI-enable your application.' Wow, that's pretty cool, because now they're not in the old guard. You're enabling them as a partner to come into the forefront of what people want, which is more intelligent applications that have better data that are faster delivering the solution to their problem. Make sense? Makes sense to you? Great. All right, next one is what I call the three ups. So think about this as teeing up if you're looking for something, a solution to have a great go-to-market experience. So it turns out for your product to get adopted is just the beginning. You are always going to want to improve it, right? So you're going to want to update it. That sometimes is just for security fixes and things like that. Then you're going to upgrade it. You're going to upgrade it when, for example, new capabilities are needed or new technologies like AI come along, or you want to make it mobile, etc. So those are the upgrades. And then guess what? You're selling into some particular function. So let me pick one of the teams here. Lisa, you actually haven't talked about your solution. Where do you start with FoodPrint? Trying to provide environmental information on groceries to consumers based on data, not marketing. So easily comparable environmental information about the food you consume and buy. All right, so I know nothing about your business, but I can think of three ups for you. What might they be? So how might you update your solution? How might you upgrade it? And how might you upsell it? So somebody's already bought it. And anybody wants to help Lisa, please join in. This is a chance to really get somebody going.

Perfect. So I'm going to let you off the hook with coming up with all three of them, but that was fabulous. No, seriously. People buy her product and they're figuring this out with their groceries. The first thing I would say that you pointed out is you can give them an upgrade that makes recommendations for them. Great. You could sell that. If people really value it, they'll pay for it. That's both going to help you sell more because you're solving more of the problem, because people want recommendations to find better products, but it's also going to increase value for you. So that's a classic upgrade. By the way, the things I thought of were pretty obvious: you're going to constantly update the data, right? The data was out of date, you're dead. So you need that. And then the upsell one: would this apply to CPG as much as groceries?

And guess what? I did only one thing: I kept the customer the same. Because if the customer is the same here, this is why we always talk about this is customer-centric value propositions. And you can keep updating, upgrading, and upselling them. You have a fantastic business model. So that's the secret. And guess what? It plays with what we've already talked about, which is if you make it really slippery for people to just land and expand, to get their first customer, and then you keep updating, upgrading, and upselling them, you build ultimately a moat, meaning a defensibility around you that is tremendously valuable. That's by the way how every social network works. I might come up with a fantastic new social network tomorrow, and let's say you will love posting photos. I'm guessing that some of you do. And I said, 'I've got a way easier way. We've figured out this slip for you to just instantly download this thing.' But bad news: you've got to invite all your friends before it's actually of any value to you. You're not gonna do it. That's the value. The value is that somebody did a really good job of building whatever social network you like, whether it's TikTok or Instagram or pick your favorite, of building that network to the point where they've got huge defensibility. Even if their features aren't that good, they keep bringing you in, sucking you up in there and their ecosystem effectively. So somebody had a question. I saw a raised hand. Yep, go ahead, Clint.

Yeah, yeah, you have it exactly right. And by the way, there's no reason why all of that can't be true. So remember my virus subscription example? That was just updates. We actually didn't change the product at all. All we did was send you virus updates all the time so that you had the latest signature, the latest virus before it even hits you. We don't have to change anything about the product. We did ultimately end up upgrading it because people had different ways in which they wanted to monitor it, for example, and they wanted to see, well, how many viruses did I get? And they wanted an analysis of that. And then the people who were actually in the IT department said, 'Well, I want to track whether it's happening in certain regions, etc.' So lots of ways these things happen. And then we upsold them. I think I told you this: by 2.6x by upgrading this functionality to being data security for everything. So it wasn't just virus, it was data backup and it was improving your performance of your PCs at the time, etc. Except very, very compelling business model. Startup secret basically just think of three-upping everything and you have a great basis. So what I've been doing here is quietly building what we started out talking about: multipliers and levers around your core. And anything that you can do to do that, whether it's create whole product strategic partnerships, or for example find ways to make your product more friction-free in the slip model, or price and package it so it has pull, you're not pushing it but customers demanding it because it's so easy, it's so efficient for them to download, it's free for them to try, or how you co-create it with a community that makes it a real win-win, or ultimately what we just talked about, which is three-upping it so it has a long life cycle. And to Clint's point, you can keep selling and getting more value for it. That's it. You just got four startup secrets very quickly, all around increasing your lifetime value for your customers and reducing your cost of acquisition. It's a fun thing to play this game, and I encourage you to just work on it very simply starting with this core, as I said. So we're nearly at the end here, and what I want to do is give you a chance to just for a moment brainstorm on this as your own venture. Could be a multiplier or a lever for your table, but jump in everybody. This is your chance to just brainstorm with each other. I hear great discussion going on. So top right, what do we have? This table said increased reach will be their one multiplier. A lever? And what is it that your customer is going to benefit from that?

Fabulous. Zipporah, I actually don't need anybody else's answer tonight. You just exposed the exact same thing. No, it's perfect. Seriously, because the next slide is you're designing this for your customers. So what's great about what you answered right away was that yeah, you want to get increased reach, but why does your customer benefit? And you just said it: access. Are you getting that reach? The low-income people that couldn't have got access to this coffee can now get access to it. Fabulous. Again, we need a round of applause here. That was just superb. So we just came perfectly to the end for the session by bringing it all the way back to what I said was we need to design customer-centric models, so things that benefit the customer. I'm going to give you just a quick flip through what will be on the portal, and that is how you do this. So what you do, the secret to it, is following the customer journey. Which is actually when they first engage with you, all they have is a problem, and they spend a lot of time and it costs them money to basically figure out what solutions are out there. They buy it, then they have to implement it, then they have to get trained on it, then they test it, then they roll it out, then they measure whether it's working, then they optimize it. And only at some point do they go, 'You know what? We've got enough value from this thing that we should keep buying it. We should go through the three-up process.' So this is a whole journey that I encourage you to figure out. And Clint, you asked about this. All of that, you're trying to increase the dollars you're taking over the lifetime of your engagement with the customer. And the more that they engage with you, the longer they engage with you, the higher your lifetime value, which is going to make your business model much, much better. And obviously on the other side of this, the question Zipporah just nailed this, so I don't really need to tell you, but you're going to be answering questions for your customers like: why is this better for them? Does it save them money, just like Zipporah is saying it does? Or does it save them time, like you're saying it does in terms of how you get the data to them? Or what's the margin improvement in their business, not yours? You've got probably plenty of examples of where you've been proving the customers' ultimate business model themselves by how what you're selling to them. So these things are the things that make this a customer-centric model. And for examples of these things, think about Airbnb. They're helping homeowners utilize their home. They're getting paid money that they wouldn't have otherwise got. Wow. What about, for example, Salesforce? Why would you sell Salesforce? It's a good model. Well, pretty obviously, people are getting better utilization out of their salespeople if they're more in touch with their customers, they have better relationships with them, they can sell more to them. Sort of basic stuff, but at the same time, this stuff is what drives businesses. So I won't ask you this question just because of time, but I would leave you to think about it, which is: what's the one thing that makes your business profitable that your customer also gets profit from or benefit from? If you can identify that, this is the key to having a great sustainable business model. That last thing I was talking about, it's sustainable because it's not just you who's succeeding, it's your customer. You're making them successful. That's what makes for a great business model. So to bring it all together, this is the sustainable part. It's what you're going to do to make your customer successful in the long run with all the different facets of the business model that you've built. There's one phrase I said it to you at the beginning, you're going to remember: if you can get a great business model, it's going to be like that invitation you're going to RSVP to. It's going to be something that becomes repeatable, in other words the customers will keep buying. It'll become scalable, because not only they keep buying it, but you can keep operating it at a profitable basis. And importantly, it's valuable along the way, because the way in which you're actually creating that might be very effective, for example from a community, or you're making it very easy to sell through partners, etc. And it's disruptive because you're doing something that nobody else could do. So open source disrupted, for example, many traditional software stacks. Or the ad model disrupted all the traditional software stacks. So Google, for example, gives its apps away. It caused Microsoft to have a stock price that was a dial turn for nearly a decade while they tried to catch up and compete. That's what business models do. They're that disruptive. And ultimately it becomes defensible because you build a moat around it with things like your network. And that's what's so exciting about an RSVP model. And obviously the bottom line of this is it's for you and your customer. If you design this right, so thank you for listening. The summary of all this is going to be up online, but you just learned four startup secrets. You learned how to figure out how to build those around the core of what you're doing and your design, and you've learned how to design an RSVP model that will create a very disruptive and defensible business for you. Real pleasure having you here. I only have one question for you now: do you now understand why a business model is important for you as a founder? That was incredibly quiet. Okay, good. So I'll connect the dots for you in one way you probably didn't think of. If you have a smart business model, it'll make you spend less. You'll be very cash efficient. You'll have better valuations. You'll have lower dilution. That'll give you higher ownership. And the bottom line is you'll have a much bigger outcome as a founder. This directly impacts your bottom line outcome. Let's figure out how to do great jobs with it. Thanks a lot, really appreciate it.