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Class 11

Class 11. Elevator Pitches. Individual Elevator Pitch 7/8 ( 火 ) 30-45 second “pitch” (every person). Pitch Content (ENGLISH): Opportunity/problem being solved Target market/customer Product/service to be created Value being created Why it is better than competition

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Class 11

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  1. Class 11 • Elevator Pitches NBC1 2008, (c) 2008　Jay A. Smith

  2. Individual Elevator Pitch 7/8 (火)30-45 second “pitch” (every person) • Pitch Content (ENGLISH): • Opportunity/problem being solved • Target market/customer • Product/service to be created • Value being created • Why it is better than competition • Business model (how firm will make money) • Anything else unique that will capture attention/interest • Pitch Goal: Get enough interest for a meeting • Choose the most interesting parts • Business idea to use for rest of the class NBC1 2008, (c) 2008　Jay A. Smith

  3. Start Pitching • 30 sec (soft stop) • 45 sec (hard stop) • 1 summary sentence – “hook” • Who / produces What / for Whom • Company/ Product / Customer Market • No PC or powerpoint • 2 questions from class/instructor NBC1 2008, (c) 2008　Jay A. Smith

  4. Class 12 • Business Models & Business Strategy • Valuation and investors NBC1 2008, (c) 2008　Jay A. Smith

  5. Inbound Logistics > Operations > Outbound Logistics > Marketing/Sales > Service Toyota McDonalds Amex Uniqlo Amazon Business Model Questions • How do we make money? • We sell stuff to… • How do we help customers? • How do we add value? “Value Chain” NBC1 2008, (c) 2008　Jay A. Smith

  6. n n n n Business Model　“Profit Engine” • Revenue Sources (how do we get paid?) • Key Expenses • Size (volume, scale/growth) ( ) Profit Sales - Product Costs Units Overhead = x - Year Unit Year Year Profit = (Margin x Volume) - Overhead NBC1 2008, (c) 2008　Jay A. Smith

  7. Business Model + Business Strategy • Strategy: Development, protection, adjustment of business model over time • Plan for executing on Key Success Factors • Goal: Sustainable Competitive Advantage ( ) Profit Sales - Product Costs Units Overhead = x - Year Unit Year Year Year 1, Year 2, Year 3,… NBC1 2008, (c) 2008　Jay A. Smith

  8. Key Success Factors • Key skills, functions, actions needed to maintain and strengthen business model and strategy • Subscriptions/Memberships • Get many members (acquisition effectiveness) • Get members at low cost (acquisition efficiency) • Keep members from leaving (retention rate) • Increase spending per member (share of wallet) • Transaction-based • Command above average pricing (value effectiveness) • Lower product costs (production efficiency) • Lower fixed overhead costs NBC1 2008, (c) 2008　Jay A. Smith

  9. Member/customer retention strategies • Adding value/benefits to membership • Automatic renewal • Increase switching costs • Exit fees (early departure, cancellation) • Pain (email address changes) • Proprietary systems (MS Windows) • Loyalty cards (point cards, mileage cards) • Makes transaction based customers more like members • Membership referrals NBC1 2008, (c) 2008　Jay A. Smith

  10. Cash Flow Valuation • Valuation = “price” of the whole company • Valuation depends on both company and market for investment in stocks • Public stocks are priced in an open market • Private company stock transactions are usually negotiated between company and “lead” venture capital investor Value = f(ΣProfit n) +α (not a strict formula) NBC1 2008, (c) 2008　Jay A. Smith

  11. Many Factors Affect Valuation • Opportunity-Related • Is this a good business opportunity? • How big a business can this be, when? • Company-Related • Is it a good business strategy? • Is this a good team? Right skills, prior success? • Is there a sustainable competitive advantage? • What are the business strengths/weaknesses, • How risky? Biggest risks, challenges? • What else is needed to make this work? • How badly does the company need financing? • Capital Market-Related • What are prices for companies that are similar? • How much VC competition is there for the investment? • How are the public stock markets doing? NBC1 2008, (c) 2008　Jay A. Smith

  12. Valuation • Valuation of company = price for the whole company • Market Value = current stock price x total shares • Enterprise Value = Market Value – Cash + Debt • Example 1: $30.00/share x 5,000,000 total shares = $150,000,000 • Determined by what investor pays to own piece of company • Valuation = $2,000,000 / 0.25 = $8,000,000 • Example 2: VC buys 25% of company for $2 mil. • $8,000,000 “post-money” valuation • $6,000,000 “pre-money” valuation (pre-money = post-money – investment amount: $8 - $2 = $6 mil.) $6 million $2 million NBC1 2008, (c) 2008　Jay A. Smith

  13. Simple Valuation Calculation NBC1 2008, (c) 2008　Jay A. Smith

  14. Is eBay a better business than Amazon? NBC1 2008, (c) 2008　Jay A. Smith

  15. Forward P/E Projected Growth Rate PEG= Price/Earning Growth Ratio = Is eBay a better business than Amazon? Earnings Before Interest, Taxes, Depreciation & Amortization yoy: year over year ttm: trailing twelve months NBC1 2008, (c) 2008　Jay A. Smith Source: Yahoo! Finance 7/7/08

  16. Computer Industry “Comps” NBC1 2008, (c) 2008　Jay A. Smith

  17. Homework • Prepare Business Investor Presentation • Company Name (can change) • Initial Business Idea • Think Big! Sales > ３億円 in year 3 • Schedule • 7/15 Initial presentation/workshop (English) • 7/22 Final Presentations (English or E&J) • See Springboard Enterprises • By 7/29 Final Report (English) • Read “Picture Perfect” 2 page business summary NBC1 2008, (c) 2008　Jay A. Smith

  18. Presentation Goal:Convince Investor to Invest • Early stage investor into “seed-stage” business • 1-2 Minute Summary of Key Points • Important, Interesting Points Early • Sample/Demonstration/Prototype is helpful • Creating a COMPANY, not just a product • Strategies of business FIT each other NBC1 2008, (c) 2008　Jay A. Smith

  19. Making a Successful Venture Business Strategic Partners, Early Users, Supporters Customer Markets Business Model & Strategy R&D, Production,Operations Sales & Marketing Suppliers, Distributors Capital Yen/ $ Idea Entrepreneur Team NBC1 2008, (c) 2008　Jay A. Smith

  20. Basic Business Plan Questions • What is the opportunity? • What is happening? Why? • How big can it be? When? • What is the business strategy? • Does it fit? • Is it sustainable? • What is the business model? • How do they make money? • Sales/Profit Years 1-3 • How much funding is needed? NBC1 2008, (c) 2008　Jay A. Smith

  21. More Strategic Questions • What are the key factors for success? • No. 1 merit • Number 1 risk • Confidence of it working • When will you know if it is working? Why? • Are these the right people? • What is missing? NBC1 2008, (c) 2008　Jay A. Smith

  22. Sample Marketing Questions • Who is target customer? • How many possible customers are there? • How does customer buy? • Is the purchase compelling to customer? • How will you reach the customer? • How much does it cost to get a customer? • What does it cost to support a customer? • How easy is it to retain a customer? • What is the pricing? • What is the cost of goods? MARGIN NBC1 2008, (c) 2008　Jay A. Smith

  23. Company Name Your Name and Title Mission statement “catch phrase” Business Idea Problem Being Solved Product/Service Solution (why it’s a great idea) Target Customer Market, segment, size (Who, how many?) Place/Channel Promotion Business Model & Revenue Sources Business Strategy and Implementation Competitive Advantages (defensible, sustainable) Key Success Factors (what is important to do well) Operations (How you do it, supply, scale) Financials (3 year forecast) Price, other driving factors (memberships, etc.) Breakeven, How much money do you need, when? Risks Workshop Checklist • __________________ • __________________ • __________________ • __________________ • __________________ • __________________ • __________________ • __________________ • __________________ • __________________ • __________________ • __________________ • __________________ • __________________ • __________________ • __________________ • __________________ • __________________ • __________________ NBC1 2008, (c) 2008　Jay A. Smith

  24. Helpful Links • www.springboardenterprises.com • www.garage.com • www.guykawasaki.com • www.entrepreneur.com • www.inc.com • www.startupjournal.com • http://nvc.nikkeibp.co.jp/ Nikkei Venture • www.dreamgate.gr.jp NBC1 2008, (c) 2008　Jay A. Smith

  25. Picture Perfect Inc. • Location/contact information • Good, simple business summary • Industry analysis • Market Size & Growth • Competition • History/Progress • Team • Products • Marketing • Finance • Forecast • Finance needed • How much raised and from whom • What’s missing? NBC1 2008, (c) 2008　Jay A. Smith

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